Stock Code: 2428

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

2023 Annual Report

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Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Annual Report is available at: https://www.thinking.com.tw Printed on May 9, 2024

I. Spokesperson and Acting Spokesperson

Name of spokesperson : Hung, Yu-Fang Position : Manager of Finance Department Telephone : (07)557-7660 Email : [email protected] Name of acting spokesperson : Chen, Chia-Hua Position : Assistant 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. 6, Xinjian S. Rd., Nanzi Dist., Kaohsiung City Telephone : (07)961-6668 Address of Factory : No. 6, Xinjian S. Rd., Nanzi Dist., Kaohsiung City Telephone : (07)961-6668 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...................................................................................................................... 6 2.1 Date of Incorporation .............................................................................................................. 6 2.2 Company History .................................................................................................................... 6 III.Corporate Governance Report........................................................................................... 10 3.1 Organizational ....................................................................................................................... 10 3.2 Information of Directors, President, Vice President, Associate Vice President, and Heads of Various Departments and Branches .................................................................................. 12 3.3 Remuneration Paid to Directors, President and Vice President for the Most Recent Fiscal Year ....................................................................................................................................... 18 3.4. Implementation of Corporate Governance ............................................................................ 23 3.5 Information on CPAs’ professional fee ................................................................................. 89 3.6 Information on Replacement of CPAs .................................................................................. 90 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 ................................................................................................. 91 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 ................................................................................................................. 92 3.9 Relationship among the Top Ten Shareholders .................................................................... 94 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 ............................................................................................................................... 95 IV.Capital Overview ................................................................................................................. 96 4.1 Capital and Shares ................................................................................................................. 96 4.2 Corporate Bonds .................................................................................................................. 104 4.3 Preferred Shares .................................................................................................................. 104 4.4 Global Depositary Receipt .................................................................................................. 104 4.5 Status of Employee Share Options ...................................................................................... 104 4.6 Status of New Restricted Employee Shares ........................................................................ 104 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions .................. 104 4.8 Financing Plans and Implementation .................................................................................. 104

V.Operational Highlights ...................................................................................................... 105 5.1 Business Activities .............................................................................................................. 105 5.2 Overview of Market, Production, and Sales ....................................................................... 110 5.3 Human Resources ................................................................................................................ 116 5.4 Environmental Protection Expenditure ............................................................................... 116 5.5 Labor Relations ................................................................................................................... 116 5.6 Cyber Security Management ............................................................................................... 120 5.7 Material Contracts ............................................................................................................... 121 VI.Financial Information ....................................................................................................... 122 6.1 Financial Summary for the Past Five Fiscal Years ............................................................. 122 6.2 Financial Analysis for the Past Five Fiscal Years ............................................................... 126 6.3 Audit Committee’s Review Report on the Most Recent Fiscal Year ................................. 132 6.4 Financial Statements for the Most Recent Fiscal Year ....................................................... 133 6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year. .................................................................................................... 133 6.6 The Impact of Financial Difficulties of the Company and its Affiliates ............................. 133 VII.Review and Analysis of Financial Conditions, Operating Results, and Risk Management ...................................................................................................................... 290 7.1 Review and Analysis of Financial Status ............................................................................ 290 7.2 Review and Analysis of Operating Results ......................................................................... 291 7.3 Review and Analysis of Cash Flow .................................................................................... 292 7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation ............................................................................................................................. 292 7.5 Investment Policy for the Most Recent Fiscal Year, Reasons for Profit (Loss), Improvement Plan and the Investment Plan for the Coming Year ..................................... 293 7.6 Review and Analysis of Risk Management ........................................................................ 293 7.7 Other Material Items ........................................................................................................... 296 VIII.Special Disclosure .......................................................................................................... 297 8.1 Summary of Affiliated Companies ..................................................................................... 297 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 ........................... 306 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 ..................................................................................................................... 306 8.4 Other Matters Requiring Supplementary Information ........................................................ 306 IX.Matters with Important Impacts on Shareholders’ Equity or Prices of Securities 307

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. Within the electronics industry, the Company is also steadily working towards its goal of becoming the leading brand for protective components.

1.1 Business report:

i. Results:

The consolidated revenue for the year was NT$ 7,077,136 thousand, a decrease of 5.17% from the previous year; the consolidated net profit after tax was NT$ 1,311,159 thousand, a decrease of 5.67% from the previous year, and the earnings per share (EPS) after tax was NT$10.21.

ii. Execution of budget: N/A.

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

Unit: NT$ Thousand

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Year
2023 2022
Item
Operating revenue, net 7,077,136 7,463,135
Financial
receipts and Gross profit 2,743,767 2,633,376
expenditures
Current net profit 1,311,159 1,389,978
ROA 9.66% 10.62%
ROE 14.25% 16.14%
Operating income to paid-in capital ratio 124.30% 109.29%
Profitability
EBT to paid-in capital ratio 134.45% 140.24%
Net profit margin 18.52% 18.62%
EPS after tax (NT$) 10.21 10.72
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iv. Research and development:
(1) Complete the TSM 01005 103/104 small-size NTC Thermistor model development.
(2) Complete the TPM 100Ω/170Ω PTC Thermistor model development.
(3) Complete the development of chips for high-precision medical treatment devices, including nucleic acid detection, infrared temperature sensors, and thermometers, etc.
(4) Complete the development of LCP 0402 ultra-low breakdown voltage Vt <300V products.
(5) Complete the development of TVR grade A explosion-proof products.
(6) Complete the development of TGM zero-increase products and commence mass production.
(7) Complete the development of PTC Thermistor SMD 0603 low-resistance series (10Ω and 6.8Ω).
(8) Complete the development of the SCK 03Φ 1.5Kv surge resistant series products.
(9) Complete the development of certain models of TVM SMD silver electrodes 5B series high-pass Varistors.
(10) Complete the development of TVA34821 high-pass Varistor.
(11) Complete the development of the CPTC PH/PP/Sensor lead-free product series.
(12) Complete the development of the CPTC 120~150℃ antimony series products.
(13) Complete the development of KMC 0402/2016 series products.
(14) Complete the development and mass production of sensor product series for motor motors.
(15) Complete the development of the IGBT automotive grade MELF product series.

1.2 Summary of business plan:

i. Business policy
(1) Continue applying the management philosophy, "New Concept, New Management, New Technology and New Market", and increase efforts in cultivating new markets such as electric vehicles, communications and low-orbit satellites, new energy, AI, medical treatment, and healthcare.
(2) Leverage the economies of scale and competitive advantages of each manufacturing site, establish an internal support network within the Group, utilize the most suitable technological capabilities, and supply the most competitive products to achieve optimal business profits.
(3) Enhance employee capabilities to handle more international large-scale clients, increase organizational connectivity to ensure operational continuity across departments; promote job rotation to strengthen operational stability and achieve the goal of sustainable business operations.
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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's efforts in this market have been fruitful and have become a major component of our revenue. Market demands for renewable energy and energy storage continues to rise due to global climate change and energy issues; at the same time, the markets for communications and automation, as well as intelligent industrial applications and infrastructure, are also driving business growth. After the inventory reduction in 2023, the electronics industry is no longer plagued by high inventory levels. However, ongoing tensions between the United States and China, changes in the overall economic situation in China, and the Russo-Ukrainian and Israel-Hamas wars are all existing negative factors for economic growth. In consolidating key customers' estimates for the new year, as well as the budgets for new clients, new products, and new applications, the Company’s estimated sales for 2024 are expected to exceed the performance of 2023, indicating upward growth.

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.
- (b)Adjust inventory management at each factory in order to rationalize inventory levels and maximize inventory turnover.
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.
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d-2 Continue to pursue lean production, minimize or eliminate low-value work, and focus on high-yield actions.
d-3 To exercise departments’ operational effectiveness, the Group's factories and entities work together to set and promote the KPI project.
(e)Environment:
e-1. Promote the energy conservation project, check overall energy consumed by equipment, diagnose energy consumption, and activate the energy conservation project.
e-2. 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 drastic changes in the market demand, the Company keeps holding production and marketing meetings for teamwork to adjust the production scale to the best scale of the economy. 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. Increase the proportion of orders from existing customers and maintain high manufacturing capacity.
B. Expand customer base to include more high-profile international clients and enhance global reputation.
C. Deepen the markets for electric vehicles and automotive electronics, and cutlivate the markets of energy storage, low-orbit satellites, AI, healthcare, and more.
D. Increase sales of niche-type pressure-sensitive, thermal-sensitive, TVS, and ESD products to expand market coverage.
E. Develop more customers in Southeast Asia, and put customers at the center of manufacturing operations in Southeast Asia.
F. Consistently increase sales opportunities across the electronics industry supply chain.

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”.
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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. Under effective internal control and corporate governance, the impact of legal environment changes on the Company is insignificant. In recent years, CSR has become a globally embraced business concept, while ESG has become a crucial indicator of corporate sustainable development, its implementation a focal point in the Company's operations. While pursuing revenue growth, the Company is also committed to giving back to society and contributing to environmental sustainability, which is accomplished by mitigating risks associated with regulatory changes, competitive landscape, and climate impacts. This approach not only ensures long-term business development but also enables the Company to make a positive impact on society and the environment.

As far as the macroeconomic environment is concerned, as pandemic restrictions are lifted and inventory clearance nears completion, the passive component industry is gradually rising from its low point, and the automotive electronics sector is also experiencing a steady recovery. Over the past year, the Company has been cultivating the automotive and energy storage sectors, and with the AI trend sweeping the globe, new opportunities have emerged in the server industry, laying the foundation for future operational growth. The Company's production and sales layout continues to expand, with a more stable product portfolio to meet market demands for protective components, and its growth momentum will restart along with the overall economic recovery.

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

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

Chairman of Board: Sui, Tai-Chung

II. Company Profile

2.1 Date of Incorporation July 16, 1979

2.2 Company History

July 1979 : Thinking Enterprise Co., Ltd. was established in Zuoying District, Kaohsiung, to be engaged with the processing, manufacturing, and distribution of electronic and electrical wiring, with a capital size of NTD 3 million only.
May 1984 : Collaborated with the well-known connector manufacturer in the US technically and the sales were expanded to turn the Company into a leader in electronic and electrical wiring assembly facility in Southern Taiwan.
January 1986 : Organized capital increase in cash worth NTD 3 million only to bring the capital size to NTD 6 million only.
July 1988 : The name was changed to Thinking Enterprise Corporation. May 1989 : The negative temperature coefficient thermistor production site was established in Sanmin District, Kaohsiung, and the capital size was expanded to NTD 26 million only.
June 1989 : The name was changed to Thinking Electronic Industrial Co., Ltd. November 1994 : The capital size was increased to NTD 126 million only. May 1996 : The capital size was increased to NTD 189 million only. July 1996 : Approved by the FSC to be a public offering company. January 1997 : Reinvested in Heyi Electronic Enterprise Co., Ltd. March 1997 : Purchases for and remodeling of the Main Management Department were completed; the administration unit was relocated.
April 1997 : Reinvested to establish Greenish Co., Ltd. July 1997 : Reinvested in Yenyo Technology Co., Ltd. September 1997 : Reinvested in Welljet Hong Kong Ltd. and promoted the ISO-14000 Environmental Management System.
January 1998 : Indirectly reinvested in Mainland Thinking (Changzhou) Electronic Co., Ltd.
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August 1998	:	Earnings transferred capital increase; the capital size after the increase
		reached NTD 438,480,000 only.
December 1998	:	Approved to be listed at TPEx.
March 1999	:	The stock began to be traded at TPEx.
June 1999	:	Earnings transferred capital increase; the capital size after the increase
		reached NTD 576,024,000 only.
August 2000	:	Earnings and employee bonus transferred capital increase worth NTD
		67,602,400 only and capital increase in cash worth NTD 50,000,000
		only; the capital size after the increase reached NTD 693,626,400 only.
September 2000	:	Switched from being TPEx-listed to be TWSE-listed.
September 2001	:	Earnings and employee bonus transferred capital increase worth NTD
		63,453,110 only; the capital size after the increase came to NTD
		757,079,510 only.
September 2002	:	Earnings and employee bonus transferred capital increase worth NTD
		63,665,560 only; the capital size after the increase reached NTD
		820,745,070 only.
August 2003	:	Earnings and employee bonus transferred capital increase worth NTD
		54,944,700 only; the capital size after the increase came to NTD
		875,689,770 only.
June 2004	:	Reinvested in Thinking International Co., Ltd.
July 2004	:	Indirectly reinvested in Thinking (Yichang) Electronic Co., Ltd.
November 2006	:	Organized conversion of convertible bonds to common stock shares
		worth NTD 430,560 only; the paid-in capital size after the conversion
		reached NTD 1,016,177,360 only.
January 2007	:	Reinvested in Saint East Co., Ltd.
		Organized conversion of convertible bonds to common stock shares
		worth NTD 37,298,080 only; the paid-in capital size after the
		conversion reached NTD 1,053,475,440 only.
April 2007	:	Reinvested in Thinking Holding (Cayman) Co., Ltd.
		Organized conversion of convertible bonds to common stock shares
		worth NTD 7,427,330 only; the paid-in capital size after the conversion
		reached NTD 1,060,902,770 only.

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July 2007 : Organized conversion of convertible bonds to common stock shares worth NTD 484,380 only; the paid-in capital after the conversion reached NTD 1,061,387,150 only.
October 2007 : Earnings and employee bonus transferred capital increase worth NTD 108,690,930 only; the capital size after the increase reached NTD 1,170,078,080 only.
November 2007 : Established a branch office of Thinking in Nanzi Export Processing Zone.
January 2008 : Organized conversion of convertible bonds to common stock shares worth NTD 178,030 only; the paid-in capital size after the conversion reached NTD 1,170,256,110 only.
June 2008 : Issued convertible corporate bonds worth NTD 300 million only. September 2008 : Established the Thinking Education Fund. December 2008 : Organized write-off of treasury stock shares worth NTD 31,580,000 only; the paid-in capital size after the reduction came to NTD 1,138,676,110 only.
February 2009 : Organized dissolution and liquidation of the reinvested company Heyi Electronic Enterprise Co., Ltd.
September 2009 : Reinvested in Thinking (HK) Enterprises Limited. Reinvested in Jiang Xi Thinking Jingguang Technology Co., Ltd. (The name is now changed to Jiang Xi Thinking Electronic Co., Ltd.)
October 2009 : Organized conversion of convertible bonds to common stock shares worth NTD 32,419,590 only; the paid-in capital size after the conversion reached NTD 1,171,095,700 only.
December 2009 : Organized conversion of convertible bonds to common stock shares worth NTD 72,146,320 only; the paid-in capital size after the conversion reached NTD 1,275,661,610 only.
January 2011 : Issued convertible corporate bonds worth NTD 200 million only. February 2012 : Organized write-off of treasury stock shares worth NTD 6,180,000 only; the paid-in capital size after the reduction came to NTD 1,269,481,610 only.
January 2013 : The convertible corporate bonds reached their second anniversary following initial issuance and were sold back for the first time. The convertible corporate bonds included in this sell-back totaled NTD 157,100,000 only.
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January 2014	:	The convertible corporate bonds reached their third anniversary
		following initial issuance and were sold back for the second time. The
		convertible corporate bonds included in this sell-back totaled NTD
		700,000 only.
April 2014	:	Reinvested in View Full (Samoa) Ltd. and Guangdong Welkin Thinking
		Electronic Co., Ltd.
December 2014	:	Reinvested in Thinking Electronic (Samoa) Ltd. and Guangdong
		Thinking Electronic Co., Ltd.
November 2016	:	Reinvested in Dong Guan Welkin Electronic Co., Ltd. Through the
		subsidiary Thinking (Changzhou).
December 2016	:	The second plant in Nanzi Export Processing Zone was completed.
September 2017	:	Reinvested in Dong Guan Welkin Electronic Co., Ltd. through Thinking
		Electronic (Samoa) and acquired 25% of its shares.
December 2018	:	Organized dissolution and liquidation of the reinvested company
		Guangdong Thinking Electronics Co., Ltd.
September 2019	:	Organized dissolution and liquidation of the reinvested company Saint
		East Co., Ltd.
October 2019	:	Organized dissolution and liquidation of the reinvested company Welljet
		Hong Kong Ltd.
September 2020	:	Won the Kaohsiung Leading Model Enterprise Award 2020.
October 2020	:	Won the bronze medal in the enterprise/institution category for its
		human resources development quality management system.
December 2020	:	Won prizes for “working hours” and “advancement” in the Happy
		Enterprise Gold Contest organized by the Labor Affairs Bureau of
		Kaohsiung.
December 2020	:	Receives Certificate of Appreciation.
December 2020	:	Indirectly reinvested in Welkin Electronic Co., Ltd.
April 2021	:	Receives Award in Excellence of Employee Relaitons.
December 2022	:	Reinvested to establish Thinking Electronic USA, Inc.
January 2023	:	Receives "Social Service Award" by Taiwan's Library Association.
April 2023	:	Reinvested to establish Thinking (Viet Nam) Electronic Co., Ltd.

III. Corporate Governance Report

3.1 Organizational

i. Organizational Chart

As of: December 31, 2023

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Shareholders’
meeting
Audit Committee
Board of
directors
Compensation and
Remuneration
Committee
Chairman
Audit Office
President
President’s
Office Information
Technology
Labor Safety Department
Office
Operational Office of the R&D Main Management
Department Head of Plant Department Department
Production Quality
Automation Production
Control Assurance
Department Department
Department Department
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ii. Major Corporate Functions

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

April 20, 2024

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Shareholding by Executives, Directors or
Shareholding when Spouse & Minor
Title Nationality/ Place of Name Gender Date Term Date First Elected Current shareholding Shareholding ArrangementNominee Experience Other Supervisors Who are Spouses or within Two Degrees of Kinship
Age Elected (Years) Elected (Education) Position
Incorporation
Shares % Shares % Shares % Shares % Title Name Relation
Boh Chin
R.O.C. Investment Co., - 6/13/2023 3 4/12/1999 27,178,247 21.21% 27,178,247 21.21% - - - -
Ltd.
Representative of
R.O.C. Boh Chin: Male - - - - - 4,080,862 3.19% 1,474,733 1.15% - - Department of Physics, National Taiwan Ocean Note 1 Director Chen, Spouse
Sui, Tai-Chung 71-75 Su-Ai
University
(Chairman)
Provincial Sinying
Representative of Vocational High School Sui,
Female
R.O.C. Boh Chin: 66-70 - - - - - 1,474,733 1.15% 4,080,862 3.19% - - of Economics Note 2 Chairman Tai- Spouse
Chen, Su-Ai Manager at the Finance Chung
Department of Thinking
Department of Business
R.O.C. Chang, Shan-Hui Male 6/13/2023 3 4/12/1999 20,051 0.02% 20,051 0.02% - - - - Administration, National Note 3 None None None
71-75
Chengchi University
Department of
Transportation and
R.O.C. Chen, Yen-Hui Male 6/13/2023 3 4/12/1999 37,443 0.03% 37,443 0.03% - - - - Communication Note 4 None None None
66-70
Management Science,
Feng Chia University
Male Master of Department of
R.O.C. Chou, Pao-Heng 46-50 6/13/2023 3 6/13/2023 - - - - - - - - Accounting, National Note 5 None None None
Chengchi University
Master of Financial
Operation, National
R.O.C. Huang, Cheng-Nan 56-60Male 6/13/2023 3 6/20/2017 - - - - - - - - Kaohsiung University of Science and Technology Note 6 None None None
Department of Law,
National Chengchi
University
Master of Financial
R.O.C. Chou, Chi-Wen Male 6/13/2023 3 6/20/2017 - - - - - - - - Operation, National Note 7 None None None
56-60 Kaohsiung University of
Science and Technology
Director
Independent Director
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Note 1: Chairman of Boh 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., Chairman of Thinking Electronic USA, Inc. and Chairman of Thinking (Viet Nam) Electronic Co., Ltd
Note 2: Associate Vice President at the Main Management Department of Thinking Electronic Industrial Co., Ltd., Director of Boh Chin Investment Co., Ltd., Chairman 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 3: Person in charge of EnWise CPAs & Co., Supervisor of Wupaochun Foods Limited Company and Supervisor of Jin Lian Cheng Resources and Technology Co., Ltd.

Note 4: Person in charge of Yongxin Bookkeeper and Land Administrator Firm, and Supervisor of Yenyo Technology Co., Ltd.

Note 5: CPA of Honesty & Superb CPA Firm, Person in charge of Honesty & Superb Consulting Ltd., Director of Young Shine Electric Co., Ltd.,

Independent Director of Life Travel & Tourist Service Co., Ltd. and Member of the Audit Committee of Thinking Electronic Industrial Co., Ltd. Note 6: Attorney at Dinghe Law Firm, Director of SanFar Property Limited, Independent Director of Sunfar Computer Co., Ltd, member of the

Compensation and Remuneration Committee 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 20,2024
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.

13 -

(3)Professional qualifications and independence analysis of directors

==> picture [490 x 682] intentionally omitted <==

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

Number of
Criteria Other Public
Companies in
Which the
Professional qualifications and
Status of independence Individual is
experience
Concurrently
Name Serving as an
Independent
Director
Boh Chin With years of experience in the
Investment Co., management of the electronic
Ltd. components industry, and -
Representative: possessing decision-making
-
Sui, Tai Chung leadership.
Boh Chin
Possess operation management,
Investment Co.,
industry knowledge, and
Ltd. -
international market
Representative:
observation abilities.
Chen, Su-Ai
Neither the directors nor
Currently the representative of
independent directors of
EnWise CPAs & Co., and with
Chang, Shan-Hui the Company are subject to -
extensive experience in finance
any of the provisions of
and taxation.
Article 30 of the Company
The current representative of
Act.
Yongxin Tax and Accounting
Chen, Yen-Hui All the independent -
Firm and Land Administration
directors comply with the
Office.
provisions of Article 3 of
Previously worked at Deloitte
the Regulations Governing
& Touche for over 15 years,
Appointment of
with experience in financial risk
Chou, Pao-Heng Independent Directors and 1
assessment and management.
Compliance Matter for
Passed the national exam and
Public Companies.
holds an accounting certificate.
Currently practicing lawyer at
Dinghe United Law Offices,
Huang, Cheng-Nan 1
providing diverse legal advice
to companies.
With over 10 years of
experience in the banking
Chou, Chi-Wen industry, with a comprehensive -
financial and finance
background.
----- End of picture text -----

14 -

(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 Board of Directors of the Company is composed of members with diverse backgrounds, including different industries, financial and accounting, law, and banking. Among them, there are 5 directors who do not hold executive positions in the Company, accounting for 71% of the total number of directors. This reflects the goal of diversifying the Board of Directors as set forth. The independent directors all meet the requirements of the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies." They do not serve as independent directors for more than 3 other public companies, and their consecutive terms do not exceed 3 terms.

D. Independence of the Board of Directors:

The Company's Board of Directors election in 2023 follows a candidate nomination system. There is currently a total of 7 board members, including 3 independent directors, accounting for 43% of all board members. All independent directors meet the regulations of the Securities and Futures Bureau, Financial Supervisory Commission regarding independent directors. Among the directors, there are 2 individuals who have a spouse or a relative within the second degree of kinship, accounting for 29% of all directors. Independent directors, either individually or in relation to other directors, do not have a spouse or a relative within the second degree of kinship, in compliance with Article 26-3, Paragraphs 3 and 4 of the Securities and Exchange Act.

15 -

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

April 20, 2024

==> picture [764 x 421] 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
Department of
Mechanical
Engineering,
National Pingtung
University of
President R.O.C. Ho, Yi-Sheng Male 11/8/2023 - - - - - - Science and Note 1 None None None
Technology
Manager at the
Business
Department of
Thinking
Provincial Sinying
Vocational High
Associate Vice School of Manager at
President at the Main Economics the branch Sui, Tai-
R.O.C. Chen, Su-Ai Female 8/7/1981 1,474,733 1.15% 4,080,862 3.19% - - Note 2 Spouse
Management Manager at the office in Chung
Department 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
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
----- End of picture text -----

16 -

==> picture [764 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 Yenyo Technology Co., Ltd.

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

17 -

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, 2023 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 Chen, Su-Ai (Note 2) - - - - 21,624 21,624 - - 21,624 21,624 10,083 10,083 92 92 1,973 - 1,973 - 33,772 33,772 None
1.65% 1.65% 2.58% 2.58%
Representative of Boh Chin:
Chung, Shih-Ying (Note 2)
Chang, Shan-Hui
Chen, Yen-Hui
Chou, Pao-Heng
Independent 870 870 870 870
Director Huang, Cheng-Nan - - - - 870 870 - - 0.07% 0.07% - - - - - - - - 0.07% 0.07% None
Chou, Chi-Wen
----- End of picture text -----

18 -
(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
19 -

Remuneration bracket table

==> picture [731 x 387] 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
Chang, Shan-Hui, Chang, Shan-Hui, Chang, Shan-Hui, Chang, Shan-Hui,
Chen, Yen-Hui, Chen, Yen-Hui, Chen, Yen-Hui, Chen, Yen-Hui,
Less than NT$ 1,000,000 Chou, Pao-Heng, Chou, Pao-Heng, Chou, Pao-Heng, Chou, Pao-Heng,
Huang, Cheng-Nan, Huang, Cheng-Nan, Huang, Cheng-Nan, Huang, Cheng-Nan,
Chou, Chi-Wen, Chou, Chi-Wen, Chou, Chi-Wen, Chou, Chi-Wen,
NT$1,000,000 ~ NT$1,999,999 Chen, Su-Ai Chen, Su-Ai
NT$2,000,000 ~ NT$3,499,999
NT$3,500,000 ~ NT$4,999,999 Chung, Shih-Ying Chung, Shih-Ying
NT$5,000,000 ~ NT$9,999,999 Sui, Tai-Chung Sui, Tai-Chung
NT$10,000,000 ~ NT$14,999,999
Boh Chin Investment Boh Chin Investment Boh Chin Investment Boh Chin Investment
NT$15,000,000 ~ NT$29,999,999
Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.
NT$30,000,000 ~ NT$49,999,999
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 2023.

Note 2: On November 8, 2023, the institutional director of Boh Chin Investment Co., Ltd., re-appointed representative. Director Chung, Shih-Ying resigned and Ms. Chen, Su-Ai took

over as director.

20 -

ii. Remuneration Paid to President and Vice President

==> picture [792 x 448] intentionally omitted <==

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

December 31, 2023 Unit: NTD thousands
Total amount of A, B, C and
Bonuses and Allowances Employee Compensation (D)
Salary(A) Pension (B) D and a % of the net profit Remuneration
(C) ( Note 1)
after 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 consolidated from the parent
company financial company financial company financial financial company financial company
statements statements
statements statements statements
Cash Stock Cash Stock
Ho, Yi-Sheng
President
(Note 2)
Chung, Shih-Ying
President
(Note 2) 11,740 11,740
7,668 7,668 108 108 2,764 2,764 1,200 - 1,200 - None
Vice 0.90% 0.90%
Hsiao, Fu-Chang
President
Vice
Sung, Hsing-Jang
President
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 Chung, Shih-Ying, Sung, Hsing-Jang Chung, Shih-Ying, Sung, Hsing-Jang
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999
NT$15,000,000 ~ NT$29,999,999
NT$30,000,000 ~ NT$49,999,999
NT$50,000,000 ~ NT$99,999,999
Greater than or equal to NT$100,000,000
Total 4 4
----- 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 2023.

Note 2: President Chung, Shih-Ying resigned and stepped down from the position on November 8, 2023; Mr. Ho, Yi-Sheng was promoted to the position of President on November 8, 2023.
21 -

iii. Employees’ Profit Sharing Bonus Paid to Management Team

==> picture [492 x 537] intentionally omitted <==

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

December 31, 2023 Unit: NTD thousands
Ratio of Total
Title Name Stock Cash Total Amount to Net
Profit (%)
President Ho, Yi-Sheng
Associate Vice
President at the Main
Chen, Su-Ai
Management
Department
Manager at the branch
Sui, Tai-Chung
office in Nanzi
Vice President at the
Operational Sung, Hsing-Jang
Department
Associate Vice
President at the Second
Chiu, Chung-Chi
Division of R&D
Department
Associate Vice
Manager - 5,533 5,533 0.42%
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.

22 -

(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:

	2023	2023	2022	2022
		Companies		Companies
Title		in the		in the
	The Company	consolidated	The Company	consolidated

		financial		financial
		statements		statements
Director	1.72%	1.72%	1.69%	1.69%
President and Vice President	0.90%	0.90%	1.14%	1.14%

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.

23 -

i. Operations of the Board of Directors

A total of 7 meetings of the Board of Directors were held in 2023. The attendances of

directors were as follows:

==> picture [470 x 476] intentionally omitted <==

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

Attendance Attendance Remarks
Title Name in person By Proxy Rate (Note 1) (Note 2 、 3)
Boh Chin
Investment Co., Ltd.
Chairman 7 - 100% Re-elected
Representative:
Sui, Tai-Chung
Boh Chin
Investment Co., Ltd.
Director 5 2 71% Resigned
Representative:
Chung, Shih-Ying
Boh Chin
Investment Co., Ltd. Newly
Director - - -%
Representative: appointed
Chen, Su-Ai
Director Chang, Shan-Hui 7 - 100% Re-elected
Director Chen, Yen-Hui 7 - 100% Re-elected
Independent Newly
Chou, Pao-Heng 4 - 100%
Director elected
Independent
Huang, Cheng-Nan 7 - 100% Re-elected
Director
Independent
Chou, Chi-Wen 7 - 100% Re-elected
Director
Independent Term
Chen, Hsiu-Yen 3 - 100%
Director expired
----- 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: The 16th Board of Directors election was completed at the Annual Shareholders' Meeting on June 13,

Independent Director Chen, Hsiu-Yen stepped down, and Independent Director Chou, Pao-Heng assumed office. The Board of Directors held three meetings before the election and four meetings after the election.

Note 3: On November 8, 2023, the institutional director of Boh Chin Investment Co., Ltd., re-appointed

representative. Director Chung, Shih-Ying resigned and Ms. Chen, Su-Ai took over as director.

24 -

Audit Committee Board of directors	Contents of the proposal
First meeting of 2023 2/8/2023 First meeting of 2023 2/8/2023	1. Investing in the establishment of a subsidiary in Vietnam
Second meeting of 2023 3/22/2023 Second meeting of 2023 3/22/2023	1. 2022 Internal Control System Declaration
	2. 2022 Financial Statements
	3. 2022 Business Report
	4. Earnings distribution proposal for 2022
	5. Rotation of CPAs and evaluation of independence and suitability
	6. Appointment of CPAs and their remuneration for 2023
	7. List of non-assurance services expected to be provided by Deloitte & Touche.
Third meeting of 2023 5/2/2023 Third meeting of 2023 5/2/2023	1. Consolidated financial statements of the first quarter of 2023 and CPAs' Review Report
	2. Revision of the Financial Derivatives Transaction Procedure
Fifth meeting of 2023 8/9/2023 Fifth meeting of 2023 8/9/2023	1. Consolidated financial statements of the second quarter of 2023 and CPAs' Review Report
Sixth meeting of 2023 11/8/2023 Seventh meeting of 2023 11/8/2023	1. 2024 Audit Plan
	2. Consolidated financial statements of the third quarter of 2023 and CPAs' Review Report
	3. Financial Derivatives Transaction Quotas
	4. Proposal for increase investment in subsidiaries.
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 resolutions recommended by the Audit Committee.

Date	Communication points
3/22/2023	1. Internal audit execution status for October-December 2022 and January 2023. 2. 2022 Internal Control System Declaration
5/2/2023	1. Internal audit execution status for February-March 2023.
8/9/2023	1. Internal audit execution status for April-June 2023.
11/8/2023	1. Internal audit execution status for July-September 2023. 2. 2024 Audit Plan


(II)Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (III) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?	 		(II) Disclosure of information by the Company to the public: 1. Designated personnel are responsible for the declaration matters of the MOPS, including various regular and irregular financial and business information, and the publication of significant information in accordance with relevant regulations. 2. Setting up English and German websites, and having dedicated personnel responsible for collecting and disclosing the Company's information. 3. The spokesperson and acting spokesperson system is in place and a contact window is available on the Company’s website. 4. The information on investor conference and related materials is available on the Company’s website. (III) According to relevant regulations, the Company announces and reports the annual financial report within two months after the end of the fiscal year, and announces and reports the first, second, and third quarterly financial statements and the operation situation of each month by the specified deadline, please refer to MOPS and the Company's website for related information.	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 to protect the rights of shareholders, stakeholders, and investors. (V) The Company irregularly provides information on relevant training courses, arranges for directors to participate in further education, and discloses it on the MOPS in accordance with regulations. (VI) Since 2019, the Company has purchased directors' liability insurance and reported the annual insurance situation to the Board of Directors on February26,2024.	None

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

			December 31, 2023	December 31, 2023
Criteria Title Name				Number of
				other public
				companies in
				which the
				individual is
		Professional qualifications and	Status of independence	concurrently
		experience		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.
42 -

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: 6/13/2023-6/12/2026
- A total of 3 meetings of the Compensation and Remuneration Committee were held in
- The attendances of members were as follows:


		Attendance		Attendance
Title	Name		By Proxy		Remarks
		in person		Rate(Note)


Convener	Huang, Cheng-Nan	3	-	100%	Re-elected
Member	Chou, Chi-Wen	3	-	100%	Re-elected
Member	Tseng, Su-Hui	3	-	100%	Re-elected

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.

43 -

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

made and how the Company addressed opinions from the members are provided below:

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How the Company
addressed opinions
Compensation
from the
and Remuneration Contents of the proposal Decisions made
Compensation and
Committee
Remuneration
Committee
Nineth meeting of 1. 2022 remuneration to employees and It was approved It was submitted to
the fourth intake directors as is all the Board of
3/22/2023 2. Compensation and remuneration for attending Directors and was
promoted manager members. approved by all
attending directors.
First meeting of 1. Election of the convener of the fifth It was approved It was submitted to
the fifth intake Remuneration Committee. as is all the Board of
8/8/2023 2. Distribution of the remuneration to directors attending Directors and was
for 2022 members. approved by all
3. Distribution of employee remuneration to attending directors.
managers for 2022
Second meeting 1. Remuneration proposal for hiring managers. It was approved It was submitted to
of the fifth intake as is all the Board of
11/8/2023 attending Directors and was
members. approved by all
attending directors.
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Corporate Sustainable Development Organizational Structure

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

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

Corporate Sustainable
Development Committee
Green
Corporate Risk Labor- Supplier Labor Safety Energy Public
Product
Governance Management Management Management and Health Conservation Interest
Design
Group Group Committee Group Group Group Group
Group
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Responsibilities of the Corporate Sustainable Development Committee

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

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

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

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			(III) The Corporate Sustainability Development Committee takes charge of also promoting and integrating content concerning respective issues such as corporate governance, environmental protection, green products, energy management, employee wellness, and public interests and reporting them to the board of directors once a year. On May 7, 2024, the Company reported the implementation status of 2023 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 makeimprovements when necessary.

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II. Does the Company perform risk assessments when dealing with environmental, social, and corporate governance-related issues that concern the Company’s operations according to the materiality principle and define related risk management policies or strategies?			(I) The disclosed information covers the sustainable development performance of the Company in key locations from January 2023 to December 2023. 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 2023 and called for the management review meeting on January 17, 2024 to discuss the implementation of achievements in 2023.	None

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	Implementation status	Implementation status	Deviations from “the
			Sustainable Development Best-
Promotion items			Practice Principles for
	Yes No Abstract Explanation
			TWSE/TPEx Listed

			Companies”andReasons
	(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: 2/8/2022 - 2/4/2025) and IECQ QC 080000 (effective period: 2/25/2024 - 2/24/2027) certifications, has conducted the annual greenhouse gas inventory in accordance with ISO 14064-1, tracked and publicly disclosed the emission reduction results onthe Company's website.	None

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	Implementation status	Implementation status	Deviations from “the
			Sustainable Development Best-
Promotion items			Practice Principles for
	Yes No Abstract Explanation
			TWSE/TPEx Listed

			Companies”andReasons
(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 2023 82,866.37 2022 89,892.52 In 2023, the total electricity consumption of the Company and its subsidiaries decreased by 7,026.15 thousanddegreescompared to 2022, a reduction of 7.8%. In addition, the Company has added new solar energy equipment in the current year, with an investment amount exceeding NTD15,400 thousand. The system capacity is 200.54 KWP, and it was commissioned in September of the same year. The electricity generated was 66.07 thousanddegrees, with a total solar energy generation of 2,109.11 thousand degreesfor the Company and its subsidiaries. The goal for 2024 is to reduce electricity consumption by more than 1% compared to 2023, and further improve the efficiency of solar power generation equipment for renewable energy. Withtheimplementationofgreen	None

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(III) Does the company evaluate the potential risk and oppertunities of climate change on its operations and take actions?			energy infrastructure, we are gradually moving towards energy transition. The Company is devoted to eradicating inefficiency and waste of resources in production and manufacturing and improving reutilization of resources. Developing green energy products is a comprehensive movement. From technical R&D, design, manufacturing, and transport to recycling and reutilization, environmental protection regulations and requirements are strictly followed for each of the said stages. In addition, the Company bans the use of hazardous substances in 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.	None

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	Implementation status	Implementation status	Implementation status	Deviations from “the
				Sustainable Development Best-
Promotion items				Practice Principles for
	Yes No Abstract Explanation
				TWSE/TPEx Listed

				Companies”andReasons
(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?		(	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 Company attaches great importance to the environmental protection and reduction policy. In the past two years, greenhouse gas intensity, water consumption, total wastes and energy intensity were all set to be reduced by 1% annually, and all of the achievements in 2023 exceeded 1% of annual reduction target. Greenhouse gas emissions in the past 2 years: Unit: metric ton,CO2e/year Year Category 1 Category 2 Category 3 Total emissions 2023 1,307.98 47,089.08 1,362.45 49,759.51 2022 1,145.64 51,839.59 2,767.98 55,753.21 In 2023, the total greenhouse gas emission of the Company and its subsidiaries was 49,759.51 metric tons CO2e, which mainly came from the indirect use of electricity of Category 2, accounting for about 95% of the total emission. The total greenhouse gas emissions in 2023 decreased by 5,993.7 metric tons CO2e compared to 2022,mainlydue to energy-saving	None

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		Implementation status	Deviations from “the
			Sustainable Development Best-
Promotion items			Practice Principles for
	Yes No	Abstract Explanation
			TWSE/TPEx Listed

			Companies”andReasons
		and carbon reduction efforts in 2023. The 2024 continuous emission reduction program measures included updating the exhaust ventilation system, upgrading the air conditioning system's chilled water main unit, upgrading the air compressor equipment, and implementing energy-saving designs, all aimed at achieving energy-saving and carbon reduction performance. In order to respond to climate change and promote the sustainable operation of the Company, we will continue to invest in improving the efficiency of renewable energy use and the development of energy-saving products. 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 2023 350,276 2022 393,410 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/ROpure water equipment and recycled back to the

54 -

		Implementation status	Implementation status	Implementation status	Implementation status	Deviations from “the
						Sustainable Development Best-
Promotion items						Practice Principles for
	Yes No	Abstract Explanation
						TWSE/TPEx Listed

						Companies”andReasons
		manufacturing process for further utilization. Other water-saving measures are also conducted. The total water consumption in 2023 was 350,276 metric tons, which decreased by 43,134 metric ton compared to 2022, a reduction of 11%. In 2024, the relevant waste water recovery equipment will be replaced and improved, and the target recovery rate is over 10%. Waste output in the past 2 years: Unit: metric ton/year Year Hazardous waste Non-hazardous waste Total waste 2023 300.61 206,874.04 207,174.65 2022 376.35 218,690.81 219,067.16 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 2023 was 207,174.65 metric tons, which decreased by 11,892.51 metric tons compared to 2022, a reduction of 5%. 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 2024 will increase bymore than 5%.

		Year	Hazardous waste	Non-hazardous waste	Total waste
		2023	300.61	206,874.04	207,174.65
		2022	376.35	218,690.81	219,067.16

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

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Implementation status Deviations from “the
Sustainable Development Best-
Promotion items 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, high- for employees
speed development and 4. Complete and smooth
delicate care. promotion channels
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
2023 was up to 100%.
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(II) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?			(II) The Company has established the Work Rules and related personnel management regulations that cover the basic wage, working hours, leave, pension, Labor Insurance and National Health Insurance coverage, occupational hazard compensation, etc. All meet the applicable requirements of the Labor Standards Act. The Employee Welfare Committee is in place. It is operated by the Welfare Committee elected by employees and takes care of respective benefits. The Company’s remuneration policy is based on personal capabilities, contribution to the Company, and performance; it is positively correlated with the operational performance. Employees’ Remuneration: The Company's year-end bonus system was on the basis 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 (viii) Employees’ and Directors’ Compensation - “IV. Capital Overview” of this Annual Report.	None

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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 2023, the average proportion of female employees was approximately 50%, and that of female senior executives was 48%.

59 -

			Implementation status	Implementation status	Deviations from “the
					Sustainable Development Best-
Promotion items					Practice Principles for
	Yes No		Abstract Explanation
					TWSE/TPEx Listed

					Companies”andReasons
			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, hires employees with disabilities and providing suitable job positions. 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 2023, the annual average salary adjustment rate of the Company's supervisory and non-supervisory positions in Taiwan was 2.3%.
(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. All the plants and subsidiaries of the Company have obtained ISO 45001 certification. (latest effective period: 2/25/2022 - 2/25/2025) Two fire prevention educational drills are organized eachyear to	None

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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. The Company has purchased public liability insurance and complies with the regulations to report the inspection of public safety equipment for buildings and fire protection equipment to the competent authority. The Company also obtains qualified certificates for fire safety managers, develops workplace fire safety plans, and maintains the safety of workplace fire protection equipment. Occupational Safety and Health Policy: The Company formulates policies in accordance with the Occupational Safety and Health Act and the

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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. There were no cases of occupational disasters occurring in 2023. Labor Working Environment Monitoring: In order to protect workers from the hazards of harmful substances in the workplace and provide them with a

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Implementation status Deviations from “the
Sustainable Development Best-
Promotion items Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed
Companies” and Reasons
healthy and comfortable work environment, the work
environment monitoring is carried out twice per year to
gradually understand the actual exposure of workers.
Occupational safety and health training and
promotion:
Category Course Name Persons
Occupational safety and health
149
Internal training for new employees
Training Occupational safety and health
1,308
training for employees
Emergency personnel
6
education and training
Fire prevention manager
2
training
On-the-job training for
External
occupational safety and health 2
Training
supervisors
On-the-job training for organic
3
solvent operation supervisor
Occupational safety and health
1
administrator training
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(IV) Does the company provide its employees with career development and training sessions? (V) Does the Company comply with relevant laws and regulations and international standards regarding such matters as customer health and safety, customer privacy, marketing and labeling of products and services, and establish relevant consumer or customer rights protection policies and complaint procedures?	 		(IV) Each department in the Company submits its annual training plan according to the training operating procedure that focuses on occupational gaps and future development plans. Including new employees training, professional advanced training, supervisor training and the like, assistance to the colleagues in persistently learning and growing through multiple learning methods, the introduction of relevant training courses on corporate ethics and belief development to cultivate colleagues' key capabilities. In 2023, a total of 3,747 employees completed the career training, with total training hours of 7,023. 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	None

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	Implementation status	Implementation status	Deviations from “the
			Sustainable Development Best-
Promotion items			Practice Principles for
	Yes No Abstract Explanation
			TWSE/TPEx Listed

			Companies”andReasons
	other international laws and regulations. Customers’ privacy is protected in honor of the Confidentiality Agreement and the Personal Data Protection Act and there is an exclusive section for stakeholders and complaint-filingaccess isprovided.
(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 2023.	None

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Implementation status Deviations from “the
Sustainable Development Best-
Promotion items Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed
Companies” and Reasons
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 2023.
Supplier All the suppliers must pass the
Evaluation 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 The Company has established an audit
Audit team and a coaching team to track and
improve the progress of suppliers'
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Implementation status Deviations from “the
Sustainable Development Best-
Promotion items Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed
Companies” and Reasons
defects, jointly improve quality and
technology, strengthen the
environmental protection, safety and
health performance, and introduce the
automation technique to increase the
production capacity.
The Company has been awarded the RBA Certified
Gold Medal. (latest effective period: 6/17/2023 -
5/26/2025)
V. Does the company reference internationally  As the Company is currently not within the scope In the future, it will be handled
accepted reporting standards or guidelines, mandated by regulations to prepare a Sustainable as needed for the developments
and prepare reports that disclose non- Development reports, no report has been prepared for the of the Company and as
financial information of the company, such current year. However, in response to the rising global required by applicable laws and
as Sustainable Development reports? Do the awareness of sustainability, the Company plans to prepare regulations.
reports above obtain assurance from a third- and compile a Sustainable Development reports ahead of
party verification unit? schedule, and obtain third-party verification. It is expected
to be completed by the end of August 2024.
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.”
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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.

2023 Thinking Education Foundation Public Welfare Activities: 1. Sponsored the Taiwan Soloists Symphony Orchestra's "2023 New Year Concert" with the opening performance of Rossini's beautiful and lively "William Tell Overture", leading everyone towards an exciting 2023. 2. Contributed to the National Sun Yat-sen University's Education Fund. 3. Donated to the establishment of the Kaohsiung Public Library Gangshan Cultural Center Branch's Joyful Reading Zone and supported the development of the cloud-based electronic reading platform. 4. Encouraged company employees to participate in various charity bazaars and donated all proceeds.

(III) Consumer rights:

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

(IV) Human rights:

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

(V) Safety and health:

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

(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.

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(VII) Response to Climate-related Risks and Opportunities:
Climate risks Potential financial impacts Climate opportunities Potential financial impacts Response in 2023
1. Adjust and reduce water
pressure.
Construction of green To reduce the operating water
2. Gradually replace high-energy-
Production was impacted buildings and electricity costs
Unstable water and consuming production and
and the operating cost
electricity supply office equipment.
increased
To improve water To reinforce climate resilience
1. Establishment of a pure water
resource efficiency and and to reduce impacts of a
recycling machine.
utilization disaster on the production
To reduce the cost of
Increased cost of operational water resource and 1. Adjusting equipment
Cost of developing Reduced use of water
developing water-saving to streamline the parameters to achieve energy
water-saving processes resource
processes manufacturing procedure for efficiency.
increased profits
1. Maintain appropriate levels of
raw materials and finished
goods inventory.
Typhoons, floods
2. Insure against property loss to
Production suffering To reinforce climate resilience
mitigate the risk of disaster
impacts to result in To improve resistance and to reduce chances of
damage.
financial losses and a against natural disasters interrupted operations and
1. Promotion of Water
decline in revenue possible losses
Conservation.
Drought 2. Increase water storage capacity.
3. Establish a channel for
purchasing water resources.
1. Promote paperless initiatives
and reduce unnecessary
document printing; Non-
confidential documents printed
Increased electricity Promoting green, on recycled paper.
To conserve electricity and
Rising temperature consumption, costs, and energy conservation, 2. Implement the reuse of
reduce cost
carbon emissions and carbon reduction recyclable packaging materials
and centrally process those that
cannot be recycled to increase
revenue and reduce
incineration.
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69 -

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 2023, 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.

70 -

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

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Climate-related Information of TWSE/TPEx Listed Companies

Disclosure of climate-related information

Item	Implementation status
1. Describe the supervision and governance of climate-related risks and opportunities by the Board of Directors and management.	The Board of Directors of the Company regularly oversees the risks, opportunities, response strategies, and related implementation plans and the results of related promotion targets. The various departments within the Company constantly review the internal and external risks (including climate change risks) that the Company faces, and develop risk response strategies for material company-wide risk issues. The Remuneration Committee regularly evaluates and reviews the remuneration of managers based on their ESG performance, incorporating climate-related goals and achievement levels into the performance assessment and remuneration system for senior executives to monitor the achievement of objectives on climate-related issues. By linking the results of the reward system and climate change management, the management is encouraged to operate the Company's business in a way that both profits the Companyand achieves sustainable operation.
2. Describe how the identified climate risks and opportunities impact the business, strategy, and finances of the Company (short-term, medium-term, long-term).	The Company actively develops solutions in order to reduce the operational and financial impacts of climate change, enhance organizational climate resilience, and assess the potential operational and financial effects of climate-related risks and opportunities for the Company, in order to plan actions to address these climate-related risks and opportunities. Item Schedule Risk Opportunity Business Short-term Customer requested carbon inventory information and carbon reduction goals. Understanding the major sources of emissions within the factory, establishing a carbon reduction direction. Medium and long- term Higher unit carbon emissions will reduce competitiveness. Through green product development and process optimization, reduce the unit carbon emissions, increase customer procurement willingness, expand the market, and create intangible competitive advantages.

Item

Implementation status

1. Describe the supervision and governance
of climate-related risks and opportunities
by the Board of Directors and
management.

The Board of Directors of the Company regularly oversees the risks, opportunities, response strategies,
and related implementation plans and the results of related promotion targets. The various departments
within the Company constantly review the internal and external risks (including climate change risks)
that the Company faces, and develop risk response strategies for material company-wide risk issues.
The Remuneration Committee regularly evaluates and reviews the remuneration of managers based on
their ESG performance, incorporating climate-related goals and achievement levels into the
performance assessment and remuneration system for senior executives to monitor the achievement of
objectives on climate-related issues. By linking the results of the reward system and climate change
management, the management is encouraged to operate the Company's business in a way that both
profits the Companyand achieves sustainable operation.

2. Describe how the identified climate risks
and opportunities impact the business,
strategy, and finances of the Company
(short-term, medium-term, long-term).

The Company actively develops solutions in order to reduce the operational and financial impacts of
climate change, enhance organizational climate resilience, and assess the potential operational and
financial effects of climate-related risks and opportunities for the Company, in order to plan actions to
address these climate-related risks and opportunities.
Item
Schedule
Risk
Opportunity
Business
Short-term Customer requested carbon inventory
information and carbon reduction goals.
Understanding the major sources of
emissions within the factory, establishing
a carbon reduction direction.
Medium
and long-
term
Higher unit carbon emissions will
reduce competitiveness.
Through green product development and
process optimization, reduce the unit
carbon emissions, increase customer
procurement willingness, expand the
market, and create intangible competitive
advantages.

72 -

Item				Implementation status	Implementation status
	Item Schedule Risk Opportunity Strategy Short-term After the government announced its net zero emissions target, it also faces the issue of carbon reduction. Obtain carbon inventory certification and understand carbon reduction direction. Medium and long- term Guiding operational direction with low- carbon transformation goals. Enhancing competitiveness among peers and improving corporate image. Finance Short-term Increased procurement costs due to the transition to low-carbon raw materials. Reduce operational management costs and minimize carbon emissions through energy saving and carbon reduction measures. Medium and long- term The high uncertainty surrounding carbon tariffs between countries and domestic carbon rights adds to operational and investment costs unnecessarily. Develop low-carbon energy-saving technologies and materials to reduce carbon emissions and lower expenses. The Company has assessed the above-mentioned risks and identified climate-related risks and opportunities that may have significant financial impacts. The strategies to address these risks and opportunities 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.
		Item	Schedule	Risk	Opportunity
		Strategy	Short-term	After the government announced its net zero emissions target, it also faces the issue of carbon reduction.	Obtain carbon inventory certification and understand carbon reduction direction.
			Medium and long- term	Guiding operational direction with low- carbon transformation goals.	Enhancing competitiveness among peers and improving corporate image.
		Finance	Short-term	Increased procurement costs due to the transition to low-carbon raw materials.	Reduce operational management costs and minimize carbon emissions through energy saving and carbon reduction measures.
			Medium and long- term	The high uncertainty surrounding carbon tariffs between countries and domestic carbon rights adds to operational and investment costs unnecessarily.	Develop low-carbon energy-saving technologies and materials to reduce carbon emissions and lower expenses.
3. Describe the financial impact of extreme climate events and transformational actions.	The financial impact of extreme climate events: The Company has assessed and identified potential risks to the production or transportation stages, including floods, droughts, changes in precipitation patterns, and extreme changes in climate patterns. The flooding caused by heavy rainfall can result in the suspension of operations at our facilities and damage to equipment, leading to temporary inability to ship products. On the other hand, drought and water shortages can affect the normal operation of our production lines. In addition, self-use solar energy is one of the renewable energy projects invested by the Company. Changes in weather conditions that result in changes in the amount of sunlight will affect the efficiencyof renewable electricity generation.

73 -

Item		Implementation status
		The financial impact of transformational actions: Under the risk of transformation, the transition to a low-carbon economy may require facing extensive policy and regulatory, technological, and market changes. Based on the nature, speed, and focus of the aforementioned changes, within the analyzed time frame, carbon fees and greenhouse gas emissions control, regulations on renewable energy, as well as shifts in consumer preferences, may result in increased operating costs or decreased sales volume. The Company actively implements energy-saving and carbon reduction projects to reduce the impact of energy consumption, water consumption, and waste on the climate. We aim to improve energy efficiency and invest in solar power generation equipment to address these transitional risks. The financial impact of this project on the Companywill result in an increase in the Company's own capital investment and operatingcosts.
4. Describe how climate risk identification, assessment and management processes are integrated into the overall risk management system.		Enhance the awareness of climate change issues among various departments, implement relevant risk management policies through cross-departmental integration mechanisms, gradually incorporate climate change impact factors into risk management, and integrate them into corporate sustainability policy management.
5. If using scenario analysis to assess resilience to climate change risks, the scenario, parameters, assumptions, analysis factors, and major financial impacts should be explained.		The Company uses a questionnaire survey method to assess climate change risks, so it is not applicable.
6. If there is a transformation plan to address climate-related risks, describe the content of the plan, as well as the indicators and objectives used to identify and manage physical risks and transition risks.		To achieve net zero emissions, the Company is planning a low-carbon transformation project, which will focus on reducing direct emissions from operational activities (Scope 1), indirect emissions from energy use (Scope 2), and indirect emissions from the value chain (Scope 3). The execution includes: 1. Continuously and actively reducing carbon emissions: Research and develop advanced technologies, enhance energy productivity and efficiency to minimize carbon emissions during the manufacturing and product use stages. 2. Purchase additional renewable energy equipment: Add new solar energyequipment to activelysupport the transition to low-carbon energywith tangible actions.

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Item Implementation status
7. If using internal carbon pricing as a The Company has not yet used internal carbon pricing as a planning tool, so it is not applicable.
planning tool, the basis for price
determination should be described.
8. If climate-related goals are set, the The Company is a company with a paid-in capital of less than NT$5 billion. In accordance with the
activities covered, scope of GHG Financial Supervisory Commission's promotion of the "Sustainable Development Roadmap",
emissions, planning schedule, annual greenhouse gas inventory and verification information will be disclosed in stages. The Company should
apply greenhouse gas inventory in the third stage (complete the inventory in 2026 and the verification in
progress, and other information should be
2028). Subsidiaries included in the consolidated financial statements should complete the inventory in
explained. If carbon offsetting or
2027 and verification in 2029.
renewable energy certificates (RECs) are
The Company has completed the greenhouse gas inventory and verification schedule plan for the parent
used to achieve the goals, the source and
company and the Group (including subsidiaries) in accordance with the regulations of the Financial
quantity of carbon offsetting or the
Supervisory Commission. The schedule has been submitted to the Board of Directors and is being
quantity of RECs should be specified.
monitored on a quarterly basis.
9. Inventory and verification status and The greenhouse gas inventory and assurance situation are as the table below.
reduction targets of greenhouse gas,
strategies and specific action plans.
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The greenhouse gas inventory and assurance situation

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Basic information of the Company According to the regulations of Sustainable Development Roadmap, at least the following
should be disclosed
□ Companies with capital of over NT$10 billion, steel □ Parent company individual inventory □ Consolidated financial report subsidiary
industry, cement industry inventory
□ Companies with capital of over NT$5 billion but less □ Parent company individual assurance □ Consolidated financial report subsidiary
than NT$10 billion assurance
▓ Companies with capital less than NT$5 billion
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Intensity
Total emissions Assurance
Scope 1 (metric tons CO2e/NT$ Explanation of the assurance situation
(metric tons of CO2e) Institutions
million)
Parent company 168.78 0.02
Not yet
Subsidiary 1,139.20 0.16 Not applicable
executed
Total 1,307.98 0.18
Intensity
Total emissions Assurance
Scope 2 (metric tons CO2e/NT$ Explanation of the assurance situation
(metric tons of CO2e) Institutions
million)
Parent company 7,282.43 1.03
Not yet
Subsidiary 39,806.65 5.62 Not applicable
executed
Total 47,089.08 6.65
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Ethical Corporate Management Structure

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

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

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Board of
directors
Audit Office
Audit
Committee
Main
Management
Department
Ethical Corporate Corporate Risk Management Stakeholder
Management Group Governance Group Group Advisory Group
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vi.Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies" and Reasons

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


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

	Implementation Status	Implementation Status	Deviations from “the Ethical
	Yes No Abstract Explanation		Corporate Management Best-
Evaluation Item			Practice Principles for
			TWSE/TPExListed Companies”
			andReasons
(III)Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?	 (III) The Company has established the Ethical Corporate Management Best-Practice Principles where the operating procedures, behavioral guide, penalties for violations, and complaint filing system are defined and have been enforced. Meanwhile, at the end of each year, when the Board of Directors presents the implementation report of ethical corporate management for the year, the Company’s Ethical Corporate Management Best-Practice Principles 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 2023 implementation status on May7,2024.	None

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(III) Does the company establish policies to			(III) The recusal system in case of conflicting interests	None
prevent conflicts of interest and provide appropriate communication channels, and implement it? (IV) Does the company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or hire outside accountants to perform the audits? (V) Does the company regularly hold internal and external educational trainings on operational integrity?	 		for board directors is defined in the Company’s Ethical Corporate Management Best-Practice Principles and Regulations of Procedure for the Board of Directors’ Meetings. In cases of conflicting interests for the director or the corporation represented by the director in any proposal included in the Board of Directors’ meeting agenda that are likely to harm the interests of the Company, the proposer may state opinions and answer questions but may not take part in the discussions or cast a vote and shall be excused during discussion and voting and the director may not exercise voting rights on behalf of any other director. (IV) The Company has established a valid accounting system and internal control system and the Company’s Internal Audit Unit performs regular and irregular inspections according to the Annual Audit Plan or a project-based plan and reports it to the Audit Committee and the Board of Directors on a quarterly basis. In addition, the Company follows the requirements of applicable laws and regulations to have the CPA to take charge of auditing and certifying accounting books. (V) To ensure that ethical corporate management covers the RBA Code of Conduct Handbook, compliance with laws and regulations, the accounting system, and internal control, etc., the Company held related courses, 47 sessions in total, in 2023 and 1,889 of its people attended self-organized or outsourced educationaltrainings totaling 3,313hours.

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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

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.

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 BestPractice Principles, and the Ethical Corporate Management Best-Practice Principles, among others. For more information, please refer to the Company's website: https://www.thinking.com.tw/tw/investor.php?id=13.

viii. Other important information that is sufficient to boost knowledge of corporate governance: The Company continues to strive to improve corporate governance and has set up a "Corporate Governance" and "ESG" section on the Company's website to provide timely updates on the Company's latest corporate governance operation and effectiveness. For more information, please refer to the Company's website: http://www.thinking.com.tw.
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ix. Implementation of Internal Control System: The following information shall be disclosed.
(1) Statement of Internal Control System

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

Date: February 26, 2024

For the Company's internal control system of 2023, 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 abovementioned 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.
84 -
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, 2023 (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 February 26, 2024 with no directors expressing dissent out of the 7 Directors in attendance.

Thinking Electronic Industrial Co., Ltd.

Chairman of Board: Sui, Tai-Chung

President: Ho, Yi-Sheng

(2) If review of the internal audit system is outsourced to CPAs as an exception, the CPA Review Report shall be disclosed: None.
x. For the Most Recent Fiscal Year and during the Current Fiscal Year up to the date of Publication of the Annual Report, facts about penalties imposed upon the Company and its internal personnel for their violation of the internal control system, major defects and the corrective actions taken: None.
85 -
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 2023 Regular Shareholders’ Meeting of the Company was held on June 13, 2023 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 2022 Business Report and Financial Statements
B. Approval of distribution of earnings for 2022

Implementation: August 30, 2023 was set to be the ex-dividend record date and

September 22, 2023 the payment date. (NTD 5.4 as cash dividends per share)

C. Approval of the Financial Derivatives Transaction Procedure

Implementation: Disclosed on the Company’s website and Market Observation Post System (MOPS) as well as implemented per the shareholders’ amended articles.

D. Re-election of directors

List of elected directors:

Representative of Boh Chin Investment Co., Ltd.: Sui, Tai-Chung

Representative of Boh Chin Investment Co., Ltd.: Chung, Shih-Ying

Chang, Shan-Hui Chen, Yen-Hui

List of elected independent directors:

Huang, Cheng-Nan Chou, Chi-Wen Chou, Pao-Heng

Implementation: Registration was approved by the Ministry of Economic Affairs on

July 5, 2023 and disclosed on the Company’s website.

E. Approved to waive of non-competition clauses for new-elected directors of the Company.

Implementation: Removal of non-competition restrictions on directors in accordance

with the resolution of the shareholders' meeting.

86 -

(2) Important decisions of the Board of Directors:

Item No.
1
2
3
4
5
6

Date
Important decision
2/8/2023
1. Investing in the establishment of a subsidiary in Vietnam
3/22/2023
1. 2022 Internal Control System Declaration
2. 2022 remuneration to employees and 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
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. Resolved to waive of non-competition clauses for new-elected
directors of the Company
15. Convening of shareholders’ meeting
5/2/2023
1. Consolidated financial statements of the first quarter of 2023
and CPAs' Review Report
2. Revision of the Financial Derivatives Transaction Procedure
3. To approve the Company’ s review on the nominated directors
(including independent directors) ’ s qualification
4. Change in the cause for convening the shareholders’ meeting
6/13/2023
1. Election of the Company's chairman of the board of directors
2. Appointment of members of the Compensation and
Remuneration Committee
8/9/2023
1. Distribution of dividends in cash
2. Distribution of remuneration to directors (including
independent directors) for 2022
3. Distribution of employee remuneration to managers for 2022
4. Consolidated financial statements of the second quarter of 2023
and CPAs' Review Report
8/15/2023
1. Proposal for the change of the Company's location for the
Nanzi Branch.

87 -

Item No.
7
8
9

Date
Important decision
11/8/2023
1. 2024 Audit Plan
2. Consolidated financial statements of the third quarter of 2023
and CPAs' Review Report
3. Financial Derivatives Transaction Quotas
4. Financing Facilities Quotas
5. Proposal for opening domestic and foreign exchange accounts
for overseas institutions
6. Remuneration to members of the Compensation and
Remuneration Committee for 2023
7. Assignment of directors and supervisor for the subsidiary,
Welkin Electronic Co., Ltd.
8. Proposal for lending funds to subsidiary by the Company
9. Proposal for increasing investment in subsidiaries
10. Appointment of President
11. Appointment of Spokesman
1/24/2024
1. Proposal for providing financing endorsement guarantee for
subsidiaries by the Company
2. The amount of the year-end-bonus for managers for 2023
3. Discussion of regulations relevant to the compensation and
rewards policy, system, criteria, and structure of 2024
4. Monthly salary structure, amount paid, and expected pension
appropriation for managers for 2024
2/26/2024
1. 2023 Internal Control System Declaration
2. 2023 remuneration to employees and directors
3. 2023 Financial Statements
4. 2023 Business Report
5. Earnings distribution proposal for 2023

2024 Operational Plan
Rotation of CPAs and evaluation of independence and suitability
Appointment of CPAs and their remuneration for 2024
Revision of the Company’s Articles of Incorporation
Election of an independent director of the Company
Resolved to waive of non-competition clauses for new-elected directors of the Company.
Convening of shareholders’ meeting
88 -
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, 2023
Title	Name	Date of	Date of	Reasons for Resignation
		Appointment	Termination	or Dismissal
R&D officer	Hsiao, Fu-Chang	11/1/2016	8/8/2023	Position adjustment
President	Chung, Shih-Ying	12/19/2022	11/8/2023	Personal career planning

3.5 Information on CPAs’ professional fee:

					Unit: NT$ thousands	Unit: NT$ thousands
Name of	Name of CPA	Audit Period	Audit Fees	Non-audit	Total	Remarks
CPA Firm				Fees
Deloitte & Touche	Chiang, Jia-Ling	1/1/2023 -12/31/2023	4,000	456	4,456	Note
	Liu, Yu-Hsiang

Note: Non-audit Fees includes the report on transfer pricing and direct deductions, etc.

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: Decrease: NTD 600 thousand

Reduction ratio: 13%

Cause of decrease: Adjustment of audit fees following negotiations with accounting firm due to changes in Group organizational structure.

89 -

3.6 Information on Replacement of CPAs:

i. Regarding the former CPA

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

Date of replacement March 22, 2023
Due to the adjustment of the CPA firm’s internal job
Replacement reasons and responsibilities, the co-signing partner Wu, Chiu-Yen will be
explanations replaced by Liu, Yu-Hsiang starting from the first quarter of 2023.
The engagement partner will remain to be Chiang, Jia-Ling.
Parties
Describe whether the CPA The Company
Status
Company terminated or
the CPA did not accept Termination of
the appointment appointment Not applicable Not applicable
No longer accepted
(continued) Not applicable Not applicable
appointment
Other issues (except for
unqualified issues) in the
None
audit reports within the
last two years
- Accounting principles or practices
- Disclosure of Financial Statements
Disagreement with the Yes
Company - Auditing scope or procedures
- Others
No 
Explanation: None
Supplementary
Disclosure (Disclosures
Specified in None
Article 10.6.1.4~7 of the
Standards)
----- End of picture text -----

90 -

ii. Regarding the successor CPA

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

Accounting firm Deloitte & Touche
Name of CPA Chiang, Jia-Ling and Liu, Yu-Hsiang
Approved by Board of Directors on March 22,
Date of appointment
2023
Consultation results and opinions on
accounting treatments or principles with
respect to specified transactions and the None
company's financial reports that the CPA
might issue prior to the engagement.
Succeeding CPA’s written opinion of
None
disagreement toward the former CPA
----- End of picture text -----

iii. The reply of former CPAs on Article 10.6.1 and Article 10.6.2.3 of the Standards: 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.
91 -

3.8 Transfer of Equity Interests and/or Pledge of or Changes in Equity Interests by Directors,

Managers or Major Shareholders with a Stake of More than 10 Percent for the Most

Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report:

i. Changes in Equity of Directors, Managers, and Major Shareholders

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2023 2024 (as of April 20)
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) Chen, Su-Ai
Representative of
Director and
Manager at the Sui, Tai-Chung - - - -
branch office in
Nanzi
Representative of
Director and
Associate Vice
Chen, Su-Ai
President at the - - - -
(Note 2)
Main
Management
Department
Representative of
Chung, Shih-Ying
Director and - - - -
(Note 2、Note 3)
President
Director Chang, Shan-Hui - - - -
Director Chen, Yen-Hui - - - -
Independent Chou, Pao-Heng
Director (Note 4) - - - -
Independent
Huang, Cheng-Nan - - - -
Director
Independent
Chou, Chi-Wen - - - -
Director
Independent Chen, Hsiu-Yen
Director (Note 4) - - - -
Major
Yih Chin
Shareholders - - - -
Investment Co., Ltd.
(Note 1)
President Ho, Yi-Sheng
(Note 5) - - - -
Technical Vice
Hsiao, Fu-Chang
President at the - - - -
(Note 6)
R&D Department
Vice President at
Sung, Hsing-Jang
the Operational - - - -
(Note 7)
Department
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92 -

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2023 2024 (as of April 20)
Pledged Pledged
Holding Holding
Title Name Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Head of Plant Chang, Mei-Hui
(Note 8) - - - -
Head of Plant Chan, Chia-Hao
(Note 9) - - - -
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 November 8, 2023, the institutional director of Boh Chin Investment Co., Ltd., re-

appointed representative. Director Chung, Shih-Ying resigned and Ms. Chen, Su-Ai took over as director.

Note 3: Mr. Chung, Shih-Ying resigned on November 8, 2023. His shareholding is no longer required to disclose.
Note 4: THINKING’s 16th Board of Directors was elected at THINKING’s Annual Shareholders’ Meeting on June 13, 2023. Independent director Chen, Hsiu-Yen’s tenure expired on June 13, 2023. Her shareholding is no longer required to disclose. Mr. Chou, Pao-Heng was elected as independent director. His shareholding was disclosed starting from that date.
Note 5: Mr. Ho, Yi-Sheng was promoted to President, effective November 8, 2023. His shareholding was disclosed starting from that date.
Note 6: Mr. Hsiao, Fu-Chang resigned the position of R&D officer on August 8, 2023. His shareholding is no longer required to disclose.
Note 7: Mr. Sung, Hsing-Jang was promoted to Vice President, effective February 1, 2023. His shareholding was disclosed starting from that date.
Note 8: Ms. Chang, Mei-Hui retired on September 30, 2023. Her shareholding is no longer required to disclose.
Note 9: Mr. Chan, Chia-Hao resigned on March 1, 2024. His shareholding is no longer required to disclose.
93 -

3.9 Relationship among the Top Ten Shareholders

April 20, 2024

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Shareholding Name and Relationship Between the
Spouse’s/minor’s
Current Shareholding by Nominee Company’s Top Ten Shareholders, or
Name Shareholding Remarks
Arrangement Spouses or Relatives Within Two Degrees
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., Ltd. second degree of
-
Investment Co., Sui, Tai Chung kinship of the
Ltd. Person in charge: 15,871,153 12.39% - - - - Chen, Su-Ai Chairman of Yih Chin Investment
Chen, Su-Ai Sui, Wan-Ni Co., Ltd.
Sui, Chieh-Heng
Chang, Jui-Min 5,994,000 4.68% - - - - 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.,
Ltd.
Relatives within
Yih Chin
Sui, Wan-Ni 3,465,829 2.71% - - - - second degree of
Investment Co., Ltd.
- kinship
Sui, Tai Chung
Chen, Su-Ai
-
Sui, Chieh Heng
Boh Chin
Investment Co.,
Ltd.
Relatives within
Yih Chin
Sui, Chieh-Heng 2,484,469 1.94% - - - - second degree of
Investment Co., Ltd.
- kinship
Sui, Tai Chung
Chen, Su-Ai
Sui, Wan-Ni
Boh Chin Relatives within
Sui, Chung-Hua 1,763,719 1.38% - - - - Investment Co., Ltd. second degree of
Sui, Tai-Chung kinship
LGT in the
trusteeship of 1,640,000 1.28% - - - - None None
Standard
Chartered Bank
Boh Chin
Investment Co., Ltd.
Relatives within
Yih Chin
second degree of
Chen, Su-Ai 1,474,733 1.15% 4,080,862 3.19% - - Investment Co., Ltd.
Sui, Wan-Ni kinship
Sui, Chieh-Heng
Sui, Tai-Chung Spouses
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94 -

3.10 Number of Shares Held by the Company, the Company’s Directors, Managers, and Directly

or Indirectly Controlled Businesses and the Consolidated General Holding Ratio as follows:

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Date: December 31, 2023 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 1,505,763 3.73 27,238,271 67.49
Co., Ltd.
Greenish Co., Ltd. 7,374,997 100.00 - - 7,374,997 100.00
Thinking Holding
25,476,302 100.00 - - 25,476,302 100.00
(Cayman) Co., Ltd.
Thinking Electronic
1,000,000 100.00 - - 1,000,000 100.00
USA, Inc.
Thinking (Viet Nam)
- 100.00 - - - 100.00
Electronic Co., Ltd.
Thinking International
- - 6,375,000 100.00 6,375,000 100.00
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.
Dong Guan Welkin
- - - 100.00 - 100.00
Electronic Co., Ltd.
Welkin Electronic Co.,
- - - 100.00 - 100.00
Ltd.
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95 -

IV. Capital Overview

4.1 Capital and Shares

i. Source of Capital

==> picture [552 x 648] intentionally omitted <==

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

Unit: Share; NTD
Authorized Capital Paid-in Capital Remarks
Capital
Increased
Month/ Issued
by
Year Price Shares Amount Shares Amount Sources of Capital Other
Assets
Other
than Cash
7/1979 10,000 300 3,000,000 300 3,000,000 Establishment (cash) None
Capital increase in
1/1986 10,000 600 6,000,000 600 6,000,000 None
cash NTD 3,000,000
Capital increase in
5/1989 10,000 2,600 26,000,000 2,600 26,000,000 cash NTD None
20,000,000
Capital increase in
cash NTD
50,000,000
11/1994 10 12,600,000 126,000,000 12,600,000 126,000,000 None
Earnings transferred
capital increase
NTD 50,000,000
Capital increase in
cash NTD
25,200,000
5/1996 10 18,900,000 189,000,000 18,900,000 189,000,000 None
Earnings transferred
capital increase
NTD 37,800,000
Earnings transferred 5/15/1997 (1997)
5/1997 10 30,240,000 302,400,000 30,240,000 302,400,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 113,400,000 39314
Earnings transferred 7/22/1998 (1998)
7/1998 10 43,848,000 438,480,000 43,848,000 438,480,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 136,080,000 59845
Earnings transferred 5/24/1999 (1999)
5/1999 10 90,000,000 900,000,000 57,602,400 576,024,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 137,544,000 48165
Capital increase in (1) 7/12/2000 (2000)
cash NTD Tai-Cai-Zheng (I) No.
50,000,000 58119
7/2000 10 90,000,000 900,000,000 69,362,640 693,626,400 None
Earnings transferred (2) 7/6/2000 (2000)
capital increase Tai-Cai-Zheng (I) No.
NTD 67,602,400 58129
Earnings transferred 7/10/2001 (2001)
7/2001 10 90,000,000 900,000,000 75,707,951 757,079,510 capital increase None Tai-Cai-Zheng (I)
NTD 63,453,110 No. 144251
Earnings transferred 7/9/2002
7/2002 10 120,000,000 1,200,000,000 82,075,000 820,745,000 capital increase None Tai-Cai-Zheng (I)
NTD 63,665,490 No. 0910137524
Earnings transferred 6/27/2003
7/2003 10 120,000,000 1,200,000,000 87,568,977 875,689,770 capital increase None Tai-Cai-Zheng (I)
NTD 54,944,770 No. 0920128599
Earnings transferred 7/7/2004
9/2004 10 120,000,000 1,200,000,000 95,399,495 953,994,950 capital increase None SFB (I)
NTD 78,305,180 No. 0930129935
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96 -

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

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98 -

Unit: Share


		Authorized Capital
Share Te				Remarks

yp	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 20,2024	April 20,2024
					Foreign
	Government	Financial	Other Juridical
Item				Natural Persons	Institutions & Total
	Agencies	Institutions	Persons
					Natural Persons

Number of Shareholders	-	-	67	11,752	131	11,950
Shareholding (shares)	-	-	48,861,958	61,652,401	17,598,367	128,112,726
Ratio(%)	-	-	38.14	48.12	13.74	100.00

iii. Shareholding Distribution Status

(1) Common shares:

Denomination per share: NTD 10; April 20, 2024

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

Number of Shareholding
Class of Shareholding Ratio (%)
Shareholders (Shares)
1 ～ 999 3,485 570,186 0.44
1,000 ～ 5,000 7,174 13,051,222 10.19
5,001 ～ 10,000 650 5,172,078 4.04
10,001 ～ 15,000 217 2,759,002 2.15
15,001 ～ 20,000 111 2,049,924 1.60
20,001 ～ 30,000 91 2,338,068 1.82
30,001 ～ 40,000 45 1,595,347 1.25
40,001 ～ 50,000 29 1,360,338 1.06
50,001 ～ 100,000 61 4,307,310 3.36
100,001 ～ 200,000 36 5,336,351 4.17
200,001 ～ 400,000 17 4,645,563 3.63
400,001 ～ 600,000 13 6,838,656 5.34
600,001 ～ 800,000 5 3,472,669 2.71
800,001 ～ 1,000,000 1 859,000 0.67
1,000,001 or over 15 73,757,012 57.57
Total 11,950 128,112,726 100.00
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(2) Preferred shares: None.

99 -

iv. List of Major Shareholders:

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

April 20, 2024
Shareholding
Name of Major Shareholders
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 5,994,000 4.68
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
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Note: Major shareholders are those holding 5% or more of the Company’s equity or Top 10 shareholders.

100 -

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

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

Unit: NTD$
2024
Year
2022 2023 (as of
Items
March 31)
Highest 162.00 182.50 181.00
Market Price per
Lowest 100.00 121.00 154.00
Share (Note 1)
Average 132.12 151.61 168.08
Before Distribution 68.76 72.67 77.59
Net Worth per
Share (Note 2) After Distribution 63.36 67.47 (Note 6) Undistributed
Weighted Average Shares
128,113 128,113 128,113
Earnings per
(thousand shares)
Share
Earnings Per Share 10.72 10.21 2.60
Cash Dividends 5.40 5.20 (Note 6) -
Dividends from
Retained Earnings - - -
Dividends per Stock Dividends
Share Dividends from
Capital Surplus - - -
Accumulated Undistributed Dividends - - -
Price / Earnings Ratio (Note3) 12.32 14.85 -
Return on
Price / Dividend Ratio (Note 4) 24.47 29.16 -
Investment
Cash Dividend Yield (Note 5) 4.09 3.43 -
----- 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 2023 are NTD 5.20 per share in cash yet it is pending approval through the 2024 General Shareholders’ Meeting.

101 -
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 666,186,176 is intended to be set aside as shareholder bonus from the distributable earnings of 2023, that is, NTD 5.20 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.

102 -
(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 2023 earnings are as follows:
- (a) Distribution of the remuneration to employees in cash worth NTD 66,157 thousand.
- (b) Distribution of the remuneration to directors worth NTD 22,494 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 2023 Financial Statements" of this Annual Report.

ix. Buy-back of Treasury Share: None.

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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.

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V. Operational Highlights

5.1 Business Activities

i. Business Scope
(1) The Company’s business lines are stated as follows:

THINKING provides a broad line of circuit protection components for over-voltage protection, over-temperature protection, and over-current protection. The product portfolio offers negative temperature coefficient thermistor (NTC thermistor), zinc oxide varistors (MOV), ceramic positive temperature thermistors (PTC thermistor), polymer positive temperature coefficient thermistors (Polymer PTC resettable fuse), temperature sensors, and gas discharge tubes.

Assured to better quality and improving management system, The Company has been IATF 16949 and ISO 9001 certified and remains committed to offer product compliance in conformity assessment with UL, VDE, TUV, and CQC approvals.

The Company is continually developing better quality and better service by working closely with customers, and remains committed to be the best choice of passive components.

(2) Revenue Distribution:

evenue Distribution:
	December 31,2023/NTD thousand
Major Divisions	Total Sales in Year	(%)of Total Sales
Protection Element	6,749,536	95.37
Others	327,600	4.63
Total	7,077,136	100.00

(3) Main products:
A. Thermistor
B. Varistor
C. Temperature sensor
(4) New products and services planned to be developed:
A. Development of specifications for the ultra-miniature SMD type 01005 thermistor product series
B. Development of SMD type 5G communication application high-quality pure silver inner electrode varistor
C. Development of high-voltage, high-current varistors with pure silver internal electrodes 1812 and 2220 SMD type
D. Development of automotive specifications for 0402 SMD type ultra-low capacitance static discharge protectors
E. Development of a series of negative temperature coefficient thermistors for high-temperature automotive applications up to 300 ℃
F. Development of SMD type thermistor series products for preventing metal migration
G. Development of low B-value high resistance negative temperature coefficient sensors
H. Development of miniaturized negative temperature coefficient thermistor with high responsiveness
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I. Development of miniaturized, highly stable, high-precision negative temperature coefficient thermistors for medical applications
J. Development of BME process SMD positive temperature coefficient thermistor ultra-low resistance product series
K. Development of SMD positive temperature coefficient thermistors for automotive overcurrent protection product series
L. Development of 0201 SMD positive temperature coefficient thermistor products overcurrent protection series
M. Development of negative temperature coefficient thermistors for automotive applications with a high temperature resistance of 350℃
N. Development of SCK 03Φ lightning protection series products
O. Development of PPTC positive temperature coefficient high temperature-resistant 125°C product series
P. Development of CPTC lead-free series product
Q. Development of CPTC high pressure resistant product series

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.

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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.

(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:

==> picture [436 x 433] intentionally omitted <==

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

Upstream Midstream Downstream
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

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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 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 2023: NTD 360,706 thousand.

R&D expenses spent as of the first quarter of 2024: NTD 93,539 thousand.

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(2)Successfully developed technologies or products
A. Completed the development of process TSM 01005 103/104 small-size negative temperature coefficient thermistor series model products
B. Completed development of TPM 0201 100Ω/170Ω positive temperature coefficient thermistor model products
C. Completed the development of zero-inflation high-precision medical chips for medical applications, including nucleic acid testing, infrared temperature sensing, and thermometers
D. Completed the development of LCP 0402 ultra-low breakdown voltage Vt <300V product
E. Completed the development of TVR Class A explosion-proof products
F. Completed the development of TGM zero-increase products and implemented mass production
G. Completed development of positive temperature coefficient thermistor (PTC) SMD 0603 low resistance series (10Ω and 6.8Ω) products
H. Completed development of SCK 03Φ 1.5KV lightning resistant series products
I. Completed the development of partial models of TVM SMD pure silver electrode 5B series high-pass flow varistor
J. Completed the development of TVA34821 high-pass flow varistor model
K. Completed the development of the CPTC PH/PP/Sensor lead-free product series
L. Completed the development of the CPTC 120~150 degree antimony removal product series
M. Completed the development of KMC 0402/2016 series products
N. Completed the development and mass production of sensor products for motor and electric machinery
O. Completed the development of the IGBT vehicle specification MELF development product series

iv. Long-term and Short-term Development

(1) Short-term Development
A. Increase the proportion of orders from existing customers
B. Develop more large and iconic international clients
C. Deepen the electric vehicle and automotive electronics market, increase the market for energy storage, low-orbit satellites, AI, healthcare, and more
D. Increase sales of niche-type pressure-sensitive, thermal-sensitive, and TVS products
E. Develop more Southeast Asian customers

(2) Mid-to-long-term Development

Continuing to connect the sales opportunities across the upstream and downstream of the electronics industry chain, with a complete product portfolio, excellent quality and service, the brand image created, through the complete sales channels, global layout; to invest more business resources in new applications to maintain the Company's profitability; and to establish a long-term stable supply chain relationship with major customers, and to continue to expand the market share of the Company's products.

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5.2 Overview of Market, Production, and Sales

i. Market Analysis

(1)Sales Area

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

Unit: NTD Thousand

==> picture [384 x 130] intentionally omitted <==

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

Year 2023
Sales Area Net sales %
Greater China (Include Taiwan) 5,472,787 77.33
Europe 974,102 13.76
Others 630,247 8.91
Total 7,077,136 100.00
----- 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.

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.

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B. 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. The most widely used energy storage system at present mainly adopts batteries as the energy storage solution. Under the dual requirements of safety and efficiency, it has created a huge business opportunity for temperature detection and control.

C. Telecommunications and AI

The telecommunications industry starts with user-end devices, including wireless transceiver base stations for access network, optical communication for carrying network, data centers for core networks, edge computing, and even satellite communication equipment. In addition to the well-known 5G ecosystem development, overcoming the last mile of low-orbit satellite communication is truly the rising star of tomorrow. On this basis, artificial intelligence AI, which requires a large amount of information for deep learning, has a starting point for computing and to be able to provide services without boundaries. In this field, whether it's the demand for increased power density/efficiency brought by the high frequency and short wavelength of communication systems, the threat of lightning strikes in outdoor and open space environments, or the need for efficient thermal management brought by efficient computing, all these scenarios represent ideal application areas for the Company's three major products: overcurrent, overvoltage, and overtemperature detection and protection.

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.

(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) Good technical ability to quickly satisfy customers

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.

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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.

(d) High degree of production automation

Through years of development and investment in automation equipment, the Company's component products have established a solid manufacturing platform. Our process control capabilities are excellent, ensuring extremely stable product quality. This stands as the main core competencies for us.

(e) 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 visibility in the European and American regions as well as in the traditional fuel vehicle market

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. The traditional fuel vehicle market has long been dominated by European, American, and Japanese brands, and the Company's visibility in this market 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, however, the emergence of the red supply chain has lowered the market price of component products with lower technological bottlenecks.

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. Among them, the revenue of the PPTC, TVS, ESD... product lines still have considerable room for growth.

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C. Countermeasures:

(a) Establishing a subsidiary in the United States and offices in Northeast Asia and Southeast Asia, expanding international new customer base from the locations of European and American clients; also providing nearby services in Southeast Asia where customers are producing, achieving the dual benefits of increasing visibility and consolidating revenue.
(b) Increase the order volume of miniaturized SMD products and through flexible pricing to achieve greater economies of scale and reduce the impact of price competition on revenue.
(c) By leveraging business synergies and comprehensive product certification qualifications, we will increase sales activities for PPTC, TVS, and ESD product lines, expand the range of products supplied to customers, and ensure balanced development across all product lines.
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.

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

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

Main product Item	Main product Item

	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 energy consumption.
Temperature
Sensor

(2) Major Products and Their Production Processes

Manufacturing process flowchart for plug-in resistors

==> picture [431 x 170] 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 95] intentionally omitted <==

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

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

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iii. Supply Status of Main Materials

Primary raw materials for the Company are silver, manganese, cobalt, nickel, and
copper, etc. All the partners are long-term collaborators and have been working closely under optimal partnerships. The quality of supply and lead time remain steady. Shortage or interruption is not a concern.
iv. List of main purchases and sales customers over the past two years
(1) Information of suppliers accounting for 10% or more of the overall purchases in any of the past two years: None.
(2) Information of customers accounting for 10% or more of the overall sales in any of the past two years: None.

v. Production in the Last Two Years

Unit: Thousand particles/NTD thousand

Output
		2022			2023


	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Major Products

Protection Element	16,045,800	10,330,022	5,657,775	15,385,140	9,151,657	5,321,696
Other	192,065	174,765	407,699	192,065	62,658	297,284
Total	16,237,865	10,504,787	6,065,474	15,577,205	9,214,315	5,618,980

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

Shipments	2022	2022	2022	2022	2023	2023	2023	2023
& Sales Local			Export		Local		Export

	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Major Products

Protection Element	495,067	348,896	5,579,585	6,718,084	204,366	167,111	5,625,362	6,582,425
Other	88,828	173,022	177,289	223,133	94,759	149,174	57,181	178,426
Total	583,895	521,918	5,756,874	6,941,217	299,125	316,285	5,682,543	6,760,851

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5.3 Human Resources

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

2024
Year 2022 2023
(as of March 31)
Direct employees 2,360 2,239 2,276
Number of
Indirect employees 1,720 1,712 1,759
Employees
Total 4,080 3,951 4,035
Average Age 33.42 37.46 34.90
Average Years of Service 5.10 5.23 5.19
Masters 2.42% 2.48% 2.62%
University and College 26.60% 28.15% 28.97%
Education Senior High School 28.21% 28.80% 26.83%
Below Senior High
42.77% 40.57% 41.58%
School
----- End of picture text -----

5.4 Environmental Protection Expenditure

i. Total Losses

The Company did not suffer losses 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. In 2023, the investment in the installation of renewable energy generation equipment and related improvement expenses amounted to NTD27,550 thousand. In 2024, efforts will continue to be made to improve the process of recycling and reusing wastewater, reduce wastewater, enhance the efficiency of renewable energy utilization, and develop energy-saving products. It is estimated that the investment in improvement and purchase of related equipment will be approximately NTD20,000 thousand.

5.5 Labor Relations

i. Employee Welfare

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

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(1) Employee proposal bonus and patent bonus;
(2) New Year's Day gift vouchers, birthday gift vouchers, and subsidies for weddings and funerals;
(3) Outstanding employees of the current year and the May 1st model worker commendation and reward;
(4) On-the-job training allowances;
(5) Staff travel at home and abroad, staff family days and unscheduled staff dinners;
(6) Annual year-end banquet and lottery event;
(7) Annual free health check;
(8) Physicians/nursers are regularly stationed in the factory to provide healthcare consultation and services;
(9) Adequate condolences upon occupational injuries or casualties and emergency aids;
(10) Uniforms, personal locker rooms, and pantry room equipped with food steamers, refrigerators, and other appliances for employees; and
(11) Special resort hotel or hotel contract discount

The welfare measures mentioned above are being implemented desirably now and in the future, will be adequately modified reflective of changes made to laws and regulations, social condition, and the operational status of the Company.

ii. Continuing education and training for employees:

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

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

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

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

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

In order to improve the behavior, attainment, and professional ethics of all employees, the Company has established the Work Rules and employees need to sign the

“Employment Contract” and the “Ethical Corporate Management and Integrity Letter of Undertaking” upon reporting to work to govern against violations of laws and regulations or occupation, theft, destruction of the Company’s properties or disclosure of the Company's secrets, incomplete handover, acceptance of briberies, and other behavior that results on losses borne by the Company during employment. Examples include:

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

vi. Rewards and penalties for employees

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

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

vii. Labor-management agreement:

The Company has always believed in “Labor and Management as One” and
“Co-existence and Co-prosperity” and has been instilling the belief in its employees so that they share the same consensus on corporate sustainability and long-term development. Meanwhile, difficulties and problems facing the Company are adequately clarified and the Company’s stance and decision are conveyed so that both employees and the employer are treated equally. In addition, there are the labor-management meeting, email, and employee feedback box in place to maintain optimal communications and interactions at all times for steady and harmonious labor-management relations.
viii. Losses suffered by the Company due to labor-management disputes in the past year up to the date the Annual Report was printed and estimated values now and likely incurred in the future and countermeasures: None.
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5.6 Cyber Security Management
i. Risk Management Framework for Cyber Security:

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

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

Establish the group’s firewall connection management rules. In case of any special connection requirements, a separate application for access should be filed.

(2) Endpoint behavior monitoring and protection software

The endpoint behavior monitoring software is used to detect any abnormal network behaviors in the Company's network domain, and protect important system hosts, critical leaders, external operators, and computers of production-related machines.

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

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

v. Information security education and training:

As of the printing date of this year's annual report, 428 participants have attended the seminars on information security, and seminars on information security will be held annually in the future.

5.7 Material Contracts

			Major
Contract Type	Counterparty	Period		Restrictions
			Contents

Lease	Administration of Export Processing Zones under the Ministry of Economic Affairs	6/1/2016- 5/31/2026	Lease of land	-
Lease	Administration of Export Processing Zones under the Ministry of Economic Affairs	8/1/2016- 7/31/2025	Lease of land	-
Lease	Administration of Export Processing Zones under the Ministry of Economic Affairs	11/1/2020- 10/31/2030	Lease of land	-

121 -

VI. Financial Information

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

Unit: NTD Thousand

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Year Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item 2019 2020 2021 2022 2023 (Note) March 31, 2024
Current assets 6,067,809 8,084,389 8,850,782 9,136,066 7,988,976 8,562,107
Property, plant and
2,031,402 2,174,967 2,619,638 3,219,260 3,693,813 3,758,914
equipment
Intangible assets 44,884 43,982 48,075 42,449 39,913 41,818
Other assets 606,420 727,322 1,151,390 1,360,041 1,927,127 2,184,061
Total assets 8,750,515 11,030,660 12,669,885 13,757,816 13,649,829 14,546,900
Before
1,254,736 2,051,426 2,309,372 2,299,113 1,638,848 1,947,475
Current distribution
liabilities After
1,792,809 2,756,046 3,116,482 2,990,922 2,305,034 Undistributed
distribution
Non-current liabilities 980,796 1,534,447 2,084,160 2,515,256 2,563,168 2,524,487
Before
2,235,532 3,585,873 4,393,532 4,814,369 4,202,016 4,471,962
Total distribution
liabilities After
2,773,605 4,290,493 5,200,642 5,506,178 4,868,202 Undistributed
distribution
Equity attributable
6,371,393 7,305,365 8,158,633 8,809,079 9,309,776 9,940,165
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 348,263 348,263 352,907 352,907 352,907 352,907
Before
5,026,658 5,877,411 6,746,977 7,315,672 7,931,978 8,264,918
Retained distribution
earnings After
4,488,585 5,172,791 5,939,867 6,623,863 7,265,792 Undistributed
distribution
Other equities (284,655) (201,436) (222,378) (140,627) (256,236) 41,213
Treasury shares - - - - - -
Non-controlling interests 143,590 139,422 117,720 134,368 138,037 134,773
Before
6,514,983 7,444,787 8,276,353 8,943,447 9,447,813 10,074,938
distribution
Total equity
After
5,976,910 6,740,167 7,469,243 8,251,638 8,781,627 Undistributed
distribution
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Note: The distribution of earnings from 2023 is yet to be decided during the shareholders’ meeting.

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B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

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Year Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item 2019 2020 2021 2022 2023 March 31, 2024
Operating revenue,
5,814,232 5,920,258 7,500,455 7,463,135 7,077,136 1,561,384
net
Gross profit 2,340,329 2,714,605 3,239,431 2,633,376 2,743,767 636,629
Profit from
1,448,901 1,843,142 2,124,835 1,400,177 1,592,445 369,569
operations
Non-operating
64,786 24,191 34,499 396,567 130,102 66,893
income and expenses
Profit before income
1,513,687 1,867,333 2,159,334 1,796,744 1,722,547 436,462
tax
Net profit 1,115,265 1,380,603 1,590,623 1,389,978 1,311,159 329,676
Other comprehensive
income (loss), net of (173,212) 87,274 (25,187) 84,226 (114,984) 297,449
tax
Total comprehensive
942,053 1,467,877 1,565,436 1,474,204 1,196,175 627,125
income
Net profit
attributable to:
Owners of the
1,115,990 1,385,016 1,577,307 1,373,833 1,307,803 332,940
company
Non-controlling
(725) (4,413) 13,316 16,145 3,356 (3,264)
interests
Total comprehensive
income (loss)
attributable to:
Owners of the
942,387 1,472,045 1,553,244 1,457,556 1,192,506 630,389
company
Non-controlling
(334) (4,168) 12,192 16,648 3,669 (3,264)
interests
Earnings per Share 8.71 10.81 12.31 10.72 10.21 2.60
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(2) Parent company only financial information

A. Condensed Balance Sheet

Unit: NTD Thousand

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Year Financial Summary for the Past Five Fiscal Years
Item 2019 2020 2021 2022 2023 (Note)
Current assets 2,202,968 2,943,972 3,206,025 3,422,794 1,908,892
Investments accounted for
5,397,746 6,434,738 7,490,254 7,955,007 8,930,161
using the equity method
Property, plant and
544,596 613,528 936,977 1,368,831 1,709,060
equipment
Intangible Assets 30,795 28,359 33,652 29,015 27,338
Other assets 240,433 286,537 308,393 237,147 289,968
Total assets 8,416,538 10,307,134 11,975,301 13,012,794 12,865,419
Before
1,134,157 1,555,581 1,806,160 1,785,012 1,091,595
Current distribution
liabilities After
1,672,230 2,260,201 2,613,270 2,476,821 1,757,781
distribution
Non-current liabilities 910,988 1,446,188 2,010,508 2,418,703 2,464,048
Before
2,045,145 3,001,769 3,816,668 4,203,715 3,555,643
Total distribution
liabilities After
2,583,218 3,706,389 4,623,778 4,895,524 4,221,829
distribution
Ordinary shares 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127
Capital surplus 348,263 348,263 352,907 352,907 352,907
Before
5,026,658 5,877,411 6,746,977 7,315,672 7,931,978
Retained distribution
earnings After
4,488,585 5,172,791 5,939,867 6,623,863 7,265,792
distribution
Other equities (284,655) (201,436) (222,378) (140,627) (256,236)
Treasury shares - - - - -
Before
6,371,393 7,305,365 8,158,633 8,809,079 9,309,776
distribution
Total equity
After
5,833,320 6,600,745 7,351,523 8,117,270 8,643,590
distribution
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Note: The distribution of earnings from 2023 is yet to be decided during the shareholders’ meeting.

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B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

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Year
Financial Summary for the Past Five Fiscal Years
2019 2020 2021 2022 2023
Item
Operating revenue, net 3,137,848 3,219,942 3,775,517 3,619,285 3,172,798
Gross profit (Note) 1,052,791 1,178,182 1,464,528 1,153,128 1,150,096
Profit from operations 703,425 789,521 952,159 694,967 692,455
Non-operating income and
697,022 933,245 1,036,297 995,847 930,813
expenses
Profit before income tax 1,400,447 1,722,766 1,988,456 1,690,814 1,623,268
Net profit 1,115,990 1,385,016 1,577,307 1,373,833 1,307,803
Other comprehensive
(173,603) 87,029 (24,063) 83,723 (115,297)
income (loss), net of tax
Total comprehensive income 942,387 1,472,045 1,553,244 1,457,556 1,192,506
Earnings per Share 8.71 10.81 12.31 10.72 10.21
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Note: The operating gross profit does not include realized (unrealized) gross profit from sales.

ii. Auditors’ Opinions from 2019 to 2023

Year
	Accounting Firm	CPA	Audit Opinion

2019	Deloitte & Touche	Chiang Jia-Ling (Note), Wu Chiu-Yen (Note)	Unqualified opinion plus the paragraph containing 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
2023	Deloitte & Touche	Chiang Jia-Ling Liu, Yu-Hsiang (Note)	Unqualified opinion

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

125 -

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

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Financial Analysis for the Past Five Fiscal Years
Year As of
March 31,
Analytical item (Note 1) 2019 2020 2021 2022 2023 2024
Debt Ratio 25.54 32.50 34.67 34.99 30.78 30.74
Financial
structure (%) Ratio of long-term funds to 368.99 412.84 395.49 355.94 325.16 335.18
property, plant and equipment
Current ratio 483.59 394.08 383.25 397.37 487.47 439.65
Solvency (%) Quick ratio 412.38 328.68 292.34 316.30 401.75 363.33
Time interest earned 300.14 206.17 187.71 105.61 103.30 125.45
Accounts receivable turnover
2.82 2.64 3.23 3.34 3.06 2.63
(times)
Average collection period 129.43 138.25 113.00 109.28 119.28 138.78
Inventory turnover (times) 3.89 3.06 2.65 2.67 2.98 2.87
Operating Accounts payable turnover
5.94 5.43 6.80 9.10 9.34 7.22
performance (times)
Average sales days 93.83 119.28 137.73 136.70 122.48 127.17
Property, plant and equipment
2.86 2.81 3.12 2.55 2.04 1.67
turnover (times)
Total assets turnover (times) 0.68 0.59 0.63 0.56 0.51 0.44
Return on assets (%) 13.17 14.03 13.50 10.62 9.66 9.43
Return on equity (%) 17.73 19.77 20.23 16.14 14.25 13.50
Profit before income tax to
Profitability 118.15 145.75 168.54 140.24 134.45 136.27
paid-in capital (%)
Net profit ratio (%) 19.18 23.31 21.20 18.62 18.52 21.11
Earnings per share ($) 8.71 10.81 12.31 10.72 10.21 2.60
Cash flow ratio (%) 131.23 65.46 68.16 81.25 129.88 76.74
Cash flows Cash flow adequacy ratio (%) 126.22 114.99 100.03 101.34 107.15 108.52
Cash flow reinvestment ratio
12.88 7.53 7.08 7.82 10.08 2.49
(%)
Operating leverage 1.78 1.59 1.65 2.10 1.90 2.12
Leverage
Financial leverage 1.00 1.00 1.00 1.01 1.01 1.00
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Reasons for the changes in respective financial ratios over the past two years (with a change rate of 20% and above)

Increase in Current ratio, quick ratio, and cash flow ratio: mainly due to the repayment of short-term borrowings, resulting in a decrease in current liabilities.
Decrease in Property, plant and equipment turnover: mainly due to the increase in property, plant, and equipment.
Increase in Cash flow reinvestment ratio: mainly due to a decrease in inventory, resulting in an 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)
22. Cash flow
23. (1) Cash flow ratio = net cash flow from operating activities / current liabilities
24. (2) Cash flow adequacy ratio = net cash flow from operating activities over the past five years / (capital expenditure + increase in inventory + cash dividend) over the past five years.
25. (3) Cash flow reinvestment ratio = (net cash flow from operating activities - cash dividends)/(gross value of property, plant, and equipment + long-term investment + other non-current assets + working capital) (Note 3)
127 -
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.
128 -

ii. Parent Company only Financial Analysis – Based on IFRS

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Year Financial Analysis for the Past Five Fiscal Years
2019 2020 2021 2022 2023
Analytical item (Note 1)
Debt Ratio 24.29 29.12 31.87 32.30 27.63
Financial
structure (%) Ratio of long-term funds to 1,337.20 1,426.43 1,085.31 820.24 688.90
property, plant and equipment
Current ratio 194.23 189.25 177.50 191.75 174.87
Solvency (%) Quick ratio 163.08 174.75 152.62 169.18 145.96
Time interest earned 810.97 793.44 276.40 142.62 147.10
Accounts receivable turnover
3.18 3.12 3.53 3.51 3.41
(times)
Average collection period 114.77 116.98 103.39 103.98 107.03
Inventory turnover (times) 5.72 7.71 7.47 6.48 6.42
Operating Accounts payable turnover
4.41 4.00 4.24 5.59 5.02
performance (times)
Average sales days 63.81 47.34 48.86 56.32 56.85
Property, plant and equipment
5.85 5.56 4.87 3.13 2.06
turnover (times)
Total assets turnover (times) 0.38 0.34 0.33 0.28 0.24
Return on assets (%) 13.64 14.81 14.20 11.07 10.17
Return on equity (%) 18.16 20.25 20.39 16.19 14.43
Profit before income tax to
Profitability 109.31 134.47 155.21 131.97 126.70
paid-in capital (%)
Net profit ratio (%) 35.56 43.01 41.77 37.95 41.21
Earnings per share ($) 8.71 10.81 12.31 10.72 10.21
Cash flow ratio (%) 50.29 52.08 28.83 37.82 66.95
Cash flow adequacy ratio (%) 106.02 108.09 83.48 73.99 65.48
Cash flows
Cash flow reinvestment ratio
1.06 2.90 (1.69) (1.10) 0.31
(%)
Operating leverage 1.43 1.34 1.33 1.45 1.44
Leverage
Financial leverage 1.00 1.00 1.00 1.01 1.01
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129 -

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

Decrease in Property, plant and equipment turnover: mainly due to the increase in property, plant, and equipment.
Increase in cash flow ratio: mainly due to the repayment of short-term borrowings, resulting in a decrease in current liabilities.
Increase in 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

Financial structure
(1) Debt ratio = total liabilities / total assets
(2) Ratio of long-term funds to property, plant and equipment = (total equities + non-current liabilities) / net value of property, plant and equipment
Solvency
(1) Current ratio = current assets / current liabilities
(2) Quick ratio = (current assets-inventory-prepaid expense) / current liabilities
(3) Time interest earned = profit before interest and tax / interest expenses
Operating performance
(1) Accounts receivable (including accounts receivable and receivable notes from operations) turnover = net sales / average receivables (including accounts receivable and receivable notes from operations)
(2) Average collection period = 365 / accounts receivable turnover
(3) Inventory turnover = cost of goods sold / average inventory
(4) Accounts payables (including accounts payable and payable notes from operations) turnover = cost of goods sold / average payables (including accounts payable and payable notes from operations)
(5) Average sales days = 365 / inventory turnover
(6) Property, plant and equipment turnover = net sales / average net property, plant and equipment
(7) Total asset turnover = net sales / average total assets
Profitability
(1) Return on assets = [net profit + interest expenses (1- tax rate)] / average total assets
(2) Return on equity = net profit / average net shareholder's equity
(3) Net profit ratio = net profit / net sales
－
(4) Earnings per share = (profits or losses that belong to the owner of the parent company Preferred stock dividend)/weighted average number of issued shares (Note 2)
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities
(2) Cash flow adequacy ratio = net cash flow from operating activities over the past five years / (capital expenditure + increase in inventory + cash dividend) over the past five years.
(3) Cash flow reinvestment ratio = (net cash flow from operating activities - cash dividends)/(gross value of property, plant, and equipment + long-term investment + other non-current assets + working capital) (Note 3)
130 -
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.
131 -

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 2023 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 Liu, Yu-Hsiang, 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 2024

Thinking Electronic Industrial Co., Ltd.

Convener of Audit Committee: Chou, Pao-Heng

February 27, 2024

132 -
6.4 Financial Statements for the Most Recent Fiscal Year: Refer to Pages 134-206 through for details.
6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year: Refer to Pages 207-289 through for details.
6.6 The Impact of Financial Difficulties of the Company and its Affiliates: None.
133 -

Thinking Electronic Industrial Company Limited and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors’ Report

134 -

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, 2023, 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 February 26, 2024

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INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying consolidated financial statements of Thinking Electronic Industrial Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, 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 material accounting policy information (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, 2023 and 2022, 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 Financial Statement Audit and Attestation Engagements of 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, 2023. 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, 2023 is described as follows:

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Authenticity of sales revenue

The Group’s operating revenue for the year ended December 31, 2023 included sales revenue from specific customers. As these revenues had a higher correlation to the calculation of key performance indicators of corporations, the authenticity of sales revenue from specific customers was determined to be the key audit matter based on the presumption in the statements of auditing standards that significant risk exists in revenue recognition. For the accounting policy on revenue recognition, refer to Note 4 (K) to the financial statements.

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

We obtained an understanding of and tested the effectiveness of the management’s internal control process that is related to the authenticity of revenue recognition.
We obtained details on the sales revenues of specific customers, randomly selected an adequate number of samples and examined shipping documents and receipt vouchers. We also verified the amounts collected and confirmed that payers and sales customers were in agreement with one another regarding the authenticity of revenue.

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.

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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, 2023 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.

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The engagement partners on the audits resulting in this independent auditors’ report are Jia-Ling Chiang and Yu-Hsiang Liu.

Deloitte & Touche Taipei, Taiwan Republic of China February 27, 2024

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.

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (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) Accounts receivables from related parties (Notes 10 and 30) Other receivables 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 (Note 15) 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, 2023 Amount % $ 2,599,316 19 1,127,549 8 302,843 2 432,050 3 1,930,604 14 620 - 66,081 1 27,192 - 1,236,708 9 95,120 1 170,893 1 7,988,976 58 27,682 - 986,429 7 3,693,813 27 372,854 3 33,375 1 39,913 1 163,861 1 142,079 1 31,036 - 23,584 - 146,227 1 5,660,853 42 $ 13,649,829 100 $ 135,000 1 629 - 65,390 1 407,028 3 820 - 721,868 5 1,357 - 27,267 - 44,994 - 131,589 1 76,342 1 26,564 - 1,638,848 12 895,659 7 1,547,020 11 81,328 1 31,902 - 2,084 - 5,175 - 2,563,168 19 4,202,016 31 1,281,127 9 352,907 3 1,454,089 11 140,627 1 6,337,262 46 7,931,978 58 (256,236) (2) 9,309,776 68 138,037 1 9,447,813 69 $ 13,649,829 100		December 31, 2022	December 31, 2022
		Amount $ 2,599,316 1,127,549 302,843 432,050 1,930,604 620 66,081 27,192 1,236,708 95,120 170,893 7,988,976 27,682 986,429 3,693,813 372,854 33,375 39,913 163,861 142,079 31,036 23,584 146,227 5,660,853 $ 13,649,829 $ 135,000 629 65,390 407,028 820 721,868 1,357 27,267 44,994 131,589 76,342 26,564 1,638,848 895,659 1,547,020 81,328 31,902 2,084 5,175 2,563,168 4,202,016 1,281,127 352,907 1,454,089 140,627 6,337,262 7,931,978 (256,236) 9,309,776 138,037 9,447,813 $ 13,649,829		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	% 26 7 1 2 14 - - - 12 2 2 66 - 4 24 3 - - 1 2 - - - 34 100 5 1 1 3 - 5 - 1 - - 1 - 17 7 10 1 - - - 18 35 9 3 9 2 42 53 (1) 64 1 65 100

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 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		2023 Amount % $ 7,077,136 100 4,333,369 61 2,743,767 39 338,346 5 445,347 6 360,706 5 6,923 - 1,151,322 16 1,592,445 23 118,743 1 57,048 1 (28,851) - (16,838) - 130,102 2 1,722,547 25 411,388 6 1,311,159 19 781 - 1,959 - (156) - 2,584 -		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) -

(Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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			2023 Amount % (146,960) (2) 29,392 - (117,568) (2) (114,984) (2) 1,196,175 17 1,307,803 19 3,356 - 1,311,159 19 1,192,506 17 3,669 - 1,196,175 17 $ 10.21 $ 10.17		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


		$
		$
		$
		$
		$

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 $ 352,907 - - - - - - - - - - - - - - 1,281,127 352,907 - - - - - - - - - - - - - - $ 1,281,127 $ 352,907	Retained Earnings	Total Retained Earnings $ 6,746,977 - - (807,110) (807,110) 1,373,833 1,972 1,375,805 7,315,672 - (691,809) - (691,809) 1,307,803 312 1,308,115 $ 7,931,978	Other Equity	Total Other Equity $ (222,378) - - - - - 81,751 81,751 (140,627) - - - - - (115,609) (115,609) $ (256,236)
			Exchange Differences on Translation of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (224,709) $ 2,331 - - - - - - - - - - 92,301 (10,550) 92,301 (10,550) (132,408) (8,219) - - - - - - - - - - (117,568) 1,959 (117,568) 1,959 $ (249,976) $ (6,260)
	Legal Reserve Special Reserve Unappropriated Earnings $ 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 5,776,786 137,581 - (137,581) - - (691,809) - (81,751) 81,751 137,581 (81,751) (747,639) - - 1,307,803 - - 312 - - 1,308,115 $ 1,454,089 $ 140,627 $ 6,337,262

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 Net loss on financial assets or liabilities at fair value through profit or loss Finance costs Interest income Dividend income Loss (gain) on disposal of property, plant and equipment 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 Accounts receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments 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	2023 $ 1,722,547 373,241 17,822 6,923 33,242 16,838 (118,743) (763) 16,529 (1,079) (697) (32,703) (108,311) (13,160) (620) 6,222 - 428,084 (17,968) 34,574 (20,725) (4,437) 22,221 819 10,830 (2,756) 6,712 (8,354) 2,366,288 102,355 (12,485) (327,535) 2,128,623 (870,857) 131,526 (2,660,443)	2022 $ 1,796,744 370,789 10,690 4,634 2,165 17,175 (100,827) (988) (13,785) (1,084) (16) (2,075) 3,396 (44,166) - 866 145 278,724 - (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) (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Acquisition of right-of-use assets Decrease in other financial assets Increase in other non-current assets Decrease 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 Repayment of long-term borrowings Increase in guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT THE END OF YEAR	2023 $ 2,429,400 (862,483) 59,935 (15,499) - 188,009 (104,030) 4,596 763 (1,699,083) 420,000 (993,000) 155,148 (169,413) 405 (56,310) (691,809) (1,334,979) (68,365) (973,804) 3,573,120 $ 2,599,316	2022 $ 4,837,254 (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

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 February 26, 2024.

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 “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies:

1) Amendments to IAS 1 “Disclosure of Accounting Policies”

When applying the amendments, the Group refers 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. Moreover:

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 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 accounting policy information is likely to be considered 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;
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b) The Group chose the accounting policy from options permitted by the standards;
c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
d) The accounting policy relates to an area for which the Group is required to make significant judgments or assumptions in applying an accounting policy, and the Group discloses those judgments or assumptions; or
e) The accounting is complex, and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Refer to Note 4 for related accounting policy information.

2) Amendments to IAS 8 “Definition of Accounting Estimates”

The Group has applied the amendments since January 1, 2023, which defines accounting estimates as 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.

b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024

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Effective Date
New, Amended and Revised Standards and Interpretations Announced by IASB (Note 1)
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Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback”	January 1, 2024 (Note 2)
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
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”	January 1, 2024 (Note 3)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards 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.
Note 3: The amendments provide some transition relief regarding disclosure requirements.

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

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

New, Amended and Revised Standards and Interpretations Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts”	Effective Date Announced by IASB (Note 1)
	To be determined by IASB January 1, 2023 (Continued)

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Effective Date Announced by IASB (Note 1)

New, Amended and Revised Standards and Interpretations

Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 - January 1, 2023 Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2) (Concluded)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

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

Current liabilities include:

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

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

d. Basis of consolidation

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

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

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

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

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

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

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.

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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 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,semi-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.

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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.

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

iii Investments in equity instruments at FVTOCI

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

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

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

b) Impairment of financial assets

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

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

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

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

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

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.

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c) Derecognition of financial assets

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

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

2) Financial liabilities
a) Subsequent measurement

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.

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

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

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

m. Leases

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 a lessor classifies leases as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

The Group as a lessee 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.

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n. Borrowing costs

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

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

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

o. Government grants

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

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

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future related costs are 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.

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q. Taxation

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

1) Current tax

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

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

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

2) Deferred tax

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

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

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5. MATERIAL 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.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

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

b. Write-down of inventories

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

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts Demand deposits Cash equivalents Time deposits with original maturities of 3 months or less The annual interest rate of time deposits (%)		December 31	December 31
		2023 $ 3,647 74 1,316,094 $ 1,279,501 $ 2,599,316 0.855-5.7	2022 $ 4,563 74 2,490,333 $ 1,078,150 $ 3,573,120 2-2.74

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

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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 (b) Financial assets mandatorily classified as at FVTPL Derivative instruments (non-designated hedges) Swap contracts (b) Forward exchange contracts (c)		December 31	December 31
		2023 $ 1,127,549 - $ 1,127,549 $ - 629 $ 629	2022 $ 914,951 92,250 $ 1,007,201 $ 92,273 67 $ 92,340

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 cross-currency 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.

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

December 31, 2023

Notional Amount Currency Maturity Date (In Thousands) Buy EUR/USD 2024.01 EUR4,000/USD4,406 December 31, 2022 Notional Amount Currency Maturity Date (In Thousands) Buy USD/CNY 2023.01 USD3,718/CNY25,901

Buy December 31, 2022

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Details of profit and loss of financial instruments at FVTPL for the year 2023 and 2022 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
		2023 $ 1,289,272 $ 302,843 986,429 $ 1,289,272 3-4.18	2022 $ 572,376 $ 88,058 484,318 $ 572,376 3.4-4.18

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

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2023 $ 27,682	2022 $ 25,723

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 Accounts receivable-non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accounts receivable from related parties At amortized cost Gross carrying amount - operating		December 31	December 31
		2023 $ 432,050 $ 1,950,683 20,079 $ 1,930,604 $ 620	2022 $ 323,739 $ 1,953,361 29,209 $ 1,924,152 $ -

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

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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, 2023

Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2022 Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due $ 1,832,137 (952) $ 1,831,185 Not Past Due $ 1,807,561 (972) $ 1,806,589	Past Due 1to 30 Days $ 4,041 (20) $ 4,021 Past Due 1to 30 Days $ 32,562 (164) $ 32,398	Past Due 31 to 60 Days $ 83,718 (826) $ 82,892 Past Due 31 to 60 Days $ 73,420 (734) $ 72,686	Past Due 61 to 90 Days $ 13,650 (4,026) $ 9,624 Past Due 61 to 90 Days $ 12,540 (3,762) $ 8,778	Past Due 91 to 180 Days $ 7,004 (3,502) $ 3,502 Past Due 91 to 180 Days $ 7,402 (3,701) $ 3,701	Past Due Over 180 Days $ 10,753 (10,753) $ - Past Due Over 180 Days $ 19,876 (19,876) $ -	Total $ 1,951,303 (20,079) $ 1,931,224 Total $ 1,953,361 (29,209) $ 1,924,152

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

Balance at January 1 Net remeasurement of loss allowance Amounts written off Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 29,209 6,923 (15,838) (215) $ 20,079	2022 $ 24,525 4,634 - 50 $ 29,209

11. INVENTORIES

Finished goods Work-in-process	December 31
	2023 2022 $ 619,092 $ 749,101 225,714 293,862 (Continued)

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December 31 2023 2022 Semi-finished $ 173,079 $ 276,647 Raw materials 191,382 311,356 Supplies 21,133 27,761 Inventory in transit 6,308 6,065 $ 1,236,708 $ 1,664,792 (Concluded) In the consolidated company, the cost of goods sold related to inventories includes inventory losses recognized for writing down the inventory cost to its net realizable value, as well as inventory recovery benefits recognized for increases in the net realizable value of inventories.The amount were as follows: For the Year Ended December 31 2023 2022 Cost of goods sold $ 4,333,369 $ 4,829,759 Inventory write-downs 61,277 318,331 Unallocated manufacturing overhead 5,139 205 $ 66,416 $ 318,536		December 31	December 31
		2023 $ 4,333,369 61,277 5,139 $ 66,416	2022 $ 4,829,759 318,331 205 $ 318,536

In the consolidated company, the cost of goods sold related to inventories includes inventory losses recognized for writing down the inventory cost to its net realizable value, as well as inventory recovery benefits recognized for increases in the net realizable value of inventories.The amount were as follows:

As the idle capacity and actual production capacity were lower than the normal production capacity, unallocated manufacturing overhead was recognized as the 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 Current Non-current The annual interest rate of pledge time deposits (%) For other financial assets pledged information please refer to Note 31.		December 31	December 31
		2023 $ 51,471 28,800 14,849 23,584 $ 118,704 $ 95,120 23,584 $ 118,704 1.32	2022 $ 100,153 151,700 33,886 20,974 $ 306,713 $ 285,739 20,974 $ 306,713 1.195-4.15

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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
Thinking (Viet Nam) Electronic Co., Ltd.
（ThinkingViet Nam）
Note 3
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,
2023
December 31,
2022
Description
63.76
63.76
100.00
100.00
47.39
47.39
100.00
100.00
Note 8
100.00
100.00
Note 9
100.00
-
Note 10
52.61
52.61
100.00
100.00
Note 8
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Note 8
100.00
100.00
-
100.00
Note 11
64.96
58.34
Note 11
8.76
10.42
Note 11
26.28
31.24
Note 11
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.
Note 8: In order to cope with the working capital demands, the Group invested Thinking Holding US$0.3 million and, through its subsidiary Thinking International, registered Thinking Yichang in mainland China.
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, 2023, the Company had invested US$1 million in the subsidiary.
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Note 10: In order to integrate manufacturing, marketing and facility layouts, the board of directors resolved to set up a new subsidiary in Vietnam on February 8, 2023, and the total investment amount is expected to be US$27 million. As of December 31, 2023, the Group had invested US$4.8 million in the subsidiary.
Note 11: In response to optimizing the organizational structure of the Group, the board of directors of Dongguan Welkin resolved to merge Guangdong Welkin Thinking in April 2023, and the base date for the merger was June 30, 2023. Guangdong Welkin Thinking was dissolved after the merger, and Dongguan Welkin assumed the assets and liabilities of the merged companies.

14. PROPERTY, PLANT, AND EQUIPMENT

a. Changes in costs and accumulated depreciation

For the Year ended December 31, 2023

Land Buildings Cost Balance at January 1, 2023 $ 195,719 $ 995,231 Additions - 200,726 Disposals - (200) Effect of foreign currency exchange differences - (14,587) Balance at December 31, 2023 $ 195,719 $ 1,181,170 Accumulated depreciation Balance at January 1, 2023 $ - $ 343,299 Depreciation expense - 45,337 Disposals - (200) Effect of foreign currency exchange differences - (4,200) Balance at December 31, 2023 $ - $ 384,236 Carrying amount at December 31, 2023 $ 195,719 $ 796,934 For the Year ended December 31, 2022	Machinery and Equipment Leasehold Improvements $ 2,550,730 $ 126,040 318,212 13,950 (202,603) - (31,149) (2,399) $ 2,635,190 $ 137,591 $ 1,316,973 $ 109,473 213,387 10,170 (126,737) - (14,791) (2,042) $ 1,388,832 $ 117,601 $ 1,246,358 $ 19,990	Others $ 468,037 31,898 (16,550) (4,082) $ 479,303 $ 325,693 38,205 (15,952) (2,450) $ 345,496 $ 133,807	Property under Construction $ 978,941 326,294 - (4,230) $ 1,301,005 $ - - - - $ - $ 1,301,005	Total $ 5,314,698 891,080 (219,353) (56,447) $ 5,929,978 $ 2,095,438 307,099 (142,889) (23,483) $ 2,236,165 $ 3,693,813

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 $ 978,864 17,208 (9,569) 8,728 $ 995,231 $ 308,750 41,935 (9,540) 2,154 $ 343,299 $ 651,932	Machinery and Equipment Leasehold Improvements $ 2,236,815 $ 142,919 424,705 4,976 (130,203) (23,925) 19,413 2,070 $ 2,550,730 $ 126,040 $ 1,200,021 $ 105,671 192,438 26,249 (85,433) (23,925) 9,947 1,478 $ 1,316,973 $ 109,473 $ 1,233,757 $ 16,567	Others $ 438,799 40,594 (14,000) 2,644 $ 468,037 $ 293,715 43,515 (12,949) 1,412 $ 325,693 $ 142,344	Property under Construction $ 534,679 442,481 - 1,781 $ 978,941 $ - - - - $ - $ 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

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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 Decrease (increase) in payables for equipment (in other payables) 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
		2023 $ 891,080 15,622 (43,635) (584) $ 862,483	2022 $ 929,964 (20,050) (35,141) (585) $ 874,188

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 (include improvement engineering)
Main plants	20-60 years
Improvement engineering	2-60 years
Machinery and equipment	2-12 years
Leasehold improvements	10 years
Others	2-19 years

c. As of December 31, 2023 and 2022, 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
	2023 $ 303,863 68,991 $ 372,854 For the Year Ended		2022 $ 316,304 65,005 $ 381,309 December 31
		2023 $ 58,350 $ -	2022 $ 204,268 $ 2,387

(Continued)

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Depreciation charge for right-of-use assets Land Buildings	For the Year Ended	For the Year Ended	December 31
		2023 $ 7,929 52,594 $ 60,523	2022 $ 7,962 52,758 $ 60,720 (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, 2023 and 2022.

b. Lease liabilities

Carrying amount Current Non-current		December 31	December 31
		2023 $ 44,994 81,328 $ 126,322	2022 $ 41,563 85,285 $ 126,848

Range of discount rates for lease liabilities was as follows:

Land Buildings	December 31
	2023 2022 0.75-1.38 0.75-1.38 3.72-5.13 4.70-6.04

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 2 to 6 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 31 to 49 years.

2) Buildings

The building is located in mainland China with the remaining useful life of 2 to 5 years. The lease payments will be adjusted every 3 years based on the changes in market rental rates.

3) The Group signed a Vietnam land lease contract to use to build a factory; the total amount of the contract is VND$112,943,820 thousand. As of December 31, 2023, the Group had paid VND$83,558,292 thousand (in other non-current assets of $104,030 thousand). As of December 31, 2023, the land hasn't completed the registration transfer procedures.
166 -

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

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended	For the Year Ended	December 31
		2023 $ 6,376 $ 878 $ 69,430	2022 $ 5,012 $ 608 $ 155,638

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
		2023 $ 115,189 (1,999) $ 113,190 $ 75,013 6,203 (1,401) $ 79,815 $ 33,375	2022 $ 113,697 1,492 $ 115,189 $ 67,637 6,517 859 $ 75,013 $ 40,176

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 $95,207 thousand and $96,440 thousand as of December 31, 2023 and 2022, respectively.

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17. BORROWINGS

a. Short-term borrowings

Secured loans (Note 31) Credit loans The annual interest rate (%) Secured loans Credit loans		December 31	December 31
		2023 $ - 135,000 $ 135,000 - 0.5-1.64	2022 $ 108,000 600,000 $ 708,000 1.5 1.09-1.80

b. Long-term borrowings

Credit loans Less: Government grants discount Current portion of long-term borrowings The annual interest rate (%)		December 31	December 31
		2023 $ 1,037,322 10,074 131,589 $ 895,659 1.1	2022 $ 1,051,780 15,104 14,458 $ 1,022,218 0.975

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, with a drawdown facility amounted to $1,051,780 thousand as of December 31, 2023 and 2022. 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 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 1.595% and 1.47% as of December 31, 2023 and 2022, 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:

		Amounts of	Amounts of
	Repayment year	Repayment
2024		$	131,589
2025			286,741
2026			331,610
			(Continued)

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Repayment year 2027 (January-October)

Amounts of
Repayment
$ 287,382
$ 1,037,322
(Concluded)

18. NOTES PAYABLE AND ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

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
		2023 $ 388,726 64,393 75,333 22,494 170,922 $ 721,868	2022 $ 392,695 80,015 79,543 23,242 151,816 $ 727,311

20. REFUND LIABILITIES

Balance at January 1 Usage Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 84,696 (8,354) $ 76,342	2022 $ 92,669 (7,973) $ 84,696

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.
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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.

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 Movements in net defined benefit assets were as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2022 $ 102,739 Service cost Current service cost 102 Net interest expense (income) 623 Recognized in profit or loss 725 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial gain - changes in financial assumptions (3,434) Actuarial loss - experience adjustments 8,722 Recognized in other comprehensive income 5,288 Contributions from the employer -		December 31
	2023 2022 $ 82,717 $ 104,610 (113,753) (114,140) $ (31,036) $ (9,530) Fair Value of the Plan Assets Net Defined Benefit Assets $ (107,633) $ (4,894) - 102 (669) (46) (669) 56 (8,381) (8,381) - (3,434) - 8,722 (8,381) (3,093) (1,599) (1,599) (Continued)

170 -

	Present Value	Present Value
	of the Defined
		Benefit	Fair Value of		Net Defined
	Obligation		the	Plan Assets	Benefit Assets
Benefits paid	$	(4,142)	$	4,142	$	-
Balance at December 31, 2022		104,610		(114,140)		(9,530)
Service cost
Current service cost		96		-		96
Net interest expense (income)		1,012		(1,375)		(363)
Recognized in profit or loss		1,108		(1,375)		(267)
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(1,064)		(1,064)
Actuarial loss - experience adjustments		283		-		283
Recognized in other comprehensive income		283		(1,064)		(781)
Contributions from the employer		-		(2,020)		(2,020)
Benefits paid		(23,284)		4,846		(18,438)
Balance at December 31, 2023	$	82,717	$(113,753)		$	(31,036)
						(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:

171 -

Discount rate (%) Expected rate of salary increase (%)	December 31
	2023 2022 1.25 1.25 2-3 2-3

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
		2023 $ (989) $ 1,017 $ 4,171 $ (3,820)	2022 $ (1,248) $ 1,285 $ 5,290 $ (4,797)

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
		2023 $ 1,970 7-9	2022 $ 2,130 8-10

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
		2023 $ 200,000 $ 2,000,000 128,113 $ 1,281,127	2022 $ 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.

172 -

b. Capital surplus

May be used to offset a deficit, distributed as cashdividends, or transferredto ordinary shares (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
		2023 $ 265,446 59,168 23,649 4,644 $ 352,907	2022 $ 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 IFRS Accounting Standards” 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 2022 and 2021 were approved in the shareholders’ meeting on June 13, 2023 and June 16, 2022, respectively. The appropriations of earnings for 2022 and 2021 were as follows:

173 -

Legal reserve Special reserve (reversed) Cash dividends	Appropriation of Earnings For the Year Ended 2022 2021 $ 137,581 $ 157,419 (81,751) 20,942 691,809 807,110 $ 747,639 $ 985,471	Appropriation of Earnings For the Year Ended 2022 2021 $ 137,581 $ 157,419 (81,751) 20,942 691,809 807,110 $ 747,639 $ 985,471	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2022 $ 137,581 (81,751) 691,809 $ 747,639	2022 2021 $ 5.4 $ 6.3

The appropriations of earnings for 2023 were proposed by the Company’s board of directors on February 26, 2024. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per	Dividend Per
	of Earnings	Share	(NT$)
Legal reserve	$ 130,811
Special reserve	115,609
Cash dividends	666,186	$	5.2
	$ 912,606

The appropriations of earnings for 2023 are subject to the resolution of the shareholders in their meeting to be held on June 18, 2024.

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 (gain) on financial assets at FVTOCI Balance at December 31	For the Year Ended	For the Year Ended	December 31
	2023 $ (132,408) (146,960) 29,392 $ (249,976) For the Year Ended		2022 $ (224,709) 115,376 (23,075) $ (132,408) December 31
		2023 $ (8,219) 1,959 $ (6,260)	2022 $ 2,331 (10,550) $ (8,219)

2) Unrealized valuation gain (loss) on financial assets at FVTOCI
174 -

e. Non-controlling interests

Balance at January 1 Share in gain for the year Other comprehensive income during the year Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2023 $ 134,368 3,356 313 $ 138,037	2022 $ 117,720 16,145 503 $ 134,368

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
		2023 $ 7,077,049 87 $ 7,077,136	2022 $ 7,462,925 210 $ 7,463,135

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

December 31, 2023 December 31, 2022 Notes and accounts receivable (Note 10) $ 2,363,274 $ 2,247,891	January 1, 2022 $ 2,211,805

c. Disaggregation of revenue For the year ended December 31, 2023

Reportable Segments Thinking Yenyo Thinking Changzhou Dongguan Welkin (Note 13 and 11) Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 2,795,535 327,513 1,744,608 1,827,094 382,299 $ 7,077,049	Service Revenue $ 87 - - - - $ 87	Total $ 2,795,622 327,513 1,744,608 1,827,094 382,299 $ 7,077,136

175 -

For the year ended December 31, 2022

Reportable Segments Thinking Yenyo Thinking Changzhou Dongguan Welkin (Guangdong Welkin Thinking) Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 3,116,111 395,945 1,812,397 1,831,563 306,909 $ 7,462,925	Service Revenue $ 210 - - - - $ 210	Total $ 3,116,321 395,945 1,812,397 1,831,563 306,909 $ 7,463,135

24. CONSOLIDATED NET PROFIT

Consolidated net profit included following items:

a. Interest income

For the Year Ended	For the Year Ended	December 31
2023 $ 68,969 21,231 27,661 882 $ 118,743 For the Year Ended		2022 $ 44,611 37,794 17,555 867 $ 100,827 December 31
2023 $ 40,609 4,877 763 556 10,243 $ 57,048 For the Year Ended		2022 $ 35,647 5,111 988 10,937 17,125 $ 69,808 December 31
	2023 $ (33,242) 36,858 (16,529) (15,938) $ (28,851)	2022 $ (2,165) 240,666 13,785 (9,179) $ 243,107

b. Other income

c. Other gains and losses

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d. Finance costs

For the Year Ended	For the Year Ended	December 31
2023 $ 5,866 19,978 25,844 9,006 $ 16,838 For the Year Ended		2022 $ 5,727 16,417 22,144 4,969 $ 17,175 December 31
2023 $ 9,006 0.975-1.23 For the Year Ended		2022 $ 4,969 0.35-1.23 December 31
	2023 $ 307,099 60,523 6,203 17,822 391,647 584 $ 391,063 $ 298,031 69,007 6,203 $ 373,241 $ 5,226 12,596 $ 17,822	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

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f. Employee benefits expense

Short-term employee benefits Salary Others Retirement benefits Defined contribution plans Defined benefit plans (Note 21) An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 1,689,667 192,273 1,881,940 113,616 (267) 113,349 $ 1,995,289 $ 1,332,133 663,156 $ 1,995,289	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

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, 2023 and 2022, which were approved by the Company’s board of directors on February 26, 2024 and March 22, 2023, respectively, were as follows:

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2023 2022 3.9 3.9 1.3 1.3 $ 66,157 $ 68,812 22,494 23,242

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, 2022 and 2021.

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

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25. INCOME TAX

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments for prior years Tax rate amendment Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2023 $ 191,479 31,408 (39,533) 183,354 222,604 1,736 3,694 228,034 $ 411,388	2022 $ 383,742 29,504 (20,990) 392,256 33,514 (19,004) - 14,510 $ 406,766

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 Tax rate amendment 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
		2023 $ 1,722,547 $ 505,481 (153) (23,173) 31,408 836 (77) 3,694 (68,831) (37,797) $ 411,388	2022 $ 1,796,744 $ 489,062 (198) (11,443) 29,504 (6,729) 5 - (53,441) (39,994) $ 406,766

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%. Zhongshan Welkin has obtained High and New Technology Enterprises status in 2023, adjusting the corporate income tax rate from 25% to 15%.

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
		2023 $ (29,392) 156 $ (29,236)	2022 $ 23,075 618 $ 23,693

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c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2023 $ 27,192 $ 27,267	2022 $ 7,883 $ 152,139

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, 2023

Balance, Beginning of Year Deferred Tax Assets Temporary differences Unrealized loss on inventories $ 88,155 Unrealized gross profits 15,787 Unrealized refund liabilities 16,939 Loss Carryforwards 6,952 Exchange differences on translation of the financial statements of foreign operations 33,102 Others 22,537 $ 183,472 Balance, Beginning of Year Deferred Tax Liabilities Temporary differences Foreign investment income $ 1,306,304 Others 61,367 $ 1,367,671	Recognized in Profit or Loss Recognized in Other Comprehens ive Income Exchange Differences $ (26,956) $ - $ (742) (10,122) - (1,671) - (6,940) - (12) - 29,392 - (2,139) (156) (265) $ (47,828) $ 29,236 $ (1,019) Recognized in Profit or Loss Exchange Differences $ 183,337 $ - (3,131) (857) $ 180,206 $ (857)	Balance, End of Year $ 60,457 5,665 15,268 - 62,494 19,977 $ 163,861 Balance, End of Year $ 1,489,641 57,379	Balance, End of Year $ 60,457 5,665 15,268 - 62,494 19,977
			$ 163,861

		$ 1,547,020

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For the Year ended December 31, 2022

Recognized in Profit or Loss Recognized in Other Comprehens ive 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

e. Income tax assessments

The tax returns of the Company and Yenyo through 2021 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
	2023	2022
Profit for the year attributable to owners of the Company	$ 1,307,803	$ 1,373,833
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	For the Year Ended December 31
	2023 2022 128,113 128,113 (Continued)

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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
		2023 500 128,613	2022 706 128,819 (Concluded)

The Group may settle the compensation of employees in cash or shares; therefore, the Group assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

27. GOVERNMENT GRANTS

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

Balance at January 1 Deferred revenue in the reporting period Realized revenue in the reporting period (in other income) Effect of foreign currency exchange differences Balance at December 31 Carrying amount of deferred revenue Current (in other current liabilities) Non-current	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 34,308 (26) (1,079) (227) $ 32,976 December	2022 $ 28,078 7,135 (1,084) 179 $ 34,308 31
		2023 $ 1,074 31,902 $ 32,976	2022 $ 1,080 33,228 $ 34,308

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.

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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, 2023 Financial assets at FVTPL Structured deposit Financial assets at FVTOCI Domestic unlisted shares Financial liabilities at FVTPL Derivative financial liabilities December 31, 2022 Financial assets at FVTPL Structured deposit Derivative financial assets Total Financial assets at FVTOCI Domestic unlisted shares Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - $ - $ - Level 1 $ - - $ - $ - $ -	Level 2 $ - $ - $ 629 Level 2 $ - 92,250 $ 92,250 $ - $ 92,340	Level 3 $ 1,127,549 $ 27,682 $ - Level 3 $ 914,951 - $ 914,951 $ 25,723 $ -	Total $ 1,127,549 $ 27,682	Total 1,127,549
				$ 629
				Total $ 914,951 92,250
				$ 1,007,201
				$ 25,723
				$ 92,340

There were no transfers between Level 1 and Level 2 in 2023 and 2022.

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

For the year ended December 31, 2023

Financial assets Balance at January 1, 2023 Purchases Disposals Recognized in other comprehensive income Foreign currency exchange differences Balanced at December 31, 2023 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 $ 914,951 2,660,443 (2,429,400) - (18,445) $ 1,127,549 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 $ 25,723 - - 1,959 - $ 27,682 Equity Instruments Financial Assets at FVTOCI $ 36,273 - - (10,550) - $ 25,723	Total $ 940,674 2,660,443 (2,429,400) 1,959 (18,445) $ 1,155,231 Total $ 1,561,759 4,208,837 (4,837,254) (10,550) 17,882 $ 940,674

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.
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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
	2023 2022 $ 1,127,549 $ 1,007,201 6,433,953 6,753,447 27,682 25,723 629 92,340 2,360,795 2,932,414

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 and excluding income tax refund receivable) and other financial assets.
2) The balances include financial liabilities at amortized cost, which comprise short-term loans, notes payable, accounts payable (including related parties), other payables (including related parties), long-term borrowings (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.

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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 33.

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.

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USD Impact CNY Impact
For the Year Ended For the Year Ended
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	USD Impact For the Year Ended	CNY Impact For the Year Ended
Profit or loss	December 31 2023 2022 $ 9,868 $ 12,574	December 31
		2023 2022 $ 4,282 $ 13,323

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	December 31
	2023 2022 $ 2,658,677 $ 1,928,439 261,322 714,848 2,472,443 3,434,084 1,027,248 1,156,676

Sensitivity analysis

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, 2023 and 2022 would have been higher/lower by $14,452 thousand and by $22,774 thousand, respectively, which was mainly a result of the changes in the floating interest rate financial instrument.

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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.

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, 2023 and 2022, 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 at the end of the year.

December 31, 2023

On Demand or Less than 1 Month Non-interest bearing $ 361,459 Lease liabilities 3,995 Variable interest rate liabilities 8,180 Fixed interest rate liabilities 35,277 $ 408,911	1-3 Months $ 538,988 8,056 17,096 100,061 $ 664,201	3 Months to 1 Year $ 295,816 36,212 117,165 118 $ 449,311	1-5 Years $ - 38,611 922,558 - $ 961,169	5+ Years $ - 59,419 - -
				$ 59,419

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

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 48,263 142,441 $ 190,704	1-5 Years $ 38,611 922,558 $ 961,169	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 - - - $ 7,321 $ 7,321 $ 7,321	20+ Years $ 37,456 -
				$ 37,456

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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

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

Gross settled Forward exchange contracts Inflows Outflows Swap contracts Inflows Outflows	December 2023 $ 136,560 (137,189) $ (629) $ - - $ -	31 2022 $ 113,924 (113,991) $ (67) $ 92,122 (92,145) $ (23)

Liquidity of derivative financial instruments is paid on demand or less than 1 month.

c) Financing facilities

Bank loan facilities Amount used Amount unused		December 31	December 31
		2023 $ 1,172,322 3,464,787 $ 4,637,109	2022 $ 1,759,780 3,314,799 $ 5,074,579

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e. Transfers of financial assets

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

The maximum exposure to loss from the Group’s continuing involvement in the derecognized bills receivable is equal to the face amounts of the transferred but unsettled bills receivable, and as of December 31, 2023 and 2022, the face amounts of these unsettled bills receivable were $312,429 thousand and $263,156 thousand, respectively. The unsettled bills receivable will be due in 6 months and 10 months, respectively after December 31, 2023 and 2022. 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, 2023 and 2022, the Group did not recognize any gains or losses upon the transfer of the banker’s acceptance bills. No gains or losses were recognized from the continuing involvement, both during the current year or cumulatively.

30. TRANSACTIONS WITH RELATED PARTIES

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

a. Related party name and its relationship with the Group

Related Party Name Welkin Electronic Industrial Co., Ltd. (Pingtung Welkin) Boh Chin Investment Co., Ltd. (Boh Chin Investment) Honungxin Technology Co., Ltd. (Honungxiu Technology)

Relationship with the Group

Related party in substance Related party in substance Related party in substance

b. Sales of goods

Related Party Category/Name Related party in substance- Pingtung Welkin	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 1,337	2022 $ -

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

c. Purchases of goods

Related Party Category/Name Related party in substance- Honungxin Technology Related party in substance- Pingtung Welkin	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 409 2,341 $ 2,750	2022 $ 888 - $ 888

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

d. Receivables from related parties

Related Party Line Item Category/Name Accounts receivables-related parties Related party in substance Pingtung Welkin		December 31	December 31
		2023 $ 620	2022 $ -

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, 2023 and 2022, 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 Related party in substance Pingtung Welkin 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
		2023 $ 814 6 $ 820 $ 653 704 $ 1,357	2022 $ - 1 $ 1 $ 4,079 34 $ 4,113

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

f. Prepayments (in prepayments for equipment)

Related Party Line Item Category/Name Prepayments for equipment Related party in substance Honungxin Technology Pingtung Welkin		December	31
		2023 $ 8,132 370 $ 8,502	2022 $ - - $ -

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g. Acquisition of property, plant and equipment

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

h. 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	For the Year Ended	December 31
		2023 $ 4,902 554 $ 5,456	2022 $ 11,061 374 $ 11,435

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 60 days from the invoice date.

2) 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
		2023 $ 480	2022 $ 480

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

i. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 67,743 1,315 $ 69,058	2022 $ 73,852 1,081 $ 74,933

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.

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31. ASSETS PLEDGED AS COLLATERAL FOR SECURITY

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

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
		2023 $ 204,301 51,471 28,800 14,849 $ 299,421	2022 $ 83,956 100,153 151,700 33,886 $ 369,695

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

December 31 2023 2022 Acquisition of property, plant and equipment $ 177,104 $ 550,321 Right-of-use land 36,585 - $ 213,689 $ 550,321 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 Carrying Amount (In Thousand) December 31, 2023 Financial assets Monetary items USD $ 18,510 7.0974 (USD:CNY) $ 568,350 USD 26,080 30.705 (USD:NTD) 800,786 CNY 93,468 4.3262 (CNY:NTD) 404,361 CNY 9,934 0.1409 (CNY:USD) 42,976 $ 1,816,473 Financial liabilities Monetary items USD 413 7.0974 (USD:CNY) $ 12,681 USD 12,039 30.705 (USD:NTD) 369,657 (Continued)		December 31

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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Foreign Currency (In Thousand) Exchange Rate CNY $ 4,415 4.3262 (CNY:NTD) 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)	Carrying Amount (In Thousand) $ 19,100 $ 401,438 $ 587,462 1,053,898 1,313,558 42,949 $ 2,997,867 $ 5,346 378,593 24,177 $ 408,116 (Concluded)

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.

34. ADDITIONAL DISCLOSURES

a. Information on significant transactions and b. investees
1) Financing provided to others: Table.1
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 2.
4) Marketable securities acquired or disposed of at cost or price of at least NT$300 million or 20% of the paid-in capital: Table 3.
5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
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8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5.
9) Information on investees: Table 6.
10) Trading in derivative instruments: Note 7.
11) Intercompany relationships and significant intercompany transaction: Table 8.
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 7.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year: Table 4.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 4.
- c) The amount of property transactions and the amount of the resultant gains or losses: None.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes: None.
- e) The highest balance, the end of year balance, the interest rates range, and total current year interest with respect to financing of funds: 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 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 9.

35. SEGMENT INFORMATION

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

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

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

For the Year ended December 31,2023 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 31,2023 Total segment assets Total segment liabilities For theYearendedDecember31,2022 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 December31,2022 Total segment assets Total segment liabilities	Thinking $ 2,795,622 377,176 $ 3,172,798 $ 692,455 $ 3,935,258 $ 3,555,643 $ 3,116,321 502,964 $ 3,619,285 $ 694,967 $ 5,057,787 $ 4,203,715	Yenyo $ 327,513 497 $ 328,010 $ 12,403 $ 475,435 $ 94,346 $ 395,945 641 $ 396,586 $ 33,408 $ 484,435 $ 113,472	Thinking Changzhou $ 1,744,608 1,177,073 $ 2,921,681 $ 319,939 $ 3,954,236 $ 551,315 $ 1,812,397 1,387,031 $ 3,199,428 $ 375,138 $ 4,278,902 $ 531,024	Dongguan Welkin (Guangdong Welkin Thinking) $ 1,827,094 1,256,107 $ 3,083,201 $ 275,661 $ 2,536,687 $ 772,310 $ 1,831,563 1,778,788 $ 3,610,351 $ 223,221 $ 2,367,077 $ 809,199	Others $ 382,299 2,207,535 $ 2,589,834 $ 271,413 $ 4,167,588 $ 590,231 $ 306,909 1,707,908 $ 2,014,817 $ 27,858 $ 2,971,328 $ 461,865	Adjustment and Elimination $ - (5,018,388) $ (5,018,388) $ 20,574 $ (1,419,375) $ (1,361,829 ) $ - (5,377,332) $ (5,377,332 ) $ 45,585 $(1,401,713) $(1,304,906)	Consolidated Amount $ 7,077,136 - $ 7,077,136 $ 1,592,445 118,743 57,048 (28,851 ) (16,838) 1,722,547 411,388 $ 1,311,159 $ 13,649,829 $ 4,202,016 $ 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

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 Dongguan Welkin (Include Guangdong Welkin Thinking) Others	Depreciation and amortization	Depreciation and amortization	Depreciation and amortization
		December 31
		2023 $ 95,860 14,718 104,238 51,895 124,352 $ 391,063	2022 $ 88,861 12,763 120,416 57,038 102,401 $ 381,479

195 -

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 2023 2022 $ 6,749,536 $ 7,066,980 327,600 396,155 $ 7,077,136 $ 7,463,135	For the Year Ended December 31 2023 2022 $ 6,749,536 $ 7,066,980 327,600 396,155 $ 7,077,136 $ 7,463,135	For the Year Ended December 31 2023 2022 $ 6,749,536 $ 7,066,980 327,600 396,155 $ 7,077,136 $ 7,463,135
		2023 $ 6,749,536 327,600 $ 7,077,136	2022 $ 7,066,980 396,155 $ 7,463,135

c. Geographical information

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

Greater China (Include Taiwan) Europe Others	Revenue from External Customers	Revenue from External Customers	Revenue from External Customers
	For the Year Ended December 31
		2023 $ 5,472,787 974,102 630,247 $ 7,077,136	2022 $ 5,653,250 987,652 822,233 $ 7,463,135

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

China Taiwan Vietnam		Non-current Assets	Non-current Assets
		December 31
		2023 $ 2,296,432 2,027,799 104,030 $ 4,428,261	2022 $ 2,230,596 1,667,137 - $ 3,897,733

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.

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TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Reasons for Collateral
No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) FinancingNature of Business Transaction Amount Short-term Financing Impairment LossAllowance for Item Value Each Borrower (Note 2)Financing Limit for Aggregate Financing Limit (Note 2) Note
0 The Company Thinking Viet Nam Other receivables - Yes $ 96,615 $ 92,115 $ - 5 Note 1 $ - For short -term $ - - $ - $ 2,792,932 $ 3,723,910
related parties (US$ 3,000 thousand ) (US$ 3,000 thousand ) ( US$ - thousand ) working capital
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Note 1: For short-term financing necessities.

Note 2: The aggregate financing limit shall not exceed 40% of the net assets of the Company. The financing limit for the financing amount on each individual loan shall not exceed 30% of net assets. The financing amount on each individual loan shall not exceed 100% of the net asset of the Company for inter-company loans of funds between overseas subsidiaries in which the Company holds, directly or indirectly, 100% of the voting shares.

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TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2023

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

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December 31, 2023
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 2,619,499 $ 27,682 11 $ 27,682
Thinking Yichang CNY financial products
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 40,000 thousand - CNY 40,000 thousand
(China)
Structured Deposits - Bank Of China - Financial assets at FVTPL - current - CNY 60,000 thousand - CNY 60,000 thousand
Jiangxi Thinking CNY financial products
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 50,200 thousand - CNY 50,200 thousand
(China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
Merchants Bank
Structured Deposits - E.SUN Bank - Financial assets at FVTPL - current - CNY 70,350 thousand - CNY 70,350 thousand
Hui Ji XinFu Structured Deposits- CTBC Bank - Financial assets at FVTPL - current - CNY 20,060 thousand - CNY 20,060 thousand
Zhongshan Welkin CNY financial products
Structured Deposits -Ping An Bank - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
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TABLE 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

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

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Company Name Marketable Securities Type and Name Financial Statement Account Counterparty Relationship Number of sBhareginnines g BalanAmceount Number of sharAescquisition Amount Number of shares Amount DisposCarral ying Amount Gain/Loss on Disposal Number of sharEndesing BalanAmce ount
Thinking Yichang CNY financial products
Structured Deposits Financial assets at FVTPL - Bank of China - CNY 45,000 thousand - CNY 80,000 thousand - CNY 65,588 thousand CNY 65,000 thousand CNY 588 thousand - CNY 60,000 thousand
current
Jiangxi Thinking CNY financial products
Time Deposit Monthly Profit Financial assets at FVTPL - Fubon Bank - CNY 9,810 thousand - CNY 81,900 thousand - CNY 41,798 thousand CNY 41,510 thousand CNY 288 thousand - CNY 50,200 thousand
current (China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 20,000 thousand - CNY 100,000 thousand - CNY 110,327 thousand CNY 110,000 thousand CNY 327 thousand - CNY 10,000 thousand
Deposit current Merchants
Bank
Structured Deposits Financial assets at FVTPL - E.SUN Bank - CNY 20,000 thousand - CNY 181,030 thousand - CNY 131,878 thousand CNY 130,680 thousand CNY 1,198 thousand - CNY 70,350 thousand
current
Guandong Welkin Thinking CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 30,000 thousand - CNY 55,000 thousand - CNY 85,331 thousand CNY 85,000 thousand CNY 331 thousand - CNY - thousand
Deposits current Merchants
Bank
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TABLE 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

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

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Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment Ending Balance
Purchases/Sales Amount % of Total Payment Terms Unit Price % of Total Note
Term (Note)
The Company Thinking Changzhou Subsidiary Sales $ (203,462 ) (6 ) 60 days from the end of $ - - $ (91,687 ) (12 )
the month
Thinking Changzhou Subsidiary Purchases 854,360 41 60 days from the end of - - 173,059 23
the month
Dongguan Welkin Subsidiary Sales (115,422 ) (4 ) 60 days from the end of - - (22,978 ) (4 )
the month
Dongguan Welkin Subsidiary Purchases 1,039,295 50 60 days from the end of - - 173,785 23
the month
Thinking Changzhou Thinking Yichang Associate Purchases 186,457 13 60 days from the end of - - 52,297 11
the month
Jiangxi Thinking Associate Purchases 163,340 12 60 days from the end of - - 25,274 5
the month
Dongguan Welkin Associate Sales (105,987 ) (4 ) 60 days from the end of - - (23,709 ) (2 )
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 192,813 34 60 days from the end of - - 36,898 21
the month
Dongguan Welkin Associate Sales (370,531 ) (38 ) 60 days from the end of - - (64,805 ) (22 )
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (198,157 ) (24 ) 60 days from the end of - - (40,329 ) (22 )
the month
Zhongshan Welkin Associate Sales (218,594 ) (26 ) 60 days from the end of - - (64,813 ) (35 )
the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 785,047 38 60 days from the end of - - 158,782 22
the month
Zhongshan Welkin Subsidiary Sales (123,187 ) (4 ) 60 days from the end of - - (42,710 ) (4 )
the month
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Note: All intercompany transactions have been eliminated upon consolidation.

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TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023

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

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Overdue Amounts Received
Allowance for
Company Name Related Party Relationship Ending Balance (Note) Turnover Rate in Subsequent
Amount Actions Taken Doubtful Accounts
Period
Thinking Changzhou The Company Parent company $ 173,059 5.12 $ - - $ 57,705 $ -
Dongguan Welkin The Company Parent company 173,785 5.49 - - 78,916 -
Zhongshan Welkin Dongguan Welkin Parent company 158,782 5.61 - - 98,881 -
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Note: All intercompany transactions have been eliminated upon consolidation.

201 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount Balance as of December 31, 2023
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Percentage Net Income Note
2023 2022 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 $ 237,878 $ 9,262 $ 5,906 Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 2,691,574 245,549 255,719 Note 1
Island ( US$ 7,375 thousand) (US$ 7,375 thousand)
Thinking Holding Cayman Investment holding and international trading 792,506 783,237 25,476,302 100 3,860,398 478,468 475,244 Note 1
( US$ 25,476 thousand) (US$ 25,176 thousand)
Thinking USA USA Electronic product design and marketing 30,715 30,715 1,000,000 100 11,426 (17,113 ) (17,113 )
( US$ 1,000 thousand) (US$ 1,000 thousand)
Thinking Viet Nam Vietnam Manufacturing and selling thermistors, varistors 149,313 - - 100 141,205 111 111
and sensors ( US$ 4,800 thousand)
Thinking Holding Thinking International Mauritius Investment holding and international trading 205,781 196,512 6,375,000 100 1,190,521 80,616 80,616
( US$ 6,375 thousand) (US$ 6,075 thousand)
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 900,479 144,551 144,551
( 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 1,592,927 221,141 221,141
( US$ 5,055 thousand) (US$ 5,055 thousand)
Thinking Samoa Samoa Investment holding and international trading 112,518 112,518 3,864,354 100 215,167 32,654 32,654
( US$ 3,864 thousand) (US$ 3,864 thousand)
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Note 1: The share of profits or losses of investee includes the effect of unrealized gross profit on intercompany transaction.

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

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TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Outward Remittance of Funds Accumulated Outward Percentage of Accumulated
Remittance for Remittance for Ownership Carrying Amount as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Method of Investment Investment from Taiwan as of Outward Inward Investment from Taiwan as of Net Income (Loss)of the Investee Direct or Indirect Investment Gain (Loss)(Note 7) December 31, 2023 (Note 7) Income as of Investment Note
January 1, 2023 December 31, 2023 Investment December 31, 2023
Thinking Changzhou Manufacturing and selling thermistors, $ 1,008,050 Note 1 $ 452,725 $ - $ - $ 452,725 $ 439,343 100 $ 458,676 $ 4,036,634 $ 1,868,287 Notes 10 and 12
varistors and sensors (US$ 31,260 thousand ) ( US$ 61,686 )
Thinking Yichang Manufacturing and selling thermistors, 203,439 Note 2 194,170 9,269 - 203,439 80,741 100 80,741 1,189,299 - Note 12
varistors and sensors ( US$ 6,300 thousand )
Jiangxi Thinking Manufacturing and selling thermistors and 310,330 Note 3 310,330 - - 310,330 144,583 100 144,583 900,271 - Note 12
varistors (US$ 10,000 thousand)
Guandong Welkin Thinking Wholesale of thermistors, varistors, - Note 4 and 11 153,547 - 153,547 - 4,379 - 4,379 - - Note 12
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, 868,640 Note 5 and 11 111,759 153,547 - 265,306 322,085 100 322,085 2,460,385 - Note 12
varistors, sensors and equipment (CNY$194,782 thousand)
Zhongshan Welkin Manufacturing and selling thermistors, 658,145 Note 6 - - - - 70,946 100 70,946 685,539 - Note 12
varistors and sensors (CNY$150,000 thousand)
Accumulated Outward Remittance for Investment in Investment Amounts Authorized by the Investment Upper Limit on the Amount of Investments
Mainland China as of December 31, 2023 Commission, MOEA Stipulated by the Investment Commission, MOEA
$1,231,800 $1,077,561 $5,585,865
(US$38,774 thousand) (US$35,094 thousand) (Note 9)
(Note 8)
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Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary, Thinking Changzhou.
Note 6: Indirectly investment in mainland China through subsidiary (Dongguan Welkin).
Note 7: The financial statements have been audited by the ultimate parent company’s certified public accountant.
Note 8: The amount of US$35,094 thousand was the difference between the MOEA approved investment amount of US$38,774 thousand and the amount of accumulated outflow of investment from Taiwan of US$3,680 thousand. Such difference was the result of deducting the capital increase of US$32,024 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$35,831 thousand, was repatriated, and the difference between the exchange rate of the remitted funds and US$49 thousand. The balance as of December 31, 2023 was based on the exchange rate of US$1=NT$30.705.
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 $217,380 thousand, and Greenish recognized share of profits of Thinking Changzhou was $241,296 thousand. Total amount of share of profits was $458,676 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: In response to optimizing the organizational structure across the group, the board of directors of Dongguan Welkin resolved to merge Guangdong Welkin Thinking with Dongguan Welkin in April 2023. Guangdong Welkin Thinking would be dissolved after the merger. The base date for the merger was June 30, 2023. Dongguan Welkin has completed the change of registration.
Note 12: All intercompany transactions have been eliminated upon consolidation.
203 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INTERCOMPANY BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Intercompany Transactions
Percentage of
Nature of Relationship
No. Company Name Counterparty Amount Consolidated
(Note 1) Financial Statement Item Terms
Total Sales or
Total Assets
0 The Company Thinking Changzhou 1 Sales $ 203,462 Pricing by cost-plus practice 3
Thinking Changzhou 1 Purchases 854,360 Pricing by cost-plus practice 12
Thinking Changzhou 1 Accounts receivable 91,687 60 days from the end of the month 1
Thinking Changzhou 1 Accounts payable 173,059 60 days from the end of the month 1
Thinking Yichang 1 Sales 1,477 Pricing by cost-plus practice -
Thinking Yichang 1 Purchases 60,593 Pricing by cost-plus practice 1
Thinking Yichang 1 Accounts receivable 834 60 days from the end of the month 1
Thinking Yichang 1 Accounts payable 16,667 60 days from the end of the month -
Jiangxi Thinking 1 Sales 1,146 Pricing by cost-plus practice -
Dongguan Welkin 1 Sales 115,422 Pricing by cost-plus practice 2
Dongguan Welkin 1 Purchases 1,039,295 Pricing by cost-plus practice 15
Dongguan Welkin 1 Accounts receivable 22,978 60 days from the end of the month -
Dongguan Welkin 1 Accounts payable 173,785 60 days from the end of the month 1
Dongguan Welkin 1 Prepayments 617 T/T days from the end of the -
month
Zhongshan Welkin 1 Sales 55,669 Pricing by cost-plus practice 1
Zhongshan Welkin 1 Accounts receivable 54,904 60 days from the end of the month -
1 Thinking Changzhou Thinking Yichang 2 Sales 92,280 Pricing by cost-plus practice 1
Thinking Yichang 2 Purchases 186,457 Pricing by cost-plus practice 3
Thinking Yichang 2 Accounts receivable 26,862 60 days from the end of the month -
Thinking Yichang 2 Other accounts receivable 11,681 60 days from the end of the month -
Thinking Yichang 2 Accounts payable 52,297 60 days from the end of the month -
Jiangxi Thinking 2 Sales 91,244 Pricing by cost-plus practice 1
Jiangxi Thinking 2 Purchases 163,340 Pricing by cost-plus practice 2
Jiangxi Thinking 2 Accounts receivable 30,082 60 days from the end of the month -
Jiangxi Thinking 2 Accounts payable 25,274 60 days from the end of the month -
Dongguan Welkin 2 Sales 105,987 Pricing by cost-plus practice 1
Dongguan Welkin 2 Purchases 51,714 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 23,709 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 8,915 60 days from the end of the month -
Dongguan Welkin 2 Prepayments 723 T/T days from the end of the -
month
Zhongshan Welkin 2 Sales 33,202 Pricing by cost-plus practice -
Zhongshan Welkin 2 Purchases 4,816 Pricing by cost-plus practice -
Zhongshan Welkin 2 Accounts receivable 8,136 60 days from the end of the month -
Zhongshan Welkin 2 Accounts payable 4,956 60 days from the end of the month -
(Continued)
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204 -

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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 $ 16,922 Pricing by cost-plus practice -
Jiangxi Thinking 2 Purchases 192,813 Pricing by cost-plus practice 3
Jiangxi Thinking 2 Accounts receivable 2,111 60 days from the end of the month -
Jiangxi Thinking 2 Accounts payable 36,898 60 days from the end of the month -
Dongguan Welkin 2 Sales 370,531 Pricing by cost-plus practice 5
Dongguan Welkin 2 Purchases 13,660 Pricing by cost-plus practice -
Dongguan Welkin 2 Accounts receivable 64,805 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 2,197 60 days from the end of the month -
Dongguan Welkin 2 Prepayments 3,638 T/T days from the end of the -
month
Zhongshan Welkin 2 Sales 8,550 Pricing by cost-plus practice -
Zhongshan Welkin 2 Purchases 1,020 Pricing by cost-plus practice -
Zhongshan Welkin 2 Accounts receivable 3,972 60 days from the end of the month -
3 Jiangxi Thinking Dongguan Welkin 2 Sales 198,157 Pricing by cost-plus practice 3
Dongguan Welkin 2 Purchases 7,756 Pricing by cost-plus practice -
Dongguan Welkin 2 Accounts receivable 40,329 60 days from the end of the month -
Dongguan Welkin 2 Other accounts payable 6,167 60 days from the end of the month -
Zhongshan Welkin 2 Sales 218,594 Pricing by cost-plus practice 3
Zhongshan Welkin 2 Purchases 732 Pricing by cost-plus practice -
Zhongshan Welkin 2 Accounts receivable 64,813 60 days from the end of the month -
4 Guangdong Welkin Thinking Dongguan Welkin 2 Sales 20,485 Pricing by cost-plus practice -
5 Dongguan Welkin Zhongshan Welkin 1 Sales 123,187 Pricing by cost-plus practice 2
Zhongshan Welkin 1 Purchase 785,047 Pricing by cost-plus practice 11
Zhongshan Welkin 1 Accounts receivable 42,710 60 days from the end of the month -
Zhongshan Welkin 1 Advanced receipts 744 T/T days from the end of the -
month
Zhongshan Welkin 1 Accounts payable 158,782 60 days from the end of the month 1
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(Concluded)

Note : Transactions are categorized as follows:

1) Transactions from parent company to subsidiaries.
2) Transactions between subsidiaries.
205 -

TABLE 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2023

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

206 -

Thinking Electronic Industrial Company Limited

Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors’ Report

207 -

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, 2023 and 2022, 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 material accounting policy information (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, 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 Financial Statement Audit and Attestation Engagements of 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, 2023. 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, 2023 is described as follows:

Authenticity of sales revenue

The Company’s operating revenue for the year ended December 31, 2023 included sales revenue from specific customers. As these revenues had a higher correlation to the calculation of key performance indicators of corporations, the authenticity of sales revenue from specific customers was determined to be the key audit matter based on the presumption in the statements of auditing standards that significant risk exists in revenue recognition. For the accounting policy on revenue recognition, refer to Note 4 (K) to the financial statements.

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

We obtained an understanding of and tested the effectiveness of the management’s internal control process that is related to the authenticity of revenue recognition.
We obtained details on the sales revenues of specific customers, randomly selected an adequate number of samples and examined shipping documents and receipt vouchers. We also verified the amounts collected and confirmed that payers and sales customers were in agreement with one another regarding the authenticity of revenue.

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
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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 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, 2023 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 Yu-Hsiang Liu.

Deloitte & Touche Taipei, Taiwan Republic of China

February 27, 2024

Notice to Readers

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

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (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 receivables from related parties (Notes 9 and 28) Other receivables Other receivables from related parties (Note 28) Current tax assets (Notes 4 and 23) 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) Other non-current assets 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 to related parties (Notes 16 and 28) Other payables (Note 17) Other payables to 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, 2023 Amount % $ 712,390 6 - - 2,288 - 671,220 5 171,023 2 3,019 - 54 - 4,086 - 279,573 2 28,800 - 36,439 - 1,908,892 15 27,682 - 8,930,161 70 1,709,060 13 49,065 - 27,338 - 104,462 1 55,018 1 32,966 - 2,807 - 17,968 - 10,956,527 85 $ 12,865,419 100 $ 100,000 1 629 - 34,497 - 364,372 3 356,427 3 1,418 - 12,712 - 1,508 - 131,589 1 76,342 1 12,101 - 1,091,595 9 895,659 7 1,498,435 12 50,727 - 19,107 - 120 - 2,464,048 19 3,555,643 28 1,281,127 10 352,907 3 1,454,089 11 140,627 1 6,337,262 49 7,931,978 61 (256,236) (2) 9,309,776 72 $ 12,865,419 100		December 31, 2022	December 31, 2022
		Amount $ 712,390 - 2,288 671,220 171,023 3,019 54 4,086 279,573 28,800 36,439 1,908,892 27,682 8,930,161 1,709,060 49,065 27,338 104,462 55,018 32,966 2,807 17,968 10,956,527 $ 12,865,419 $ 100,000 629 34,497 364,372 356,427 1,418 12,712 1,508 131,589 76,342 12,101 1,091,595 895,659 1,498,435 50,727 19,107 120 2,464,048 3,555,643 1,281,127 352,907 1,454,089 140,627 6,337,262 7,931,978 (256,236) 9,309,776 $ 12,865,419		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	% 13 1 - 7 1 - - - 3 1 - 26 - 61 11 1 - 1 - - - - 74 100 5 1 - 3 3 - 1 - - 1 - 14 8 10 - - - 18 32 10 3 10 2 44 56 (1) 68 100

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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, 9, 22 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (gain) Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 12, 22, 25 and 28) Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR		2023 Amount % $ 3,172,798 100 2,022,702 64 1,150,096 36 (1,180) - 26,915 1 1,175,831 37 133,433 4 199,956 6 145,843 5 4,144 - 483,376 15 692,455 22 16,117 1 4,015 - (15,456) - (11,110) - 937,247 30 930,813 31 1,623,268 53 315,465 10 1,307,803 43		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

(Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 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			2023 Amount % (299) - 1,959 - 551 - 60 - 2,271 - (59,119) (2) (87,841) (3) 29,392 1 (117,568) (4) (115,297) (4) 1,192,506 39 $ 10.21 $ 10.17		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




		$

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2022 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 Appropriation of 2022 earnings (Note 20) Legal reserve Cash dividends distributed by the Company Reversal of special reserve Net profit for the year ended December 31, 2023 Other comprehensive income (loss) for the year ended December 31, 2023 Total comprehensive income (loss) for the year ended December 31, 2023 BALANCE AT DECEMBER 31, 2023	Share Capital Capital Surplus $ 1,281,127 $ 352,907 - - - - - - - - - - - - - - 1,281,127 352,907 - - - - - - - - - - - - - - $ 1,281,127 $ 352,907		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings Total Retained Earnings $ 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 7,315,672 137,581 - (137,581) - - - (691,809) (691,809) - (81,751) 81,751 - 137,581 (81,751) (747,639) (691,809) - - 1,307,803 1,307,803 - - 312 312 - - 1,308,115 1,308,115 $ 1,454,089 $ 140,627 $ 6,337,262 $ 7,931,978	Other Equity	Total Other Equity $ (222,378) - - - - - 81,751 81,751 (140,627) - - - - - (115,609) (115,609) $ (256,236)	Total Equity $ 8,158,633 - - (807,110) (807,110) 1,373,833 83,723 1,457,556 8,809,079 - (691,809) - (691,809) 1,307,803 (115,297) 1,192,506 $ 9,309,776
				Exchange Differences on Translation of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (224,709) $ 2,331 - - - - - - - - - - 92,301 (10,550) 92,301 (10,550) (132,408) (8,219) - - - - - - - - - - (117,568) 1,959 (117,568) 1,959 $ (249,976) $ (6,260)

The accompanying notes are an integral company only financial statements.

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 on disposal of property, plant and equipment Unrealized gain on transactions with subsidiaries Realized gain on transactions with subsidiaries 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 receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Net defined benefit assets 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 investment accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment	2023 $ 1,623,268 81,802 14,058 4,144 33,242 11,110 (16,117) (763) (937,247) (305) 1,180 (26,915) (746) (32,703) 269 158,188 8,770 (138) 1,004 70,575 (17,968) 16,742 (19,751) 7,523 (14,605) 14,845 (3,674) 9,028 (8,354) 976,462 19,058 (6,748) (257,868) 730,904 (158,581) (438,029) 305	2022 $ 1,690,814 81,398 7,463 (130) 2,165 11,939 (25,666) (988) (837,609) (404) 26,915 (29,161) (749) (2,075) 1,322 (3,841) 32,620 357 (792) 60,847 - (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) 1,973 (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

Acquisition of intangible 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 Repayments of long-term borrowings Repayments of the principal portion of lease Cash dividends paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT THE END OF YEAR	2023 $ (12,381) 122,408 763 (485,515) 325,000 (903,000) 141,830 (156,288) (1,465) (691,809) (1,285,732) (1,040,343) 1,752,733 $ 712,390	2022 $ (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

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 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 February 26, 2024.

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 “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies:

1) Amendments to IAS 1 “Disclosure of Accounting Policies”

When applying the amendments, the Company refers 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. Moreover:

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

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;
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b) The Company chose the accounting policy from options permitted by the standards;
c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
d) The accounting policy relates to an area for which the Company is required to make significant judgments or assumptions in applying an accounting policy, and the Company discloses those judgments or assumptions; or
e) The accounting is complex, and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Refer to Note 4 for related accounting policy information.

2) Amendments to IAS 8 “Definition of Accounting Estimates”

The Company has applied the amendments since January 1, 2023, which defines accounting estimates as 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.

b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024

Effective Date New, Amended and Revised Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” January 1, 2024 (Note 2) 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 Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” January 1, 2024 (Note 3)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards 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.
Note 3: The amendments provide some transition relief regarding disclosure requirements.

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

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

Effective Date New, Amended and Revised Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 (Continued)

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New, Amended and Revised Standards and Interpretations

Effective Date Announced by IASB (Note 1)

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 21 “Lack of Exchangeability” January 1, 2025 (Note 2) (Concluded)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

As of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact of the application of the above standards and interpretations on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

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.

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

Current assets include:

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

Current liabilities include:

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

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

d. Foreign currencies

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

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

For the purposes of presenting 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.

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e. Inventories

Inventories consist of finished goods, semi-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.

f. Investments accounted for using the equity method

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

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

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

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

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

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

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

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

g. Property, plant, and equipment

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

Freehold land is not depreciated.

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

h. Intangible assets

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

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

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

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

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

j. Financial instruments

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

1) Financial assets

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

a) Measurement category

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

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.

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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.

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.

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.

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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.

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.

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k. Revenue recognition

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

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

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

l. Leases

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 a lessor classifies leases as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

The Company as a lessee 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.

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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 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.

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

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(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 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 Act, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

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

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. 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 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.

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3) Current and deferred taxes

5. MATERIAL 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.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

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

b. Write-down of inventories

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
		2023 $ 575 74 349,263 362,478 $ 712,390 0.855-5.7	2022 $ 631 74 1,138,435 613,593 $ 1,752,733 2.6-2.74

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

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7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Derivative instruments (non-designated hedges) Swap contracts (a) Financial liabilities at FVTPL-current Financial liabilities mandatorily classified as at FVTPL Derivative instruments (non-designated hedges) Swap contracts (a) Forward exchange contracts (b) a. At the end of the year, outstanding swap contracts not under hedge December 31, 2022 Currency Maturity Date USD/NTD 2023.01		December	31
	2023 2022 $ - $ 92,250 $ - $ 92,273 629 67 $ 629 $ 92,340 accounting were as follows: Notional Amount (In Thousands) USD3,000/NTD92,122

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

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

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

December 31, 2023

					Notional Amount
			Currency	Maturity Date	(In Thousands)
Buy			EUR/USD	2024.01	EUR4,000/USD4,406
December	31,	2022
					Notional Amount
			Currency	Maturity Date	(In Thousands)
Buy			USD/CNY	2023.01	USD3,718/CNY25,901

Details of profit and loss of financial instruments at FVTPL for the year 2023 and 2022 list on Note 22.

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

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2023 $ 27,682	2022 $ 25,723

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

9. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount - operating Accounts receivable - non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accounts receivable - related parties At amortized cost Gross carrying amount - operating (Note 28)		December 31	December 31
		2023 $ 2,288 $ 677,074 5,854 $ 671,220 $ 171,023	2022 $ 2,557 $ 849,075 15,523 $ 833,552 $ 179,793

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:

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December 31, 2023

Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2022 Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due $ 821,300 (362) $ 820,938 Not Past Due $ 980,321 (470) $ 979,851	Past Due 1to 30 Days $ 1,567 (7) $ 1,560 Past Due 1to 30 Days $ 5,068 (26) $ 5,042	Past Due 31 to 60 Days $ 18,044 (180) $ 17,864 Past Due 31 to 60 Days $ 26,531 (266) $ 26,265	Past Due 61 to 90 Days $ 1,947 (584) $ 1,363 Past Due 61 to 90 Days $ 3,100 (930) $ 2,170	Past Due 91 to 180 Days $ 1,037 (519) $ 518 Past Due 91 to 180 Days $ 34 (17) $ 17	Past Due Over 180 Days $ 4,202 (4,202) $ - Past Due Over 180 Days $ 13,814 (13,814) $ -	Total $ 848,097 (5,854)
							$ 842,243 Total $ 1,028,868 (15,523)
							$ 1,013,345

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

Balance at January 1 Net remeasurement (reversal) of loss allowance Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 15,523 4,144 (13,813) $ 5,854	2022 $ 15,653 (130) - $ 15,523

10. INVENTORIES

Finished goods Semi-finished Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2023 $ 152,028 23,121 63,657 29,959 4,500 6,308 $ 279,573	2022 $ 175,797 59,087 69,908 36,348 2,943 6,065 $ 350,148

Operating costs related to inventory included the write-down of inventory and the reversal of the write-down of inventory, which were as follows:

Cost of goods sold Inventory write-downs Unallocated production overhead	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 2,022,702 $ 11,982 4,134 $ 16,116	2022 $ 2,466,157 $ 86,781 - $ 86,781

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Unallocated fixed overheads attributable to idle productive capacity are recognized as cost of goods sold in the period when they are incurred.

11. OTHER FINANCIAL ASSETS

Pledged time deposits Refundable deposits Current Non-current The annual interest rate of pledge time deposits (%)		December 31	December 31
		2023 $ 28,800 2,807 $ 31,607 $ 28,800 2,807 $ 31,607 1.32	2022 $ 151,700 2,315 $ 154,015 $ 151,700 2,315 $ 154,015 1.195-4.15

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

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries

Unlisted 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) Thinking (Viet Nam) Electronic Co., Ltd. (Thinking Viet Nam)		December 31	December 31
		2023 $ 237,878 2,691,574 1,987,680 3,860,398 11,426 141,205 $ 8,930,161	2022 $ 231,421 2,463,106 1,794,272 3,437,858 28,350 - $ 7,955,007

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 (Note 1) Thinking USA (Note 2) Thinking Viet Nam (Note 3)	Proportion of Ownership and Voting Rights
	December 31
	2023 2022 63.76% 63.76% 100.00% 100.00% 47.39% 47.39% 100.00% 100.00% 100.00% 100.00% 100.00% -

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Note 1: In order to cope with the working capital demands, the Company invested Thinking Holding US$0.3 million and, through its subsidiary Thinking International, registered Thinking Yichang in mainland China.
Note 2: 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 was US$3 million. As of December 31, 2023, the Company had invested US$1 million in the subsidiary.
Note 3: In order to integrate manufacturing, marketing and facility layouts, the board of directors resolved to set up a new subsidiary in Vietnam on February 8, 2023, and the total investment amount was US$27 million. As of December 31, 2023, the Company had invested US$4.8 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, 2023 and 2022 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, 2023

Cost Balance at January 1, 2023 Additions Disposals Balance at December 31, 2023 Accumulated depreciation Balance at January 1, 2023 Depreciation expenses Disposals Balance at December 31, 2023 Carrying amount at December 31, 2023	Land $ 144,685 - - $ 144,685 $ - - - $ - $ 144,685	Buildings $ 210,271 - - $ 210,271 $ 94,207 5,311 - $ 99,518 $ 110,753	Machinery and Equipment Leasehold Improvements $ 782,280 $ 1,514 61,837 - (721) - $ 843,396 $ 1,514 $ 471,129 $ 1,474 64,511 26 (721) - $ 534,919 $ 1,500 $ 308,477 $ 14	Others $ 211,705 10,041 (982) $ 220,764 $ 186,988 10,525 (982) $ 196,531 $ 24,233	Property under Construction $ 772,174 348,724 - $ 1,120,898 $ - - - $ - $ 1,120,898	Total $ 2,122,629 420,602 (1,703) $ 2,541,528 $ 753,798 80,373 (1,703) $ 832,468 $ 1,709,060

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

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

Investing activities that affected both cash and non-cash items Additions to property, plant, and equipment (Increase) decrease in payables for equipment (in other payables) (Increase) decrease in payables for equipment to related parties (in other payables to 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
		2023 $ 420,602 13,812 (1,093) 5,292 (584) $ 438,029	2022 $ 513,392 (18,541) 1,151 (28,080) (585) $ 467,337

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 improvements	10 years
Others	5-6 years

c. As of December 31, 2023 and 2022, 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
	2023 2022 $ 49,065 $ 51,078 For the Year Ended December 31
		2023 $ 2,013	2022 $ 2,014

Except for the recognized depreciation above, the Company did not have material acquisition, impairment or subleasing of right-of-use assets for the years ended December 31, 2023 and 2022.

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b. Lease liabilities

Carrying amount Current Non-current Range of discount rates for lease liabilities was as follows:		December	31
		2023 $ 1,508 $ 50,727	2022 $ 1,465 $ 52,235

Land	December 31
	2023 2022 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 2 to 6 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
		2023 $ 968 $ 441 $ 3,543	2022 $ 812 $ 402 $ 2,917

15. BORROWINGS

a. Short-term borrowings

Secured loans (Note 29) Credit loans The annual interest rate (%) Secured loans Credit loans		December 31	December 31
		2023 $ - 100,000 $ 100,000 - 1.64	2022 $ 108,000 570,000 $ 678,000 1.5 1.09-1.655

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b. Long-term borrowings

Credit loans Less: Government grants discount Less: Current portion of long-term borrowings The annual interest rate (%)		December 31	December 31
		2023 $ 1,037,322 10,074 131,589 $ 895,659 1.1	2022 $ 1,051,780 15,104 14,458 $ 1,022,218 0.975

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 with a drawdown facility amounted to $1,051,780 thousand as of December 31, 2023 and 2022. 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, 2023 and 2022, which was 1.595% and 1.47% , 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 2024 2025 2026 2027 (January-October)	Amounts of Repayment $ 131,589 286,741 331,610 287,382 $ 1,037,322

16. ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

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.

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17. OTHER PAYABLES

Payables for salaries and bonuses Payables for employees’ compensation Payables for purchases of equipment Payables for remuneration of directors Others		December 31	December 31
		2023 $ 146,730 75,333 44,856 22,494 67,014 $ 356,427	2022 $ 141,859 79,543 58,668 23,242 52,724 $ 356,036

18. REFUND LIABILITIES

Balance at January 1 Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2023 $ 84,696 (8,354) $ 76,342	2022 $ 92,669 (7,973) $ 84,696

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.

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The amounts included in the parent company only balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets Movements in net defined benefit assets were as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2022 $ 83,126 Service cost Current service cost 102 Net interest expense (income) 536 Recognized in profit or loss 638 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial (gain) loss Change in financial assumptions (2,060) Experience adjustments 8,015 Recognized in other comprehensive income 5,955 Contributions from the employer - Benefits paid (4,142) Balance at December 31, 2022 85,577 Service cost Current service cost 96 Net interest expense (income) 832 Recognized in profit or loss 928 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial (gain) loss Experience adjustments 1,177 Recognized in other comprehensive income 1,177 Contributions from the employer - Benefits paid (23,284) Balance at December 31, 2023 $ 64,398		December	31
	2023 2022 $ 64,398 $ 85,577 (97,364) (99,091) $ (32,966) $ (13,514) Fair Value of the Plan Assets Net Defined Benefit Assets $ (94,226) $ (11,100) - 102 (612) (76) (612) 26 (7,315) (7,315) - (2,060) - 8,015 (7,315) (1,360) (1,080) (1,080) 4,142 - (99,091) (13,514) - 96 (1,238) (406) (1,238) (310) (878) (878) - 1,177 (878) 299 (1,003) (1,003) 4,846 (18,438) $ (97,364) $ (32,966)

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

1) Investment risk

2) Interest risk

3) Salary risk

Discount rate (%) Expected rate of salary increase (%)	December 31
	2023 2022 1.25 1.25 2 2

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 1% increase 1% decrease		December	31
		2023 $ (612) $ 628 $ 2,568 $ (2,360)	2022 $ (816) $ 841 $ 3,454 $ (3,135)

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.

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Expected contributions to the plans for the next year Average duration of the defined benefit obligation (years)		December	31
		2023 $ 990 7	2022 $ 1,130 8

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
		2023 200,000 $ 2,000,000 128,113 $ 1,281,127	2022 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 ordinary shares (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
		2023 $ 265,446 59,168 23,649 4,644 $ 352,907	2022 $ 265,446 59,168 23,649 4,644 $ 352,907

c. Retained earnings and dividends policy

Under the dividends 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 dividends 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

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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.

Legal reserve Special reserve (reversed) Cash dividends	Appropriation of Earnings For the Year Ended 2022 2021 $ 137,581 $ 157,419 (81,751) 20,942 691,809 807,110 $ 747,639 $ 985,471	Appropriation of Earnings For the Year Ended 2022 2021 $ 137,581 $ 157,419 (81,751) 20,942 691,809 807,110 $ 747,639 $ 985,471	Dividends Per Share (NT$)
		For the Year	For the Year Ended
		2022 $ 137,581 (81,751) 691,809 $ 747,639	2022 2021 $ 5.4 $ 6.3

The appropriation of earnings for 2023 had been proposed by the Company’s board of directors on February 26, 2024. The appropriation and dividends per share were as follows:

	Appropriation	Dividends Per	Dividends Per
	of Earnings	Share	(NT$)
Legal reserve	$ 130,811
Special reserve	115,609
Cash dividends	666,186	$	5.2
	$ 912,606

The appropriation of earnings for 2023 is subject to the resolution of the shareholders in their meeting to be held on June 18, 2024.

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	For the Year Ended December 31
	2023 2022 $ (132,408) $ (224,709) (59,119) 611,730 (Continued)

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Share from subsidiaries accounted for using the equity method Income tax benefit (expenses) relating to exchange differences arising on translation of foreign operations Income tax benefit relating to share from subsidiaries accounted for using the equity method Balance at December 31 2) Unrealized valuation gain (loss) on financial assets at FVTOCI	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ (87,841) 11,824 17,568 $ (249,976)	2022 $ (496,354) (122,346) 99,271 $ (132,408) (Concluded)

Balance at January 1 Recognized for the year Unrealized gain (loss) on financial assets at FVTOCI Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2023 $ (8,219) 1,959 $ (6,260)	2022 $ 2,331 (10,550) $ (8,219)

21. OPERATING REVENUE For the Year Ended December 31 2023 2022 Revenue from contracts with customers Revenue from sale of goods $ 3,172,711 $ 3,619,075 Service revenue 87 210 $ 3,172,798 $ 3,619,285 a. Refer to Note 4 (k) for information related to contracts with customers. b. Contract balances December 31, 2023 December 31, 2022 January 1, 2022 Notes and accounts receivable (Note 9) $ 844,531 $ 1,015,902 $ 1,045,873 c. Disaggregation of revenue For the Year Ended December 31 2023 2022 Type of revenue Passive components $ 3,172,711 $ 3,619,075 Service revenue 87 210 $ 3,172,798 $ 3,619,285	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 3,172,711 87 $ 3,172,798	2022 $ 3,619,075 210 $ 3,619,285

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22. NET PROFIT

Net profit included following items:

a. Interest income

Bank deposits 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
	2023 2022 $ 16,056 $ 25,076 61 590 $ 16,117 $ 25,666 For the Year Ended December 31
		2023 $ 1,290 734 763 1,228 $ 4,015	2022 $ 1,343 717 988 426 $ 3,474

b. Other income

c. Other gains and losses

Loss on financial assets at FVTPL Foreign exchange gains, net Others	For the Year Ended	For the Year Ended	December 31
		2023 $ (33,242) 18,061 (275) $ (15,456)	2022 $ (2,165) 142,798 404 $ 141,037

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
		2023 $ 19,447 669 20,116 9,006 $ 11,110	2022 $ 16,228 680 16,908 4,969 $ 11,939

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Information on capitalized interest is as follows:

For the Year Ended	For the Year Ended	December 31
2023 $ 9,006 0.975-1.23 For the Year Ended		2022 $ 4,969 0.35-1.23 December 31
2023 $ 80,373 2,013 14,058 96,444 584 $ 95,860 $ 67,756 14,046 $ 81,802 $ 3,830 10,228 $ 14,058 For the Year Ended		2022 $ 79,969 2,014 7,463 89,446 585 $ 88,861 $ 67,280 14,118 $ 81,398 $ 2,712 4,751 $ 7,463 December 31
	2023 $ 419,799 83,318 503,117 17,874 (310) 17,564 $ 520,681 $ 198,991 321,690 $ 520,681	2022 $ 427,425 83,266 510,691 17,987 26 18,013 $ 528,704 $ 203,040 325,664 $ 528,704

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g. Compensation of employees and remuneration of directors

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2023 2022 3.9 3.9 1.3 1.3 $ 66,157 $ 68,812 22,494 23,242

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, 2022 and 2021.

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
		2023 $ 119,342 31,408 (29,250) 121,500 193,965 - 193,965 $ 315,465	2022 $ 259,460 29,436 (21,936) 266,960 59,813 (9,792) 50,021 $ 316,981

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

Profit before income tax Income tax expense calculated at the statutory rate Nondeductible income in determining taxable income Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Usage of investment credits 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
		2023 $ 1,623,268 $ 324,654 (1,183) 2,754 (153) 31,408 (12,765) (29,250) $ 315,465	2022 $ 1,690,814 $ 338,163 (5,682) - (198) 29,436 (13,010) (31,728) $ 316,981

The applicable tax rate of the Company is 20%.

b. Income tax recognized in other comprehensive income

Deferred tax Remeasurement of defined benefit plans Exchange differences on the translation of the financial statements of foreign operations Share of other comprehensive loss of subsidiaries by using equity method Income tax recognized in other comprehensive income Current tax assets and liabilities Current tax assets Tax refund receivable Current tax liabilities Income tax payable	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ (60) (11,824) (17,568) $ (29,452) December	2022 $ 272 122,346 (99,271) $ 23,347 31
		2023 $ 4,086 $ 12,712	2022 $ - $ 144,994

c. Current tax assets and liabilities

d. Deferred tax assets and liabilities

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

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For the Year ended December 31, 2023

Balance,
Beginning of
Year
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income

Deferred Tax Assets
Temporary differences
Unrealized loss on inventories
$ 23,757
$ (7,396)
$ -
Unrealized gross profits
15,787
(10,122)
-
Unrealized refund liabilities
16,939
(1,671)
-
Exchange differences on
translation of the financial
statements of foreign
operations
95
-
11,824
Share of other comprehensive
income (loss) of subsidiaries
for using the equity method
33,007
-
17,568
Others
5,206
(592)
60
$ 94,791
$ (19,781)
$ 29,452
Deferred Tax Liabilities
Temporary differences
Foreign investment income
$ 1,306,304
$ 183,337
$ -
Others
17,947
(9,153)
-
$ 1,324,251
$ 174,184
$ -
For the Year ended December 31, 2022
Balance,
Beginning of
Year
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income

Deferred Tax Assets
Temporary differences
Unrealized loss on inventories
$ 8,344
$ 15,413
$ -
Unrealized gross profits
6,528
9,259
-
Unrealized refund liabilities
18,534
(1,595)
-
Exchange differences on
translation of the financial
statements of foreign
operations
122,441
-
(122,346)
Share of other comprehensive
income (loss) of subsidiaries
for using the equity method
(66,264)
-
99,271
Others
9,424
(3,946)
(272)
$ 99,007
$ 19,131
$ (23,347)

Balance, End
of Year
$ 16,361
5,665
15,268
11,919
50,575
4,674
$ 104,462
$ 1,489,641
8,794
$ 1,498,435
Balance, End
of Year
$ 23,757
15,787
16,939
95
33,007
5,206
$ 94,791
(Continued)

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				Recognized	Recognized	in
	Balance,				Other
	Beginning of	Recognized in		Comprehensive			Balance, End
	Year	Profit	or Loss		Income		of Year
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)

e. Income tax assessments

The tax returns of the Company through 2021 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

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

Net profit for the year

	For the Year Ended December 31	For the Year Ended December 31
	2023	2022
Net profit used in the computation of earnings per share	$ 1,307,803	$ 1,373,833
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
		2023 128,113 500 128,613	2022 128,113 706 128,819

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

249 -

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 Carrying amount of deferred revenue Current (in other current liabilities) Non-current	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 20,626 (26) (746) $ 19,854 December	2022 $ 14,240 7,135 (749) $ 20,626 31
		2023 $ 747 19,107 $ 19,854	2022 $ 747 19,879 $ 20,626

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, 2023

Financial assets at FVTOCI Domestic unlisted shares Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - $ -	Level 2 $ - $ 629	Level 3 $ 27,682 $ -	Total $ 27,682
				$ 629

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December 31, 2022

Financial assets at FVTPL Derivative financial assets Financial assets at FVTOCI Domestic unlisted shares Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - $ - $ -	Level 2 $ 92,250 $ - $ 92,340	Level 3 $ - $ 25,723 $ -	Total $ 92,250
				$ 25,723
				$ 92,340

There were no transfers between Level 1 and Level 2 in 2023 and 2022.

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

Balance at January 1 Recognized in other comprehensive income Balanced at December 31		December	31
		2023 $ 25,723 1,959 $ 27,682	2022 $ 36,273 (10,550) $ 25,723

It refers to financial assets at FVTOCI - Investments in equity instruments.

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

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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.

251 -
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
	2023 2022 $ - $ 92,250 1,588,907 2,926,962 27,682 25,723 629 92,340 1,884,082 2,480,782

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.

252 -

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities exposed to foreign currency risk at the end of the reporting year are set out in Note 31.

Sensitivity analysis

The Company is mainly exposed to the risk from the 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
		2023 $ 3,924	2022 $ 6,635		2023 $ 3,218	2022 $ 12,221		2023 $ 2,586	2022 $ 2,839

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
	2023 2022 $ 365,285 $ 738,808 152,235 611,700 378,063 1,167,235 1,027,248 1,156,676

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, 2023 and 2022 would have been lower/higher by $6,492 thousand and higher/lower by $106 thousand, respectively, which was mainly a result of the changes in the floating interest rate financial instrument.

253 -

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, 2023 and 2022, 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 estimated at the end of the year.

December 31, 2023

On Demand or Less than 1 Month Non-interest bearing $ 90,034 Lease liabilities 178 Variable interest rate liabilities 8,180 Fixed interest rate liabilities 246 $ 98,638	1-3 Months $ 445,143 356 17,096 100,032 $ 562,627	3 Months to 1 Year $ 221,337 1,629 117,165 - $ 340,131	1-5 Years $ - 6,978 922,558 - $ 929,536	5+ Years $ - 59,419 - -
				$ 59,419

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

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 2,163 142,441 $ 144,604	1-5 Years $ 6,978 922,558 $ 929,536	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 - - - $ 7,321 $ 7,321 $ 7,321	20+ Years $ 37,456 -
				$ 37,456

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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

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.

Gross settled Forward exchange contracts Inflows Outflows Swap contracts Inflows Outflows		December 31	December 31
		2023 $ 136,560 (137,189) $ (629) $ - - $ -	2022 $ 113,924 (113,991) $ (67) $ 92,122 (92,145) $ (23)

The liquidity analysis for financial derivatives is on demand or less than 1 month.

c) Financing facilities

Bank loan facilities Amount used Amount unused		December 31	December 31
		2023 $ 1,137,322 2,455,520 $ 3,592,842	2022 $ 1,729,780 2,204,220 $ 3,934,000

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28. TRANSACTIONS WITH RELATED PARTIES

a. Related party name and its relationship with the Company

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Related Party Name Related Party Category
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Related Party Name	Related Party Category
Yenyo	Subsidiary
Thinking Changzhou	Subsidiary
Thinking Yichang	Subsidiary
Jiangxi Thinking	Subsidiary
Dongguan Welkin	Subsidiary
Zhongshan Welkin	Subsidiary
Thinking Viet Nam	Subsidiary
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 (Honungxin Technology)	Related party in substance

b. Operating revenue

Related Party Line Item Category/Name Sales of goods Subsidiaries Thinking Changzhou Dongguan Welkin Zhongshan Welkin Others Related party in substance Pingtung Welkin	For the Year Ended	For the Year Ended	December 31
		2023 $ 203,462 115,422 55,669 2,623 1,337 $ 378,513	2022 $ 256,764 242,658 - 3,542 - $ 502,964

The price of goods sold to related parties is calculated at cost plus gross profit. Additionally, the term of collection was 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 $1,180 thousand and $26,915 thousand as of December 31, 2023 and 2022, 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 Dongguan Welkin Thinking Changzhou 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
		2023 $ 1,039,295 854,360 61,078 2,341 $ 1,957,074	2022 $ 1,117,170 982,797 87,711 - $ 2,187,678

256 -

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.

d. Receivables from related parties

Related Party Line Item Category/Name Accounts receivables from related Subsidiaries parties Thinking Changzhou Dongguan Welkin Zhongshan Welkin Others Related party in substance Pingtung Welkin Other receivables from related parties Subsidiaries (exclude loans to related parties) Thinking Changzhou Yenyo Thinking Yichang		December 31	December 31
		2023 $ 91,687 22,978 54,904 834 620 $ 171,023 $ - - 54 $ 54	2022 $ 108,871 70,435 - 487 - $ 179,793 $ 937 121 - $ 1,058

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, 2023 and 2022, no impairment losses were recognized for trade receivables from related parties.

e. Payables to related parties

Related Party Line Item Category/Name Accounts payable to related parties Subsidiaries Dongguan Welkin Thinking Changzhou Others Related party in substance Pingtung Welkin Other payables to related parties Subsidiaries Dongguan Welkin Related party in substance Honungxin Technology Pingtung Welkin		December 31	December 31
		2023 $ 173,785 173,059 16,714 814 $ 364,372 $ 71 704 643 $ 1,418	2022 $ 204,929 160,381 13,667 - $ 378,977 $ - - 3,999 $ 3,999

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

257 -
f. Prepayments ( in prepaid equipment payment)

Related Party Line Item Category/Name Prepayments for equipment Subsidiaries Dongguan Welkin Related party in substance Honungxin Technology Pingtung Welkin		December	31
		2023 $ 617 7,382 370 $ 8,369	2022 $ - - - $ -

g. Acquisition of property, plant and equipment

For the Year Ended December 31, 2022

Related Party Category/Name	Purchase Price	Purchase Price
Subsidiaries
Thinking Changzhou	$	1,427
Dongguan Welkin		3,830
	$	5,257

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. Loans to related parties

The Company provided short-term unsecured loans for its subsidiary, Thinking Viet Nam, at an interest rate of 5%. As of December 31, 2023, it had not yet been draw down.

j. 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
		2023 $ 4,815	2022 $ 10,918

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.

258 -

2) Consigned purchases

Related Party Category/Name Subsidiaries Thinking Changzhou Thinking Yichang Others 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
	2023 2022 $ 14,303 $ - 137 1,381 265 37 $ 14,705 $ 1,418 For the Year Ended December 31
		2023 $ 480	2022 $ 480

3) Lease arrangements

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

k. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2023 $ 63,002 1,084 $ 64,086	2022 $ 69,419 853 $ 70,272

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
		2023 $ 28,800	2022 $ 151,700

259 -

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

December 31 2023 2022 Acquisition of property, plant and equipment $ 88,865 $ 390,034 SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES The significant assets and liabilities denominated in foreign currencies were as follows: Foreign Currency (In Thousand) Exchange Rate Carrying Amount (In Thousand) December 31, 2023 Financial assets Monetary items USD $ 24,479 30.705 (USD:NTD) $ 751,628 CNY 78,794 4.3262 (CNY:NTD) 340,879 EUR 7,674 34.14 (EUR:NTD) 261,990 Non-monetary items Investments accounted for using the equity method USD 213,757 30.705 (USD:NTD) 6,563,398 CNY 459,452 4.3262 (CNY:NTD) 1,987,680 VND 113,417,671 0.00125 (VND:NTD) 141,205 Financial liabilities Monetary items USD 11,700 30.705 (USD:NTD) 359,249 CNY 4,415 4.3262 (CNY:NTD) 19,100 EUR 99 34.14 (EUR:NTD) 3,380 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 Investments accounted for using the equity method USD 192,980 30.725 (USD:NTD) 5,929,314 CNY 407,576 4.4023 (CNY:NTD) 1,794,272 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

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

260 -

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, 2023
USD		30.705	(USD:NTD)	$	11,504
CNY		4.3262	(CNY:NTD)		4,292
EUR		34.14	(EUR:NTD)		742
				$	16,538
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)

32. ADDITIONAL DISCLOSURES

a. Information on significant transactions and b. investees
1) Financing provided to others: Table 1.
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 2.
4) Marketable securities acquired or disposed of at cost or price of at least NT$300 million or 20% of the paid-in capital: Table 3.
5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5.
9) Trading in derivative instruments: Note 7.
10) Information on investees: Table 6.
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
261 -

investment in the mainland China areas: Table 7.

2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year: Table 4.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 4.
- c) The amount of property transactions and the amount of the resultant gains or losses: Refer to Note 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 8

33. SEGMENT INFORMATION

The Company has provided the operating segments disclosure in the consolidated financial statements; the parent company financial statements do not need to disclose segment information.

262 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Reasons for Collateral
No. Lender Borrower Financial Statement Account Related Party Highest Balance for the Period Ending Balance Actual Amount Borrowed Interest Rate (%) Financing Nature of Business Transaction Amount Short-term Financing Impairment LossAllowance for Item Value Each Borrower (Note 2)Financing Limit for Aggregate Financing Limit (Note 2) Note
0 The Company Thinking Viet Nam Other receivables - Yes $ 96,615 $ 92,115 $ - 5 Note 1 $ - For short-term $ - - $ - $ 2,792,932 $ 3,723,910
related parties (US$ 3,000 thousand ) (US$ 3,000 thousand ) (US$ - thousand ) working capital
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Note 1: For short-term financing necessities.

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TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2023

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

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December 31, 2023
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 2,619,499 $ 27,682 11 $ 27,682
Thinking Yichang CNY financial products
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 40,000 thousand - CNY 40,000 thousand
(China)
Structured Deposits - Bank of China - Financial assets at FVTPL - current - CNY 60,000 thousand - CNY 60,000 thousand
Jiangxi Thinking CNY financial products
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 50,200 thousand - CNY 50,200 thousand
(China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
Merchants Bank
Structured Deposits - E.SUN Bank - Financial assets at FVTPL - current - CNY 70,350 thousand - CNY 70,350 thousand
Hui Ji Xinfu Structured Deposit - CTBC Bank - Financial assets at FVTPL - current - CNY 20,060 thousand - CNY 20,060 thousand
Zhongshan Welkin CNY financial products
Structured Deposits - Ping An Bank - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
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TABLE 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

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

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Company Name Marketable Securities Type and Name Financial Statement Account Counterparty Relationship Number of sBhareginnines g BalanAmceount Number of sharAescquisition Amount Number of shares Amount DisposCarral ying Amount Gain/Loss on Disposal Number of sharEndesing BalanAmce ount
Thinking Yichang CNY financial products
Structured Deposits Financial assets at FVTPL - Bank of China - CNY 45,000 thousand - CNY 80,000 thousand - CNY 65,588 thousand CNY 65,000 thousand CNY 588 thousand - CNY 60,000 thousand
current
Jiangxi Thinking CNY financial products
Time Deposit Monthly Profit Financial assets at FVTPL - Fubon Bank - CNY 9,810 thousand - CNY 81,900 thousand - CNY 41,798 thousand CNY 41,510 thousand CNY 288 thousand - CNY 50,200 thousand
current (China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 20,000 thousand - CNY 100,000 thousand - CNY 110,327 thousand CNY 110,000 thousand CNY 327 thousand - CNY 10,000 thousand
Deposit current Merchants
Bank
Structured Deposits Financial assets at FVTPL - E.SUN Bank - CNY 20,000 thousand - CNY 181,030 thousand - CNY 131,878 thousand CNY 130,680 thousand CNY 1,198 thousand - CNY 70,350 thousand
current
Guangdong Welkin CNY financial products
Thinking Point Gold Series Structured Financial assets at FVTPL - China - CNY 30,000 thousand - CNY 55,000 thousand - CNY 85,331 thousand CNY 85,000 thousand CNY 331 thousand - CNY - thousand
Deposit current Merchants
Bank
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TABLE 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

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

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Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment
Purchases/Sales Amount % of Total Payment Terms Unit Price Ending Balance % of Total Note
Term
The Company Thinking Changzhou Subsidiary Sales $ (203,462) (6) 60 days from the end of $ - - $ (91,687) (12)
the month
Thinking Changzhou Subsidiary Purchases 854,360 41 60 days from the end of - - 173,059 23
the month
Dongguan Welkin Subsidiary Sales (115,422) (4) 60 days from the end of - - (22,978) (4)
the month
Dongguan Welkin Subsidiary Purchases 1,039,295 50 60 days from the end of - - 173,785 23
the month
Thinking Changzhou Thinking Yichang Associate Purchases 186,457 13 60 days from the end of - - 52,297 11
the month
Jiangxi Thinking Associate Purchases 163,340 12 60 days from the end of - - 25,274 5
the month
Dongguan Welkin Associate Sales (105,987) (4) 60 days from the end of - - (23,709) (2)
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 192,813 34 60 days from the end of - - 36,898 21
the month
Dongguan Welkin Associate Sales (370,531) (38) 60 days from the end of - - (64,805) (22)
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (198,157) (24) 60 days from the end of - - (40,329) (22)
the month
Zhongshan Welkin Associate Sales (218,594) (26) 60 days from the end of - - (64,813) (35)
the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 785,047 38 60 days from the end of - - 158,782 22
the month
Zhongshan Welkin Subsidiary Sales (123,187) (4) 60 days from the end of - - (42,710) (4)
the month
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TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023

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

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Overdue Amounts Received
Allowance for
Company Name Related Party Relationship Ending Balance Turnover Rate in Subsequent
Amount Actions Taken Doubtful Accounts
Period
Thinking Changzhou The Company Parent company $ 173,059 5.12 $ - - $ 57,705 $ -
Dongguan Welkin The Company Parent company 173,785 5.49 - - 78,916 -
Zhongshan Welkin Dongguan Welkin Parent company 158,782 5.61 - - 98,881 -
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TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount Balance as of December 31, 2023
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Percentage Net Income Share of profit (Loss) Note
2023 2022 shares of ownership Carrying Amount (Loss) of the Investee
(%)
The Company Yenyo Yilan Processing, sales and manufacturing of diodes $ 304,410 $ 304,410 25,732,508 63.76 $ 237,878 $ 9,262 $ 5,906 Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 2,691,574 245,549 255,719 Note 1
Island ( US$ 7,375 thousand) ( US$ 7,375 thousand)
Thinking Holding Cayman Investment holding and international trading 792,506 783,237 25,476,302 100 3,860,398 478,468 475,244 Note 1
( US$ 25,476 thousand) ( US$ 25,176 thousand)
Thinking USA USA Electronic product design and marketing 30,715 30,715 1,000,000 100 11,426 (17,113) (17,113)
( US$ 1,000 thousand) ( US$ 1,000 thousand)
Thinking Viet Nam Vietnam Manufacturing and selling thermistors, varistors 149,313 - - 100 141,205 111 111
and sensors ( US$ 4,800 thousand )
Thinking Holding Thinking International Mauritius Investment holding and international trading 205,781 196,512 6,375,000 100 1,190,521 80,616 80,616
( US$ 6,375 thousand) ( US$ 6,075 thousand)
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 900,479 144,551 144,551
( 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 1,592,927 221,141 221,141
( US$ 5,055 thousand) ( US$ 5,055 thousand)
Thinking Samoa Samoa Investment holding and international trading 112,518 112,518 3,864,354 100 215,167 32,654 32,654
( US$ 3,864 thousand) ( US$ 3,864 thousand)
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Note 1: The share of profits or losses of investee includes the effect of unrealized gross profit on intercompany transaction.

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

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TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Outward Remittance of Funds Accumulated Outward Percentage of Accumulated
Remittance for Remittance for Ownership Carrying Amount as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Method of Investment Investment from Taiwan as of Outward Inward Investment from Taiwan as of Net Income (Loss)of the Investee Direct or Indirect Investment Gain (Loss)(Note 7) December 31, 2023 (Note 7) Income as of Investment Note
January 1, 2023 December 31, 2023 Investment December 31, 2023
Thinking Changzhou Manufacturing and selling thermistors, $ 1,008,050 Note 1 $ 452,725 $ - $ - $ 452,725 $ 439,343 100 $ 458,676 $ 4,036,634 $ 1,868,287 Note 10
varistors and sensors (US$ 31,260 thousand) ( US$ 61,686 )
Thinking Yichang Manufacturing and selling thermistors, 203,439 Note 2 194,170 9,269 - 203,439 80,741 100 80,741 1,189,299 - -
varistors and sensors (US$ 6,300 thousand)
Jiangxi Thinking Manufacturing and selling thermistors and 310,330 Note 3 310,330 - - 310,330 144,583 100 144,583 900,271 - -
varistors (US$ 10,000 thousand)
Guangdong Welkin Thinking Wholesale of thermistors, varistors, - Notes 4 and 11 153,547 - 153,547 - 4,379 - 4,379 - - -
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, 868,640 Notes 5 and 11 111,759 153,547 - 265,306 322,085 100 322,085 2,460,385 - -
varistors, sensors and equipment (CNY$194,782 thousand)
Zhongshan Welkin Manufacturing and selling thermistors, 658,145 Note 6 - - - - 70,946 100 70,946 685,539 - -
varistors and sensors (CNY$150,000 thousand)
Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2023 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$ 1,231,800 $ 1,077,561 $ 5,585,865
(US$38,774 thousand) (US$35,094 thousand) (Note 9)
(Note 8)
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Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary, Thinking Changzhou.
Note 6: Indirectly investment in mainland China through subsidiary (Dongguan Welkin).
Note 7: Financial report had been audited by ultimate parent company’s certified public accountant.
Note 8: The amount of US$35,094 thousand was the difference between the MOEA approved investment amount of US$38,774 thousand and the amount of accumulated outflow of investment from Taiwan amount of US$3,680 thousand. Such difference was the result of deducting the capital increase of US$32,024 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$35,831 thousand, was repatriated, and the difference between the exchange rate of the remitted funds and US$49 thousand. The balance as of December 31, 2023 was based on the exchange rate of US$1=NT$30.705.
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 $217,380 thousand, and Greenish recognized share of profits of Thinking Changzhou was $241,296 thousand. Total amount of share of profits was $458,676 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: In response to optimizing the organizational structure across the group, the board of directors of Dongguan Welkin resolved to merge Guangdong Welkin Thinking with Dongguan Welkin in April 2023. Guangdong Welkin Thinking would be dissolved after the merger. The base date for the merger was June 30, 2023. Dongguan Welkin has completed the change of registration.
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TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2023

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270 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

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ITEM STATEMENT INDEX
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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

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STATEMENT 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item
Maturity Date
Annual
Interest
Rate(%)
Petty cash and cash on hand
Bank deposits
Checking accounts
Demand deposits
Foreign currency demand
deposits (Note)
USD 2,911 thousand
CNY 25,264thousand
EUR 1,395 thousand
JPY
8,549 thousand
HKD 1,631 thousand
Cash equivalents
Time deposits with original
maturities of 3 months or
less
Deposit of NTD
2024.01
0.855
Foreign currency deposits
(Note)
USD 2,500 thousand
2024.01
5.7
CNY 10,000 thousand
2024.01
1.4
EUR 4,000 thousand
2024.01
3.8
HKD 1,500 thousand
2024.01
5.6

Amount
$ 575
74
94,678
89,390
109,296
47,626
1,865
6,408

349,912
100,000
76,763
43,262
136,560
5,893

$ 712,390

Note: Foreign currency exchange rates of USD, CNY, EUR, JPY and HKD were as follows: USD:NTD=1: 30.705 CNY:NTD=1: 4.3262 EUR:NTD=1: 34.14 JPY:NTD=1: 0.2182 HKD:NTD=1: 3.929

272 -

STATEMENT 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

	Description	Amount
Company A	Sale of goods	$ 1,292
Company B	Sale of goods	378
Others (Note)	Sale of goods	618
		$ 2,288

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

273 -

STATEMENT 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Client Name Related parties Thinking Changzhou Dongguan Welkin Zhongshan Welkin Others (Note) Non-related parties Company C Others (Note) Less: Loss allowance	Amount Over a Year $ 91,687 $ - 22,978 - 54,904 - 1,454 - 171,023 - 34,129 642,945 - 677,074 - (5,854) - 671,220 - $ 842,243 $ -

Remark

Sale of goods Sale of goods Sale of goods Sale of goods

Sale of goods Sale of goods

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

274 -

STATEMENT 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item	Amount	Amount	Remark
Related parties
Thinking Yichang	$	54	Consigned purchases
Non-related parties
Income tax refund receivable		2,694	Business tax
Earned revenue receivable		305
Others		20
		3,019
	$	3,073

275 -

STATEMENT 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2023 (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) $ 152,028 $ 191,745 23,121 40,429 63,657 106,339 29,959 30,215 4,500 4,552 6,308 6,308 $ 279,573 $ 379,588

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

276 -

STATEMENT 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT ASSETS DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Prepayments for purchases Prepaid expenses Office supplies Offsets against business tax payable Others	Amount $ 2,910 19,716 4,813 7,762 1,238
	$ 36,439

277 -

STATEMENT 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2023

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

Investees Non-listed company Yenyo Greenish Thinking Changzhou Thinking Holding Thinking USA Thinking Viet Nam	Balance, January 1, 2023 Shares Amount 25,732,508 $ 231,421 7,374,997 2,463,106 14,814,804 1,794,272 25,176,302 3,437,858 1,000,000 28,350 - - $ 7,955,007	Additions in Investment Shares Amount - $ 6,457 - 268,430 - 228,831 300,000 487,265 - - - 149,424 $ 1,140,407 (Note 1)	Decrease	in Investment Amount $ - 39,962 35,423 64,725 16,924 8,219 $ 165,253 (Note 2)	Balance, December	31, 2023 Amount $ 237,878 2,691,574 1,987,680 3,860,398 11,426 141,205 $ 8,930,161	Market Value or Net Assets Value Unit Price Total Amount Collateral Note $ 9.44 $ 242,985 None 366.59 2,703,586 None 129.79 1,922,838 None 153.19 3,902,645 None 11.43 11,426 None - 141,205 None $ 8,924,685
					% of Shares Ownership 25,732,508 63.76 7,374,997 100 14,814,804 47.39 25,476,302 100 1,000,000 100 - 100
	Shares 25,732,508 7,374,997 14,814,804 25,176,302 1,000,000 -	Shares - - - 300,000 - -	Shares - - - - - -

Note 1: Share of profit of investments accounted for using the equity method, realized gain on transactions in the beginning of year, acquired investment funds using the equity method and remeasurement of defined benefit plans amounted to $954,360 thousand, $26,915 thousand, $158,581 thousand and $551 thousand.
Note 2: Share of loss of investments accounted for using the equity method, unrealized gain on transactions at the end of the year, exchange differences on the translation of the financial statements of foreign operations amounted to $17,113 thousand, $1,180 thousand and $146,960 thousand.
278 -

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, 2023

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

Investees Non-listed company’s shares ACPA TECHNOLOGY CO., LTD.	Balance, January 1, 2023 Shares Fair Value 2,543,203 $ 25,723	Additions in Investment Shares Amount (Note 1) (Note 2) 76,296 $ 1,959	Decrease in Investment Shares Amount - $ -	Balance, December 31, 2023 Fair Value Accumulated Shares (Note 3) Impairment Collateral 2,619,499 $ 27,682 $ - None
	Shares 2,543,203	Shares (Note 1) 76,296	Shares -	Shares 2,619,499

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

Note 2: Recognized as unrealized gain on financial assets at FVTOCI.

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

279 -

STATEMENT 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

	Balance,					Balance,
	January 1,					December 31,
	2023	Additions		Deductions		2023
Cost
Land	$ 58,682	$	-	$	-	$ 58,682
Accumulated depreciation
Land	(7,604)		(2,013)		-	(9,617)
	$ 51,078	$	(2,013)	$	-	$ 49,065

280 -

STATEMENT 10

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2023

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

		Interest Rates
Type of Borrowings and		for the Year	Balance, December
Bank Name	Contract Period	(%)	31, 2023
Credit Loans
Bank of Taiwan	2023.11.09-2024.02.07	1.64	$ 100,000

Note: As of December 31, 2023, the amount of unused short-term borrowings was approximately $2,112,450 thousand.

281 -

STATEMENT 11

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2023

(In Thousands of New Taiwan Dollars)

Vendor Name Related parties Dongguan Welkin Thinking Changzhou Thinking Yichang Pingtung Welkin Yenyo Non-related parties Company D Company E Company F Company G Company H Company I Company J Others (Note)	Amount $ 173,785 173,059 16,667 814 47
	364,372
	4,153 4,149 2,340 1,871 1,863 1,812 1,792 16,517
	34,497
	$ 398,869

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

282 -

STATEMENT 12

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT LIABILITIES DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Over received Withholding Temporary receipts Deferred revenue	Amount $ 8,635 2,173 546 747
	$ 12,101

283 -

STATEMENT 13

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2023

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

		Discount Rate	Balance, December
Item	Lease Term	(%)	31, 2023
Land	2016.06-2029.10	0.75-1.38	$ 52,235
Less: Lease liabilities - current			1,508
Lease liabilities - non-current			$ 50,727

284 -

STATEMENT 14

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Shipments (Thousand PCS) Revenue from sale of goods Passive components 5,761,119 Service revenue	Amount $ 3,172,711 87
	$ 3,172,798

285 -

TATEMENT 15

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2023 (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
Income from sale of scraps
Loss on obsolete inventory
Others

Amount
$ 36,348
90,057
(29,959 )
(63)
96,383
17,025
137,846
239,094
490,348
128,995
11,405
(86,778 )
(2,249)
541,721
175,797
1,959,795
(152,028 )
(505,693)
2,019,592
(7,728 )
11,982
(1,144)
3,110
$ 2,022,702

286 -

TATEMENT 16

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars)

Item Salaries Employee benefits (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 recognized on trade receivables	Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses $ 54,212 $ 112,937 $ 90,202 8,288 18,094 15,463 14,078 69 1 3,481 16,287 2,384 11,761 - - 5,082 8,659 10,533 339 3,562 6,769 - 22,494 - 29 113 10,138 13,019 838 330 23,144 16,903 10,023 $ 133,433 $ 199,956 $ 145,843	Total $ 257,351 41,845 14,148 22,152 11,761 24,274 10,670 22,494 10,280 14,187 50,070
		479,232 4,144
		$ 483,376

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

287 -

TATEMENT 17

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

Employee benefits 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
	2023	Total $ 419,799 36,367 17,564 22,494 24,457 $ 520,681 $ 81,802 $ 14,058	2022
	Operating Costs Operating Expenses $ 162,448 $ 257,351 16,144 20,223 7,099 10,465 - 22,494 13,300 11,157 $ 198,991 $ 321,690 $ 67,756 $ 14,046 $ 3,830 $ 10,228		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	Total $ 427,425 36,918 18,013 23,242 23,106 $ 528,704 $ 81,398 $ 7,463

Note: a. For the years ended December 31, 2023 and 2022, the Company had 520 and 525 employees in average, 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, 2023 and 2022 was $967 thousand and $972 thousand, respectively.
c. The average employee salary and bonuses for the years ended December 31, 2023 and 2022 was $815 thousand and $822 thousand, respectively.
d. Change in the average employee salary and bonuses was 1%.
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, 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)

288 -

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)

289 -

VII. Review and Analysis of Financial Conditions, Operating Results, and Risk Management

7.1 Review and Analysis of Financial Status

Unit: NTD Thousand

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

Year Difference
2023 2022
Entry Amount %
Current asset 7,988,976 9,136,066 (1,147,090) (13)
Property, plant and
3,693,813 3,219,260 474,553 15
equipment
Other assets 1,967,040 1,402,490 564,550 40
Total assets 13,649,829 13,757,816 (107,987) (1)
Current liabilities 1,638,848 2,299,113 (660,265) (29)
Non-current liabilities 2,563,168 2,515,256 47,912 2
Total liabilities 4,202,016 4,814,369 (612,353) (13)
Equity attributable owners of
9,309,776 8,809,079 500,697 6
the company
Ordinary shares 1,281,127 1,281,127 - -
Capital surplus 352,907 352,907 - -
Retained earnings 7,931,978 7,315,672 616,306 8
Other equities (256,236) (140,627) (115,609) 82
Non-controlling interest 138,037 134,368 3,669 3
Total shareholders' equities 9,447,813 8,943,447 504,366 6
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i. Analysis of increases/decreases over 20%:
(1) Increase in other assets: Mainly due to the increase in Financial assets at amortized cost - non-current.
(2) Decrease in current liabilities: mainly due to the repayment of short-term borrowings.
(3) Decrease in other equities: mainly due to the exchange differences on translation of foreign operations caused by fluctuating exchange rates.
290 -

7.2 Review and Analysis of Operating Results

Unit: NTD Thousand

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

Year Difference
2023 2022
Entry Amount %
Operating revenue, net 7,077,136 7,463,135 (385,999) (5)
Gross profit 2,743,767 2,633,376 110,391 4
Profit from operations 1,592,445 1,400,177 192,268 14
Non-operating income and
130,102 396,567 (266,465) (67)
expenses
Profit before income tax 1,722,547 1,796,744 (74,197) (4)
Income tax expense 411,388 406,766 4,622 1
Net profit 1,311,159 1,389,978 (78,819) (6)
Other comprehensive income
(114,984) 84,226 (199,210) (237)
(loss), net of tax
Total comprehensive income 1,196,175 1,474,204 (278,029) (19)
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Decrease in non-operating income and expenses: mainly due to the decrease in exchange profit caused by fluctuating exchange rates.
(2) Decrease in other comprehensive income (loss), net of tax: mainly due to the decrease 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.
291 -
7.3 Review and Analysis of Cash Flow
i. Cash Flow Analysis for the Current Year

Unit: NTD Thousand

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

Cash and Leverage of Cash Deficit
Net Cash Net Cash Flow
Cash
Flow from from Investing
Equivalents, Cash Surplus Investment
Operating and Financing Financing Plans
Beginning of Plans
Activities Activities
Year
3,573,120 2,128,623 (3,102,427) 2,599,316 - -
----- 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 repayment of loans and distribution of cash dividends.
(2) Remedies in case of cash shortage: Not applicable.

ii. Cash Flow Analysis for the Coming Year

Unit: NTD Thousand

Cash and Cash Net Cash Flow Net Cash Flow	Leverage of Cash Surplus
Equivalents, Beginning of Year from Operating Activities from Investing and Financing Activities Cash Surplus	(Deficit)
	Investment plan Financing plan
2,599,316 1,364,495 (1,967,923) 1,995,888	- -
(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)Projectedremediesincase ofcashshortage: Not applicable.

7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation: None.
292 -
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 strengthen operational layout in the United States and Southeast Asia 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 2023 was NT 937,247 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

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

Item 2023 (NTD thousand; %)
Net interest income (expenses) 101,905
Net (loss) profit from exchange 36,858
Ratio of net interest income/ expenses to net sales 1.44%
Ratio of net interest income/ expenses to pre-tax net profit 5.92%
Ratio of net loss/profit from exchange to net sales 0.52%
Ratio of net loss/profit from exchange to pre-tax net profit 2.14%
----- End of picture text -----

293 -

Changes in interest rate:

The net interest income of the Company for 2023 was NTD 101,905 thousand, accounting for only 1.44% 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 2023 were NTD 36,858 thousand, accounting for 0.52% 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."

294 -

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 2024.

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 2023 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 2023 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.
295 -
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.
296 -

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 [667 x 395] intentionally omitted <==

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

Thinking Electronic
Industrial Co., Ltd.
Holding ratio Holding ratio Holding ratio Holding ratio Holding ratio Holding ratio
63.76% 47.39% 100% 100% 100% 100%
Yenyo
Thinking (Changzhou) Greenish Co., Thinking Electronic Thinking Holding Thinking (Viet Nam)
Technology Co.,
Electronic Co., Ltd. Ltd. USA, Inc. (Cayman) Co., Ltd. Electronic Co., Ltd
Ltd.
Holding ratio
52.61%
Holding ratio Holding ratio Holding ratio Holding ratio
100% 100% 100% 100%
Thinking (HK) Thinking
Thinking Electronic View Full
Enterprises International
(Samoa) Ltd. (Samoa) Ltd.
Limited Co., Ltd.
Holding ratio
Holding ratio 8.76%
26.28% Holding ratio Holding ratio
100% 100%
Holding ratio
64.96%
Dong Guan Welkin Jiang Xi Thinking Thinking (Yichang)
Electronic Co., Ltd. Electronic Co., Ltd. Electronic Co., Ltd.
Holding ratio
100%
Welkin Electronic Co.,
Ltd.
----- End of picture text -----

297 -

B.Profile of respective affiliates:

December 31, 2023; 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 25,476 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 6,375 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 6,300 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
Dong Guan Welkin Electronic 10/19/2001 No. 45, Dongda Street, Shatou Community, Changan CNY 194,782 Manufacturing and selling
Co., Ltd. Township, Dongguan City, Guangdong Province thermistors, varistors, sensors
and equipment
Welkin Electronic Co., Ltd. 12/18/2020 Building B, No.3 Zhenxing North Road, Tanzhou Town, CNY 150,000 Manufacturing and selling
Zhongshan City, Guangdong Province thermistors, varistors and
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
Thinking (Viet Nam) 4/18/2023 Lot CN8.3, Nam Cau Kien Industrial Park, Hoang Dong USD 4,800 Manufacturing and selling
Electronic Co., Ltd Commune, Thuy Nguyen District, Hai Phong City, thermistors, varistors and
Vietnam sensors
----- End of picture text -----

298 -

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 422] 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
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
Thinking (Viet Nam) Electronic Co., Ltd Manufacturing and selling thermistors, varistors and sensors -
----- End of picture text -----

299

E. Profile of directors, supervisors, and president of each affiliate

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

Shareholding
Name of affiliate Position Name or Representative Shares Shareholding
ratio
Chairman Sui, Tai-Chung (Representative of Thinking) 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 25,476,302 100.00%
Co., Ltd.
Thinking International Co., Chairman Sui, Tai-Chung (Representative of Thinking Holding (Cayman))
USD 6,375,000 100.00%
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))
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300

==> picture [789 x 425] 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 6,300,000 100.00%
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 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 194,781,918 100.00%
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 150,000,000 100.00%
Director Sui, Chieh-Heng (Representative of Dongguan Welkin)
-
Supervisor Ting, Si Nan (Representative of Dongguan Welkin)
Thinking Electronic USA, Chairman Sui, Tai-Chung (Representative of Thinking)
USD 1,000,000 100.00%
Inc.
Thinking (Viet Nam) Chairman Sui, Tai-Chung (Representative of Thinking)
USD 4,800,000 100.00%
Electronic Co., Ltd
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301

(2) Operational overview of respective affiliates

==> picture [777 x 418] intentionally omitted <==

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

December 31, 2023; 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. 403,580 475,435 94,346 381,089 328,010 10,837 9,262 0.23
Thinking (Changzhou) Electronic Co., Ltd. 1,008,050 4,608,543 551,315 4,057,228 2,921,681 319,939 439,343 Note1
Greenish Co., Ltd. 242,300 2,712,640 9,053 2,703,587 - (10,202) 245,549 Note1
Thinking Holding (Cayman) Co., Ltd. 792,506 3,902,645 - 3,902,645 - (471) 478,468 Note1
Thinking International Co., Ltd. 205,781 1,190,521 - 1,190,521 - (143) 80,616 Note1
Thinking (HK) Enterprises Limited 311,109 900,479 - 900,479 - (38) 144,551 Note1
View Full (Samoa) Ltd. 155,108 1,592,927 - 1,592,927 - (29) 221,141 Note1
Thinking Electronic (Samoa) Ltd. 112,518 215,167 - 215,167 - (29) 32,654 Note1
Thinking (Yichang) Electronic Co., Ltd. 203,439 1,366,436 177,137 1,189,299 967,370 56,405 80,741 Note1
Jiang Xi Thinking Electronic Co., Ltd. 310,330 1,027,982 127,711 900,271 830,850 158,260 144,583 Note1
Guangdong Welkin Thinking Electronic Co., Ltd. - - - - 22,219 3,027 4,379 Note1 and Note2
Dong Guan Welkin Electronic Co., Ltd. 868,640 3,222,226 772,310 2,449,916 3,082,852 275,630 322,085 Note1 and Note2
Welkin Electronic Co., Ltd. 658,145 954,168 268,629 685,539 791,615 84,845 70,946 Note1
Thinking Electronic USA, Inc. 30,715 19,125 7,699 11,426 - (17,167) (17,113) Note1
Thinking (Viet Nam) Electronic Co., Ltd 149,313 141,205 - 141,205 - (19) 111 Note1
----- End of picture text -----

Note1: The company is a company limited.

Note2: In response to optimizing the organizational structure of the Group, the board of directors of Dong Guan Welkin resolved to merge Guangdong Welkin

Thinking in April 2023, and the base date for the merger was June 30, 2023. Guangdong Welkin Thinking was dissolved after the merger, and Dong Guan Welkin assumed the assets and liabilities of the merged companies.

302

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, 2023, 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

February 26, 2024

303

iii. Affiliation Report

Declaration

The Affiliation Report of the Company for 2023 (from January 1 to December 31, 2023) 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

February 26, 2024

304

Thinking Electronic Industrial Co., Ltd.

Affiliation Report

2023

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 by the controlling company
		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/Chen, Su-Ai

II. Current Transaction:

(I) Purchases/Sales: None

(II) Properties: None

(III) Capital financing: None

(IV) Asset lease: The Company spent NTD 480 thousand in 2023 for renting buildings and land from Boh Chin Investment Co., Ltd.

III. Endorsements/guarantees: None

305

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

306

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.

307 -

Evaluation cycle	Evaluated period	Scope of evaluation	Evaluation method	Evaluation Content
Once a year	1/1/2023- 12/31/2023	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

	Implementation Status	Deviations from “the
Evaluation Item Yes No	Abstract Explanation	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”andReasons
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) The indicators that the Company has improved in 2023 are as follows:
1. Complete simultaneous release of important English information.
(II) Future strengthening matters and measures are explained as follows:
1. Gradually promote the expansion of independent director seats and increase the proportion of female director members.
2. Future efforts will be made to quarterly financial reports in English.

Evaluation Item	Implementation Status	Implementation Status	Deviations from “the
	Yes No Abstract Explanation		Corporate Governance
			Best-Practice Principles
			for TWSE/TPEx Listed
			Companies”andReasons
(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 newly hired employees are educated prior to the pre-service training by the Personnel Department. In 2023, 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 on April 28, 2023 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

AI assistant

THINKING — Annual Report 2023

52076_rns_2024-08-13_640a72d7-e3aa-4f6a-b531-4982bf9c57c3.pdf

2023 Annual Report

Notice to readers

Contents

I. Letter to Shareholders

Dear Shareholders,

1.1 Business report:

i. Results:

1.2 Summary of business plan:

ii. Expected sales volume and basis thereof

iii. Key production and sales policies

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

3.1 Organizational

(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

Statement in the past two years:

3.4. Implementation of Corporate Governance

i. Operations of the Board of Directors

Other details to be documented:

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

(2) Compensation and Remuneration Committee Responsibilities:

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

Corporate Sustainable Development Organizational Structure

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

(III) Consumer rights:

(IV) Human rights:

(V) Safety and health:

(VI) Certification:

Climate-related Information of TWSE/TPEx Listed Companies

Disclosure of climate-related information

The greenhouse gas inventory and assurance situation

Ethical Corporate Management Structure

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

3.6 Information on Replacement of CPAs:

i. Regarding the former CPA

3.8 Transfer of Equity Interests and/or Pledge of or Changes in Equity Interests by Directors,

3.10 Number of Shares Held by the Company, the Company’s Directors, Managers, and Directly

IV. Capital Overview

4.1 Capital and Shares

i. Source of Capital

Information for shelf registration: None.

ii. Status of Shareholders

iii. Shareholding Distribution Status

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

4.3 Preferred Shares: None.

V. Operational Highlights

5.1 Business Activities

ii. Industrial Overview

(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

B. Energy Storage System

C. Telecommunications and AI

B. Unfavorable factors:

C. Countermeasures:

(2) Major Products and Their Production Processes

THINKING Annual Report 2023