Sunplus Technology Company Limited
Annual Report 2020

Plain-text annual report

Stock code: 2401 LSE：SUPD 2020 Annual Report Sunplus Technology Co., Ltd. Prepared by Search the annual website: http://mops.tse.com.tw Date of publication: May 15th, 2021 PLEASE READ FOLLOWING NOTICE BEFORE USING THIS REPORT Readers are advised that the original version of the report is in Chinese. If there is any conflict between these financial statements and the Chinese version or any difference in the interpretation of the two versions, the Chinese-language report shall prevail. In addition, certain of our financial information have been published in accordance with requirements of the Republic of China Securities and Futures Commission and are presented in conformity with accounting principles generally accepted in the Republic of China. Readers should be cautioned that these accounting principles differ in many material respects from accounting principles generally accepted in other countries. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. The materials and information provided on this report have been issued by Sunplus and are posted solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securities issued by us or otherwise. SPOKESPERSON Name: Wayne Shen Title: Vice President Tel: +886-3-5786005 E-mail: IR@sunplus.com DEPUTY SPOKESPERSON Name: Ji-An Zhuang Title: Investor Relations Manager Tel: +886-3-5786005 E-mail: IR@sunplus.com SUNPLUS LOCATION Address: 19, Innovation 1st Road, Hsinchu Science Park, Hsinchu 300, Taiwan Tel: +886-3-5786005 Fax: +886-3-5786006 http://www.sunplus.com COMMON SHARES TRANSFER AGENT Company: China Trust Commercial Bank Corporate Trust Operation and service Department Address: 5F, 83, Sec. 1, Chung-Ching S. Rd. Taipei 100, Taiwan Tel: +886-2-21811911 http://www.chinatrust.com.tw AUDITORS Name: Cheng-Chi Lin, Mei-Zhen Cai Company: Deloitte & Touche Tohmatsu Limited Address: 6F, 2, Prosperity Road 1, Hsinchu Science Park, Hsinchu 300, Taiwan Tel: +886-3-5780899 http://www.tw.deloitte.com GDR DEPOSITARY BANK Company: The Bank of New York Address: 101 Barclay Street New York, N.Y. 10286 Tel: +1-212-815-2476 http://www.adrbnymellon.com Please refer to London Stock Exchange official website for Sunplus’ Market Price. http://www.londonstockexchange.com SUNPLUS WEBSITE http://www.sunplus.com TABLE OF CONTENT I. II. III. LETTER TO SHAREHOLDERS ..................................................................................................................................... 1 COMPANY PROFILE.................................................................................................................................................. 4 2.1 Foundation of Sunplus ........................................................................................................................................... 4 2.2 Milestones ............................................................................................................................................................. 4 CORPORATE GOVERNANCE ..................................................................................................................................... 6 3.1 Organization........................................................................................................................................................... 7 3.2 Director, general manager, deputy general manager, associate, department and branch office in charge of information ............................................................................................................................................................ 9 3.3 Corporate Governance Implementation .............................................................................................................. 20 3.4 Audit Fees ............................................................................................................................................................ 48 3.5 Replacement of Auditors ..................................................................................................................................... 48 3.6 Chairman, Presidents, and Managers in Charge of Finance and Accounting Who Held a Position in Sunplus’ Independent Audit Firm or Its Affiliates during the Recent Year ......................................................................... 49 3.7 Net Change in Shareholding and Net Changes in Shares Pledged by Director, Manager, and Shareholders with IV. 10% Shareholding or More .................................................................................................................................. 50 3.8 Top 10 Shareholders & Related Parties ............................................................................................................... 52 3.9 Long-term Investment Ownership ....................................................................................................................... 53 CAPITAL & SHARES ................................................................................................................................................ 54 4.1 Capitalization ....................................................................................................................................................... 54 4.2 Issuance of Corporate Bonds ............................................................................................................................... 61 4.3 Preferred Shares .................................................................................................................................................. 61 4.4 Issuance of GDR ................................................................................................................................................... 62 4.5 Employee Stock Options Plan .............................................................................................................................. 63 4.6 Restricted Employees Stock ................................................................................................................................. 63 4.7 Mergers and Acquisitions .................................................................................................................................... 63 V. FINANCIAL PLAN & IMPLEMENTATION .................................................................................................................. 64 VI. BUSINESS HIGHLIGHT ............................................................................................................................................ 65 6.1 Business Activities ................................................................................................................................................ 65 6.2 Market Status ...................................................................................................................................................... 73 6.3 Personnel Structure ............................................................................................................................................. 80 6.4 Environmental Protection & Expenditures .......................................................................................................... 80 6.5 Employees ............................................................................................................................................................ 82 6.6 Important Contracts ............................................................................................................................................ 83 VII. FINANCIAL STATEMENTS ....................................................................................................................................... 84 7.1 Condensed Financial Statement and Auditors’ Opinions by adopting IFRSs ....................................................... 84 7.2 Financial Analysis for recent 5 years .................................................................................................................... 89 7.3 Report by Audit Commitee .................................................................................................................................. 94 7.4 Consolidated Financial Statements ...................................................................................................................... 95 7.5 Financial Statements-Standalone ...................................................................................................................... 197 7.6 Financial Difficulties ........................................................................................................................................... 288 VIII. FINANCIAL ANALYSIS ........................................................................................................................................... 274 8.1 Financial Status .................................................................................................................................................. 274 8.2 Operational Results............................................................................................................................................ 275 8.3 Cash Flow ........................................................................................................................................................... 276 8.4 Major Capital Expenditure ................................................................................................................................. 277 8.5 Long-Term Investment ....................................................................................................................................... 277 8.6 Risk Management .............................................................................................................................................. 278 8.7 Other Remarks ................................................................................................................................................... 280 SPECIAL NOTES .................................................................................................................................................... 281 9.1 Affiliates ............................................................................................................................................................. 281 9.2 Private Placement Securities ............................................................................................................................. 293 9.3 Status of Sunplus Common Shares/GDRs Acquired, Disposed of, or Held by Subsidiaries ............................... 294 9.4 Special Notes ..................................................................................................................................................... 295 9.5 Any Events Impact to Shareholders’ Equity and Share Price ............................................................................. 295 IX. I. LETTER TO SHAREHOLDERS BUSINESS REPORT 2020 Business Results Sunplus consolidated net operating revenue totaled NT$6,414 million and the gross profit were NT$2,925 million in 2020. While R&D expense totaled NT$1,624 million and the G&A expenses were NT$488 million, marketing expense were NT$297 million, Operating profit was NT$516 million in 2020. Including total non-operating net income NT$269 million, the profit before tax were NT$785 million. Excluding the income tax expense NT$166 million, the net profit of the year totaled NT$619 million, attributable to owner of the Company were NT$323 million which the earning per share after tax for 2020 was NT$0.55. The net sales from continuing operations in 2020 increased 16.9% compared to the same period last year. The gross profit margin is about 46% compared with the previous year ’s 43%, a slight increase. 2020 operating net profit increased by 291.80% compared to 2019. Off-line income increased from 112 million in 2019 to 269 million in 2020, Mainly because the net profit of financial assets measured at fair value through profit and loss in 2020 increased by 105 million compared with 2019. The IFRS Consolidated Statement exposes other comprehensive gains and losses in 2020, Including the difference between the conversion of financial statements of foreign operating institutions, Unrealized gains and losses on equity instrument investments measured at fair value through other comprehensive income, determine the number of reassessments of the welfare plan, the shareholding of related enterprises recognized by equity method, the total net after-tax other comprehensive profit and loss in 2020 is NT$6 million. The total consolidated profit and loss in 2020 was NT$625 million, the consolidated profit and loss was attributed to NT$327 million by the owner of the company. PRODUCTS R&D, TECHNOLOGIES AND OUTLOOK Sunplus technology mergers and acquisitions of major individuals, including Sunplus Technology, Generplus Technology, SunplusIT Technology, Jumplux Technology, and mainland subsidiary. Sunplus is currently focuses on the development, in addition to Automotive Infotainment System (In-Vehicle Infotainment), Display Audio chip, advanced driver assistance system (ADAS) automotive chip, In addition to airlyra's SoundBar chip, audio-visual entertainment system and other chip products, it also introduces the smart computing chip Plus1 suitable for AIoT applications. It also provides IP authorization for high-speed interfaces, data converters, and analogs. With the popularity of smart phones, the convenience of being integrated with the car's infotainment system when getting on the car makes this system a standard equipment for the front of new cars! The growth momentum of this system will be the main source of growth for Sunplus's revenue and profit. The revolutionary breakthrough of the intelligent computing chip Plus1, which greatly reduces the threshold for the development of edge computing applications. It will be the best solution for a small number of diverse AIoT new applications, and countless innovative applications will be commercialized to benefit the crowd. 1 Generalplus Technology focuses on consumer electronics chips, product line includes voice, multimedia, and MCU chips, Product development market leadership. The main application products include interactive toys, education and learning, driving Recorder, Sports DV, Wireless Charging, Motor control, etc.. In 2020, a new generation of voice IC GPC74C series platform, advanced version GPC22 series and low-power GPL873 series will be launched. In terms of multimedia products, the introduction of 40nm R&D 32-bit SoC, including 3D image processing, H.264, voice processing, and deep learning algorithms, can be used for education and learning, driving records, sports photography, aerial photography and other applications. On the MCU side, developed a 32-bit Cortex-M0 sine wave drive motor control chip. For touch IC, complete high anti-interference and low radiation requirements to meet home appliances and industrial control applications. Sunplus Innovation Technology focuses on human-machine interface device chips. 2020 is a year of severe challenges. The market has greatly increased demand due to the epidemic, but its production capacity is also severely tight. With its efforts, its annual revenue has increased by 93%. 59% came from PC cameras, mouse keyboards and storage, and 41% came from USB external camera devices, driving pullers, high-speed cameras, new retail and remote controls. In 2021, the field of machine vision intelligent imaging applications will continue, and we look forward to continued growth in 2021. Jumplux Technology focuses on automotive electronics and high-speed storage. In 2020, affected by the epidemic, it will adjust the organization and product development direction, focusing on the peripheral IC and Serdes IP of the front-mounted car regulations, including MediaHub USB2.0 IC – SPD102, MediaHub USB3.2 Gen2 IC – SPD1023, MIPI APHY IP. The main customers of 2020 are the TIER1 auto brand, a Sino-foreign joint venture between North America and Europe. The SPD10X series has successfully achieved design introduction, and mainland brand automakers have also begun mass production. It is expected to add growth momentum in 2021. Subsidiaries in China include Shanghai Sunplus, Sunplus prof-tek, Sunmedia, Sunplus-EHUE and Sunplus APP. Mainly to support the company's mainland customers in the company's engineering services and business promotion. External competition, regulations, and overall economic environment Sunplus Technology focuses on the development of automotive chips, audio chips, and intelligent computing chips, continuing its past leadership in the audio-visual market, which is conducive to the competitiveness of automotive audio-visual systems, connected car driving assistance systems, and AIoT Edge Computing. Generplus Technology will be affected by the new crown pneumonia in 2020, the global economy will fluctuate sharply, and the US-China trade war will cause a substantial adjustment in the supply chain, bringing a completely different development pattern to the world than in the past. Looking forward to 2021, we will continue to invest more R&D resources, accelerate the development of new products, and respond to market changes. In addition to continuing to develop towards a higher degree of integration, Sunplus Innovation Technology also actively develops intelligent imaging products to increase added value and create the greatest benefits for shareholders and employees. Under the imbalance between supply and demand in the automotive semiconductor supply chain, Jumplux Technology will continue to work closely with TIER1 and car manufacturers, and actively cooperate with the supply chain to obtain a stable supply of goods. Looking forward to 2021, although COVID-19 has seen the dawn of a vaccine, the short-term haze is still there. With the Biden administration coming to power, the US-China trade war may be expected to slow down. The market generally expects that the international economy will grow significantly. The company will pay close attention to changes in the international economic environment, adjust the pace of product research and development in a timely manner, and conform to market demand. 2 Future company development strategy Sunplus Technology includes all of the merged individuals of the Group, will continue to deepen the core competitiveness of various fields, efforts to expand the market, Improve product value and observe market trends, adjust and optimize product lines and investments, Improve industry and industry performance, at the same time actively investing in advanced technology, open up new products and markets, reserve a new wave of growth momentum. Expect to continue to increase profits, return the long-term support of shareholders. All the best, Chairman & CEO, 3 II. COMPANY PROFILE 2.1 Foundation of Sunplus Sunplus was founded in August 3rd 1990 in Hsinchu, Taiwan. 2.2 Milestones For the formation of the Company's share capital, please refer to pages 63-66 of this annual report. Please refer to pages 284 to 295 of this annual report on the relationship between the Company and the investment enterprises. August 1990 Sunplus Technology was founded May 1993 Obtained approval from the SIPA to move into Hsinchu Science Park October 1993 Moved into Hsinchu Science Park September 1994 Company started in-house wafer circuit probe testing December 1995 Groundbreaking for the construction of Sunplus’ office building, located in 19, Innovation First Road, Hsinchu Science Park April 1996 Evaluated as “The most productive IC design company” by Hsinchu SIPA January 1997 Grand opening of Sunplus’ office building September 1997 Sunplus Technology was IPO on the Over-The-Counter stock market January 2000 Sunplus was listed on the main board of the Taiwan Stock Exchange (TSE) Jun 2000 Received certificate of ISO 9001 Quality Assessment by RWTUV September 2000 Reorganized into three new business unit, Consumer center, Multimedia center, and production center; and the BOD appointed Mr. Yarn-Chen Chen as the president December 2000 Received the “Distinguished Achieved Award” from Hsinchu SIPA March 2001 Launched Global Depositary Receipts on the London Stock Exchange December 2001 Completed the Grandtech merger and announced the company’s reorganization January 2002 Established a subsidiary in Shanghai, China to provide better service to customers in Mainland. February 2002 Implemented ERP system successfully to enhance company‘s operating efficiency and competence Jun 2002 Purchased a new office building (B-building) at Science Park July 2002 Sponsored the new Innovation Park and Parking Lot at Science Park, Hsinchu February 2003 Licensed 32-bit core IP from MIPS Technology for next-generation consumer electronic products April 2003 Completed acquisition of Oak Optical Storage Business and spin-off a new venture, Sunext May 2003 Technology to focus on next generation Blue Ray ODD controller Licensed MPEG-4 video compression technology from DivX Networks to create DivX certified IC solution for consumer electronic products Jun 2003 Announced reorganization by altering the Product Business Unit Systems to Functional Business Unit Systems August 2003 Established a new milestone for monthly sales over NT$1 billion December 2003 Won “Innovation Product Award 2003” and “R&D Performance Award 2003” from Hsinchu SIPA March 2004 Established a new subsidiary, Generalplus Technology to focus on consumer IC design September 2004 Received certificate of ISO 14000 Quality Assessment December 2004 MFP SoC with 4800dpi image quality won “Innovation Product Award 2004” from Hsinchu SIPA December 2004 Won “R&D Performance Award 2004” from Hsinchu SIPA Jun 2005 Announced the first 32-bit processor core S+core® with Sunplus-owned instruction set Jun 2005 architecture Launched USB2.0-to-Serial ATA bridge solution August 2005 Applied MPEG-4 image controlling technology to the first IP cam with resolution up to 1M pixel in the worldwide August 2005 Completed the merger with the 3G team of information & communication research lab ITRI and started the development of 3G cellular communication ICs September 2005 Established a new milestone of monthly sales up to NT$1.899 billion as record high October 2005 Mass-produced the PHS mobile baseband processor November 2005 Announced the worldwide first DVD ICs certificated by DivX Ultra December 2005 Announced reorganization by altering the Functional Business Unit System to Product Business Unit System and the resolved to spin off the LCD IC business. Mr. Chou-Chye Huang was appointed to CEO of Sunplus 4 March 2006 Completed the spin-off of the LCD IC business into Orise Technology Co., Ltd. December 2006 Completed the spin-off of Controller & Peripheral Business Unit into Sunplus Innovation Technology Inc. December 2006 Completed the spin-off of the Personal Entertainment Business Unit and Advanced Business Unit into Sunplus mMobile Inc. December 2006 Established a new record high with 2006 profit after tax, NT$2.97 billion February 2007 Licensed digital TV SoC IP to Silicon Image, Inc. with US$40 million for license fee. March 2007 Completed the return of capital with outstanding shares afterward 512,953,665 shares April 2007 The spin-off LCD driver IC design company Orise Technology was IPO April 2007 Sunplus mMobile spun-off Sunplus mMedia Inc. December 2007 Highly integrated SoC SPG290 with interactive game and education function won the “Innovation Product Award 2007” from Hsinchu SIPA December 2007 Received certificate of IECQ 080000 for hazardous substance process management. December 2007 Established a new subsidiary, Sunplus Prof-tek Technology, in Shenzhen January 2008 Established a new subsidiary, Sunmedia Technology, in Chengdu March 2008 Sunext licensed optical storage technology to Broadcom Corporation with license income up March 2008 to US$38 million Launched first DTMB demodulator for China digital broadcasting TV system among Taiwanese IC design companies April 2008 Established new subsidiary Sunplus APP Technology in Beijing, to follow up Sunplus University March 2009 Program in China Joint-promoted with DTS next generation DVD SoC delivering the ultimate audio entertainment experience. October 2009 Spun off Sunplus mMedia’s product lines: PC-Cam to Sunplus Innovation Technology Inc.; PMP/MP3/DPF to Generalplus Technology Inc.; DSC to new start-up December 2009 Started up iCatch Technology Inc. to take over the DSC business from Sunplus mMedia Inc. August 2010 Celebrated Sunplus’ 20th Anniversary and Kept Going for “Technology for Easy Living” May 2011 Announced reorganization by altering the IC design Unit and System design Unit to “DVD Product Center”, “STB Product Center”, “TV Product Center” and “IP Product Center”. Appointed Dr. Archie Yeh as President of Home Entertainment Business Unit November 2011 The subsidiary, Generalplus Technology Co., Ltd., focused on consumer IC design listing on Taiwan Stock Exchange under the code “4952” May 2012 Updated the company vision from “Technology for Easy Living” to “Customers Win we win” June 2012 Elected the 9th Board of Directors and Supervisors in AGM2012, the BOD re-elected December 2012 Unanimously Mr. Chou-Chye Huang as Chairman Joint-invest Sunplus Core Technology (renamed: S2-tek Inc.) for TV IC design January 2013 Reorganization to “DVD Product Center”, “STB Product Center” and “IP Product Center”. November 2013 “DVD Product Center” renamed to “Automotive Product Center”. January 2014 Established new subsidiary Beijing Sunplus-Ehue Tech Co., Ltd. October 2014 Sunplus mMedia spun-off Jumplux for USB Multi-Screen Display SoC and IP Design December 2014 The consolidated net sales reached NT$8.71 billion January 2015 Orise Technology merged with Focal Tech January 2015 Disposed STB product Center February 2015 Reorganization due to disposal of STB center, Chariman & CEO Mr. Chou-Chye Huang is acting June 2015 December 2016 June 2017 March 2018 August 2018 February 2019 as President of HE BU Elected the 10th Board of Directors and Supervisors in AGM2015, the BOD re-elected Unanimously Mr. Chou-Chye Huang as Chairman Completed TSMC 28nm HPC + IP development and verification The first release of the Corporate Social Responsibility Report (CSR Report) actively implements corporate social responsibility to meet the international trends of balanced environmental, social and corporate governance development, contribute to economic development, and improve employees, their families, and the local community as a whole. Social quality of life Home Entertainment BU has set up a "Smart Computing Project" Update Slogan to "Make difference". Simple and powerful, easy to understand, the larger version of Make declares that you want to "do something" and create valuable differentiation Passed ISO45001 and TOHSMS environmental safety and health management system certification 5 December 2014 July 2020 September 2020 February 2021 March 2021 Announced highly integrated automotive instrumentation solutions and successfully entered the supply chain of automotive instrument manufacturers Subsidiary "Sunplus Innovation Technology Co., Ltd." registered in emerging stock market Join the Hon Hai MIH Electric Vehicle Platform Alliance The "Smart Device Product Center" was established under the home platform business group 6 III. Corporate Governance 3.1 Organization 3.1.1 Organization Chart 7 3.1.2 Major Corporate Functions Department Job Description March 31st, 2021 Chairman Office CEO Office Internal Auditor Home Entertainment Business Unit Engaging the strategic alliances (1) (2) Planning and executing investment plans (3) Arranging Board of Directors Meetings (4) Executing internal auditing plan as routine Executing and managing the strategic alliances The planning, promotion and implementation of the Company's integrity management Establishing company’s operational strategies, and goals (1) (2) Auditing and improving the operating performances (3) Communicating with investors, public and media (4) (5) Managing strategic investments (1) (2) Auditing subsidiaries regularly (3) Auditing special cases (4) Re-certification auditing of self-examination (5) Establishing the internal control system (1) Developing world-class audio and video solutions (2) Managing sales channels and distributors and providing customer services (3) Marketing and expanding business worldwide (4) Conducting production, material control, International trading affairs (5) Developing and handling quality assurance system (6) Planning new products and engaging cutting-edge technologies (7) Maintaining testing software and facility (1) Total Management, Plant Management, Procurement, Occupational safety, Environmental Protection and Administrative Services Administration Unit Finance & Accounting Division Legal & IP Department Establishing corporate information service to upgrade the productivity (2) Managing human resources and personnel (3) (4) Automating of business process to be more competitive (5) Consulting for management to making business decisions (1) Managing finance & accounting affairs (2) Arranging annual shareholders’ meeting (1) Coordinating the legal and IP affairs (2) Controlling the project procedures and design documents (3) Conserving company confidential documents (4) Purchasing, maintaining librarianship (5) Conducting contracts & IP management 8 3.2 Directors, and Management 3.2.1 Directors& Supervisors Title Name Date Elected Initial Date Elected Term of Office Chairman & CEO Chou-Chye Huang 2018.06.11 1990.07.09 3 years Share holding When Elected Amount 92,737,817 15.67 % Current Shareholding Amount 92,737,817 15.67 % Spouse & Minor Shareholding Amount 1,370,993 Educational Background % 0.23 M.S., Electrical Engineering, Director Wen-Shiung Jan 2018.06.11 2009.04.30 3 years 0 0.00 0 0.00 0 0.00 MBA, International Business, National Taiwan University, Taiwan National Tsing Hua University, Taiwan Director Global View Co., Ltd., 2018.06.11 1990.07.09 3 years 10,038,049 1.70 10,038,049 1.70 0 0.00 - April 9th, 2021/Unit: shares Positions Currently held in Other Companies (Note 2) Note 1 Supervisor: Hi-Yes Group., Director: Ability Enterprise, Panjit, OPALS, E-Pin Optical Inc. Independent Director: Biostar, Nien Hsing Textile Chairman: iCatch Chairman: ECSC Inc. Chairman: RADIANT INNOVATION INC. Chairman: British Cayman Islands GLOBAL VIEW CO.,LTD Director: NVTEK 2018.06.11 1990.07.09 3 years 0 0.00 0 0.00 0 0.00 B.S., Accounting, Chinese Culture University General manager: Global View, Director: Beijing Global View, Radiant Innovation Inc. Supervisor: NVTEK Director Director Wen-Ren Su (Global View Co., Ltd., Representative of Legal Entity) Wei-Min Lin Independent Director Che-Ho Wei 2018.06.11 2009.04.30 3 years 2018.06.11 2009.04.30 3 years 0 0 0.00 0.00 0 0 0.00 0.00 0 0 0.00 M.S., Accountancy, Jinan University, China 0.00 Ph.D., Electronic Engineering, University of Washington, Seattle, USA CPA Auditor of Wei-Min Lin Accounting Firm Independent Director: Fu-Shin holding Cayman Independent Director & Compensation Committee: Genesis Photonics Inc., Director: Unizyx Holding Corporation, Arcadyan Technology, MXIC Chairman : NIIEPA Adjunct Professor, Department of Electronic Engineering, National Yang Ming Chiao Tung University Independent Director Tse-Jen Huang 2018.06.11 2015.06.12 3 years 0 0.00 0 0.00 0 0.00 EMBA, National Taiwan CPA and Head of Shengxin CO., CPAs Independent Director Yao-Ching Hsu 2018.06.11 2015.06.12 3 years 0 0.00 0 0.00 University of Science and Independent Director & Audit Committee and Remuneration Technology Committee: GenMont Independent Director & Compensation Committee: Sunfon Director: Framy Inc. 0 0.00 M.S., Laws, Cornell University, USA Charged lawyer of Yuan Qing Patent and Trademark Office Supervisor: Xiyinlina Prevention Foundation Note1: Chairman: Generalplus, Russell Holdings Co., Ltd.,Venturplus Group Inc., Venturplus Mauritius Inc., Venturplus Cayman Inc., Shanghai Sunplus, Sunplus Technology (HK), Sunplus Venture Capital, Lin Shih Investment, Weiying Investment, Sunplus Management Consulting, Generalplus International (SAMOA)Inc., Sunplus Innovation Technology, Sunplus mMobile, Generalplus (MAURITIUS) Inc., Generalplus (Shenzhen), , Sunplus Prof-tek, Sunmedia, Magic Sky Limited, , Award Glory Ltd., Sunny Fancy Ltd., Giant Rock Inc., Giant Kingdom Ltd., Zhu Ming Teaching Foundation, Zhu Ming Academic Foundation, Jumplux, Chongqing Shuangxin Technology, GenkiTek Technology Co., Ltd., GlintMed, Capella Microsystems Chairman & President: Sunext, Sunplus mMedia, Beijing Sunplus-Ehue Tech Co., Ltd. President: Worldplus Holdings L.L.C Director: Pan Wen Yuan Foundation, Sinocon Industrial standards Foundation, iCatch, Global View Co., Ltd., Zhu Ming Foundation, Alumni Association of Industrial Technology Research Institute, AkiraNET Executive Supervisor: National Yang Ming Chiao Tung University Note 2: The chairman of the company and the general manager or equivalent (the top manager) are the same person, are relatives of each other, such as spouse or one parent, should explain the reasons, rationality, necessity and corresponding measures (such as increasing the number of independent directors and should (More than half of the directors have not served as employees or managers, etc.): The chairman of the company also serves as the chief executive officer. To improve business efficiency and decision-making execution, the company has the following specific measures. 9 1. Of the seven members of the board of directors, except for the chairman, the remaining six directors are not part-time employees or managers. 2. Independent directors can fully discuss and make recommendations for the board of directors in each functional committee to implement corporate governance. 10 3.2.2 Directors and Supervisors' Qualifications and Independence Analysis April 9th, 2021 Numbers of other public companies concurrently serving as an independent director Criteria Name (Note 1) With over 5 years of working experience and one of the following professional requirements Independent Status (Note 2) With an experience in commerce, law, finance, accounting or other specialties necessary to the Company’s business An instructor of higher position in a department of commerce, law, finance, accounting, or other departments related to the Company’s business in a public or private college or university A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the Company’s business 1 2 3 4 5 6 7 8 9 10 11 12 0                     Chou-Chye Huang Wen-Shiung Jan Wen-Ren Su (Global View Co., Ltd., Representative of Legal Entity) Wei-Min Lin Che-Ho Wei Tse-Jen Huang Yao-Ching Hsu Note 1: The amount of columns depends on the actual circumstance. Note 2: “” indicates the directors and supervisors meeting any of the following criteria during the term of office and two years before                                                                 2 1 1 0 2 0 being elected. (1) Not an employee of the company or its affiliates. (2) Not a director or supervisor of the company or its affiliates. (However, if the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations are concurrently held by each other, it is not limited.) (3) Not the shareholder (with its relatives or under others’ names) who holds more than 1% shareholding of the total issued shares or ranked as the Top 10 shareholders. (4) Not a manager listed in (1) or a spouse, relative within the second parent, or direct blood relative within the third parent, etc. (5) Directors who do not directly hold more than 5% of the total issued shares of the company, the top five shareholders, or a legal person shareholder who appoints a representative as a company director or supervisor according to Article 27, paragraph 1 or 2, of the company law, Supervisor or Employee (However, if the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations are concurrently held by each other, it is not limited to this). (6) More than half of the shares that are not on the board of directors of the company or have voting rights are the directors, supervisors or employees of other companies controlled by the same person (but if it is a company or its parent company, subsidiary or a child of the same parent company) (The independent directors established by the company in accordance with 11 this law or local national laws shall not be limited to this). (7) Directors (directors), supervisors (supervisors) or employees (but in the case of the company and its parent company) of other companies or organizations that are not the same person or spouse with the company ’s chairman, general manager or equivalent. Independent directors set up by a subsidiary company or a subsidiary of the same parent company in accordance with this law or local national laws shall not be limited to this). (8) Directors (directors), supervisors (supervisors), managers or shareholders holding more than 5% of shares in specific companies or institutions that do not have financial or business dealings with the company (but specific companies or institutions that hold issued shares in the company) If the total number is more than 20% but not more than 50%, and the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations are concurrently held by each other, it is not limited to this). (9) Professionals, sole proprietorships, partnerships, companies or institutions that do not provide audits for companies or related companies or have business, legal, financial, accounting and other related services whose cumulative amount of remuneration in recent two years has not exceeded NT $ 500,000 Business owners, partners, directors (directors), supervisors (supervisors), managers and their spouses. However, members of the Remuneration and Compensation Committee, Public Takeover Review Committee, or M & A Special Committee that perform their duties in accordance with the relevant laws and regulations of the Securities Exchange Act or the Corporate M & A Act are not limited. (10) There is no kinship relationship with other directors within the scope of spouse or second parent. (11) There is no one of the circumstances in Article 30 of the Company Law. (12) There is no Article 27 of the Company Law which stipulates that the government, legal person or its representative shall be elected. 12 3.2.3 Major Shareholders of Sunplus’ Shareholders as Legal Entities a) Global View’s Top 10 Shareholders Shareholder Sunplus Technology Jhih-Yuan Chou China Trust Commercial Bank is entrusted to keep the investment account of Baofu Investment Consultant (Hong Kong) Co., Ltd. - Customer Account THE CAPITAL GROUP is entrusted with the special investment account of Changxiong Securities Co., Ltd. Citi bank as trustee for First Securities (HK) Meng-Huei Lin Shuhui Chen Yunlong Huang Yi Jiang Nan Co., Ltd. The business department of Standard Chartered International Commercial Bank is entrusted with the custody of the investment account of Credit Suisse International b) Remark if the above Major Shareholders as Legal Entities: April 9th, 2021 Holding 13.06% 10.45% 7.05% 3.77% 3.31% 2.47% 2.47% 2.09% 1.90% 1.27% Shareholder Major Shareholders Holding China Trust Commercial Bank is entrusted to keep the investment account of Baofu Investment Consultant (Hong Kong) Co., Ltd. - Customer Account THE CAPITAL GROUP is entrusted with the special investment account of Changxiong Securities Co., Ltd. China Trust Commercial Bank is entrusted to keep the investment account of Baofu Investment Consultant (Hong Kong) Co., Ltd. - Customer Account China Trust Commercial Bank is entrusted to keep the investment account of Baofu Investment Consultant (Hong Kong) Co., Ltd. - Customer Account Yi Jiang Nan Co., Ltd. The business department of Standard Chartered International Commercial Bank is entrusted with the custody of the investment account of Credit Suisse International Not Applicable Not Applicable Not Applicable Not Applicable Jiaxi Huang Jiaqi Huang Not Applicable - - - - 27% 26% - 13 3.2.4 Management Team Title Country of Citizenship Name Gender Effective Date Current Shareholding Spouse’s & Minor’s Shareholding Use the Name of Others to Hold Shares Amount % Amount % Amount % Educational Background Positions Currently held in Other Companies (Note 5) Chairman & CEO Vice President Assistant VP Assistant VP Assistant VP Assistant VP Republic of China Republic of China Republic of China Republic of China Republic of China Republic of China Chou-Chye Huang Wayne Shen Alex Chang Jason Lin Michael Su Adam Wang male male male male male male 1990.07.09 92,737,817 15.67 1,370,993 0.23 0 2005.12.01 969,558 0.16 2013.07.01 0 0.00 0 0 0.00 0 0.00 0 0.00 M.S., Electrical Engineering, National Tsing Hua University, Taiwan Note:1 0.00 - - 0.00 Master, Industrial Engineering, Note:3 National Chiao-Tung University, Taiwan 2013.11.01 146,111 0.02 0 0.00 0 0.00 Master, Industrial Engineering, Note:4 2018.03.15 0 0 0 0.00 0 2021.04.01 10000 0 0 0.00 0 National Chiao-Tung University, Taiwan 0.00 Master of Electrical Engineering, University of Southern California, USA 0.00 Master of Control Engineering Institute, National Chiao-Tung University, Taiwan - - April 9th, 2021/Unit: shares With Spouse or Two Parents Relationship Manager Remarks Note:7 Job Title Name Relationship - - - - - - - - - - - - - - - - - - 0.01 female 36,067 2013.03.01 Shu-Chen Cheng Republic of China Director of Finance & Accounting Division Head of Corporate Governanc e Note1: Chairman: Generalplus, Russell Holdings Co., Ltd.,Venturplus Group Inc., Venturplus Mauritius Inc., Venturplus Cayman Inc., Shanghai Sunplus, Sunplus Technology (HK), Sunplus Venture Capital, Lin Shih Investment, Weiying Investment, Sunplus Management Consulting, Generalplus International (SAMOA)Inc., Sunplus Innovation Technology, Sunplus mMobile, Generalplus (MAURITIUS) Inc., Generalplus (Shenzhen), , Sunplus Prof-tek, Sunmedia, Magic Sky Limited, , Award Glory Ltd., Sunny Fancy Ltd., Giant Rock Inc., Giant Kingdom Ltd., Zhu Ming Teaching Foundation, Zhu Ming Academic Foundation, Jumplux, Chongqing Shuangxin Technology, GenkiTek Technology Co., Ltd., GlintMed, Capella Microsystems 0.00 Master of Accounting, National 0.00 Bachelor, Accounting, Tunghai Republic of China Chengchi University University, Taiwan Phoebe Chen 2021.04.01 Note:6 Note:5 0.00 0 0.00 0 female 19177 0 0 0 - - - - - - Chairman & President: Sunext, Sunplus mMedia, Beijing Sunplus-Ehue Tech Co., Ltd. President: Worldplus Holdings L.L.C Director: Pan Wen Yuan Foundation, Sinocon Industrial standards Foundation, iCatch, Global View Co., Ltd., Zhu Ming Foundation, Alumni Association of Industrial Technology Research Institute, AkiraNET Executive Supervisor: National Yang Ming Chiao Tung University Note 2 Director: Sunplus mMobile, Beijing Sunplus-Ehue Tech Co., Ltd., Sunplus mMedia, Supervisor: Jumplux, Sunext. Note 3 AVP: iCatch, Sunext, Jumplux, , Shanghai Sunplus, Chongqing Shuangxin Technology. Director: Rudong Core Electronic Technology. Note 4 Director: Advanced Vehicle Systems Co., Ltd. AutoSys Co., Ltd. Note 5 Manager: Sunext, Jumplux. Supervisor: Rudong Core Electronic Technology. 14 Director: GenkiTek. Note 6 Director: Sunext, Jumplux, Supervisor: Sunplus mMedia, GlintMed Note 7 When the general manager or equivalent (the top manager) and the chairman are the same person, are relatives such as spouse or one parent, they should disclose the reasons, rationality, necessity and corresponding measures (such as increasing the number of independent directors More than half of the directors have not served as employees or managers, etc.) related information: The chairman of the company also serves as the chief executive officer. To improve operational efficiency and decision-making execution, the company currently has the following specific measures: 1. Among the seven members of the board of directors, except for the chairman, the remaining six directors are not part-time employees or managers. 2. Independent directors can fully discuss and make recommendations for the board of directors in each functional committee to implement corporate governance. 15 3.2.5 Remuneration to Directors, Presidents, and Vice Presidents a) Remuneration to Directors Title Name (Note 1) Remuneration to Directors Remuneration to Directors who hold a Concurrent Post in the Company Salary (A) (Note 2) Pension (B) Bonus from Profit Distribution (C) (Note 3) Allowance (D) (Note 4) (A)+(B)+(C)+ (D) %of Net Income (Note 10) Salary, Bonus, etc. (E) (Note 5) Pension (F) Employee Bonus from Profit Distribution (G) (Note 6) (A)+(B)+(C)+( D) +(E)+(F)+(G) % of Net Income (Note 10) S u n p l u s S u n p l u s C o n s o l i d a t e d S u b s i d i a r i e s ( N o t e 7 ) S u n p l u s C o n s o l i d a t e d S u b s i d i a r i e s ( N o t e 7 ) C o n s o l i d a t e d S u b s i d i a r i e s ( N o t e 7 ) S u n p l u s C o n s o l i d a t e d S u b s i d i a r i e s ( N o t e 7 ) Sun plu s Cons olidat ed Subsi diarie s (Note 7) Sunplus Consolid Sunplus ated Subsidia ries (Note 7) Sunplus Consolida ted Subsidiari es (Note 7) Consolidated Subsidiaries (Note 7) S u n p l u s S u b s i d i a r i e s C o n s o l i d a t e d Cash Bonus Stock Bonus Cash Bonus Stock Bonus Receive remuneratio n from non-subsidia ry reinvestment business or parent company (Note 11) Units: NT$, shares Chairman Director Director Chou-Chye Huang Wen-Shiung Jan Global View Wen-Ren Su Representative of Legal Entity Wei-Min Lin Che-Ho Wei Tse-Jen Huang Yao-Ching Hsu - - - - 3,233,890 3,233,890 961,000 961,000 1.30 1.30 5,532,604 5,532,604 91,848 91,848 - - - - 3.04 3.04 3,874,522 Director Independent Director Independent Director Independent Director 1. Please state the policy, system, standards and structure of independent directors' remuneration payment, and describe the relevance to the amount of remuneration according to the responsibilities, risks, time invested, etc. According to one of Article 18 of the company's articles of association, "when the directors of the company perform the duties of the company, the company may pay remuneration regardless of the company's business profits and losses. The remuneration is authorized by the board of directors to negotiate with the industry's usual level. Remuneration is distributed in accordance with the provisions of Article 29 of this Constitution. " To measure the company's current operating scale and to consider the company's current operating conditions, the company's policies and regulations for the payment of independent directors' remuneration have a positive relationship with operating performance and future risks assumed. The payment of the sole director's remuneration shall be reported to the board of directors for resolution after the approval of the remuneration committee. 2. In addition to the disclosures in the above table, the directors of the company in the most recent year have received remuneration for providing services to all companies in the financial report (such as serving as consultants for non-employees): none. 1,741,326 1,741,326 1,329,000 1,329,000 0.95 0.95 0.95 0.95 - - - - - - - - - Remuneration to Directors Under NT$1,000,000 NT$1,000,000~NT$2,000,000 (Not included) NT$2,000,000~NT$3,500,000 (Not included) NT$3,500,000~NT$5,000,000 (Not included) NT$5,000,000~NT$10,000,000 (Not included) NT$10,000,000~NT$15,000,000 (Not included) NT$15,000,000~NT$30,000,000 (Not included) NT$30,000,000~NT$50,000,000 (Not included) NT$50,000,000~NT$100,000,000 (Not included) More than 100,000,000 Total Remuneration Class Names of Directors The total amount of the first four remuneration (A)+(B)+(C)+(D) Sunplus (Note 8) Wen-Shiung Jan, Global View, Wen-Ren Su, Wei-Min Lin, Tse-Jen Huang, Yao-Ching Hsu Che-Ho Wei Chou-Chye Huang Consolidated Subsidiaries (Note 9) H Wen-Shiung Jan, Global View, Wen-Ren Su, Wei-Min Lin, Tse-Jen Huang, Yao-Ching Hsu Che-Ho Wei Chou-Chye Huang The total amount of the first seven remuneration (A)+(B)+(C)+(D)+(E)+(F)+(G) Sunplus (Note 8) Wen-Shiung Jan, Global View, Wen-Ren Su, Wei-Min Lin, , Tse-Jen Huang, Yao-Ching Hsu Che-Ho Wei All companies in the financial report (I) (Note 9) Wen-Shiung Jan, Global View, Wen-Ren Su, Wei-Min Lin, Tse-Jen Huang, Yao-Ching Hsu Che-Ho Wei Chou-Chye Huang Chou-Chye Huang 8 8 8 8 Note 1: The names of directors should be listed separately (legal shareholders should separately list the names and representatives of legal shareholders), and the general directors and independent directors should be listed separately, and the amount of each payment should be disclosed in a summary manner. If the director also serves as the general manager or deputy general manager, this table and the following table (3-1), or the following tables (3-2-1) and (3-2-2). Note 2: It indicates the remuneration to directors (including salary, allowance, pension, bonus, rewards, and etc.) in the most recent fiscal year. Note 3: It indicates the remuneration to directors from profit distribution in the most recent fiscal year according to the proposal submitted by BOD to shareholders’ meeting for approval. Note 4: It indicates the expenses generated from directors’ business (including transportation fees, social activity fees, allowances, dormitories, company cars, and etc.) in the most recent fiscal year. If the Company provides a house, car/other transportation, or other allowances to directors, the relevant 16 payments, calculated at actual cost or fair value, shall be disclosed. The remuneration paid to the company drivers shall be disclosed but not included in the remuneration to directors. Note 5: It indicates the salaries, allowances, pensions, severance pay, bonuses, rewards, transportation fees, social activity fees, dormitories, cars, and etc., to directors who hold concurrently posts in the Company (including presidents, vice presidents, managers, or other employees). If the Company provides a house, car/other transportation, or other allowances to directors, the relevant payments, calculated at actual cost or fair value, shall be disclosed. The remuneration paid to the company drivers shall be disclosed but not included in the remuneration to directors. And the salary fee recognized by IFRS 2 "Share Fundamental Contribution", including obtaining employee stock vouchers, restrictions on employee rights of new shares and participation in cash replenishment of shares and so on, should also be included in the remuneration. The company's Chairman Huang and the chief executive officer are equipped with official car, and are provided with drivers to pay the relevant remuneration of NT$462,000. Note 6: It indicates the employee bonuses (including cash and stock) paid to directors who hold concurrently posts in the Company (including presidents, vice presidents, managers, or other employees). The amount of employee bonus according to the proposal of profit distribution submitted by BOD to shareholders’ meeting for approval in the most recent fiscal year shall be disclosed. If there is no such proposal yet, the stock bonus may be calculated according to the stock bonus last year. Note 7: The total amount remuneration paid to the Company’s directors by all the companies in the consolidated financial statements (including Sunplus) shall be disclosed. Note 8: It indicates the numbers of directors classified by the amount of their remuneration paid by Sunplus. The amount of remuneration paid to juridical-person shareholders shall be distributed equally to each representative, and then they shall also be classified according to the amount. If the Company is willing to disclose the names of directors in each classification, the title of column shall be changed to “Names of Directors”. Note 9: It indicates the numbers of directors classified by the amount of their remuneration paid by all the companies in the consolidated financial statements (including Sunplus). If the Company is willing to disclose the names of directors in each classification, the title of column shall be changed to “Names of Directors”. Note 10: Net profit after tax refers to net profit after tax in the most recent individual or individual financial report. Note 11: a. This column should clearly list the amount of remuneration received by the company's directors from reinvested businesses other than subsidiaries or the parent company (if not, please fill in "none"). b. If the directors of the company receive remuneration from a subsidiary's reinvestment business or parent company, the remuneration received by the company's directors from a subsidiary's reinvestment business or parent company shall be included in column I of the remuneration scale and The field name is changed to "Parent company and all reinvestment businesses". c. Remuneration refers to the remuneration, remuneration (including remuneration of employees, directors and supervisors) and business execution fees received by the directors of the company as directors, supervisors or managers of non-subsidiary investment companies or parent companies. ※The remuneration disclosed here shall not be applied for taxation purpose because those are calculated on a different basis. b) Remuneration to Management Team Title Name (Note 1) Salary (A) (Note 2) Pension (B) Reward, Allowance, etc. (C) (Note 3) Sunplus Consolidated Subsidiaries (Note 5) Sunplus Consolidated Subsidiaries (Note 5) Sunplus Consolidated Subsidiaries (Note 5) Bonus from Profit Distribution (D) (Note 4) Sunplus Consolidated Subsidiaries (Note 5) Cash Bonus Stock Bonus Cash Bonus Stock Bonus (A)+(B)+(C) +(D) % on Net Income (Note 8) Sunplus Consolidated Subsidiaries (Note 5) Unit: NT$, shares Receive remuneration from non-subsidiary reinvestment business or parent company (Note 9) CEO VP * Regardless of title, where the job is equivalent to the general manager, deputy general manager (such as: president, chief executive, director ... etc.), should be exposed. Chou-Chye Huang Wayne Shen 7,977,129 1,414,004 7,977,129 1,414,004 268,608 268,608 0 0 0 0 2.99 2.99 0 Remuneration to Management Sunplus (Note 6) All companies in the financial report (E) (Note 7) Names of Presidents and Vice Presidents Under NT$1,000,000 NT$1,000,000~NT$2,000,000 NT$2,000,000~NT$3,500,000 NT$3,500,000~NT$5,000,000 NT$5,000,000~NT$10,000,000 NT$10,000,000~NT$15,000,000 NT$15,000,000~NT$30,000,000 NT$30,000,000~NT$50,000,000 NT$50,000,000~NT$100,000,000 More than NT$100,000,000 Total Note 1: Names of presidents and vice presidents shall be disclosed separately, and the remuneration shall be disclosed in total amount. If the director concurrently serves as the general manager or deputy general manager, this table and the above table (1-1), or (1-2-1) and (1-2-2). Note 2: It indicates the remuneration to presidents and vice presidents, including salary, allowance, pension, and severance pay) in the most recent fiscal year. Note 3: It indicates the bonuses, rewards, transportation fees, social activity fees, dormitories, cars, and etc., to presidents and vice presidents. If the Company provides a house, car/other transportation, or other allowances to presidents and vice presidents, the relevant payments, calculated at actual cost or fair value, shall be disclosed. The remuneration paid to the company drivers shall be disclosed but not included in the remuneration to directors. And the salary fee recognized by IFRS 2 "Share Fundamental Contribution", including obtaining employee stock vouchers, restrictions on employee rights of new shares and participation in cash replenishment of shares and so on, should also be included in the remuneration. Chairman Huang and concurrently the CEO of the company is equipped with an official car and a driver to pay the relevant remuneration of NT$478,000. Wayne Shen Chou-Chye Huang Wayne Shen Chou-Chye Huang Note 4: It is to fill in the amount of employee compensation (including stocks and cash) approved by the board of directors for the distribution of the general manager and deputy general manager in the most recent year. And should also fill in table 1-3. Note 5: The total amount remuneration paid to the Company’s presidents and vice presidents by all the companies in the consolidated financial statements (including Sunplus) shall be disclosed. Note 6: It indicates the numbers of presidents and vice presidents classified by the amount of their remuneration paid by Sunplus. If the Company is willing to disclose the names of presidents and vice presidents in each classification, the title of column shall be changed to “Names of Presidents and 2 2 Vice Presidents”. Note 7: It indicates the numbers of presidents and vice presidents classified by the amount of their remuneration paid by all the companies in the consolidated financial statements (including Sunplus). If the Company is willing to disclose the names of presidents and vice presidents in each classification, 17 the title of column shall be changed to “Names of Presidents and Vice Presidents”. Note 8: Net profit after tax refers to net profit after tax in the most recent individual or individual financial report. Note 9: a. This column should clearly list the amount of remuneration received by the general manager and deputy general manager of the company from the investment company outside the subsidiary or the parent company (if not, please fill in "none"). b. If the general manager and deputy general manager of the company receive relevant remuneration from a subsidiary's out-of-investment business or parent company, the remuneration received by the general manager and deputy general manager of the company's out-of-subsidiary investment business or parent company shall be incorporated into Remuneration level from column E of the table and change the name of the column to "Parent company and all reinvested businesses". c. Remuneration refers to the remuneration, remuneration (including employees, directors and supervisors) and business execution received by the general manager and deputy general manager of the company as directors, supervisors or managers of non-subsidiary companies or parent companies Fees and related remuneration. ※The remuneration disclosed here shall not be applied for taxation purpose because those are calculated on a different basis. 18 c) Employee Bonus Granted to Management Team April 9th, 2021 % on Net Income Shares Bonus Cash Bonus Sum up Name Title Chairman & CEO Chou-Chye Vice President Assistant VP Assistant VP Assistant VP Assistant VP Director of Finance & Accounting Division Head of Corporate Governance Huang Wayne Shen Jason Lin Alex Chang Michael Su Adam Wang Shu-Chen Cheng Phoebe Chen - - - - 3.2.6 Analysis for remuneration paid by all the companies in the consolidated financial statements (including Sunplus) to directors, presidents and vice presidents as % net income in the most recent two years. Also, the relevant policy, standards and procedures, and the relation between remuneration and performance shall be stated. 1. Analysis for remuneration paid as % net income Remuneration Director Supervisor Management 2019 2020 Amount % of Net income(Loss) Amount % of Net income (Loss) 12,235,000 79.92% 16,925,000 5.23% 2. Remuneration policies, standards and combinations, procedures for determining remuneration, and their relevance to business performance and future risks: The company pays directors' remuneration in accordance with the company's articles of association and taking into account the usual standards of the industry. The remuneration policy of the management team is based on the salary level of the job equivalent to the same industry market, plus the achievement rate of the company's operation and individual performance in each field of responsibility, and give reasonable remuneration. According to the articles of association of the company, if the company makes a profit in the current year, it shall allocate no less than 1% for employee compensation and no more than 1.5% for director compensation. However, when the company still has accumulated losses (including adjustments to the amount of undistributed surplus), it shall reserve the amount of compensation in advance. All directors of the company receive a fixed remuneration, and each time they attend the meeting, they also receive the carriage fee. In addition, the proportion of directors' remuneration distribution is weighted based on the results of evaluation projects such as the mastery of the company's goals and tasks, the degree of participation in the company's operations, internal relationship management and communication, and the director's professional and continuous education, and the weighted results are assigned. The salary and remuneration of the company’s managers not only refer to the usual level of payment in the industry, but also consider the evaluation items of professional seniority, work performance, goal achievement, and major contributions. Important evaluation items of work performance include: the practice of the company’s core values, financial and operational indicators Management (such as product revenue, gross profit, delivery and R&D schedule), implementation of corporate social responsibility, and other special contributions, or major events, etc., after comprehensive considerations, and reasonable remuneration. 19 3.3 Corporate Governance Implementation 3.3.1 BOD Meeting Status 9 meetings were held in 2020 (9 meetings by 11th BOD) (A), and the attendance of directors is as follow: Title Name (Note 1) Attendance in Person (B) By Proxy Chairman Director Director Chou-Chye Huang Wen-Shiung Jan Representative of Legal Entity , Global View Wen-Ren Su Wei-Min Lin 9 9 9 0 0 0 Remarks Attendance Rate B/A (%) (Note 2) 100 100 100 0 9 9 Che-Ho Wei Tse-Jen Huang Director Independent Director Independent Director Independent Director Other information required to be disclosed: 1.The operation of the board if one of the following circumstances, should specify the date of the board, period, the contents of the motion, the opinions of all independent directors and the handling of opinions of independent directors: (1)matters listed in Article 14-3 of the Securities Exchange Act Yao-Ching Hsu 100 100 100 100 9 9 0 0 0 Board of Directors The contents of the motion and follow-up Article 14-3 of the Securities Exchange Act Independence or objection The Fifteenth Meeting of the Eleventh Session of the Board of Directors 109.03.30 The 16th meeting of the 11th session of the Board of Directors 109.04.22 The Eleventh Session of the Eighteenth Board of Directors 109.08.13 1. The company's 2019 employee remuneration and directors' remuneration distribution situation discussion proposal. Opinion of independent directors：None. v None The Company's handling of the opinions of independent directors：None. Resolution result: In this case, the compensation for employees and directors was determined by the total amount of compensation, and the amount of personal compensation has not been determined, so there is no need to avoid interest. The case was passed after the chairman consulted all the directors present without objection. 1. Discussion on the adjustment of employee compensation and director compensation distribution of the company in 2019. Opinion of independent directors：None. Note v The Company's handling of the opinions of independent directors：None. Resolution result: In this case, the compensation for employees and directors was determined by the total amount of compensation, and the amount of personal compensation has not been determined, so there is no need to avoid interest. The case was passed after the chairman consulted all the directors present without objection. 1. Discussion on company-wide salary adjustment and manager salary adjustment in 2020. Opinion of independent directors：None. None v The Company's handling of the opinions of independent directors：None. Resolution result: passed after the chairman consulted all the directors present without objection. 20 1. Discussion of the company's long-term investment disposal. Opinion of independent directors：None. v None The Company's handling of the opinions of independent directors：None. Resolution results: (1) This case has his own interests with Chairman Huang Zhoujie, so he avoids participating in the discussion and voting in accordance with the law. Wei Zhe and independent directors were appointed as acting chairman at the direction of the chairman. (2) Except for evading directors who did not participate in the discussion and voting in accordance with the law, the case was passed after the acting chairman consulted the remaining directors present without objection. 1. The company's "internal control system" and "internal audit implementation rules" revision discussion proposal. Opinion of independent directors：None. None v The Company's handling of the opinions of independent directors：None. Resolution result: The proposal was passed after the chairman consulted all the directors present without objection. 1. Discussion Proposal on Appointment of Accountants and Independence Evaluation in 2021. Opinion of independent directors：None. None v The Company's handling of the opinions of independent directors：None. Resolution result: The case was passed after the chairman consulted all the directors present without objection. The eleventh session of the nineteenth board of directors 109.09.07 The twentieth meeting of the eleventh board of directors 109.11.13 The Twenty-second Meeting of the Eleventh Session of the Board of Directors 109.12.29 (2) Except for the foregoing, other board of directors who oppose or retain opinions and have a record or written statement by an independent director: None. 2. The implementation of the directors ’avoidance of the proposal of interest shall state the name of the director, the content of the proposal, the reason for the avoidance of interests and the situation of participation in voting— (1) On March 30, 2020, the board of directors discussed the "Discussion Proposal for the Company's Staff Remuneration and Directors' Remuneration Distribution in 2019.": In this case, the part of employee compensation and director compensation determines the total amount of compensation, and does not determine the amount of personal compensation, so there is no need to avoid interest. The case was passed after the chairman consulted all the directors present without objection. (2) On April 22, 2020, the board of directors discussed the "Discussion on the adjustment of the company's employee compensation and directors' compensation distribution in 2019.": In this case, the part of employee compensation and director compensation determines the total amount of compensation, and does not determine the amount of personal compensation, so there is no need to avoid interest. The case was passed after the chairman consulted all the directors present without objection. (3) On September 7, 2020, the board of directors discussed the "Discussion Proposal for Disposal of the Company's Long-term Investment": 1. In this case, the chairman Huang Zhoujie also serves as the chairman of Sunplus Innovation Technology, and he has his own interests, so he avoided participating in the discussion and voting in accordance with the law. Wei Zhe and independent directors were appointed as acting chairman at the direction of the chairman. 2. Except for evading the directors who did not participate in the discussion and voting in accordance with the law, the case was passed after the acting chairman consulted the other directors present without objection. 3. The listed company shall disclose the evaluation cycle and period, evaluation scope, method and evaluation content of the self (or peer) evaluation of the board of directors— The company has passed a resolution of the board of directors on March 30, 2020 to formulate the "Board Performance Evaluation Measures". The relevant contents of the measures are as follows: Evaluation cycle The board of directors of During evaluation Completed before the end Assessment scope Performance evaluation of Evaluation method Including internal Evaluation content The company should consider the company's situation and needs to determine the 21 the company shall perform the internal board performance evaluation in accordance with the evaluation procedures and evaluation indicators of these measures every year. of the first quarter of the following year. the overall board of directors, individual board members and functional committees. self-evaluation of the board of directors, self-evaluation of board members, peer evaluation, appointment of external professional institutions, experts or other appropriate methods for performance evaluation. measurement items for board performance evaluation, and should include at least the following five aspects: 1. The level of participation in the company's operations. Second, improve the quality of board decision-making. 3. The composition and structure of the board of directors. 4. Selection and continuous training of directors. 5. Internal control. Directors (self or peers) performance evaluation measures should include at least the following six aspects: 1. Master the company's goals and tasks. 2. Cognition of directors' responsibilities. 3. The level of participation in the company's operations. 4. Internal relationship management and communication. 5. Professional and continuous education of directors. 6. Internal control. The measurement items of the performance evaluation of the functional committee should include at least the following five aspects: 1. The level of participation in the company's operations. 2. Cognition of functional committee responsibilities. 3. Improve the quality of functional committee decision-making. 4. Composition of functional committees and selection of members. 5. Internal control. The indicators for the performance evaluation of the board of directors and functional committees should be based on the company's operations and needs to determine the content that is suitable for the company's performance evaluation, and the remuneration committee should periodically review and make recommendations. The scoring standard is revised and adjusted according to the company's needs, and it can also be scored according to the weighting method of each measurement. The performance evaluation results of the board of directors and functional committees for the year 2020 were reported by the board of directors on March 29, 2021. The evaluation results scored 98 to 99 points. The operation of the board of directors and functional committees of the company should be good. 4. The objectives of strengthening the functions of the board of directors in the current year and the most recent year (for example, the establishment of an audit committee, the enhancement of information transparency, etc.) and the assessment of implementation status The company has set up functional committees such as auditing and remuneration to review relevant proposals in accordance with its powers and submit them to the board of directors for resolution to improve its supervisory functions and strengthen management functions. Board members continue to participate in refresher courses related to corporate governance topics, enrich new knowledge and enhance communication to continuously enhance board functions. Note 1: The name of a legal entity shareholder and its representative shall be disclosed. Note 2: (a) If a director or supervisor being relieved of office before year end, it shall be notified as a remark. The actual rate of attendance shall be calculated according to the meetings held when he/she is at the post. 22 (b) If there is a re-election before year-end, the new directors and supervisors along with the original ones shall be disclosed, and the date of directors and supervisors being elected shall be stated. The actual rate of attendance shall be calculated according to the meetings held when they are at posts. 3.3.2 Audit Committee The second session of the Audit Committee met for 8 times in 2020 (A), Independent directors are present as follows: Title Name Attendance in Person (B) By Proxy Attendance Rate B/A (%) (Note) Remarks 8 8 0 100.00 Che-Ho Wei Tse-Jen Huang Yao-Ching Hsu Independent director Independent director Independent director Other information required to be disclosed: 1.The operation of the Audit Committee is one of the following circumstances, should specify the date of the board, period, the contents of the motion, the results of the resolutions of the Audit Committee and the handling of the opinions of the Audit Committee. (1) The matters listed in Article 14.5 of the Securities Exchange Act. (2) Except for the foregoing, other unapproved by the Audit Committee, and more than two-thirds of all directors agreed to the matter. 100.00 100.00 8 0 0 The Audit Committee The contents of the motion and follow-up The matters listed in Article 14.5 of the Securities Exchange Act unapproved by the Audit Committee, and more than two-thirds of all directors agreed to the matter 1. Report on the results of self-assessment of internal control in 2019 and discussion of internal control system declaration. 2. Report on the implementation of the budget for the fourth quarter of 2019 and discussion of the 2008 financial statements. 3. Discussion Proposal for the 2019 Consolidated Financial Statements. v v v The 14th Audit Committee of the 2nd Session 109.03.30 None None None Audit committee resolution result: all members of the audit committee agreed to pass. The company's handling of the audit committee's opinions: all the directors present agreed to. 1. Report on the Implementation of the Budget for the First Quarter of 2020 and Discussion on Consolidated Financial Statements. None v Audit committee resolution results: All members of the Audit Committee agreed to adopt. The Company's handling of the opinions of the Audit Committee： All attendees agree to pass. 1. Budget Implementation Report and Consolidated Financial Statement Discussion Proposal for the Second Quarter of 2020. v None The 15th Audit Committee of the Second Session 109.05.14 The 16th Audit Committee of the Second Session 109.08.13 23 Audit committee resolution results: All members of the Audit Committee agreed to adopt. The Company's handling of the opinions of the Audit Committee： All attendees agree to pass. 1. The company's "internal control system" and "internal audit implementation rules" revision discussion proposal. v None Audit committee resolution results: All members of the Audit Committee agreed to adopt. The Company's handling of the opinions of the Audit Committee： All attendees agree to pass. 1. Discussion Proposal on Appointment of Accountants and Independence Evaluation in 2021. v None Audit committee resolution results: All members of the Audit Committee agreed to adopt. The Company's handling of the opinions of the Audit Committee： All attendees agree to pass. The eighteenth audit committee of the second session 109.11.13 The 2nd 20th Audit Committee 109.12.29 2. If there is any avoidance of motions in conflict of interest by Independent Director, the Independent Directors’ names, contents of motions, causes for avoidance and voting should be specified: None. 3. The communication between the independent director and the internal audit manager and the accountant (should include the company's financial, business conditions to communicate matters, methods and results): (1) The company’s internal audit supervisor on February 19, 2020, March 30, 2020, May 14, 2020, August 13, 2020, and 2020 Reported to the independent directors on the implementation of the internal audit plan and the implementation of the follow-up report on November 13 and December 29, 2020, and fully communicated the implementation and effectiveness of the audit business. (2) The company’s accountants on March 30, 2020, May 14, 2020, August 13, 2020 and November 13, 2020, communicate with the results of the audit or review of the consolidated financial reports for the fourth quarter of 2019 and the first to third quarters of 2020. The independent directors of the company may at any time request the certified accountant to report and communicate with the independent directors on the audit results of the financial statements (including the consolidated financial statements) and other relevant legal requirements. Note: *If an independent director resigns before the end of the year, the resignation date should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of audit committee meetings and the actual number of attendances during his tenure. * Before the end of the year, if an independent director is reelected, the new and old independent directors should be filled in, and the remarks column indicates that the independent director is old, new or re-elected and the date of re-election. The actual attendance rate (%) is calculated based on the number of audit committee meetings during his tenure and his actual number of attendance. Work focus of the audit committee: The main functions of the audit committee of the company are to assist the board of directors in supervising the company's implementation of relevant accounting, auditing, financial reporting procedures and financial control. The matters reviewed by the Audit Committee of the Company in 2020 mainly include: 1. Appropriate expression of the company's financial statements. 2. Appointment and independence assessment of certified accountants. 3. Effective implementation of the company's internal control. 4. The company complies with relevant laws and regulations Review financial reports The board of directors prepared the company’s 1991 business report, financial statements and surplus distribution proposals, among which the financial statements were checked by Qinye Zhongxin United Certified Public Accountants, and a check report was issued. The above-mentioned business report, financial statement and surplus distribution proposal have been checked by the Audit Committee and found that there is no discrepancy. 24 Assess the effectiveness of the internal control system The audit committee evaluated the effectiveness of the company's internal control policies and procedures, and believed that the company's risk management and control system was effective, and the company had adopted the necessary control mechanisms to supervise it. Appoint a visa accountant In order to ensure the independence of the certified public accountant firm, the audit committee of the company formulated an independence evaluation form in accordance with Article 47 of the Accountant Law and No. 10 of the Public Accountant’s Professional Ethics Bulletin to assess whether the certified public accountant is a mutual related person and has mutual ownership with the company. Items such as business or financial interests. On December 29, 2019, the 20th Audit Committee of the second term and the 22nd meeting of the 11th term of the Board of Directors passed the resolutions of Qinye Zhongxin Certified Public Accountants, CPA Lin Zheng and CPA Cai Meizhen, in compliance with independence Assessment. 25 3.3.3 Corporate Governance Implementation as Required by Taiwan Financial Supervisory Commission Item 1. Formulation of its own corporate governance principles 2. Shareholding Structure and Shareholders’ Rights 1) The way handling shareholders’ suggestions or disputes Y V V N Summary Implementation Status (Note 1) Sunplus and its subsidiaries Generalplus & Sunplus Innovation for the establishment of a good corporate governance system, participate in the "Code of Practice for Corporate Governance of Listed OTC", Code of Corporate Governance Practices, and disclosed on the public information observatory and company website. The rest of the subsidiaries has not formulated the related principles, however all of our rules and procedures are based on laws and regulations stipulated by authorities in charge. Difference to “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies” No major Difference (1) The company and its subsidiaries, Generalplus Technology and Sunplus Innovation Technology, in addition to appointing professional stock No major Difference agencies to handle related businesses, have set up a complete spokesperson system to properly handle shareholder suggestions and dispute-related matters. Subsidiaries that have not been issued publicly have stock-related specialists to properly handle shareholder suggestions, doubts and disputes. 2) The Company’s possession of major shareholders list V (2) The Company and its subsidiaries Generalplus, and Sunplus Innovation through the shares of the agency, master and understand the structure No major Difference and the list of ultimate owners of these major shareholders of major shareholders, and regularly declare the directors and managers of equity changes, to master the ultimate controlling shareholder of the major shareholders and major shareholders. Other subsidiaries shares regularly view the register of members at the end of each month, to master the ultimate controlling shareholder of the major shareholders and major shareholders. 3) Risk management mechanism and fire wall between V (3) 1. The company and Generalplus Technology have established "Investment Monitoring and Management Measures" to implement supervision No major Difference the Company and its affiliates 4) Disclosure agreement to prohibit that those insiders V may not take advantage of undisclosed information of which they have learned to engage in insider trading. 3. Composition and Responsibilities of the BOD 1) Board diversity policy V 2) Other Functional Committees than Audit committee and Compensation Committee 3) Whether the company has formulated the board performance evaluation method and its evaluation method, and conducts performance evaluation annually and regularly, and reports the results of the performance evaluation to the board of directors, and applies it to individual directors ’salary and nomination renewal. 4) Regular evaluation of external auditors’ independency V of subsidiaries. 2. The company and Sunplus Innovation have established "Measures for Dealing with Related Persons" and "Measures for Dealing with Certain Companies and Group Enterprises", and Generalplus Technology has set up "Measures for Dealing with Group Enterprises and Related Persons". 3. The remaining subsidiaries also have various management measures, which have clear regulations on transactions with related companies to achieve risk control and firewall mechanisms. 1. The company, Generalplus Technology, and Sunplus Innovation Technology have formulated the "Management Procedures for Disclosure of Internal Significant Information and Prevention of Insider Transactions" and the "Guidelines for Operational Procedures and Behaviors of Honest Business Operations". Both the company and its subsidiaries have notified the company Insiders strictly follow and prohibit company insiders from using undisclosed information on the market to buy and sell securities. 2. The company has carried out preventive insider trading promotion and after-school tests for new employees in October, 2020. As of the end of 2020, a total of 33 person-times prevent insider trading promotion and after-school tests. The company's internal webpage also announces publicity information in the "Legal Publicity Zone". 3. The company and Generalplus Technology conduct the education and promotion of "Regulations on Preventing Insider Trading" for current directors and managers at least once a year. The company has conducted relevant education and publicity for current directors and managers on December 29, 2019. The content of the course includes laws and regulations related to insider trading and legal responsibilities. No major Difference (1) A. Article 20 of the Company's Code of Practice on Corporate Governance (the ability of the board of directors as a whole) has clearly defined the composition of the board of directors. In addition to being a director of a company manager, it is not appropriate to exceed one-third of the board of directors. Operational, operational and development needs to develop an appropriate diversification approach. The nomination and selection of the board of directors of the Company follows the requirements of the Articles of Association and adopts the nomination system for candidates. In addition to assessing the eligibility of each candidate's academic experience, it also complies with the "Director's Election Method" and the "Code of Corporate Governance" to ensure the directors. Diversity and independence of members. V V No major Difference No major Difference No major Difference B. The current board of directors of the company has seven seats: (1) General directors: He holds a master's degree from the Institute of Electrical Engineering of Tsinghua University, a master's degree from the Institute of International Enterprise Management of the Taiwan University, a bachelor's degree in accounting from the Cultural University, and a Ph.D. in economics and taxation from Jinan University. (2) Independent directors: composed of members such as Dr. Motor of the University of Washington in Seattle, EMBA of the Institute of Finance and Finance of the Taiwan University of Science and Technology, and Master of Laws of Cornell University. (3) The company pays attention to the industry experience and professional capabilities of directors. The target ratio of directors with industry experience is 50%. At least one director specializing in finance, accounting and taxation; and at least one director who is superior to legal affairs. At present, among the seven directors of the company, four directors with industry experience include Huang Zhoujie, Zhan Wenxiong, Shu Weiren, and Wei Zhehe, accounting for 57.14%; those with financial accounting and taxation include two directors including Huang Zeren and Lin Weimin, with 100 seats. %; those with legal affairs include Xu Yaoqing, a director, and the number of seats reaches 100%. C. The company has 14% of employees with employee status and 43% of independent directors. An independent director has a term of office of more than nine years, and the other two independent directors are appointed for a term of five to six years. One director is over 70 years old, 26 No major Difference V 4. Whether the listed OTC company is equipped with qualified and appropriate number of corporate governance personnel, and designated corporate governance directors, responsible for corporate governance related matters (including but not limited to providing directors and supervisors with the necessary information to perform business, assisting directors and supervisors to comply with laws and (According to the law, handle matters related to the meetings of the board of directors and shareholders 'meetings, produce the minutes of the board of directors and shareholders' meetings, etc.)? one is 60 to 69 years old, and five are under 60 years old. The directors of each subsidiary also have different expertise in various fields, and indeed implement the policy of diversity of board members. (2) The company, Generalplus Technology and Sunplus Innovation Technology have established salary and remuneration committees and audit committees in accordance with the law, which are composed of all independent directors. The company, Generalplus Technology and Sunplus Innovation Technology also have a dedicated unit to promote corporate integrity management, and regularly report implementation status and results to the directors. In the future, other functional committees will be set up according to the legal environment, company operation and management needs assessment. Other subsidiaries currently have no salary and compensation committee, audit committee and other functional committees. In the future, they will be established according to the actual needs of the company. (3) 1. The company, Generalplus Technology and Sunplus Innovation Technology have successively formulated the "Board Performance Evaluation Method" in 2020 and 2021. The board of directors, individual directors and functional committees are regularly self-evaluated every year, and the results of performance evaluations are used as a reference for selecting or nominating directors; and the results of individual directors’ performance evaluations are used as a reference for determining their individual remuneration. 2. The evaluation results of the company’s board of directors and functional committees for the year 2020 were reported to the board of directors on March 29, 2021. The evaluation score was 98 to 99. The operation of the company’s board of directors and functional committees should be good. 3. The remaining subsidiaries have not formulated the "Board Performance Evaluation Method", but they review the functions of the board from time to time. In the future, the feasibility of formulating the board performance evaluation method will be evaluated based on the legal environment, company operating conditions and management needs. (4) The audit committee of the company regularly evaluates the independence of certified public accountants every year. The company’s assessment of certified public accountants Deloitte United Certified Public Accountants, CPA Lin Zhengzhi and CPA Cai Meizhen, both meet the company’s independence evaluation standards (Note 2), The audit committee and the board of directors passed a resolution on December 29, 2020. Each subsidiary will assess the independence of the certified accountant at the end of the year, and the board of directors will decide on the appointment of the certified accountant. 1. The board of directors of the company passed a resolution on March 29, 2021 to appoint the chairman of the board of directors as the head of corporate governance. The board of directors of Generalplus Technology approved the appointment of the senior director of the administrative management center on February 26, 2021. As the head of corporate governance, the financial department of Sunplus Innovation Technology is responsible for corporate governance related matters. 2. The main responsibilities of the company’s corporate governance officer include handling matters related to the board of directors and shareholders meeting in accordance with the law, and assisting the company in complying with the relevant laws and regulations of the board of directors and shareholders meeting, providing directors with the information needed to perform their business, and the latest legal development related to operating the company To assist directors in complying with the law. 3. Key points of the company's business execution in 2020: (1) Consolidate the meeting agenda for the board of directors and committees, specify the convening matters and send a convening notice to the directors or members seven days before the meeting, and provide sufficient meeting materials so that the participants can accurately understand the relevant information about the proposals; When the director or committee member himself or the legal person represented by him has an interest, he also reminds him to avoid interest. (2) Responsible for the minutes of the board of directors and shareholders' meetings on the day of the board of directors and shareholders' meetings, and publish important information or announcements of important resolutions after the meeting to ensure the legality and accuracy of the disclosed information to ensure the equivalence of investor transaction information. (3) Handle the change registration of the company's various operations. (4) Evaluate the purchase of "Directors' and Managers' Liability Insurance" with a suitable amount of insurance, complete the insurance matters, and report the contents of the insurance to the board of directors. (5) Provide directors with relevant training information from time to time, reminding them to study and complete relevant declarations in accordance with the stipulated hours of the "Main Points for Implementation of Training for Directors and Supervisors of Listed OTC Companies". (6) From time to time, provide board members with information on new issued or revised laws and regulations related to directors’ business execution, corporate governance or business operations. (7) Review the compliance status of the corporate governance evaluation indicators one by one every year, and propose improvement plans and corresponding measures for indicators that have not scored. (8) Provide operating information such as company business or finance according to directors' needs, and maintain smooth communication and exchanges between directors and business executives. 4. Please note 3 for details of the training situation of the company's corporate governance supervisor. No major Difference 5. Communication channel with Stakeholders (Including but not limited to shareholders, employees, customers and suppliers) V 1. The company and its subsidiaries maintain good relationships with banks, suppliers, and other interested parties of the company, uphold the principle of good faith, provide adequate business information, and properly safeguard their legitimate rights and interests. 2. The company’s stakeholders are concerned about topics, communication methods, and implementation status. Note 4 in detail. 3. The company, Generalplus Technology and Sunplus Innovation Technology have set up a special area for stakeholders on the company website, No major Difference 27 set up different corresponding windows for different stakeholders, and set up a complete system and response mechanism to ensure that stakeholders are concerned Appropriate response to the issue. The company has reported to the board of directors on the situation of communication with various stakeholders in 2020 on December 29, 2020. 4. The remaining subsidiaries also provide detailed contact information on the company's website. If necessary, interested parties can contact them by telephone, letter, fax, and e-mail at any time. Sunplus, Generalplus, Sunplus Innovation Technology : China Trust Commercial Bank Corporate Trust Operation and service Department Sunext: SinoPac Securities Corporate Trust Operation and service Department (1) The company, Generalplus Technology and Sunplus Innovation Technology have set up Chinese and English websites to set up special areas to disclose financial business and corporate governance information. (2) Sunplus and its subsidiaries have established English website. Sunplus, Generalplus, and Sunplus Innovation Technology have assigned spokesperson, acting spokesperson and designated specialists to disclose and collect the company’s information. Other subsidiaries are responsible for the collection and disclosure of company information, there is currently no speaker yet. (3) Generalplus Technology announced and filed its annual financial report within two months after the end of the fiscal year. Although the V company did not announce and file the annual financial report within two months after the end of the fiscal year, it still announced and filed the annual financial report before the deadline prescribed by laws and regulations. Financial reports and financial reports for the first, second and third quarters and operating conditions in each month. No major Difference No major Difference No major Difference V V V 6. Engaging professional shareholder services agent to handle shareholders meeting matters 7. Information Disclosure 1) Establishment of corporate website to disclose information regarding the Company’s financials, business, and corporate governance status 2) Other information disclosure channels (ex. English website, appointing responsible people to handle information collection and disclosure, appointing spokesman, webcasting investors conference) 3) Whether the company announces and declares the annual financial report within two months after the end of the fiscal year, and announces and declares the first, second, and third quarter financial reports and the monthly operating situation within the prescribed period. 8. Other important information to facilitate better V (1) Employee rights: Sunplus and its subsidiaries have made and followed the internal management procedures regarding employee rights under the No major Difference understanding of the Company’s corporate governance (such as human rights, employee rights, employee wellness, community participation, social contribution, community service, investor relations, supplier relations, shareholders’ rights, customer relations, the implementation of risk management policies and risk evaluation measures, the implementation of consumers/customers protection policies, and purchasing insurance for directors and supervisors. ): regulations of the Labor Standards Act and Gender Equality in Employment Act. (2) Employee wellness: Sunplus and its subsidiaries have made and followed the internal management procedures regarding employee wellness. (3) Investor relations: Sunplus and its subsidiaries have set a investor relations professionals to communicate with investors and disclose the operations and financials. (4) Supplier relations: Sunplus and its subsidiaries have good relationship with suppliers and manage the supply chains efficiently. (5) Stakeholders: Sunplus and its subsidiaries respect all stakeholders and have established the channels to communicate with stakeholders. (6) Directors and supervisors' training: The company and its subsidiaries encourage directors and supervisors to participate in continuing education courses. The company announces the status of directors' training at the public information observatory. (7) Implementation of risk management policies and risk evaluation measures: Internal rules and procedures are based on laws and regulations stipulated by authorities in charge (8) Customer: Sunplus and its subsidiaries provide best service to Customers based on internal rules and procedures (9) Sunplus, Generalplus and Sunplus Innovation Technology have taken liability insurance for directors and supervisors with respect to liabilities resulting from exercising their duties in Sunplus and subsidiaries. 9. Please review the results of the corporate governance evaluation issued by the Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd. in recent years, and to give priority to matters and measures that have not yet been improved: The improvement of 2020 years is as follows: (1) The company has fully disclosed in the annual report the reasons for discussion and resolution of the Salary and Compensation Committee, as well as the company's handling of members' opinions. The part that has not yet been improved will be actively studied and improved. The other part has not been improved, and will be actively studied for improvement. Note 1: Whether or not "yes" or "no" is checked, it should be stated in the summary description field. 28 Note 2: The evaluation criteria for the independence of the Company's accountants are as follows: Sunplus Technology Accountant Independence Assessment Criteria Evaluation items Evaluation result Whether it is independent 1. Whether the accountant has a direct or significant indirect financial interest relationship with the Company 2. Whether the accountant has a financing or guaranteeing action with the Company or the directors of the Company 3. Whether the accountant has a close business relationship or potential employment relationship with the Company 4. Whether the accountants and their members of the audit team are currently directors or managers in the current or the last two years or have a significant impact on the audit work 5. Whether the accountant has provided non-audit services to the Company that may directly affect the audit 6. Whether the accountant has any stock or other securities issued by the Company 7. In addition to the business permitted by law, does the accountant represent the defense of legal cases or other disputes between the company and a third party? 8. Whether the accountant has a kinship with the directors, managers or persons who have a significant impact on the audit No No No No No No No No Yes Yes Yes Yes Yes Yes Yes Yes Note 3: Corporate Governance Executive Training Situation: Name/Title Date Organizer Course Title Chen Meijuan Chairman's Office Manager/Head of Corporate Governance 110.05.07 aiwan Stock Exchange Company limited by shares 2021 Annual Promotion Conference on Preventing Insider Trading Time 3 hours 29 Note4: Stakeholders of the company are concerned about issues, communication methods and implementation status: boundary Stakeholder Concerns Communication route Communication frequen Contact window 2020 implementation status internal Staff Salary, benefits, education, occupational health and safety Staff communication meeting Once every six months Employee welfare committee Irregular Labor Retirement Reserves Supervision Committee Once per season Internal promotion Irregular Employee performance interview 2 times a year Labor-management meeting Once per season Occupational Safety and Health Committee Once per season Customer appeal Customer complaints Cases based on customer complaints client Customer satisfaction customer satisfaction survey 2 times a year Product quality and hazardous substance requirements mail Irregular Agent Bad quarters inventory Bad quarters inventory Quarterly external Green product requirements GPM system Update of reporting period, new product release, new specification requirements Outsourcing factory Supplier management approach Quality/environmental existing outsourcing factories assessment of Held once a year Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager HR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager shamir.chang@ sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Spokesperson Wayne Shen, Deputy General Manager QA@sunplus.com Tenant Relevant environmental protection and safety regulations Meeting, E-mail Irregular Government agencies Statute compliance Official document round trip, meeting, E-mail Irregular Shareholders and investors Operational performance, Risk Management, Corporate Company annual report, financial report Once a year Once per season 30 Spokesperson Wayne Shen, Deputy General Manager shamir.chang@ sunplus.com Spokesperson Wayne Shen, Deputy General Manager shamir.chang@ sunplus.com Spokesperson Wayne Shen, Deputy General Manager Affected by the epidemic, it will be held once this year Announcement related information in the Welfare Committee forum of the internal life exchanges 22 or more Hold 5 meetings and have meeting minutes for inquiries E-mail, posters, announcements, etc. from time to time Conduct an employee performance interview at the middle of the year and at the end of the year, prepare a performance and future development analysis table for reference, and the achievement rate is more than 90% Convene 4 meetings, and have meeting minutes for inquiries Convene 4 meetings, and have meeting minutes for inquiries A total of 26 cases in 2020 were successfully closed the middle of In the two surveys at the beginning of the year the year, customer and satisfaction scores were 8.98/9.36 points (out of 10 points), and related issues were dealt with and closed substance hazardous and Quality requirements, a total of 47 external documents and specifications, all of which are properly handled Q1/Q2/Q3 completed in 2020 and Q4 in progress in 2020 A total of 220 reports were updated in 2020 Existing factory outsourcing quality/environmental safety and health assessment, a total of 9 sessions 1. In response to the COVID-19 epidemic, nearly 200 E-MAIL transactions 2. More than 10 coordination meetings after construction and move-in 1. Participate in discussions and forums held by the competent authority 2. Cooperate with the competent authority for supervision and inspection 3. Establish a contact window and maintain good interaction with the competent authority 1. Uploaded the 108 Annual Report on the Public Information Observatory on May 26, boundary Stakeholder Concerns Communication route Communication frequen Contact window 2020 implementation status Governance, Shareholder participation Legal person briefing meeting, shareholder meeting once a year The official website sets up a special area for corporate and stakeholders responsibility social at any time Set up a contact window for stock affairs and investor relations for two-way communication at any time 3.3.4 Disclosure of Operations of the Company’s Compensation Committee: 1. Qualifications and Independence Analysis IR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager IR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager IR@sunplus.com Spokesperson Wayne Shen, Deputy General Manager IR@sunplus.com 2020 2. 2020 quarterly upload financial reports 1. The corporate briefing meeting was held on August 20, 2020 2. The regular shareholders meeting was held on June 12, 2020 A social for responsibility and stakeholders has been established on the official website The contact window for stock affairs and investor external communication channels special area corporate provides relations With over 5 years of working experience and one of the following professional requirements Independent Status (Note 2) Status(Not e 1) Name An instructor of higher position in a department of commerce, law, finance, accounting, or other departments related to the Company’s business in a public or private college or university A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the Company’s business With an experience in commerce, law, finance, accounting or other specialties necessary to the Company’s business 1 2 3 4 5 6 7 8 9 10 Numbers of other public companies concurrently serving on compensation committee Remark Che-Ho Wei  Independent Director Independent Director Tse-Jen Huang Yao-Ching Hsu Independent Director Note 1: The Status is identified by director, independent director and other. Note 2: “” indicates the directors and supervisors meeting any of the following criteria during the term of office and two years before being elected.                                    1 2 0 (1) Not an employee of the company or its affiliates. (2) Directors and supervisors of non-company or related companies (but if the company and its parent company, subsidiary or subsidiary of the same parent company are independent directors established by this law or local state laws and regulations, they are not limited to this). (3) Not the shareholder (with its relatives or under others’ names) who holds more than 1% shareholding of the total issued shares or ranked as the Top 10 shareholders. (4) Not a manager listed in (1) or a spouse, relative within the second parent, or direct blood relative within the third parent, etc. (5) Directors, supervisors or directors of corporate shareholders who do not directly hold more than 5% of the company's total issued shares, hold the top five shares, or appoint representatives to act as company directors or supervisors in accordance with Article 27, paragraph 1 or 2, of the Company Law Employee (but if the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations are concurrently held by each other, it is not limited to this). (6) More than half of the shares that are not on the board of directors of the company or have voting rights are the directors, supervisors or employees of other companies controlled by the same person (but if it is the company or its parent company, subsidiary or subsidiary of the same parent company according to this (The independent directors established by the law or local national laws and regulations are mutually concurrent, not limited to this). (7) Directors (directors), supervisors (supervisors) or employees of other companies or institutions that are not the same person or spouse with the company's chairman, general manager or equivalent, but if the company and its parent company, subsidiary Or independent directors set up by subsidiaries of the same parent company in accordance with this law or local national laws shall not be limited to this). (8) Directors (directors), supervisors (supervisors), managers or shareholders holding more than 5% of a particular company or institution that does not have financial or business dealings with the company The above does not exceed 50%, and the independent directors established by the company and its parent company, subsidiary company or subsidiary of the same parent company in accordance with this law or local national laws and regulations concurrently serve each other. (9) Professionals, sole proprietorships, partnerships, companies or institutions that do not provide audits for companies or related companies or business, legal, financial, accounting and other related services that do not exceed NT $ 500,000 in cumulative compensation in the past two years Business owners, partners, directors (directors), supervisors (supervisors), managers and their spouses. However, members of the Salary and Compensation Committee, Public Acquisition Review Committee, or M & A Special Committee that perform their duties in accordance with the relevant laws and regulations of the Securities Exchange Act or the Corporate M & A Act are not limited to this. (10) There is not one of the circumstances in Article 30 of the Company Law. 31 2. Operation 1. BOD appointed three independent director to be members of compensation committee. 2. The term of office is 3 years from June 11th 2018. The fourth salary remuneration committee of the 2020th meeting meets four times(A), membership qualifications and attendance are as follows: Title Name Convener Member Member Other information required to be disclosed: Che-Ho Wei i Tse-Jen Huang Yao-Ching Hsu Attendance in Person(B) 4 4 4 By Proxy 0 0 0 Attendance Rate(B/A) (%) (Note) 100 100 100 Remarks 1. The BOD has adopted the proposal by compensation committee without dissent 2. The participated members have approved the resolutions by compensation committee. without dissent Note 3: (a) If the member being relieved of office before year end, it shall be notified as a remark. The actual rate of attendance shall be calculated according to the meetings held when he/she is at the post. (b) If there is a re-appointment before year-end, the new member along with the original ones shall be disclosed, and the date of member being appointed shall be stated. The actual rate of attendance shall be calculated according to the meetings held when he/she is at the post. 3. Review salary and remuneration regularly The function of the company’s salary and remuneration committee is to evaluate the company’s directors and managers’ salary and remuneration policies and systems with a professional and objective status. It meets at least three times a year and may hold meetings at any time as needed to make recommendations to the board of directors. For their decision-making reference (1). The powers of the company's salary and remuneration committee (A) Review this regulation regularly and propose amendments. (B) Formulate and regularly review the policies, systems, standards and structures of the performance and remuneration of the company's directors and managers. (C) Regularly evaluate the performance of the company's directors and managers, and determine the content and amount of their remuneration. (2). When the Salary and Compensation Committee performs its functions and powers, it shall be based on the following standards Ensure that the company's salary and remuneration arrangements comply with relevant laws and regulations and are sufficient to attract outstanding talents. (A) The performance evaluation and salary remuneration of directors and managers should refer to the usual level of payment in the industry, and consider the time invested by the individual, the responsibilities of the individual, the achievement of the profit center goal, the performance of other positions, and the company's recent years. The salary and remuneration of the position holder, including the company's short-term and long-term business goals, the company's financial status, etc., assess the rationality of the relationship between personal performance and company operating performance and future risks. (B) Directors and managers should not be guided to engage in behaviors that exceed the company's risk appetite in pursuit of remuneration. (C) The ratio of dividends to directors and senior managers' short-term performance and the timing of partial variable salary payments should be determined taking into account the characteristics of the industry and the nature of the company's business. (D) The members of this committee shall not participate in discussion and voting on their personal salary and remuneration decisions. 4. The content of the proposals and resolutions of the Salary and Compensation Committee in 2009, and the company's handling of the opinions of the Salary Committee: Compensation Committee The sixth time of the fourth Proposal content and follow-up processing 1. The company's "Board of Directors Performance Evaluation Measures" drafted a discussion proposal. 2. The company's 2019 employee remuneration and directors' remuneration distribution situation discussion proposal Resolution result Company's Compensation Committee Handling of opinions All members agreed to pass All the directors present at the board of directors agreed to pass The seventh of the fourth The eighth time of the fourth The ninth time of the fourth The company's 2008 employee remuneration and directors' remuneration distribution adjustment discussion proposal. Discussion on company-wide salary adjustment and manager salary adjustment in 20220 The company formulated the "Performance Management Measures" and "Directors and Managers' Compensation Management Measures" and revised the and "Board Performance Evaluation Measures" "Remuneration Rules" Discussion Proposal Committee Organization the All members agreed to pass All the directors present at the board of directors agreed to pass All members agreed to pass All the directors present at the board of directors agreed to pass All members agreed to pass All the directors present at the board of directors agreed to pass 5. There are 3 members of the company's compensation committee 32 6. The term of office of the current members: from June 11, 2018 to June 10, 2021, the 4th Salary and Compensation Committee of the year 2019 met 4 times (A). The qualifications and attendance of the members are as follows: Job title Name Actual attendance (B) Number of delegates attended Actual attendance rate (%) (B/A) (Note) Remarks Convener Che-Ho Wei i Tse-Jen Huang Member Yao-Ching Hsu Member Other matters to be recorded: 4 4 4 0 0 0 100 100 100 3. If the board of directors does not adopt or amend the recommendations of the Salary and Compensation Committee, it shall state the date of the board of directors, the date, the content of the proposal, the results of the resolutions of the board of directors, and the company's handling of the opinions of the Salary and Compensation Committee. The differences and reasons should be stated): The board of directors adopted and did not revise the recommendations of the Salary and Compensation Committee. 4. The resolutions of the Salary and Compensation Committee. If members have objections or reservations and have records or written statements, the Salary and Compensation Committee should state the date, period, proposal content, opinions of all members and the handling of the opinions of the members: Compensation Committee All members agree to the resolutions of the Remuneration Committee without any objections or reservations. Note: (1) If a member of the Compensation and Compensation Committee resigns before the end of the year, the date of resignation should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of meetings of the Compensation and Compensation Committee during their employment and their actual attendance. (2) Before the end of the year, if the salary committee is re-elected, the new and old salary committee members should be listed, and the remarks column should indicate whether the member is old, new or re-elected and the date of reelection. The actual attendance rate (%) is calculated based on the number of meetings of the Salary and Compensation Committee during their employment and their actual attendance. 3.3.5 Social Responsibilities Implementation Status (such as environment protection, community participation, contribution to community, social service, charity, consumer rights, human rights and other social responsibilities): Item 1. Does the company conduct risk assessments on environmental, social and corporate governance issues related to the company's operations and formulate relevant risk management policies or strategies based on the principle of materiality? (Note 3). 2. Does the company set up a full-time (part-time) unit that promotes corporate social responsibility, and the board of directors authorizes the senior management to handle it, and reports the handling situation to the board of directors. 3. Environmental issues (1) Whether the company establishes an appropriate environmental management system according to its industrial characteristics. (2) Whether the company is committed to improving the utilization efficiency of various resources and using recycled materials with low impact on environmental load. Y V V V N Implementation Status (Note 1) Summary (Note 2) Deviations from “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and reasons The company and its subsidiaries conduct risk assessments on environmental, social and corporate governance issues related to No major Difference operations through the operation of various management systems. The company’s latest risk assessment date was the completion of the annual risk assessment meeting on September 7, 2020. In order to improve the management of corporate social responsibility, the chief executive designates the director of the administrative department as the convener of the corporate social responsibility inter-departmental team, responsible for studying sustainable development trends, understanding the needs of stakeholders, and raising the company’s risks on related issues With opportunities, and with the functional committees to plan application strategies and implementation plans. Report to the board of directors regularly every year. The company's latest report to the board of directors was on December 29, 2020. Although all subsidiaries have not set up special (part-time) positions to promote social responsibility. (1) The company and its subsidiaries attach great importance to environmental management. At present, the company has passed the ISO14001 environmental management system certification, and the system operation and management are implemented by the chief auditors of the management systems with a standard that is superior to that of the management system. The company has dedicated environmental protection personnel to manage statutory environmental management work; subsidiaries are exempted from appointing environmental protection personnel according to law, but there are still dedicated personnel to promote related environmental management. No major Difference No major Difference (2) The company and its subsidiaries have announced paperless operations and the use of power-saving lamps and No major Difference water-saving appliances, and at the same time implementing the policy of turning off lights and saving water. And through the optimization of factory facilities operating system and actively promote various waste reduction activities, increase the operational efficiency of the factory affairs system and reduce the impact on the environment; the company and its subsidiaries comply with relevant environmental protection laws, actively respond to resource recovery and classification, and promote Use various recycled materials and packaging materials for reuse to reduce the impact on the environment. (3) Whether the company assesses the potential risks and opportunities of climate change to the company now and in the future, and adopts measures to deal with climate-related (3) The IC design industry is located in the upstream of the semiconductor industry. The company and its subsidiaries have no No major Difference relevant manufacturing procedures. If the substantial risks caused by climate change should be caused only by the increase in electricity and water demand for air conditioning and office lighting Increased costs, but through the 33 issues. (4) Does the company count greenhouse gas emissions, water consumption and total weight of waste in the past two years, and formulate policies for energy conservation and carbon reduction, greenhouse gas reduction, water and other waste management. 4. Social issues (1) Has the company formulated relevant management policies and procedures in accordance with relevant regulations and international human rights conventions? (2) Whether the company has formulated and implemented reasonable employee welfare measures (including salary, vacation and other benefits), and appropriately reflected the operating performance or results in employee compensation. (3) Whether the company provides a safe and healthy working environment for employees, and regularly implement safety and health education for employees. (4) Whether the company has established an effective career development training program for employees. (5) Whether the company complies with relevant regulations and international standards on customer health and safety, customer privacy, marketing and labeling of products and services, and formulates relevant consumer protection policies and appeal procedures. (6) Whether the company has formulated supplier management policies, requiring suppliers to follow relevant regulations on environmental protection, occupational safety and health or labor human rights, and their implementation. optimization of factory facilities and operating systems to reduce energy consumption and environmental impact; the company and its subsidiaries continue to promote semiconductor high-end process technology and practice Moore's Law in order to save chip The consumption of energy, in turn, drives the use of electrical energy in downstream consumer electronics terminal products. In product design, provide more energy-saving solutions to increase product adoption. (4) 1. In accordance with the ISO14064 standard, the company uses the 100th year of the Republic of China as the base year for the inventory to conduct self-inspection of greenhouse gas emissions every year. In 2009, the greenhouse gas emissions were 4,056.33 tons/CO2 equivalent compared to 4,471.34 tons in 2008. The carbon dioxide equivalent was reduced by approximately 9.28%, exceeding the set reduction target of 2%; the total weight of water, electricity, and industrial waste has also been counted, evaluated and analyzed to comply with the company’s environmental, safety and health management policy "control risk" , Disaster prevention" and "energy saving and waste reduction, sustainable environment". 2. Other subsidiaries also set the company's long-term improvement goal to reduce the company's overall carbon emissions in order to implement environmental protection commitments, hoping to achieve a year-on-year reduction in greenhouse gas emissions, and are committed to saving energy, recycling waste, and complying with environmental protection regulations And promise pollution prevention and continuous improvement. (1) The company and its subsidiaries abide by labor-related laws and regulations, and formulate relevant work rules to protect the rights and interests of employees preferentially, and provide information to enable employees to understand their rights and interests. The various management policies and procedures are summarized as follows: 1. Human Rights Policy: In order to fulfill corporate social responsibility and protect the basic human rights of all colleagues, customers and stakeholders, the company strives to comply with and abide by the relevant provisions of various international human rights conventions, and follow the "United Nations Universal Declaration of Human Rights" and "United Nations Guiding Principles on Business and Human Rights" , "United Nations Global Covenant" and "United Nations International Labor Organization" and other international human rights conventions and labor standards related labor laws, respect internationally recognized basic human rights, including freedom of association, care for vulnerable groups, prohibition of child labor, elimination of forced labor in various situations, and elimination Discrimination in employment and employment, protection of the legitimate rights and interests of employees, and formulation of relevant management policies and procedures in accordance with the law. 2. Human rights risk mitigation measures: In order to mitigate human rights risks, the company is committed to the improvement of various working environments and working conditions. 3. Relevant education and training: Arrange relevant laws and regulations publicity courses during working hours, and increase the efficiency of course absorption through the recording and design of e-leaning online courses, so as to enhance employees' understanding of relevant laws and information. Please refer to Note 4 for detailed human rights concerns and corresponding practices. (2) The company's compensation and benefits are positioned to be better than the market average, to provide competitive salary and compensation to attract talents, and to encourage existing employees and stabilize excellent talents. The company and its subsidiaries provide a leave-giving system that is superior to the law, such as special days off the law, 10 days of paid sick leave per year, and 19 national holidays and anniversaries. In accordance with the "Organization Guidelines for Employee Welfare Committees" promulgated by the Ministry of Labor, the Company invites various departments to appoint members to form Employee Welfare Committees to coordinate the company's welfare committee funds and promote various welfare measures. The provision ratio has always been 0.15% of revenue (the highest statutory ratio), so that the Fu Committee can plan more diverse and interesting welfare projects. The overall rewards paid by the company and its subsidiaries each year will be determined based on the company's overall operating goals, annual profitability, and employee performance and investment levels. Before July of each year, the company will measure the overall salary level of the same industry in the market and the employees' personal performance, future development and other relevant principles, and appropriately adjust the salary for colleagues. Annual employee compensation must be approved by the board of directors and reported at the shareholders ’meeting, and disclosed in the company ’s annual report. (3) The company and its subsidiaries provide facilities and environments that are superior to occupational safety and health laws and regulations. Set up dedicated organizations and personnel in accordance with the law to implement environmental safety and health management related matters, and passed the ISO14001 environmental management system, ISO45001, TOSHMS occupational safety and health management system and the Ministry of Labor's Occupational Safety and Health Administration health workplace certification. Relevant machinery and equipment in the workplace are subject to regular automatic inspections in accordance with the law, and labor working environment monitoring is implemented every six months (April and October each year) to ensure the safety of employees, the environment and equipment, and provide regular health inspections that are better than those prescribed by laws and regulations. Provide a good environment for employee career development, and provide a variety of education training and training programs. (4) The human resources department of the company and its subsidiaries has a complete training plan for the development of colleagues ’careers, so as to ensure that colleagues can perform their duties in existing positions and learn the necessary skills for promotion. (5) The marketing and labeling of products and services by the company and its subsidiaries follow the local regulations and 34 No major Difference No major Difference No major Difference No major Difference No major Difference No major Difference No major Difference V V V V V V 5. Does the company make reference to internationally-used report preparation standards or guidelines to prepare corporate social responsibility reports and other reports that disclose the company's non-financial information? Whether the pre-report report obtained the confidence or assurance opinion of the third-party verification unit. V international standards of the company's customers and suppliers. (6) The company and its subsidiaries have long been aware of the environmental and social responsibility of the supply chain, and the requirements for suppliers are not limited to performance and quality. Colleagues in relevant departments regularly audit and liaise with suppliers to ensure that suppliers' environmental protection, occupational safety and health or labor human rights and other issues comply with relevant standards and maintain their due standards. If the supplier does not meet the regulations, it needs to improve and meet the standard within the specified time. If it cannot be improved, it will find other suppliers who can meet the expectations of the ethical and environmental standards of the company and its subsidiaries. In 2020, the company conducted nine assessments on environmental protection, occupational safety and health, or labor human rights of suppliers and outsourcing factories, all of which met the standards. The company compiles and publishes the "Corporate Social Responsibility Report" in accordance with the Global Reporting Initiative 2017 new version of the GRI Standards (GRI Sustainability Reporting Standards, GRI Standards) to disclose to stakeholders the operating performance outside of finance, including corporate governance, green processes With environmentally friendly management measures, employee occupational safety software and hardware equipment updates, employee education and training, welfare policies and social welfare implementation results, it demonstrates the corporate vision and mission of sustainable operation. The publication media is the official website and the Taiwan Stock Exchange Open Information Observatory, where both shareholders and stakeholders can conveniently and quickly obtain transparent non-financial performance information. The previous report has not obtained the confidence or assurance opinions of the third-party verification unit. Although each subsidiary has not prepared a corporate social responsibility report, it has spared no effort in environmental protection and related social responsibility activities in the company's senior management policies. No major Difference 6. If the company has its own corporate social responsibility code based on the "Code of Practice for Corporate Social Responsibility of Listed Companies", please state the difference between its operation and the established code: The company has formulated the "Corporate Social Responsibility Code", which has internal regulations governing related issues such as sustainable management, environmental protection, employee rights, social welfare and related information disclosure. Each subsidiary has not clearly formulated a corporate social responsibility policy, but related issues such as sustainable management, environmental protection, employee rights, social welfare, and related information disclosure are all regulated by internal systems. In order to fulfill corporate social responsibilities, the company and its subsidiaries will make occasional contributions to environmental protection, social contribution, social services, social welfare, consumer rights, human rights, safety and health and other social responsibility activities. 7. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices (1) Sunplus and the subsidiaries for the professional IC design company, IC research and development and design based, department of non-polluting industries, there is no environmental pollution situation. (2) Sunplus and its subsidiaries are actively involved in relevant activities related to social welfare from time to time. (3) Based on the concept of professional services, the Company and its subsidiaries have formulated the relevant guidelines for the implementation of the relevant customers, in order to seek the fastest solution to customer questions. (4) The company and its subsidiaries manage the company’s employees in accordance with the "Labor Standards Law" and relevant labor laws and regulations and other labor-related laws and regulations, and special personnel handle the employees’ work matters to protect their basic rights and interests. (5) The company and its subsidiaries handle safety and health work in accordance with relevant laws and regulations on occupational safety and health to protect the health and safety of workers. (6) The company implements workplace and worker health and safety care through ISO45001 international occupational safety and health management system and TOSHMS Taiwan occupational safety and health management system. Note 1: If the operation is checked "Yes", please explain the important policies, strategies, measures and implementations adopted; if the operation is checked "No", please explain the reasons and explain the plan for the future adoption of relevant policies, strategies and measures painting. Note 2: The company has prepared corporate social responsibility report, the abstract statement can be used to indicate the way in which the corporate social responsibility report is reviewed and the index page is replaced. Note 3: The principle of materiality refers to those who have a significant influence on the company's investors and other stakeholders in relation to environmental, social and corporate governance issues. Note 4: In order to abide by the spirit of the international human rights conventions, and formulate and implement various human rights protection policies based on the content, Sunplus Technology implements the human rights protection policies based on the content of the [International Covenant on Civil and Political Rights] and the [International Covenant on Economic, Social and Cultural Rights]. , The company pays special attention to the following human rights issues, and the implementation practices are organized as follows: Human rights concerns Ensure equal job opportunities Child labor is strictly prohibited Sunplus's corresponding human rights practices 1. No discrimination based on personal gender, race, socioeconomic status, age, marriage, family status, language, religion, party, nationality, appearance, facial features, pregnancy, physical and mental disabilities, etc. 2. Ensure that the employment policy is non-discriminatory, and implement the fairness of employment, salary system, employee training, evaluation and promotion opportunities. 1. The company prohibits the employment of children and teenagers under the age of 18, so that children under 15 years of age, child labor over 15 years of age and under 16, and teenagers over 16 years of age and under 18 years of age can fully protect their right to school . 2. The company actively participates in public welfare and donations to relevant social welfare organizations, such as cooperation with family support centers and donations of public welfare funds, so that education rights and resource opportunities are more popular and equal Freedom of assembly and association of employees Complaint channels and mechanisms Establish a healthy and safe workplace environment Provide diversified club activities and encourage employees to actively participate Provide effective complaint channels and handling mechanisms to avoid discrimination and harassment in the work environment To provide employees with a healthy and safe workplace environment, the company continues to improve the working environment to reduce the risk of occupational disasters and protect the health of employees. 35 Human rights concerns Provide employees with physical and mental health Work environment balanced with work Meet the basic salary 1. Provide diversified activities (such as sports courses, art lectures, and employee travel, etc.) to enrich the work-life balance of colleagues. 2. Establish good health care measures (medical room, visually impaired massage, health check, etc.) to protect the health of employees. Provide wages that are superior to the law. Sunplus's corresponding human rights practices 3.3.6 Implementation of Ethical Corporate Management Sunplus discloses financial reports according to the regulations of the government. In order to enhance transparency and protect shareholders’ rights and interests, Sunplus announces financial results and business information on TSE and Sunplus’ websites regularly. The situation and reasons for the implementation of integrity management and the difference with the listed company's code of integrity management Item Y N Summary Implementation Status (Note 1) 1. Promulgation ethical corporate management principles 1) Has the company formulated the integrity management policy approved by the board of directors, and stated in the regulations and external documents the policies and practices of integrity management, and the board and senior management's commitment to actively implement the management policy. V 2) Whether the company has established an assessment mechanism for the V risk of dishonesty, regularly analyzes and evaluates business activities with a high risk of dishonesty in the business scope, and formulates a plan to prevent dishonesty, and at least covers the "good faith management of listed companies "Code" Article 7, Paragraph 2, Prevention Measures. 3) Does the company clearly specify the operating procedures, behavior V guidelines, disciplinary punishment and grievance system in the plan to prevent dishonesty, and implement it, and regularly review and revise the pre-disclosure plan. 2. Implement integrity management (1) Whether the company evaluates the integrity records of the counterparties, and specifies the terms of integrity behavior in the contract signed with the counterparties. (2) Does the company set up a special unit under the board of directors to promote corporate integrity management, and regularly (at least once a year) report to the board of directors on its integrity management policies and plans to prevent dishonest behaviors and supervision and implementation. (3) Does the company formulate a policy to prevent conflicts of interest, provide appropriate reporting channels, and implement them. (4) Whether the company has established an effective accounting system and internal control system for the implementation of integrity management, and the internal audit unit formulates the relevant audit plan V V V V Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies” and reasons No major Difference No major Difference No major Difference (1) The company, Generalplus Technology and Sunplus Innovation Technology have formulated the "Integrity Management Operating Procedures and Behavior Guidelines" approved by the board of directors as a clear policy and practice for operating integrity, as well as the active implementation of operating policies by the board of directors and management. Commitment, and disclosed on the company website. The remaining subsidiaries uphold the business philosophy of "Integrity", "Creativity", "Quality", and "Service", formulate various internal management systems and measures within the company, and implement and implement irregular reviews. (2) The company, Generalplus Technology and Sunplus Innovative Technology have established the "Code of Ethical Conduct for Employees", "Code of Ethical Conduct for Directors and Managers" and "Ethical Business Procedures and Behavior Guidelines", which expressly prohibit the provision or acceptance of non-compliance. Legitimate interests. The company and Sunplus Technology have a "reporting system", and Lingtong Technology has a "handling method for reporting cases of illegal and unethical or dishonest conduct", encouraging the reporting of any illegal or violation of the code of ethical conduct or conduct of integrity management . In addition, the company still requires colleagues in the management, production center, business and information units with high job sensitivity to sign the "Integrity Commitment"; when signing the annual distributor contract with the customer, they also sign the "Integrity Behavior Declaration"; According to the annual transaction amount, the relevant suppliers sign the "Declaration of Integrity Behavior". The remaining subsidiaries have clearly stipulated the reporting and punishment system for employees’ integrity behaviors in the “Work Rules”, and effective implementation through internal control systems to reduce the risk of dishonest behaviors and to achieve preventive effects. (3) The company, Generalplus Technology and Sunplus Innovative Technology have respectively set up a "whistleblowing system", "employee ethical code of conduct", "director and manager's code of ethical behavior", "handling methods for reporting illegal and unethical or dishonest conduct" and "Integrity Management Operation Procedures and Conduct Guidelines", clearly stipulate the relevant operation procedures and behavior guidelines for preventing dishonest behaviors. For colleagues to inquire at any time, we will also provide relevant promotion for new employees through education courses. For any suspected violations of business ethics and confirmed cases, the violators will be subject to severe disciplinary measures including termination of employment or business relationships, and appropriate legal action will be taken in due course. Subsidiary's "Work Rules" set out to prohibit dishonesty, punishment and appeal system for violations of regulations. (1) The "Integrity Operation Procedures and Behavior Guide" of the company, Generalplus Technology and Sunplus Innovative No major Difference Technology clearly states that when signing a contract, it should fully understand the other party's integrity management status and incorporate the company's integrity management policy into the contract terms. In addition, when the company signed an annual distributor contract with customers since 2006, it also signed a "Certificate of Integrity"; the relevant suppliers, who defined the annual transaction amount, also signed a "Certificate of Integrity". The remaining subsidiaries carefully evaluate the legality of the counterparties through customer credit evaluation and supplier management operations to avoid dishonest business activities. (2) In order to improve the management of integrity management, the company and Generalplus Technology have designated the chairman’s office as the unit responsible for promoting corporate integrity management. The Board of Directors of Sunplus Innovation Technology authorizes the Finance and Accounting Department to be responsible for the promotion of integrity management policies, and is responsible for formulating and promoting integrity management policies and Prevention plan. The dedicated unit regularly reports the implementation status to the board of directors in December every year. The company's latest report to the board of directors was December 29, 2020. The remaining subsidiaries actively promote the corporate No major Difference 36 based on the assessment results of the risk of dishonesty, and checks the compliance with the plan to prevent dishonesty, Or entrust an accountant to perform the audit. (5) Does the company regularly organize internal and external education and training on integrity management. 3. Operation of the company's whistleblowing system (1) Whether the company has set a specific reporting and reward system, and established a convenient reporting channel, and assigned appropriate personnel for the acceptance of the reported object. (2)Has the company established the standard operating procedures for the investigation of the complaint, follow-up measures to be taken after the investigation is completed, and the relevant confidentiality mechanism? (3) Whether whistleblowers from improper disposal due to the whistleblowing. the company has taken measures to protect the 4. Strengthen information disclosure (1) Whether the company disclosed the content of its integrity management code and promoted its effectiveness on its website and public V V V V V integrity management concept from top to bottom. In the future, they will set up a promotion unit based on the actual situation of the company and report to the board of directors regularly. The company’s integrity management policy and plan for preventing dishonest behaviors and supervision and implementation in 2020: 1. Promote integrity policy The company has set up an honesty policy advocacy zone to promote honesty management policies to employees and implement core values and business philosophy based on honesty. Newcomer training promotes the company ’s integrity policy and conducts tests to ensure that the newcomer understands the company ’s integrity policy. A total of 71 people visited in 2020, about 32 hours and 31 minutes. 2. The contract stipulates the integrity management clause When the company signs a distributor contract in 2020 with its customers, they sign the "Declaration of Integrity Behavior"; the relevant suppliers also sign the "Declaration of Integrity Behavior" according to the annual transaction amount. In 2020, a total of 8 copies were signed. 3. Sign a declaration of integrity The company requires colleagues in the management, production center, business and information units with high sensitivity in their duties to sign the "Corruption Commitment Letter". A total of 11 copies were signed in 2019. 4. Establish a convenient reporting channel The company has a "whistleblowing system" that clearly defines the reporting procedures and confidentiality mechanism, and encourages internal and external personnel to report any illegal or violation of the Code of Ethical Conduct or Code of Integrity Management. " As of the end of 2020, no letter of report was received. No major Difference (3) The company requires colleagues in the management, production center, business and information units with higher job sensitivity to sign the "Incorruption Commitment", and a total of 1 additional copies will be signed in 2020. (4) The company, Generalplus Technology and Sunplus Innovation Technology have established an effective accounting system No major Difference and internal control system for the implementation of integrity management. Internal auditors regularly check the implementation of the internal control system and implement the self-inspection system to ensure The effectiveness of the internal control system shall serve as the basis for issuing the internal control system statement and shall be reported to the board of directors for approval. The parent company has prepared and implemented an annual audit plan for its subsidiaries based on risk analysis. The company and Generalplus Technology have set up "integrity management operation procedures and behavior guidelines". The built-in integrity management is in the corporate culture and is advertised at various meetings from time to time. In the internal announcement, it also promotes the integrity management operation procedures and behavior guidelines to the company's employees, and implements the company's core values and management philosophy based on integrity. In 2008, the company proclaimed the company's integrity policy to new employees and conducted tests. The remaining subsidiaries implement opportunity education in their daily business, and will organize education and training in the future according to the company's practical situation. (5) The company, Generalplus Technology and Sunplus Innovation Technology have set up "integrity management operation No major Difference procedures and behavior guidelines". The built-in integrity management is in the corporate culture and is advertised at various meetings from time to time. In the internal announcement, it also promotes the integrity management operation procedures and behavior guidelines to the company's employees, and implements the company's core values and management philosophy based on integrity. In 2020, the company proclaimed the company's integrity policy to new employees and conducted tests. Sunplus Innovation Technology has set up an honest management policy on the homepage of the company's website, conveying the core values and business philosophy based on honesty to employees, and special promotion for new colleagues. The remaining subsidiaries implement opportunity education in their daily business, and will organize education and training based on the company’s actual conditions in the future. (1) The company and Sunplus Innovation Technology have a "whistleblowing system", Generalplus Technology has "handling No major Difference methods for reporting cases of illegal and unethical or dishonesty", and the remaining subsidiaries have "employee complaint methods". The company and its subsidiaries Appropriate persons in charge will be assigned to deal with them, as a convenient reporting channel for employees to report. (2) The company and its subsidiaries all have relevant methods for reporting and appealing, which specify the procedures for reporting, the follow-up measures to be taken after the investigation is completed, and the relevant confidentiality principles. No major Difference No major Difference (3) The procedures for the protection of whistleblowers are clearly stipulated in the relevant reporting and appeal measures of the company and its subsidiaries. The company, Generalplus Technology and Sunplus Innovation Technology have placed relevant regulations on integrity management on the company's internal website for colleagues to inquire at any time. The company's external websites and public information observatories place annual reports and corporate social responsibility reports, which also fully disclose relevant policy requirements and No major Difference 37 information observatory. information on honest operation. 8. If the company has its own code of integrity management in accordance with the "Code of Integrity Management of Listed OTC Companies", please state the difference between its operation and the code: The company and its subsidiaries and various manufacturers and organizations cooperate in accordance with the principle of integrity management. 9. Other important information that helps to understand the company's integrity management and operation situation: (such as the company reviewing and revising its integrity management code and other situations) The company and its subsidiaries take honesty as the foundation, and strive for the integrity of all employees and are responsible to investors, customers and the society. The company has a mailbox for complaints and reports. If employees find any violation of the principle of good faith or harm to the reputation of the company, they can complain or report through the Internet. In addition, the company and its subsidiaries and the relevant manufacturers and partners are mostly long-term cooperation, and clearly set a contract, set up relevant full-time personnel to participate, and maintain a long-term stable cooperative relationship. Note 1: Whether the operation is checked "Yes" or "No", it should be stated in the summary description field. 3.3.7 Formulate Corporate Governance Rules and Regulations: (If the company has established corporate governance rules and related regulations, it should disclose its search methods) The Company has a Code of Corporate Governance Practices, to protect the interests of shareholders, strengthen the functions of the board of directors, respect for the interests of stakeholders, to enhance the transparency of information, etc. are relevant norms, also for the Taiwan Stock Exchange Co., Ltd. for corporate governance review one by one to review the actual implementation of the assessment indicators, hoping to help companies gradually build a good corporate governance system, to enhance the effectiveness of corporate governance. The Company's corporate governance operation, please refer to this Annual Report, Corporate Governance Report III, Corporate Governance Operations (pages 14-31), for the Code of Corporate Governance Practices, please contact our website. 3.3.8 Other Matters Needed to Improve the Company’s Implementation of Corporate Governance: None 38 3.3.9 Internal Control System Execution Status and Information a) Statement of Internal Control System Sunplus Technology Co., Ltd. Statement of Internal Control System Date: March 30th, 2021 Based on the findings of a self-assessment, Sunplus states the following with regard to our internal control system during January 1st – December 31st, 2020: Sunplus is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of Board of Directors and management team. Sunplus has established such a system aimed at providing reasonable assurance regarding achievement of objectives in the following categories: (a) effectiveness and efficiency of operations (including profitability, performance, and protection of assets), (b) reliability of financial reporting, and (c) compliance with applicable laws and regulations. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only reasonable assurance of accomplishment for the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment and circumstances. Nevertheless, Sunplus’ internal control system contains self-monitoring mechanisms, and Sunplus takes corrective actions whenever a deficiency is identified. Sunplus evaluates the design and operating effectiveness of our internal control system based on “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: (a) control environment, (b) risk assessment, (c) control activities, (d) information and communication, and (e) monitoring. Each component further contains several items. Please refer to the Regulations for details. Sunplus has evaluated the design and operating effectiveness of our internal control system according to the aforesaid criteria. Based on the findings of the evaluation mentioned in the preceding paragraph, Sunplus believe that, during the year 2020, our internal control system (including the supervision and management of subsidiaries), as well as our internal control to monitor the achievement of our objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives. This statement is an integral part of Sunplus’ annual report for the year 2020 and prospectus, and would be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Article 20, 32, 171, and 174 of the “Securities and Exchange Law”. This statement has been passed by the Board of Directors Meeting held on March 30th, 2021, with all six attending directors expressing dissenting opinions, and the remainder all affirming the content of this statement. Sunplus Technology Co., Ltd. Chou-Chye Huang Chairman& CEO 39 3.3.10 The Company’s Internal Control System Audit Report by External Auditors: Not applicable 3.3.11 Regulatory Authorities’ Legal Penalties to the Company, and the Company’s Resulting Punishment on Its Employees: None 3.3.12 Important resolutions of the shareholders meeting and the board of directors for the year of 2020 and up to the printing date of the annual report 2019 The implementation of the resolution of the shareholders' meeting Date 2020.06.12 Decision Maker Shareholders’ Meeting Resolution matters and implementation 1. Acknowledge the company's 2019 business report and financial statements. Implementation status: The relevant forms have been submitted to the competent authority for inspection and announcement in accordance with the company law and other relevant laws and regulations. 2. Acknowledgment of the company's 2019 loss appropriation case. Implementation status: No dividends were allotted this year. 3. Approved the amendment to the company's articles of association. Implementation status: Effective after the resolution of the shareholders meeting. 4. Through handling the capital reserve allocation case. Implementation status: July 19, 2020 was set as the allotment base date, and August 07, 2020 was set as the issuance date (the allotted capital reserve per share is NT$0.3). 5. Approved the proposal to lift the restrictions on the company's directors' competition. Implementation status: effective after the resolution of the shareholders meeting. 2020 and as of the date of publication of the annual report of the board of directors important matters Date Decision Maker Case Result 2020.08.13 Board Meeting 1. Discussion of the consolidated financial 2020.11.13 Board Meeting 1. Discussions on the consolidated statements for the second quarter of 2020. financial statements for the third quarter of 2020. 2020.12.29 Board Meeting 1. The 2021 accountant appointment and 2021.02.03 Board Meeting 1. The company's "procedures for independence assessment discussion proposal. acquiring or disposing of assets" revised discussion proposal. 2. The re-election proposal for the 12th term of directors (including independent directors) of the company. 3. Discussion proposal for lifting the restriction on competition for new directors of the company. 4. Matters concerning the holding of the regular shareholders' meeting in 2021 and the discussion of the right to accept shareholders’ proposals. The proposal was passed after the chairman consulted all the directors present without objection. The proposal was passed after the chairman consulted all the directors present without objection. The proposal was passed after the chairman consulted all the directors present without objection. 2021.03.29 Board Meeting 1. The company's 2020 employee remuneration and directors' remuneration distribution situation discussion proposal. 2. Proposal for the discussion of the 2020 financial statements. 3. Proposal to discuss the consolidated financial statements for the year 2020. 40 The proposal was passed after the chairman consulted all the directors present without objection. The proposal was passed after the chairman consulted all the directors present without objection. 4. Proposal for the discussion of the 2020 business report. 5. Proposal to discuss the distribution of surplus in 2020. 2021.04.21 Board Meeting 1. The company's discussion on the cancellation of the restrictions on the share release of the original shares held by the affiliated company "iCatch Technology Co., Ltd." that adopted the equity method. 2. Review the discussion proposal of the candidate qualifications of directors (including independent directors). 3. Discussion proposal for lifting the restriction on competition for new directors of the company. 4. The company's "procedures for acquiring or disposing of assets" revised discussion proposal. 5. Discussions on the agenda update of the 2021 General Meeting of Shareholders. 6. Discussion on the Renewal of Directors’ Liability Insurance. 2021.05.14 1. Discussion Proposal on Consolidated Financial Statements in 2021. The proposal was passed after the chairman consulted all the directors present without objection. 3.3.13 The most recent year and as of the date of report publication the directors have different opinions and record or written statements by the board of directors through important resolutions, its main content: None 3.3.14 The most recent year and as of the date of report publication, the person related with financial report that resignation of summary of the situation. None 3.4 Audit Fees Audit Firm Name of Auditor Duration of auditing Remarks Deloitte & Touche Zheng-Zhi Lin Mei-Zhen Cai 2020.01.01~2020.12.31 Amount 1. Under NT$2,000,000 2. NT$2,000 ,000~ NT$4,000,000 3. NT$4,000,000 ~ NT$6,000,000 4. NT$6,000,000 ~ NT$8,000,000 5. NT$8,000,000 ~ NT$10,000,000 6. Over NT$10,000,000 Item Audit fee Non-audit fee Total Amount Unit: Thousands of New Taiwan Dollars    41 Name of accounting firm Accountant name Public audit Non-audited public expense System Design Business registration Human Resources other Subtotal Accountant's review period Remarks Amount Unit: Thousands of New Taiwan Dollars Deloitte & Touche Zheng-Zhi Lin Mei-Zhen Cai 5915 - - - 350 350 109.01.01~109.12.31 Non-audit public expenses-other department transfer pricing reports and non-supervisor salary declaration and verification fees, etc. 3.4.1 Payment of visa accountants, visa accountants and their relationship between the firm's non-audit fees accounted for the proportion of the audit fee of more than one-fourth per cent, should disclose the amount of audit and non-audit fees and non-audit services: Not applicable. 3.4.2 Replacement of accounting firms and replacement of annual audit fees paid to replace the previous year's audit fee reductions, should disclose the reduction, proportion and reason of the audit public expense: Not applicable. 3.4.3 The audit fee is reduced by more than 15% over the previous year, should reduce the amount of audit fees, the proportion and reason: Not applicable. 3.5 Replacement of Auditors 3.5.1 About the former accountant Change date Approved by the board of directors on December 25, 2019 Replace reason and Deloitte & Touche internal business transfer, since the from 2020 Zheng-Zhi explanation Lin and Yu-Feng Huang accountants replaced Zheng-Zhi Lin and Mei-Zhen Cai accountants The description was litigant terminated or not accepted situation by the appointor or Proactively terminate the accountant appointment Accountant Appointed person Not applicable No longer accept (continue) appointment 42 Opinions and Reasons for Examining Check Reports Other than Unqualified Opinions within the Latest Two Years The 2020 and 2019 annual review reports of the central bank issued reservations. The relevant information of the investee companies whose main series was included in the financial statements and equity methods of the some non-substantial subsidiaries in the consolidated financial statements were based on the financial reports unaudited by the accountants during the same period. Recognize and expose. Accounting principles or practices Financial report disclosure Yes Check the scope or steps Is there any disagreement with the issuer Others Other disclosures (The first to fourth heads of Article 10, paragraphs 6 to 7 should be disclosed) No  Instructions No 43 3.5.2 About Succession Accountant Office name Deloitte & Touche Accountant's name Zheng-Zhi Lin、Mei-Zhen Cai Date of appointment Approved by the board of directors on December 25, 2019 Pre-appointment accounting for specific transactions Treatment methods or accounting principles and No Financial report may issue opinions Consultation and results Successor Accountant to Former Accountant No Written opinions on different opinions 3.5.3 Reply from former accountants to the first and second items of Article 10, paragraph 5 of this standard: None. 3.6 Chairman, Presidents, and Managers in Charge of Finance and Accounting Who Held a Position in Sunplus’ Independent Audit Firm or Its Affiliates during the Recent Year: Not applicable. 44 3.7 Net Change in Shareholding and Net Changes in Shares Pledged by Directors, Management, and Shareholders with 10% Shareholding or More 3.7.1 Net Change in Shareholding and Net Changes in Shares Pledged by Directors, Management, and Shareholders with 10% Shareholding or More 2020 Ended of April 09th, 2021 Unit: Shares Title Name Shareholding Increased (decreased) Shares Pledged (Released) Chou-Chye Huang Chairman& CEO Global View Co., Ltd. Director Wen-Shiung Jan Director Wei-Min Lin Director Independent Director Che-Ho Wei Independent Director Tse-Jen Huang Independent Director Yao-Ching Hsu Head of Corporate Governance Associate Phoebe Chen Inauguration Date: 2021/04/01 Adam Wang Inauguration Date: 2021/04/01 Wayne Shen Shu-Chen Cheng VP Director of Finance & Accounting Division AVP AVP AVP Alex Chang Jason Lin Michael Su Shares Pledged (Released) Shareholding Increased (decreased) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3.7.2 Stock Trade Name (Note 1) - Transfer Reason - Transaction Date - Name of Counter Party - Nature of Relationship - Amount of Shares - Transaction Price - Ended of April 09th, 2021 Percentage of Shares Pledge - Transaction Price - 3.7.3 Shares Pledge with Related Parties Name (Note 1) - Reason of Pledge (Note 2) - Date of Change - Name of Counter Party - Nature of Relationship Amount of Shares - - Percentage of Shareholding - Note 1: Including Directors, mangers and shareholders holding more than 10% Note 2: Reasons for shares pledged or released 45 3.8 Top 10 Shareholders & Related Parties Current Shareholding Shareholding under Spouse & Minor Amount of Shares Holding % Amount of Shares Holding % 92,737,817 15.67% 1,370,993 0.23% 13,045,795 10,038,049 2.20% 1.70% 2,006,943 - 0.34% - 0 0.00% 0 0.00% 7,962,160 1.34% 539,631 0.09% 7,511,825 1.27% - - 7,000,000 1.18% 1,210,000 0.20% 5,464,000 0.92% - - Shareholding under Others’ Name Amount of Shares Holding % - - - - - - - - - - - - - - 5,033,000 0.85% - - - - 4,518,752 0.76% 3,559,996 0.60% - - - - - - - - Name Chou-Chye Huang De-Zhong Liu Global View Co., Ltd. Zhi-yuan Zhou (Representative of Legal Entity) Chih-Hao Gong Polunin Emerging Markets Small Cap Fund, LLC Wen-Qin Lee Standard Chartered Bank Custody of Credit Suisse First Boston International The American branch of JPMorgan Chase Bank Taipei is entrusted with the custody of Vanguard's emerging market stock index fund investment account Chase Managed Advanced Starlight Advanced General International Stock Index Lingxu Investment Co., Ltd. Relationship with related-parties Name Relationship Global View - Chou-Chye Huang Corporate Director - Corporate Director of Global View Co., Ltd. - - - - - - - - - - - - - - 46 3.9 Long-term Investment Ownership Long-term Investments (Note) December 31st, 2020/Unit: thousand shares, % Sunplus Investment Shareholding of Director, Supervisor, Management or Subsidiary Synthetic Shareholding Amount of Shares Holding % Amount of Shares Holding% Amount of Shares Holding % 58 34 37,324 29,949 14,892 3,979 Generalplus Technology Sunplus Innovation Technology iCatch Technology Inc. Sunplus mMedia Inc. Jumplux Technology Global View Co., Ltd. EVERGREEN STEEL CORP. Note: Except companies listed above, all other long-term investments are held by the parent company. 20,735 22,441 13,200 8,229 5,326 2,559 10,100 28 90 55 13 7 10 42 - 14 8 195 1000 1500 - - 52,216 33,928 26,061 25,000 23,300 8,424 2500 48 66 35 100 97 13 - 47 IV. Capital & Shares 4.1 Capitalization Month/Year Price (NT$) Authorized capital Shares (thousand shares) Amount (NT$K) Issued capital Shares (thousand shares) Amount (NT$K) Funding (NT$K) 08/1990 10 2,300 23,000 620 6,200 Cash 08/1990 10 2,300 23,000 1,150 03/1992 10 2,300 23,000 2,300 Offering 6,200 11,500 Cash Offering 5,300 23,000 Cash Offering 11,500 April 09th, 2021 Remark Funding Except Cash None Not IPO yet Note None Not IPO yet None Not IPO yet 12/1993 10 6,000 60,000 6,000 60,000 Cash None Not IPO yet Offering 20,900 Capitalization of Profits 16,100 09/1994 10 19,800 198,000 19,800 198,000 Cash None Not IPO yet 06/1995 10 39,600 396,000 39,600 Offering 60,000 Capitalization of Profits 78,000 396,000 Capitalization of Profits 198,000 None 06/28/1995 SFC No. 37335 06/1996 10 64,360 643,600 64,360 643,600 Capitalization None of Profits 247,600 06/1997 10 105,500 1,055,000 105,500 1,055,000 Capitalization None of Profits 411,400 06/1998 10 184,000 1,840,000 184,000 1,840,000 Capitalization None of Profits 785,000 06/1999 10 269,120 2,691,200 269,120 2,691,200 Capitalization None of Profits 851,200 06/2000 10 600,000 6,000,000 370,000 3,700,000 Capitalization None of Profits 1,008,800 09/2000 10 600,000 6,000,000 390,000 3,900,000 Cash None 06/2001 10 700,000 7,000,000 Offering for GDR 200,000 534,000 5,340,000 Capitalization of Profits 1,440,000 06/26/1996 SFC No. 40155 06/10/1997 SFC No.46641 06/08/1998 SFC No.49408 06/23/1999 SFC No.57760 06/03/2000 SFC No.48003 09/18/2000 SFC No 72620 None 06/27/2001 SFC No 140791 12/2001 10 700,000 7,000,000 544,742 5,447,424 Merger from None Grandtech 10,742 12/12/2001 SFC No 173137 06/2002 10 1,000,000 10,000,000 694,950 6,949,500 Capitalization None 05/30/2002 SFC 48 of Profits 957,334 And Capital Surplus 544,742 07/2003 10 1,000,000 10,000,000 777,504 7,775,040 Capitalization None of Profits 130,590 And Capital Surplus 694,950 06/2004 10 1,000,000 10,000,000 875,254 8,752,544 Capitalization None of Profits 355,500 And Capital Surplus 622,004 07/2005 10 1,050,000 10,500,000 945,570 9,455,700 Capitalization None of Profits 487,576 And Capital Surplus 175,051 Employee Stock Option 40,529 11/2005 10 1,050,000 10,500,000 948,147 9,481,472 Employee None Stock Option 25,772 03/2006 10 1,050,000 10,500,000 948,730 9,487,297 Employee None Stock Option 5,825 06/2006 10 1,050,000 10,500,000 949,784 9,497,844 Employee None Stock Option 10,547 06/2006 10 1,200,000 12,000,000 1,021,358 10,213,578 Capitalization None of Profits 508,844 And Capital Surplus 189,230 Employee Stock Option 17,660 11/2006 10 1,200,000 12,000,000 1,022,777 10,227,773 Employee None 01/2007 10 1,200,000 12,000,000 Stock Option 14,195 512,212 5,122,119 Capital Reduction 5,114,358 Employee Stock Option 8,703 No.129546 05/22/2003 SFC No.0920122560 06/15/2004 SFC No.0930126644 07/11/2005 FSC No. 0940127940 TSE No.09400288741 TSE No.09400340711 TSE No.09500052761 TSE No.09500116511 FSC No.0950126238 TSE No.0950030505 None FSC No.0950159014 03/2007 10 1,200,000 12,000,000 512,954 5,129,537 Employee None Stock Option 7,418 09/2007 10 1,200,000 12,000,000 554,240 5,542,399 Capitalization None of Profits 288,622 And Capital 49 TSE No.0960005441 FSC No.0960038299 Surplus 102,415 Employee Stock Option 21,825 11/2007 10 1,200,000 12,000,000 556,051 5,560,514 Employee None Stock Option 18,115 03/2008 10 1,200,000 12,000,000 556,750 5,567,504 Employee None Stock Option 6,990 05/2008 10 1,200,000 12,000,000 556,893 5,568,931 Employee None Stock Option 1,427 09/2008 10 1,200,000 12,000,000 598,203 5,982,028 Capitalization None of Profits 301,637 And Capital Surplus 111,092 Employee Stock Option 368 02/2009 10 1,200,000 12,000,000 596,910 5,969,099 Treasury None 03/2014 10 1,200,000 12,000,000 591,995 5,919,949 Stock write-off 12,929 Treasury Stock write-off 4,915 TSE No.0960037136 TSE No.09700075761 TSE No.09700142371 FSC No.0970036239 TSE No.0980003591 None TSE No.10300058351 Issued Shares Authorized Capital Treasury Stock Shares Un-issued Shares April 09th, 2021/Unit: shares Total Remark 591,994,919 0 608,005,081 1,200,000,000 Type Common Share 50 SHELF REGISTRATION Shares Expected to Issue Total Shares N/A N/A Type N/A Amount Amount Price N/A N/A Issued Shares Objective and Expected Benefit of Issued Shares Expected time of Un-issued Shares Remark N/A N/A N/A 4.1.1 Composition of Shareholders Shareholder Amount Governmen t Financial Institutions Others Juridical Person Foreign Institutions and natural Person Domestic Retail investors April 09th, 2021/Unit: share Treasury Stock Total 2 276 0 0 0% 91,989 66,048 25,513,928 61,548,413 504,866,530 85.28% 0.01% Persons Shares Shareholding Note: The first-listed companies and cabinet companies should disclose their shareholdings in land-based capital; land-based capital refers to the people, legal persons, organizations, and other organizations in mainland China as stipulated in Article 3 of the People's Republic of China to Taiwan Investment Permit Measures, or its investment in a third region. 92,435 0 0 591,994,919 100.00% 10.40% 4.31% 168 0% 4.1.2 Distribution Profile of Shareholder Ownership – Common Share April 09th, 2021/Par value per share: NT$10 Shareholding Ownership Number of Shareholders (persons) Shares Owned (shares) Holding (%) 1~999 1,000~5,000 5,001~10,000 10,001~15,000 15,001~20,000 20,001~30,000 30,001~40,000 40,001~50,000 50,001~100,000 100,001~200,000 200,001~400,000 400,001~600,000 600,001~800,000 800,001~1,000,000 Over 1,000,001 Total 36,997 43,032 6,638 1,674 1,349 988 432 376 530 227 102 25 11 13 41 92,435 2,367,088 88,873,294 54,909,574 21,391,725 25,512,130 26,015,893 15,626,367 17,732,524 39,388,493 32,354,795 28,471,976 12,293,802 7,220,910 12,155,528 207,680,820 591,994,919 0.40% 15.01% 9.28% 3.61% 4.31% 4.39% 2.64% 3.00% 6.65% 5.47% 4.81% 2.08% 1.22% 2.05% 35.08% 100.00% 4.1.3 Distribution Profile of Shareholder Ownership – Preferred Shares Not Applicable 51 4.1.4 Major Shareholders Shareholding Name Chou-Chye Huang De-Zhong Liu Global View Co., Ltd. Chih-Hao Gong Polunin Emerging Markets Small Cap Fund, LLC Wen-qin Li Standard Chartered Bank Custody of Credit Suisse First Boston International The Vanguard Emerging Market Stock Index Fund Investment Account of the Vanguard Group Company Manager entrusted by JPMorgan Chase Bank Taipei Branch Chase Custody Advanced Starlight Advanced Aggregate International Stock Index Lingxu Investment Co., Ltd. Shares Owned Holding % April 09th, 2021 92,737,817 13,045,795 10,038,049 7,962,160 7,511,825 7,000,000 5,464,000 15.67% 2.20% 1.70% 1.34% 1.27% 1.18% 0.92% 5,033,000 0.85% 4,518,752 3,559,996 0.76% 0.60% 4.1.5 Net Worth, Earnings, Dividends, and Market Price per Share Year 2019 2020 Item Market Price Net Worth Highest Lowest Average Before Distribution After Distribution Weighted Average Shares Earnings Per Share Dividends Per Share Return on Investment EPS (Note 2) Before Adjustment After Adjustment From Profits From Surplus Cash Dividends Stock Dividends Accumulated Undistributed Dividends Price/Earnings Ratio (Note 3) Price/Dividend Ratio (Note 4) Cash Dividends Yield Rate (Note 5) 14.85 10.85 12.97 13.82 13.52 588,434,923 0.03 0.03 0.30(Note 6) - - - 432.33 43.23 0.02 19.30 7.42 12.67 14.21 (Note 1) 588,434,923 0.55 (Note1) (Note1) (Note1) (Note1) (Note1) 23.04 (Note1) (Note1) Ended of March 31st, 2021 32.00 17.20 25.02 14.60 (Note 1) 588,434,923 0.37 - - - - - 67.62 - - Note 1: Pending shareholders’ approval Note 2: Retroactively adjusted for stock dividends and stock remuneration to employees Note 3: Price/Earnings ratio=average market price/earnings per share Note 4: Price/dividends ratio=Average market price/cash dividends per share Note 5: Cash dividends yield rate=cash dividend per share/average market price per share Note 6: Capital reserve cash is NT$ 0.30 per share, and the surplus is calculated as surplus NT$ 0 per share, totaling NT$ 0.30 in cash per share 4.1.6 Dividend Policy a) Dividend policy in the “Article of Incorporation” Our dividend policy is made according to regulations set forth in the “Company Act” and the “Article of Incorporation”. The dividends can be in the form of cash or stock, which depends on the status of company’s capital, financial structure, operational needs, retained earnings and industrial environment. The dividend policy for this year will follow the aforementioned rules and maintain the policy of cash dividend with stock dividend, while cash part shall not be less than 10% of the total dividend. b) Stock dividends for 2020 The company’s 2020 surplus distribution proposal was passed by the board of directors on March 29, 2021. The 2020 resolution allotment and distribution items are as follows (not yet approved by the shareholders meeting): 52 (1) Provision of statutory surplus reserve of NT$32,889,399. (2) Turnover special surplus reserve of NT$15,110,925 (3) Shareholders’ cash dividend of NT$311,093,330, calculated on the basis of the total number of 591,994,919 shares in circulation as of April 09, 2021, and a cash dividend of NT$0.5255 per share c) Expected Variation: None 4.1.7 Impact to Profits and EPS Resulting from Dividend Distribution Due to no official financial guidance there is no related information to disclose. 4.1.8 Profits Distributed as Employee Rewards and Directors and Supervisors’ Compensation a) Regulations Concerning Rewards to Employees, Directors, and Supervisors in the “Article of Incorporation” If the Company has a profit for the year, should be raised not less than one percent for the staff and not more than one percent. Five for the directors reward. But the company still has accumulated losses (including the adjustment of undistributed surplus amount), should be kept in advance to make up the amount. The former employee is remunerated by stock or cash, which shall be made to include the employees of the subsidiary who meet the conditions set by the Board. The remuneration of the former directors is only in cash. The first two items should be resolved by the board of directors, and report to the shareholders' meeting. When allocating the net profits of each fiscal year, the Company should pay the taxes and make up the losses in previous years; and then shall set aside 10% of the rest after paying tax and making up loss as a legal capital reserve until the accumulated legal capital reserve has equaled the total capital of the Company; In accordance with the law or the competent authorities, to allocate or rotate the special surplus reserve, the surplus, together with the previous accumulated unallocated surplus, is the shareholder's dividend, the board of directors is proposing to assign a motion, to be circulated after the resolution of the shareholders' meeting. But the ratio of the distributions offered by the surplus and the cash dividends of the shareholders, depending on the actual profit and the state of the funds, adjusted by the shareholders' meeting. The above cash dividend shall not be less than 10% of the total dividend of the shareholders to be distributed, but the cash dividend per share is lower than NT$0.5 will not be issued. In the event that the previous year's accrued or current year occurred but the annual after-tax surplus was not included in the shareholders', accrual of the same amount of surplus reserve due from the previous year's accumulated unallocated surplus, and deducted before being allocated for distribution. b) The proposed distribution of employee compensation and director compensation for 2020 approved by the board of directors Approval by Board of Directors’ meeting on March 29, 2021, the company decided to distribute the profits of 2020 Cash rewards to Employee NT$3,316,811 Cash bonus to Directors NT$4,975,216 c) No information on employee compensation and director compensation for the year 2019 was allotted in the previous year The above distributions are not different from those of the Board of Directors of the Company dated 14 March 2018. 4.1.9 Buyback of Common Shares None 4.2 Issuance of Corporate Bonds None 4.3 Preferred Shares None 53 4.4 Issuance of GDR Item Issuing Date Issuance & Listing Total Amount Offering Price per Unit Issued Units Underlying Securities Common Shares Represented Rights and Obligations of GDR holders Trustee Depositary Bank Custodian Bank GDRs Outstanding Issuing Date March 16, 2001 March 31st, 2021 March 16, 2001 London Stock Exchange Listed US$191,400,000 US$9.57 14,737,222.5 Offering 20,000,000 new shares of common stock of par value NT$10 29,474,445 Common Shares Same as common share holders N/A The Bank of New York Mega International Commercial Bank 176,225 units All fees and expenses related to issuance of GDRs were borne to the selling shareholders and Sunplus, while the maintenance expenses such as annual listing fees, information disclosure fees and other expenses were borne by Sunplus Apportionment of the expenses for the issuance and maintenance Terms and Conditions in the Deposit Agreement and Custody Agreement - Closing price per GDRs 2020 January 1 to March 31, 2021 Highest Lowest Average Highest Lowest Average US$1.32 US$0.49 US$0.86 US$2.17 US$1.27 US$1.77 4.5 Employee Stock Options Plan 4.5.1 Issuance of Employee Stock Options and Its Impact to Shareholders Equity 4.5.2 Stock Option to Management Team and Top 10 Individual 4.6 Restricted Employees Stock Not applicable 4.7 Mergers and Acquisitions Not Applicable V. Financial Plan & Implementation Not Applicable 54 VI. Business Highlight 6.1 Business Activities 6.1.1 Business Scope a) Major Business CC01080 Manufacturing of electronic component I501010 Product Designing F401010 International Trading I301010 Software Design Services I301020 Data Processing Services R&D, Manufacturing, Testing, Selling of (1) ICs (2) modules (3) Application software (4) IPs (5) Trading and Agency Business of ICs 4 Product Segments and Sales Amount Product Categories Amount Percentage % 2020 Unit: NT$K, % IC income Other Total 6,084,210 329,930 6,414,140 94.86 5.14 100.00 6.1.2 Plan to develop new products (services) Company Plans to develop new products (1) Car entertainment system chip (2) Vehicle smart cockpit system chip (3) Vehicle navigation and driving assistance system flat (4) Medium and high-order Soundbar system Sunplus Technology chip Generalplus Technology (5) High-speed interface IP (6) High - performance data converter (7) Analog IP (8) Industrial control system chip based on sunplus Plus1 architecture (1) A new generation of speech synthesis control chip (a) High sound quality and high volume PWM driver (b) OTP / Flash memory, can quickly update the code (2) Digital audio and voice recognition control IC: (a) High-resolution Sigma-Delta ADC recording device (b) High sound quality Class-D broadcast drive device (c) Flash memory, can quickly update the code (3) LCD control IC: (a) Low-power platform capable of single battery operation (b) OTP memory, can quickly update the code (4) Multimedia application control IC: (a) High-performance Cortex-A series 32-bit platform (b) More display technologies and interfaces 55 (CVBS, HDMI, MIPI) (c) Advanced image processing (ISP, GPU, H.264, computer vision and AI deep learning) (d) DDR2/DDR3 DRAM interface (5) Microcontroller: (a) Cortex-M0 motor drive control IC (b) Highly integrated wireless charging IC (c) High-sensitivity touch IC (6) Other ICs: (a) Various peripheral chips supporting the main control IC (b) More complete power control IC (c) Higher quality audio amplifier IC (1) Very low power USB image processing IC (2) USB3.0 4K image processing IC (3) Image processing IC with intelligent image detection function (1) Front loading regulation USB3.2 TYPE C MediaHUB IC (2) USB3.2 10Gbps x 2 PHY IP (3) Front loading regulations MIPI APHY TX/RX IP Sunplus Innovation Technology Jumplux Technology 6.1.3 Industry Overview a) Industry Status and Exhibition Although there will be interference from the epidemic in 2020, under the trend of working at home and studying at home, Taiwan's semiconductors have reversed growth in semiconductor output due to the long-term accumulated competitiveness and the appropriate control of the epidemic. In addition, the vigorous development of 5G mobile phones and smart driving can drive the driving factors of semiconductor demand in the future. Because perception, computing, and communication are the basic requirements of AIoT, the application market for semiconductors in sensing, micro-processing and communication will continue to expand. ITRI estimates that the top three IoT products in 2023 are smart TVs, autonomous driving assistance systems (ADAS) and smart security monitors. The output value reached 3.446 billion U.S. dollars, 2.802 billion U.S. dollars and 2.705 billion U.S. dollars, and the compound annual growth rates from 2018 to 2023 were 7%, 199%, and 62%, respectively. In the face of future market development trends, with 5G, AI, high-performance computing, automotive and other related emerging semiconductor applications, various AI acceleration and collaboration chips required from the cloud to the edge have been proposed, making the future of new architectures The development trend of the chip will affect the development direction of the semiconductor industry and the transfer of semiconductor application blocks. b) Supply Chain In the product development flow, Sunplus focuses on IC design, system design, wafer testing and sales services but out-sources most of the manufacturing including mask making, wafer fabrication, wafer sawing, packaging and final testing. The infrastructure of semiconductor industry in Taiwan is very efficient; we have foundries like TSMC, UMC, etc., and backend assembly and testing houses such ASE, SPIL and KYEC. Since those factories are located in Hsinchu Science Park or nearby, the “Cluster” effect could enable high production efficiency. c) Market Trend and Competition Company Main Product Sunplus IC products are used in automotive infotainment systems, advanced driver assistance systems (ADAS), home audio Soundbar and DVD players, and authorized high-speed interface IP, high-performance data converter IP and analog IP 56 Product development trends and competitive situation Sunplus continues to develop a single chip (Display Audio SoC) in the IVI product line that supports mobile phone interconnection functions such as Apple CarPlay and Google Android Auto. It is still the most cost-optimized solution in the industry, except for the first-generation USB wired interconnection system solution. In 2020, a WiFi wireless interconnection system will also be developed. It is expected that in 2021, customers will be able to pass Apple and Google certifications to introduce mass production. In 2021, SoCs with higher computing power and machine learning capabilities will be launched to realize smart cockpit systems with DA and ADAS or digital instruments. In the home audio-visual entertainment segment, the SoundBar product line continues to be developed based on DVD player technology and customer base. 3D surround sound fields (such as Dolby Atmos, DTS:X and other technologies) have been generally accepted by consumers. Sunplus has a solid foundation for cooperation with Dolby and DTS, and has successively launched products that can support 3D sound fields. The development strategy is to optimize the system , Launching a more integrated SoC, hoping to reduce the price of terminal products and expand the penetration rate of 3D sound field products. Sunplus also provides IP licensing for high-speed interfaces, data converters, and analogs. In addition, Sunplus also launched the Plus1 architecture. The C+P architecture developed by it solves the problem that the advanced manufacturing process of the semiconductor industry cannot match the market volume. The C+P architecture is the Computing Unit plus the Peripheral Unit, and the Computing Unit uses advanced computing units. The manufacturing process and computing power can catch up with the trend of the times, while the peripheral units of Peripheral Unit use mature manufacturing processes to achieve reasonable development costs. Based on this architecture, the industrial Linux SoC development platform SP7021 has been launched in the market. A. Educational learning platform The highly integrated ARM9 SoC up to 513MHz, in addition to full HD 1080P full HD H.264 image compression and decompression, also has the flexibility of CPU and DSP (Digital Signal Processor) powerful computing capabilities. Provide a competitive hardware platform, provide customers with complete solutions in the development tools and libraries to quickly and effectively serve customers. B. Smart interactive toy market In the field of interactive toys, injecting AI technology concepts into the toy market is expected to lead the market trend and create new and different interactive toys. The model of product innovation is divided into technology-driven market and market feedback to drive the company's technological Generalplus A. Educational learning platform B. Smart interactive toy market C. Wireless charging market D. Driving recorder market 57 innovation. C. Wireless charging market In the product development, 15W products are launched, which can be applied to mobile phones, mobile power supplies, charging back clips and other various devices suitable for wireless charging. It also successfully introduced into the automotive pre-installation market and mass production. D. Driving recorder market Will continue to develop on the development of multi-channel cameras and intelligent driving assistance systems, with a view to diversifying product applications. The products built by our company in external Webcam and NB have obtained the quality recognition of major international manufacturers including Logitech HP DELL Lenovo Acer and other brands, and become their long-term cooperative supplier. Front-loading regulation product line: With the continuous shipment of front-loading customers, we continue to work on the peripheral chips of the relevant front-loading regulation.The current main competitors are Microchip, ST, Ti, NXP. Sunplus Innovation Technology Image product line, used in external network camera, NB laptop built-in network camera Jumplux Technology Front-loading regulations USB3.2 MediaHub IC Front-loading regulations USB3.2 PHY IP Front-loading regulations MIPI APHY TX/RX IP. 6.1.4 Technology and Development a) R&D expenditure Year 2020 Ended March 31st, 2021 Unit: NT$K, % 1,623,728 25% 504,019 30% Item Expense Percentage to Revenue b) R&D Accomplishment Company Sunplus Generalplus Accomplishment (1) H.264 decoder (2) MPEG2/4 decoder (3) Servo Control (4) HDMI DVD (5) JPEG decoder (6) Video encoder (7) CarPlay / Android Autod single chip and system platform (8) ADAS system platform (9) 3D surround sound field DSP and system platform (10) Plus1 architecture (1) Development and completion of GPC74B full series of voice / music synthesis controller chips (2) Development of Cortex-M0 voice recording platform with 81MHz operating frequency (3) Develop a new generation of 32-bit SoC high-end handheld open application platform (4) Development of 32-bit Cortex-M0 sine wave drive control IC GPM32F0118B Applications (1) High-end car infotainment system chip (2) Smart cockpit platform products for high-end vehicles (5) Medium and high-end Soundbar system chip (6) High-speed interface IP (7) High-performance data converter IP (8) Analog IP (9) Industrial standard Linux open platform SoC (1) Integrate CPU, OTP, RAM, I / O, timer and high resolution digital audio amplifier drive circuit. (2) In addition to integrating high-resolution Sigma-Delta ADC recording devices and 58 (5) GPMQ series product development (1) Low power consumption and high integration NB Camera control IC (2) Machine vision intelligent image (3) ISP technology-TNR HDR WDR Sunplus Innovation Technology Jumplux (1) USB Display IC (2) Automotive Mediahub IC (3) USB3.1 to UFS2.1 Bridge IC integrating high-quality performance Class-D broadcasting devices. (3) Built-in image processing unit, computer vision processing unit, voice processing unit, cooperate with self-developed deep learning and audio and video processing algorithms, develop various types of ELA education and learning, STEAM scientific toys, driving recorder, sports camera, aerial camera application. (4) Integrate Flash ROM, RAM, DMA, Programmable PWM, 1Msps 12-bit ADC and high-speed OPA to provide peripheral circuits and efficient DC brushless motor solutions. (5) Newly developed 15W IC solution, integrated high and low voltage components and passed WPC EPP certification. (1) Very low power USB image processing IC (2) USB3.0 4K image processing IC (3) Image processing IC with intelligent image detection function (4) Gaming mouse control IC (1) Front-mounted car specification USB3.2 TYPE C MediaHUB IC (2)USB3.2 10Gbps x 2 PHY IP (3) MIPI APHY TX/RX IP 6.1.5 Business Plan Short-term business plan: In terms of automotive chip products and system platforms, Sunplus Technology has successfully developed CarPlay/Android Auto (DA, Display Audio) audio and video systems for vehicles and successfully imported them into Japan, South Korea, and China. The current terminal product sales area is mainly Japan , North America, South America, Southeast Asia, etc. Affected by the epidemic in 2020, the global auto market has declined sharply, and light vehicle sales have fallen by 15%. However, China's new car production and purchase demand has recovered rapidly, and the aftermarket e-commerce demand has also increased. Recognizing and responding to this development, in 2020, Sunplus will adjust its resources to give priority to 59 serving Chinese pre-installation and overseas post-installation first- and second-tier brand customers. In 2021, it will continue to have mass production results. In terms of home soundbar and audio products, we continue to maintain close cooperation with major audio and audio codec manufacturers, integrate advanced audio processing technology on Sunplus’s system platform, and promote it to international brand customers. Currently, it has been imported into Japan, South Korea, North America, etc. Mass production for international brand customers. Dolby Atmos and DTS:X SoC products will be developed in 2020. Brand customers will be introduced in 2021 to complete the layout of medium and high-end products. In addition, there are also new product development plans for low-end products, which are expected to start in 2022. Mass production, can provide customers with a more comprehensive product portfolio. Generalplus focuses on consumer electronics chips, product lines include voice, multimedia, and microcontroller chips, and product development ranks the market leader. The main applications include multimedia interactive toys, educational learning, voice and LCD control, MP3, consumer digital camcorders and MCU and other related applications. In the consumer product line, it is expected to maintain stable growth and profitability. In the multimedia product line, focusing on intelligent interactive robots, wearable devices, IoT start-up products, driving recorders, aerial recorders, sports DVs, etc., is expected to continue to grow in product development and market expansion. In the MCU product line, more emphasis will be placed on the planning and development of new product lines and the establishment of new customers, investing more resources and accelerating the expansion of product lines. Sunplus Innovation Technology focuses on the development of computer peripheral application chips. Products include PC man-machine interface device chips, network camera chips, optical sensors, remote control ICs, etc. The sales in 2020 will mainly come from PC-related camera control chip solutions, consumer image processing solutions, computer mouse controller chips and remote control chips. Continue to deepen the image processing technology, and at the same time invest in the field of machine vision, add more value to the image product program, and can continue to grow steadily in the future. Jumplux Technology focuses on peripheral chips for pre-installed vehicles. At present, the top ten customers account for about 100% of the total revenue. The customers are all Tier1 depot customers, with a sound structure and low risk. Tier1 customers' pre-installed car products were introduced into mass production. In the early days, the Sino-foreign joint venture brands of Europe and the United States in the mainland were the main ones. Starting from 2021, the top three domestic automakers in mainland China will also introduce their products into mass production. In addition, the USB Media Hub SPD10X series planned in 2020 will be redesigned to meet the needs of Tier1 customers for various brand models. Mass production will also be launched on Tier1 customers in 2021. Bringing new camp sports to the scene. Long-term development: Sunplus Technology includes all of the Group's consolidated entities, will continue to deepen its core competitiveness in all areas, strive to expand the market to increase market share, develop high value-added products to improve gross margin, observe the boom and market trends, adjust and optimize the product line Reinvestment to improve the performance of industry and industry investment, at the same time, it actively invests in the development of advanced technologies and products, expands the scale of operations, enriches the operating team and enhances the company’s visibility and image, in the hope of creating more profit for all shareholders. 60 6.2 Market Status 6.2.1 Market Analysis a) Market Analysis by Region Area Amount (NT$K) Percentage (%) 2020 Unit: NT$K, % Asia Taiwan Others Total b) Market Share 3,816,229 2,536,578 61,333 6,414,140 59.50 39.55 0.95 100.00 According to the statistics of the International Institute of Obstetrics and Gastronomy of the Industrial Technology Research Institute, Taiwan’s IC industry output value in 2020 reached 3.222.2 billion yuan, an increase of 20.9% over 2019, a record high. The output value of the IC design industry was 852.9 billion yuan, a growth of 23.1% compared to 2019; the IC manufacturing industry was 1.820.3 billion yuan, a growth of 23.7% compared to 2019, of which foundry was 1.629.7 billion yuan, which was a growth compared to 2019 24.2%, memory and other manufacturing was 190.6 billion yuan, up 19.4% from 2019; IC packaging industry was 377.5 billion yuan, up 9% from 2019; IC testing industry was 171.5 billion yuan, up 11.1% from 2019. The company's combined revenue in 2020 is NT$6.41 billion, with a market share of approximately 0.8%. c) Demand and Growth The MIC pointed out that demand for special application chips (ASICs) is expected to increase in 2020, and Taiwan ’s IC design related companies are expected to benefit. Senior industry analyst Ye Zhenxiu pointed out that the demand for ASIC chips has always existed, but the rising demand has been observed since 2019. In the past, mainstream demand focused on 3C, but with the development of the Internet of Things, it has driven product categories toward diversified development, including AI Development has also opened up the market demand for customized chips in the cloud and terminals. Under this wave of demand, Taiwanese manufacturers are expected to benefit simultaneously. In addition to existing IC design service providers, traditional IC design manufacturers can also use the accumulated bottom layer in the past. IP is the basis for developing ASIC services, with advanced process development experience to provide services. Ye Zhenxiu, senior industry analyst at MIC, said that Taiwan ’s IC design service revenue has maintained a growth rate of approximately 10% year-on-year. From this, it can be seen that demand is still growing steadily. Although ASIC accounts for a small proportion of the overall, customized services The high gross profit also attracts many traditional IC design companies to invest in it. Taking the dynamics of Taiwanese manufacturers as an example, in the past, IC design service providers such as Creative and Chihara provided ASIC design services. Now MediaTek and Lingyang have also established ASIC departments to develop their own IP and high-end process chip development through long-term accumulation Ability to assist customers to develop unique application chips and further expand applications to markets other than 3C. In the process part, the package integrates chips of different processes such as sensors, memory, and processing cores through the type of SiP module to improve chip computing efficiency and bring chip diversity. In view of this, Lingyang has invested a relatively large amount of resources in the IC development of the Smart Computing Project (Plus1) in the past few years, which can be applied to AI. As customers gradually understand acceptance and market demand increases, sales will have the opportunity to grow year by year. Company Product Demands Sunplus Car infotainment &ADAS 61 The automotive market in 2020 will decline compared to the previous year. The severe imbalance in semiconductor supply caused by the epidemic and the Sino-US trade conflict is expected to not be significantly eased in 2021. In 2021, it is estimated that global demand for new cars will grow by 10% compared to 2020. However, the uncertain factors are still the development of the global epidemic and the status of the supply chain. Sunplus Technology's mastery of the supply chain is still at the upper-middle level, and it is cautiously optimistic about maintaining the supply of production capacity, and will adjust the supply in more detail based on the customer's material preparation status. Electronic education toys have been more than ten years of history, because of its excellent interaction and sound and light effects, can help children to learn from the shape, name, number to text and so on, through fun games and interactive processes, due to the prevalence of smart phones and tablet PCs, for school age children and adolescents, in the electronic trend, manufacturers have also begun to launch such as Tablet PC learning platform, children in the subtle, but also because the learning effect is better than traditional books development of fast learning, so the market continues to grow rapidly. The field of smart interactive toys is the company's key development direction and is the IC design company with the highest market share. In addition, in high-end products, 16 / 32-bit SoC control chips are also used in countless products every year, such as karaoke, electronic pianos, children's cameras, TV interactive entertainment platforms and wearable devices. In addition, intelligent photorealistic pets and robots are currently the hottest topics. Under the trend of aging, more products have been designed to be used by older ethnic groups. At present, the top five mobile phone brands (Apple, Samsung, Huawei, Xiaomi, Oppo) officially support wireless charging, showing that the market is constantly following this trend. The most representative is Apple's Bluetooth wireless headset AirPods charging box also Generalplus Education and learning toys Intelligent interactive toys Wireless charging 62 launched wireless charging Version, allowing this application to quickly spread to a variety of products, and even in the newly launched AirPods Pro, the original wireless charging was changed from optional to standard equipment. The volume will continue to increase. The global overall driving recorder market has a growth rate of about 15%. The latest electronic rearview mirror and voice control are popular products this year. In 2019, Lingtong still steadily occupies China's overall domestic and foreign sales in the driving recorder market. 4 ~ More than 50% of the market share. In addition, the market share of children's cameras is estimated to exceed 60%. Cameras are mainly used around the platform. Camera demand has great potential opportunities in smart home appliances and new retail. The company has invested in research and development in this high-end imaging product direction to create new products and applications suitable for machine vision. In addition, it is also actively increasing non-PC related product lines, such as wireless remote control of high-speed camera and car camera, etc. The automobile is hailed as the fourth C after the 3C market in the electronics industry. Especially with the joint investment of the automobile and electronics industries, the market has begun to accelerate development, and the industry, government, and academia are also optimistic about its future potential. According to the international management consulting company Bain & Company ’s report pointed out that the ADAS ecological supply chain includes inter-vendor technology, software, hardware and services. The output value in 2025 is $ 26 billion. In addition to the MediaHub that has been shipped, the current scene is also actively invested Development with related peripheral chips, such as pre-installed car audio class AB power amplifier chip, MIPI Driving recorder market Sunplus Innovation Image signal processing chip Jumplux Front-loading peripheral market 63 APHY TX RX chip. d) Advantages and disadvantages of competitive advantages and development prospects (1) Competition Analysis (a) Accumulation and impartation of the experience of the R&D team The company since its inception in 1990 that is positioned as IC design company, management team has established a complete product development, technology management, marketing and other systems, and passed on to the backward employees, so that technology without fault, customers less complain, the staff personal growth achievements. In addition, Sunplus and actively establish a patent layout, so that the core IP research and development can create more value. (b) Focus on high-level consumer IC market, enlarge the distance from competitors Since the IC market is extremely competitive and stagnation is an ever-present trap, we keep on bringing in a large number of R&D resources to develop new high-level consumer products and widening the distance between us and other competitors. Meanwhile, Sunplus’ numerous product lines give us a tremendous advantage over our competitors. We are the kind of customer that prized by most wafer foundries because our wafer demand does not fluctuate when a few products are eliminated. Due to our steady stream orders to our wafer suppliers, we enjoy more consistent wafer supply during peak seasons over our competitors. This also allows us to keep our wafer costs at a competitive rate. (c) Strategic cooperation with upper stream and down- stream factories In recent years, Sunplus has increased cooperation between our upper stream and down-stream factories. We believe that this new strategic and more dynamic cooperation relationship will bring positive contributions to our production and marketing in the long term. (d) Maintain long-term and stable cooperative relationship with customers Consumer electronic products rely on IC to raise their added-on value; consequently the manufacturers and brand-names choose their IC suppliers with extreme caution by evaluating their product specification, features, delivery term, yield rate, and sales service. IC design houses have to work in coordination with customers to build up long-term relationship and facilitate the cooperation. Sunplus is always devoted itself to cutting-edge technology development and have accumulated IC design expertise. We also adopted distributors as expanding sales channels to reach more customers with strongly support and best service. Till today, we have sustained a strong relationship with a lot of end-product manufacturers worldwide. (2) Advantages (a) Sunplus offers high value-added products to enable customer to win the market. (b) The growing demand for SoC complicates IC product development and raises the entry barrier, which benefits IC design companies with rich resources like Sunplus. (c) Sunplus has strong IC design capability to meet customers’ requirements for time to market and costs reduction. (d) Sunplus has built up long-term relationship with wafer foundries due to our steady demand for wafers, and therefore we can get stable supply and lower prices from wafer foundries. (e) Sunplus have developed a strong technology and customer base on car entertainment IC that makes Sunplus easier to get into automotive ADAS applications (3) Disadvantages (a) The competitors are mainly international and big IC design companies. (b) Revenue and growth are slowing down due to poor PC demands. (c) SoC design and integration of features and functions, which developing products costs are a lot more than before, has become the trend of IC design. (d) Consumer application demands link to world economics. (e) There is high entry-barrier to get into automotive market. (4) Business Strategy 64 (a) Developing new and high value-added products. (b) Process migration to make per wafer productivity higher and drive cost down. (c) Expanding strategic partnership with clients to create win-win situation. (d) Collaboration with partners to broaden IP licensing sources. 65 6.2.2 Product Applications and Development Flow a) IC Development Flow In the product development flow, Sunplus focuses on IC design, system design, wafer testing and sales services but out-sources most aspects of the manufacturing including mask making, wafer fabrication, wafer sawing, packaging, and final testing. 6.2.3 Major Suppliers The major materials are wafers, at present the main suppliers for domestic and foreign wafer foundry manufacturers, whose wafer supplements are sufficient and stable. Main raw material name Major suppliers Supply status Quality and supply stability, long-term cooperation, the supply situation is good. Wafer A, B, C 66 Product Spec.Product Spec.IC Design& LayoutIC Design& LayoutSystem Design& CodingSystem Design& CodingTape OutTape OutMask MakingWafer FoundryWaferC.P. TestingWaferC.P. TestingPackagingFinal TestingAfter SalesServiceAfter SalesServiceProduct Spec.Product Spec.IC Design& LayoutIC Design& LayoutSystem Design& CodingSystem Design& CodingTape OutTape OutMask MakingWafer FoundryWaferC.P. TestingWaferC.P. TestingPackagingFinal TestingAfter SalesServiceAfter SalesService 6.2.4 Major Customers and Suppliers in the Recent Two Years a) Major Customers 2019 2020 End of March, 31, 2021 Unit: NT$K Customer Sales Amount % of Total Sales Relation with Sunplus Customer Sales Amount % of Total Sales Relation with Sunplus Customer Sales Amount % of Total Sales Relation with Sunplus A B D Others Net sales 844,237 651,715 468,794 3,521,914 5,486,660 15.39 11.88 8.54 64.19 100.00 No No No A C B Others Net sales 1,011,656 790,658 697,017 3,914,809 6,414,140 15.77 12.33 10.87 61.03 100.00 No No No C A B Others Net sales 278,850 272,785 174,276 972,416 1,698,327 16.42 16.06 10.26 57.26 100.00 No No No b) Major Supplier 2019 2020 End of March, 31, 2021 Supplier Purchasing Value % of Total Purchasing Relation with Sunplus Supplier Purchasing Value % of Total Purchasing Relation with Sunplus Supplier Purchasing Value % of Total Purchasing A C B Others Net purchase 762,121 188,444 145,227 818,577 1,914,369 39.81 9.84 7.59 42.76 100.00 No No No A C B Others Net purchase 995,805 186,471 176,449 929,324 2,288,049 No No No 43.52 8.15 7.71 40.62 100.00 A C D Others Net purchase 252,156 42,457 22,993 318,016 635,622 39.67 6.68 3.62 50.03 100.00 Unit: NT$K Relation with Sunplus No No No 67 6.2.5 Production Year Capacity Product Multimedia ICs IC income Total Note: Sunplus out-sourced production to wafer foundries, so there is no capacity limitation. 547,812 17 547,829 - - - 2019 Output Value Capacity 3,041,599 22,248 3,063,847 Unit: thousand pcs, NT$K 2020 Output 723,493 2 723,495 - - - Value 3,384,451 128 3,384,579 6.2.6 Sales Product IC income Other ICs Total Year 2019 Unit: thousand pcs, NT$K 2020 Local Export Local Export Quantity Sales Quantity Sales Quantity Sales Quantity Sales 189,589 - 189,589 1,940,267 15,969 1,956,236 363,463 - 363,463 3,170,477 385,617 3,556,094 282,310 - 282,310 2,478,845 57,733 2,536,578 432,105 137 432,242 3,361,454 516,108 3,877,562 6.3 Personnel Structure Workforce Structure by Job Function Year R&D Production Administration Total Average Age Average Years Served Workforce Structure by Education Degree Ph.D. Master Bachelor Other Higher Education High School Total 2019 710 72 284 1,066 32.7 5.14 1% 40% 49% 6% 4% 100% 68 2020 739 71 280 1,090 36.9 6.88 1% 41% 47% 8% 3% 100% End of March 31, 2021 735 72 281 1,088 38.3 9.17 1% 40% 50% 6% 3% 100% 6.4 Environmental Protection & Expenditures 6.4.1 Environmental Protection The company is a high-tech integrated circuit professional IC design firms, in the Hsinchu Science and Technology Industrial Park in the semiconductor research and development, all products commissioned at home and abroad well-known integrated circuit manufacturers manufacturing wafer, relevant aspects of the environmental pollution regulations and the losses caused by non-violation of environmental regulations. The vast majority of the company's office operations, no facilities and equipment to produce harmful pollution sources, no expenditure on environmental protection operations. On the product, the foundry, package, and test foundry with the best combination of quality, cost, and production efficiency are entrusted to reduce the consumption of defective products and effectively reduce environmental expenditure directly and indirectly. If defective products are produced, they are currently qualified manufacturers. Unpaid cleaning, no clean-up costs. Sunplus does not violate any EPA regulation regarding pollutants and environmental protection. To adhere to the conception of Earth Vision, Sunplus has established the environment protection system for fulfilling policies, social responsibilities and obligations, and been ISO-14001 certified. To reduce the environmental impact of E-Waste, Sunplus supplies customers with hazardous substances free (HSF) and satisfying products, and has been IECQ QC080000 certified. In order to reduce the impact of the greenhouse effect on the climate, Sunplus Technology conducts independent investigation of greenhouse gas emissions in accordance with the ISO14064 standard and 2011 as the base year of inspections in the Republic of China, and exposes it in the Corporate Social Responsibility Report (CSR Report), according to the results of the self-examination, the annual 69 greenhouse gas emissions in the past three years (2018-2020) are 4585.41, 4471.34 and 4,056.33 (tons-CO2 equivalent), which belong to [Scope 1]. Direct emitters (such as official vehicle fuel consumption and generator oil) are only About 0.0001% (2020 Scope 1 is 3.67 kg-CO2 equivalent). The rest belong to [Scope 2], indirect emissions from purchased electricity and other energy sources. Sunplus is an IC design industry. More than 99.99% of greenhouse gas emissions are indirect emissions. The emission sources mainly come from water and electricity required by air conditioning and office lighting. The factory monitoring system has made air conditioning equipment more efficient. , And at the same time promote energy-saving concepts and actions to colleagues, with the goal of reducing more than 2% per year to reduce unnecessary waste. In recent years, they have reached the standard. (Compared with 2019, greenhouse gas emissions in 2020 will be significantly reduced by 9.28%) In addition, it also actively strengthens employees’ awareness of environmental protection, promotes waste reduction, recycling, energy saving and water conservation, and saves energy and resource consumption, in order to reduce the impact on the environment. 6.4.2 Working Environment As a leading company in IC design, caring for and taking care of the company’s workers is the company’s primary responsibility. We provide facilities and environments that are superior to occupational safety and health laws and regulations, and set up dedicated organizations and personnel in accordance with the law to implement environmental safety and health management related matters. Relevant machinery and equipment in employees' workplaces are subject to regular automatic inspections in accordance with the law, and labor working environment monitoring is implemented every six months (April and October each year) to ensure the safety of employees, the environment and equipment. The company implements health inspections for general employees and senior executives that are better than legal requirements every year to ensure that every employee can grasp their own health status. There is also a medical care room, where professional 70 doctors are stationed every two months to provide staff health consultation services, and health promotion activities are arranged from time to time. More importantly, we provide a good breastfeeding room for working women, equipped with refrigerators and electric breastfeeding equipment, and passed the Hsinchu County workplace friendly nursing room certification in 2015, so that every mother in need Work with peace of mind; in 2020, it will be certified by the Occupational Safety and Health Administration of the Ministry of Labor to protect the physical and mental health of every colleague. In addition, since April 2018, the company has promoted the establishment of an occupational safety and health management system. In 2019, it has obtained ISO45001: 2018 Occupational Health and Safety Management Systems and CNS15506: 2011 (TOSHMS, Taiwan). Occupational Safety and Health Management System) Taiwan Occupational Safety and Health Management System, two Occupational Safety and Health Management System certifications; in response to the revision of TOSHMS to CNS45001, it has been applied for conversion to the new version on 2019/12/26 and passed the verification. Management system International standard code and version Valid from Valid until Environmental Management System Occupational safety and health management system ISO14001:2015 2017/02/10 2023/02/09 ISO45001:2018 2019/02/25 2022/02/24 TOSHMS (CNS15506:2011)註 TOSHMS (CNS45001:2018) 2019/03/12 2021/03/11 2020/02/07 2022/02/24 Note: Sunplus Technology's TOSHMS (CNS15506:2011) certification has been applied for a new version of the verification on December 26, 2019, and the standard code is CNS45001:2018. 71 6.5 Employees 6.5.1 Employee Welfare We strive to provide a clean and supportive environment for our employees. We established an Employee Welfare Committee to operate welfare activities including emergency aid, educational grants, book purchase subsidies, social club activities and overseas trips. We also comply with the Labor Standards Law to conduct labor insurance and retirement system programs, and participation with the National Health Insurance plan according to the National Health Insurance Act. Moreover, we also handle group insurance and insurance for employees’ family to ensure security for our employees. 6.5.2 Pension Plan Sunplus has a pension plan for all regular employees, which provides benefits according to the Labor Standard Law. The Company makes monthly contributions, equal to 2% of salaries, to the pension fund, which is administered by a pension fund monitoring committee. The contributions are deposited in the committee’s name in the Central Trust of China. Since July 1, 2005, employees who choose Labor Pension Act Implementation Rules of the Labor Pension, the Company makes monthly contributions, equal to 6% of salaries to the personal pension fund of Bureau of Labor Insurance. 6.5.3 Other Affairs Sunplus have smooth commutation channels with employees. Employees could address their opinions to management team directly. All operations are based on the Labor Standard Law. Sunplus’ labor relations are outstanding. We are proud to say that there has not been a single loss resulting from a labor dispute since the establishment of the company. 6.5.4 Training The Company provides various kinds of external professional training courses & internal training regarding management, professional skills, general skills, special skills, and self-development. 72 6.5.5 Loss from Controversy between Labor and Management None Term Contract 6.6 Important Contracts Counter Party Hsinchu Science Park Administration Hsinchu Science Park Administration Lease of office Lease of Land 1995/8/01-2034/12/31 2019/01/01~2023.12.31 Lease of office Content Restriction Lease of Land Self-use - Only license Generalplus Only license Generalplus Only license Generalplus Only license Generalplus Licensing ARM Limited 2007.12.27 ~ Licensing ARM Limited 2010.06.01 ~ ARM7 TDMI-Score CORETEX-A8 Score Licensing ARM Limited 2008.03.09 ~ ARM926EJ-Score Licensing ARM Limited 2016.03.09~ ARM CORTEX –M0 VII. Financial Statements 7.1 Condensed Financial Statement and Auditors’ Opinions by adopting IFRSs 7.1.1 Condensed Balance Sheet by adopting IFRSs-Consolidated Year Recent 5 Years (Note 1) End of Unit: NT$K 73 Item Current Assets Fixed Assets Intangible Assets Other Assets Total Assets 2016 2017 2018 2019 2020 March 31, 2021 (Note 3) 8,792,142 8,561,910 6,638,302 5,940,147 6,777,941 6,887,267 2,265,910 2,164,154 2,052,359 1,968,803 1,971,252 1,948,088 352,220 3,379,946 2,557,784 3,057,802 3,404,584 3,542,805 3,858,210 14,629,022 13,479,979 11,926,984 11,489,767 12,620,589 13,045,785 176,233 191,024 178,521 196,131 328,591 Current Liabilities Before Distribution 3,045,403 2,190,116 1,684,729 1,342,416 1,824,672 1,723,533 After Distribution 3,134,084 2,517,667 1,684,729 1,342,416 574,660 (Note 2) 962,032 (Note 2) 776,916 895,442 374,649 646,578 Non-Current Liabilities Total Liabilities Before Distribution 3,940,845 2,836,694 2,059,378 1,917,076 2,601,588 2,685,565 After Distribution 4,029,526 3,164,245 2,059,378 1,917,076 (Note 2) (Note 2) Equity Attributed to Shareholder of the parent Capital Stock Capital Surplus 9,024,254 8,966,236 8,465,942 8,178,533 8,413,763 8,643,725 5,919,949 5,919,949 5,919,949 5,919,949 5,919,949 5,919,949 501,727 594,432 911,110 500,820 835,241 801,398 Retain Earnings Before Distribution 2,012,196 2,336,709 2,250,839 1,988,579 2,317,473 2,535,048 After Distribution 1,923,515 2,009,158 2,250,839 1,988,579 (Note 2) (Note 2) Unrealized Gain (Loss) on Financial Merchandise Cumulative translation adjustments Unrealized Net Loss on the Costs of Pensions Total Equity Before Distribution After Distribution 244,400 (62,262) (442,843) (261,026) (261,078) (249,598) (63,401) (63,401) (63,401) (63,401) (63,401) (63,401) 1,663,923 1,677,049 1,401,664 1,394,158 1,605,238 1,716,495 10,688,177 10,643,285 9,867,606 9,572,691 10,019,001 10,360,220 10,599,496 10,315,734 9,867,606 9,572,691 (Note 2) (Note 2) Note 1: Figures are audited by adopting IFRSs Note 2: The 2020 year surplus distribution proposal is yet to be 74 approved by the shareholders meeting Note 3: Figures are reviewed by CPA adopting IFRSs 75 7.1.2 Balance Sheet by adopting IFRSs- Standalone Year Recent 5 Years (Note 1) Unit: NT$K 2016 2017 2018 2019 2020 Item Current Assets Fixed Assets Intangible Assets Other Assets Total Assets Current Liabilities Before Distribution After Distribution Non-Current Liabilities Total Liabilities Before Distribution After Distribution Equity Attributed to Shareholder of the parent Capital Stock Capital Surplus Retain Earnings Before Distribution After Distribution Unrealized Gain (Loss) on Financial Merchandise Cumulative translation adjustments Unrealized Net Loss on the Costs of Pensions Total Before 722,145 68,497 3,267,397 2,942,735 1,909,420 1,292,316 1,555,277 682,943 687,187 688,706 700,554 86,258 243,470 62,141 6,465,991 6,055,212 6,268,285 6,663,491 6,826,298 10,524,030 9,743,031 8,951,387 8,730,771 9,325,599 471,763 312,929 898,923 413,663 604,818 86,495 987,604 932,369 413,663 600,853 1,499,776 171,977 776,795 71,782 485,445 1,588,457 1,104,346 485,445 312,929 （Note 2） 440,073 911,836 239,309 552,238 552,238 （Note 2） 5,919,949 5,919,949 5,919,949 5,919,949 5,919,949 500,820 801,398 2,012,196 2,336,709 2,250,839 1,988,579 2,317,473 594,432 835,241 911,110 1,923,515 2,009,158 2,250,839 1,988,579 （Note 2） (62,262) (442,843) (261,026) (261,078) 244,400 (63,401) (63,401) (63,401) (63,401) (63,401) - - - - - 9,024,254 8,966,236 8,465,942 8,178,533 8,413,763 76 Year Recent 5 Years (Note 1) 2016 2017 2018 2019 2020 Item Equity Distribution After Distribution 8,953,573 8,638,685 8,465,942 8,178,533 （Note 2） * If the company has prepared individual financial reports, it should prepare a separate condensed balance sheet and consolidated profit and loss statement for the individual in the last five years. * If the financial information using IFRS is less than 5 years, the following table (2) Financial information using my country’s financial accounting standards should be prepared separately. Note 1: Figures are audited by adopting IFRSs Note 2: The 2020 surplus distribution table is yet to be approved by the shareholders meeting 77 7.1.3 Condensed Income Statement adopting IFRSs -Consolidated Unit: NT$K Year Item Net Sales Gross Profit (Loss) Income from Operation (Loss) Non-operating Income (Expense) Income (Loss)Before Tax Income (Loss) From Operations of Continued Segments (Loss) Income (Loss) From Operations of Discontinued Segments Consolidated Net Income (Loss) Other comprehensive income (Loss) for the period, net of income tax 2016 Recent 5 Years (Note 1) End of March 31, 2021 (Note 2) 7,556,045 6,820,237 6,077,733 5,486,660 6,414,140 1,698,327 843,980 2019 2020 2018 2017 3,202,488 2,736,766 2,429,384 2,348,905 2,925,096 236,391 47,185 (89,790) 131,741 516,167 121,560 129,776 587,470 293,780 112,479 268,571 261,356 366,167 634,655 203,990 244,220 784,738 382,916 272,506 551,228 142,323 174,752 618,827 317,479 - - - - - - 272,506 551,228 142,323 174,752 618,827 317,479 (113,556) (320,167) (131,361) (102,073) 5,718 8,722 78 Year Recent 5 Years (Note 1) 2016 2017 2018 2019 2020 624,545 5,616 10,962 15,309 72,679 158,950 120,187 421,458 231,061 Item Total Comprehensive Income (Loss) for the Period Net Profit (Loss) Attributable to: Owner of the Company Net Profit (Loss) Attributable to: Non-controlling interests Total Comprehensive Income (Loss) Attributable to: Owner of the Company Total Comprehensive Income (Loss) Attributable to: Non-controlling interests Earnings per share (Loss) Note 1: Figures are audited for the past-5 years by CPA adopting IFRSs Note 2: Figures are audited by adopting IFRSs. 109,174 (120,733) (77,049) 129,770 121,887 152,319 136,707 159,443 132,373 149,728 131,695 26,577 0.72 0.03 0.20 0.01 323,403 295,424 297,632 0.55 326,913 End of March 31, 2021 (Note 2) 326,201 217,575 99,904 229,055 97,146 0.37 79 7.1.4 Condensed Income Statement adopting IFRSs -Standalone Year Recent 5 Years (Note 1) Unit: NT$K 2016 2017 2018 2019 2020 Item Net Sales Gross Profit(Loss) Income from Operation(Loss) Non-operating Income (Expense) Income (Loss)Before Tax Income(Loss) From Operations of Continued Segments(Loss) Income(Loss) From Operations of Discontinued Segments Net Income (Loss) Other comprehensive income (Loss) for the period, net of income tax Total Comprehensive Income(Loss) for the Period Net Profit(Loss) Attributable to: Owner of the Company 1,904,224 1,365,802 1,238,780 1,235,269 1,168,660 482,591 429,308 767,713 (79,166) (273,494) (239,614) (269,444) (352,417) 473,255 499,903 200,242 694,952 247,374 289,540 676,322 121,076 421,458 7,760 20,096 323,905 120,187 421,458 5,616 15,309 323,403 - - - - - 120,187 421,458 5,616 15,309 323,403 (93,610) (312,284) (126,349) (92,358) 3,510 26,577 109,174 (120,733) (77,049) 326,913 120,187 421,458 5,616 15,309 323,403 80 326,913 - - - - - - 26,577 (77,049) 109,174 (120,733) Net Profit (Loss)Attributable to: Non-controlling interests Total Comprehensive Income (Loss)Attributable to: Owner of the Company Total Comprehensive Income (Loss)Attributable to: Non-controlling interests Earnings per share (Loss) * If the company has prepared individual financial reports, it should prepare a separate condensed balance sheet and consolidated profit and loss statement for the individual in the last five years. * If the financial information using IFRS is less than 5 years, the following table (2) financial information using my country’s financial accounting standards should be prepared separately. Note 1: Figures are audited for the past-5 years by CPA adopting IFRSs 0.72 0.03 0.20 0.01 - - - - 0.55 81 7.1.5 Auditors’ Opinions Year 2016 2017 2018 2019 2020 Lin, CPA Zheng-Zhi Lin, Shu-Jay Huang Zheng-Zhi Shu-Jay Huang Zheng-Zhi Yu-Feng Huang Zheng-Zhi Yu-Feng Huang Zheng-Zhi Mei-Zhen Cai Lin, Lin, Lin, Audit Opinion An unqualified opinion An unqualified opinion An unqualified opinion An unqualified opinion An unqualified opinion 82 7.2 Financial Analysis for recent 5 years 7.2.1 Financial Analysis (consolidated by IFRSs) Unit: NT$K Recent 5 years (Note 1) Year 201 6 201 7 201 8 201 9 202 0 Analysis Item Capita l Struct ure Debts ratio (%) Long-term fund to Property, plant and equipment (%) Current ratio (%) Quick ratio (%) Liquid ity 26.9 3 495. 04 288. 70 251. 00 21.0 4 17.2 6 503. 31 480. 79 390. 93 319. 47 394. 02 326. 66 16.6 8 486. 21 442. 49 368. 28 20.6 1 518. 65 371. 46 304. 99 Times interest earned (times) 1,02 0.20 2,51 9.94 956. 27 1,08 2.81 5,08 3.72 End of Mar ch 31, 2021 (Not e 2) 20.5 8 551. 32 399. 60 325. 49 11,1 25.5 1 58 66 65 59 69 60 4.18 4.37 3.99 3.97 4.30 3.67 5.29 5.49 5.64 6.17 6.29 6.06 Average collection turnover (times) Average collection days Inventory turnover (times) Payment turnover (times) 6.23 5.60 6.03 7.49 8.69 7.11 Average inventory turnover days Fixed assets turnover (times) Property, plant and equipment turnover (times) Return on total assets (%) 2.02 4.07 1.27 1.66 5.23 2.49 Return on stockholders’ 2.48 5.16 1.38 1.79 6.31 3.11 2.59 3.07 2.88 2.74 3.25 3.46 0.50 0.48 0.47 0.47 0.53 0.52 99 87 92 91 83 85 Operat ing Perfor mance Profita bility 83 equity (%) Profit before tax to paid-in capital (%) (Note 8) Profit after tax to net sales (%) Earnings per share (NT$) 0.20 0.72 0.01 0.03 0.55 0.37 3.60 8.08 2.34 3.17 9.64 3.44 4.12 13.2 5 10.7 2 18.6 9 6.46 6.19 Cash flow ratio (%) Cash flow adequacy ratio (%) (Note3) Cash flow reinvestment ratio (%) Operating leverage 40.6 9 54.3 6 4.08 11.5 4 14.3 7 77.5 0 Not e 4 49.6 6 Financial leverage 1.20 2.25 16.8 5 56.7 1 Not e 4 Not e 5 Not e 5 48.5 4 81.5 9 43.4 1 79.2 8 8.30 64.6 5 2.44 3.85 1.10 15.9 8 5.24 5.96 1.23 1.03 1.03 Cash Flow Lever age Variation Analysis 2020 vs. 2019 1. The increase in the ratio of liabilities to assets was mainly due to the increase in long-term loans this year. 2. The increase in interest protection multiples was mainly due to the increase in net profit before income tax and interest expenses for the year. 3. The increase in return on assets and return on equity was mainly due to the increase in net profit after tax caused by the increase in operating profits this year. 4. The increase in the ratio of pre-tax net profit to paid-in capital, net profit ratio, and earnings per share was mainly due to the increase in net profit after tax due to the increase in operating profit this year. 5. The increase in cash reinvestment ratio was mainly due to the increase in net cash flow from operating activities this year. 6. The decrease in operating leverage was mainly due to the increase in operating profit this year. Note 1: Figures have been audited by adopting IFRSs. Note 2: Figures 1Q’21ave been audited by adopting IFRSs. Note 3: Cash flow adequacy ratio of 2016~2017 is calculated based on the data by Taiwan GAAP. Note 4: Figures not listed due to cash flow from operating less than cash dividends. Note 5: Figures not listed due to operating loss. 84 Note 6: for those stock without par value or par value not equal to NT$10, the ratio of Operating income to paid-in capital (%) is calculated by ratio to attributable to Owner of the Company. 7.2.2 Financial Analysis (Standalone) by IFRSs Unit: NT$K Year Recent 5 years (Note 1) Analysis Item 2016 2017 2018 2019 2020 Capital Structure Liquidity Operating Performance Debts ratio (%) Long-term fund to Property, plant and equipment (%) Current ratio (%) Quick ratio (%) Times interest earned (times) Average collection turnover (times) Average collection days Inventory turnover (times) Payment turnover 14.25 7.97 5.42 6.32 9.77 1,322.92 1,327.52 1,231.97 1,187.52 1,230.27 363.47 486.54 461.58 412.97 329.67 319.86 426.00 393.47 315.12 246.63 687.97 5,155.27 259.53 396.35 5,199.26 4.26 4.95 6.65 7.88 7.44 86 74 55 46 49 3.23 3.34 3.03 2.77 2.38 8.57 6.33 6.61 8.61 8.18 85 (times) Average inventory turnover days Fixed assets turnover (times) Property, plant and equipment turnover (times) Return on total assets (%) Return on stockholders’ equity (%) Profit before tax to paid-in capital (%) (Note 4) Profit after tax to net sales (%) Earnings per share (NT$) Cash flow ratio (%) (Note2) Cash flow adequacy ratio (%) Cash flow reinvestment ratio (%) Operating leverage 113 109 120 132 153 2.59 1.94 1.80 1.79 1.68 0.17 0.13 0.13 0.13 0.12 1.25 4.22 0.10 0.23 3.63 1.29 4.68 0.06 0.18 3.89 2.04 7.11 0.13 0.33 5.47 6.31 30.85 0.45 1.23 27.67 0.20 0.72 0.01 0.03 0.55 86.72 51.41 54.00 36.66 20.98 84.41 137.53 92.68 88.14 64.21 2.49 0.15 Note 5 Note 5 Note 5 Note 3 Note 3 Note 3 Note 3 Note 3 Profitability Cash Flow Leverage 86 Financial leverage Note 3 Note 3 Note 3 Note 3 Note 3 Variation Analysis 2017 vs. 2016 (1) The increase in the ratio of liabilities to assets was mainly due to the increase in long-term loans this year. (2) The decrease in current ratio and quick ratio was mainly due to the increase in accounts payable. (3) The increase in interest protection multiples was mainly due to the increase in net profit before tax this year. (4) The increase in return on assets and return on equity was mainly due to the increase in the profit and loss share of subsidiaries and affiliates that adopted the equity method during the year, which resulted in an increase in net profit after tax. (5) The increase in the ratio of net profit before tax to paid-in capital, net profit ratio and earnings per share was mainly due to the increase in the profit and loss share of subsidiaries and affiliates that adopted the equity method during the year, which resulted in the increase in net profit after tax. (6) The decrease in cash flow ratio and allowable cash flow ratio was mainly due to the decrease in net cash inflow from operating activities. * If the company has prepared individual financial reports, it should separately prepare an analysis of the company's individual financial ratios. * If the financial information adopting IFRS is less than 5 years, the following table (2) financial information adopting my country’s financial accounting standards should be prepared separately. 1. Capital Structure Analysis (1) Debts ratio (2) Long term fund to Property, plant and equipment 2. Liquidity Analysis (1) Current Ratio (2) Quick Ratio (3) Times Interest Earned = Total Liabilities/Total Assets = (Total Equity + Non-Current Liabilities)/ Property, plant and equipment = Current Assets/Current Liabilities = (Current Assets – Inventories – Prepaid Expenses)/Current Liabilities = Earnings before Interest and Taxes/Interest Expenses 3. Operating Performance Analysis 87 (1) Average Collection Turnover (2) Average Collection Days (3) Average Inventory Turnover (4) Average Payment Turnover (5) Average Inventory Turnover Days (6) Property, plant and equipment Turnover (7) Total Assets Turnover = Net Sales/Average Trade Receivables = 365/Receivables Turnover Rate = Cost of Sales/Average Inventory = Cost of Sales/Average Trade Payables = 365/Average Inventory Turnover = Net Sales/ Average Property, plant and equipment = Net Sales/Average Total Assets 4. Profitability Analysis (1) Return on Total Assets (2) Return Ratio on Stockholders’ Equity (3) Profit after Tax to Net Sales (4) Earnings Per Shares 5. Cash Flow (1) Cash Flow Rate (2) Cash Flow Adequacy Ratio (3) Cash flow reinvestment ratio = {Net Income + Interest Expense × (1 – Effective tax rate)}/Average Total Assets = Net Income/Average Total Equity = Net Income/Net Sales = (Net Profit Attributable to Owner of the Company – Preferred Stock Dividend)/ Weighted Average Number of Shares Outstanding = Net Cash Provided by Operating Activities/Current Liabilities = Five-Year Cash from Sum of Operations /(Five-Year Capital Expenditure + Inventory Increase + Cash Dividend) = (Net Cash Provided by Operating Activities – Cash Dividend)/( Property, plant and equipment + Long-term Investment + Other Non-current Assets + Working Capital) (Note3) 6. Leverage (1) Operating Leverage = (Net Sales – Operating Expenses & Cost)/Operating Income (Note4) 88 (2) Financial Leverage = Operating Income/(Operating Income – Interest Expenses) Note 1: Figures have been audited by adopting IFRSs. Note 2: The calculation of the cash flow tonnage ratio 2016 is calculated using the previous year's ROC information. Note 3: Net operating loss, it is not listed Note 4: for those stock without par value or par value not equal to NT$10, the ratio of Operating income to paid-in capital (%) is calculated by ratio to attributable to Owner of the Company Note 5: The net cash flow from operating activities is less than the number of cash dividends issued, so it is not listed. 89 7.3 Audit Committee’s Report Sunplus Technology Co., Ltd. Audit Committee’s Report The board of directors prepares the company’s 2020 business report, financial statements, and surplus distribution proposals, etc. The Deloitte & Touche CPA firm has audited the financial statements, and issued an audit report. The above-mentioned business report, financial statement and surplus distribution proposal have been checked by the review committee and found that there is no discrepancy. According to Article14-4of Securities Exchange Law and Article 219 of the Company Law, I hereby submit this report. To Sunplus 2021 Annual General Shareholders’ Meeting Sunplus Technology Co., Ltd. Audit Committee Convener, Che-Ho Wei March 29th, 2021 90 7.4 Consolidated Financial Statements and Auditors' Audit Report Sunplus Technology Company Limited and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report 91 Sunplus Technology Company Limited and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report 92 DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2020 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard No. 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we do not prepare a separate set of consolidated financial statements of affiliates. Very truly yours, Sunplus Technology Company Limited By CHOU-CHYE HUANG Chairman March 29, 2021 - 1 - INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders Sunplus Technology Company Limited Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters identified in the Goup’s consolidated financial statements for the year ended December 31, 2020 is as follows: Validity of Revenue from Specific Customers Integrated circuit chip sales accounted for 95% of the Group’s total revenue. In particular, some of the customers whose revenue has grown significantly carry a higher risk related to the validity of sales revenue. Therefore, we deemed revenue recognition as a key audit matter. For detailed disclosure of revenue, refer to Notes 4 and 23 to the accompanying consolidated financial statements. Our audit procedures performed in respect of the above key audit matter included the following: 1. We understood the related internal control and operating procedures in the Company’s sales transaction cycle, and we evaluated and confirmed the operating effectiveness of the related internal control and operating procedures. 2. We selected samples from the sales details, and we examined customers’ original orders, sales electronic orders, delivery orders, logistics receipt documents or export declaration, and sales invoices for any abnormal situations and confirmed the occurrence of the revenue. - 2 - Other Matter We have also audited the parent company only financial statements of Sunplus Technology Company Limited as of and for the years ended December 31, 2020 and 2019 on which we have issued an unmodified opinion. 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 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 of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process. Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. 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. 2. 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. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. 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. 5. 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. - 3 - 6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audits resulting in this independent auditors’ report are Cheng-Chih Lin and Mei-Chen Tsai. Deloitte & Touche Taipei, Taiwan Republic of China March 29, 2021 Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated 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 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. - 4 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars) ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Notes receivable and accounts receivable, net (Notes 4, 5, 9, 23 and 34) Other receivables (Notes 4 and 34) Inventories (Notes 4 and 10) Other financial assets - current (Notes 17 and 35) Other current assets (Notes 17 and 34) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) 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 and 35) Right-of-use assets (Notes 4 and 14) Investment properties (Notes 4 and 15) Intangible assets (Notes 4 and 16) Deferred tax assets (Notes 4 and 25) Net defined benefit assets - non-current (Notes 4 and 21) Other financial assets - non-current (Notes 17 and 35) Other non-current assets (Note 17) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 18 and 35) Contract liabilities - current (Note 23) Accounts payable (Note 19) Current tax liabilities (Notes 4 and 25) Lease liabilities - current (Notes 4 and 14) Deferred revenue - current (Notes 4, 20 and 28) Current portion of long-term bank borrowings (Note 18) Other current liabilities (Note 20) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 18) Lease liabilities - non-current (Notes 4 and 14) Deferred revenue - non-current (Notes 4, 20 and 28) Net defined benefit liabilities - non-current (Notes 4 and 21) Guarantee deposits (Note 34) Other liabilities (Note 20) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 22 and 31) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings (accumulated deficits) Total retained earnings Other equity Treasury shares 2020 2019 Amount % Amount % $ $ 3,400,482 901,857 1,204,798 57,982 861,050 240,334 111,438 27 7 10 - 7 2 1 3,020,628 1,090,679 832,633 28,159 759,211 119,920 88,917 26 10 7 - 7 1 1 6,777,941 54 5,940,147 52 1,064,261 192,528 719,696 1,971,252 229,277 1,015,544 328,591 33,037 4,440 272,167 11,855 8 1 6 16 2 8 3 - - 2 - 1,027,445 189,387 695,028 1,968,803 241,914 1,066,797 176,233 28,754 1,163 140,049 14,047 9 2 6 17 2 9 2 - - 1 - 5,842,648 46 5,549,620 48 $ 12,620,589 100 $ 11,489,767 100 $ 314,209 26,181 450,216 155,138 12,506 46,098 25,000 795,324 $ 3 - 4 1 - 1 - 6 323,626 24,912 352,155 52,169 11,885 1,568 - 576,101 3 - 3 1 - - - 5 1,824,672 15 1,342,416 12 205,000 219,510 58,300 60,319 219,942 13,845 776,916 2 2 - - 2 - 6 - 230,251 58,015 64,258 213,579 8,557 574,660 - 2 - 1 2 - 5 2,601,588 21 1,917,076 17 5,919,949 500,820 47 4 5,919,949 594,432 52 5 13 2 3 18 1,712,390 276,189 328,894 2,317,473 (261,078) (63,401) (2) (1) 1,942,388 308,452 (262,261) 1,988,579 (261,026) (63,401) 17 2 (2) 17 (2) (1) Total equity attributable to owners of the Company 8,413,763 66 8,178,533 71 NON-CONTROLLING INTERESTS (Notes 4, 11, 22 and 31) 1,605,238 13 1,394,158 12 Total equity TOTAL 10,019,001 79 9,572,691 83 $ 12,620,589 100 $ 11,489,767 100 The accompanying notes are an integral part of the consolidated financial statements. - 5 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2020 2019 Amount % Amount % NET OPERATING REVENUE (Notes 4, 23 and 34) $ 6,414,140 100 $ 5,486,660 100 OPERATING COSTS (Notes 10 and 24) 3,489,044 54 3,137,755 57 GROSS PROFIT 2,925,096 46 2,348,905 43 OPERATING EXPENSES (Notes 24 and 34) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit gain (Note 9) 297,145 488,247 1,623,728 (154) 5 8 25 - 237,703 498,466 1,481,269 (73) 5 9 27 - Total operating expenses 2,408,966 38 2,217,365 41 OTHER OPERATING INCOME AND EXPENSES INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 14, 24, 28 and 34) Interest income Other income Other gains and losses Finance costs Share of profit (loss) of associates Total non-operating income and expenses 37 516,167 24,052 117,804 126,748 (15,746) 15,713 268,571 - 8 - 2 2 - - 4 201 131,741 24,578 131,538 1,127 (24,849) (19,915) 112,479 PROFIT BEFORE INCOME TAX 784,738 12 244,220 INCOME TAX EXPENSE (Notes 4 and 25) 165,911 2 69,468 NET PROFIT FOR THE YEAR 618,827 10 174,752 OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss (Notes 4 and 22): 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 (loss) of associates accounted for using the equity method 6,780 (3,215) 7,231 - - - 4,864 (21,444) 3,789 - 2 - 2 - - - 2 4 1 3 - - - (Continued) - 6 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2020 2019 Amount % Amount % Items that may be reclassified subsequently to profit or loss (Notes 4 and 22): Exchange differences on translating the financial statements of foreign operations $ (7,150) - $ (84,888) Share of other comprehensive income (loss) of associates accounted for using the equity method Other comprehensive income (loss) for the year, net of income tax 2,072 5,718 - - (2) - (4,394) (102,073) (2) TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 624,545 10 $ 72,679 NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 26) Basic Diluted $ 323,403 295,424 $ 5 5 15,309 159,443 $ 618,827 10 $ 174,752 $ 326,913 297,632 $ 5 5 (77,049) 149,728 $ 624,545 10 $ 72,679 $ $ 0.55 0.55 $ $ 0.03 0.03 1 - 3 3 (2) 3 1 The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 7 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars) Share Capital Issued and Outstanding Share Equity Attributable to Owners of the Company Other Equity Unrealized Gain Exchange (Loss) on Retained Earnings Differences on Financial Assets Unappropriated Translating the at Fair Value Earnings Financial Through Other (Deficits not yet Statements of Comprehensive Non-controlling BALANCE AT JANUARY 1, 2019 591,995 $ 5,919,949 $ 801,398 $ 1,941,826 $ 67,279 $ 241,734 $ (138,875 ) $ (303,968 ) $ (63,401 ) $ 8,465,942 $ 1,401,664 $ 9,867,606 (Thousands) Amount Capital Surplus Legal Reserve Special Reserve Compensated) Foreign Operations Income Treasury Shares Total Interests Total Equity Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends to shareholders Changes in capital surplus from investments in associates accounted for using the equity method Issuance of cash dividends from capital surplus Difference between the consideration and carrying amount of subsidiaries during actual disposal or acquisition Changes in percentage of ownership interest in subsidiaries Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Adjustment of capital surplus for the Company Cash dividends received by subsidiaries Decrease in non-controlling interests Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,709 (213,118 ) 162 - - - - 1,281 - - 562 - - - - - - - - - - - - - 241,173 (562 ) (241,173 ) - - - - (3,394 ) 15,309 - - - - - - - - - - - - - - - - 5,339 (79,905 ) (17,792 ) 20,648 (79,905 ) (17,792 ) - - (279,514 ) - - - - - 279,514 - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,709 (213,118 ) 162 (3,394 ) - - - - - - - - - - 4,709 (213,118 ) 162 (3,394 ) 15,309 159,443 174,752 (92,358 ) (9,715 ) (102,073 ) (77,049 ) 149,728 72,679 1,281 - 1,281 - - (157,234 ) (157,234 ) - - BALANCE AT DECEMBER 31, 2019 591,995 5,919,949 594,432 1,942,388 308,452 (262,261 ) (218,780 ) (42,246 ) (63,401 ) 8,178,533 1,394,158 9,572,691 Appropriation of 2019 earnings Legal reserve used to cover accumulated deficits Special reserve Changes in capital surplus from investments in associates accounted for using the equity method Issuance of cash dividends from capital surplus - - - - - - - - - - 15,786 (177,598 ) (229,998 ) - - - - (32,263 ) 229,998 32,263 - - - - - - - - - - - - - - - - - - 15,786 (177,598 ) - - - - - - 15,786 (177,598 ) - 8 - Difference between the consideration and carrying amount of subsidiaries during actual disposal or acquisition Changes in percentage of ownership interest in subsidiaries Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 Adjustment of capital surplus for the Company Cash dividends received by subsidiaries Decrease in non-controlling interests Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - - - - - - - - - - - - - - - 67,132 - - - - 1,068 - - - - - - - - - - - - - - - - - - - (183 ) 323,403 - - - 6,846 (9,243 ) 330,249 (9,243 ) - - (1,172 ) - - - 2,112 - - 5,907 5,907 - - 1,172 - - - - - - - - 69,244 (183 ) - - 69,244 (183 ) 323,403 295,424 618,827 3,510 2,208 5,718 326,913 297,632 624,545 1,068 - 1,068 - - (86,552 ) (86,552 ) - - BALANCE AT DECEMBER 31, 2020 591,995 $ 5,919,949 $ 500,820 $ 1,712,390 $ 276,189 $ 328,894 $ (228,023 ) $ (33,055 ) $ (63,401 ) $ 8,413,763 $ 1,605,238 $ 10,019,001 The accompanying notes are an integral part of the consolidated financial statements. - 9 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss reversed on trade receivables Net gain on fair value change of financial assets at fair value through profit or loss Finance costs Interest income Dividend income Compensation costs of share-based payments Share of profits of associates Gain on disposal of property, plant and equipment Gain on disposal of intangible assets (Gain) loss on disposal of subsidiaries Net (gain) loss on foreign currency exchange Unrealized loss on transactions with associates and joint ventures Gain on lease modification Changes in operating assets and liabilities: Decrease (increase) in trade receivables Decrease in other receivables Decrease (increase) in inventories Increase in other current assets Increase in net defined benefits assets - non-current Increase (decrease) in trade payables Increase in contract liabilities Decrease in deferred revenue Increase in other current liabilities Increase (decrease) in defined benefits liabilities - non-current Cash generated from operations Interest received Dividends received Interest paid Income tax paid 2020 2019 $ 784,738 $ 244,220 301,074 89,948 (154) (122,742) 15,746 (24,052) (29,412) 9,408 (15,713) (28) - (7,795) (16,092) 2,541 (9) (377,153) 5,655 (101,839) (13,530) (3,277) 97,960 1,269 (1,559) 216,960 2,841 814,785 19,314 41,756 (16,509) (67,225) 282,554 77,812 (73) (17,879) 24,849 (24,578) (28,815) - 19,915 (161) (39) 43 8,984 - (1) 114,248 41,197 59,737 (132) (1,163) (130,606) 17,401 (1,629) 4,465 (10,191) 680,158 26,584 45,274 (27,923) (72,440) Net cash generated from operating activities 792,121 651,653 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at FVTOCI Proceeds from the sale of financial assets at FVTOCI Purchase of financial assets at FVTPL Proceeds from the sale of financial assets at FVTPL Acquisition of associates Net cash outflow on acquisition of subsidiaries (Note 29) (10,004) 2,628 (1,447,591) 1,687,133 (2,500) - - 25,990 (1,588,698) 1,572,327 - (48,215) (Continued) - 10 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars) Proceeds from disposal of subsidiaries Payments for property, plant and equipment Proceeds from the disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Proceeds from disposal of intangible assets Payments for investment properties Decrease (increase) on other financial assets 2020 2019 $ (866) $ (194,880) 590 (842) 3,004 (249,613) - (5,073) (196,789) (744) (138,970) 4,239 (459) 1,871 (78,623) 484 (1,488) 10,909 Net cash used in investing activities (414,803) (241,377) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds of guarantee deposits received Refunds of guarantee deposits received Repayment of principal portion of lease liabilities Increase in other liabilities Cash dividends paid Dividends paid to non-controlling interests Partial disposal of interests in subsidiaries without a loss of control Decrease (increase) in non-controlling interests - (26,656) 230,000 - 19,918 (4,987) (13,308) 2,014 (176,530) (139,531) 101,014 12,000 15,000 - - (248,544) 22,168 (33,729) (11,303) 4,758 (211,837) (157,520) - (2,184) Net cash generated from (used in) financing activities 3,934 (623,191) EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES (1,398) (2,178) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 379,854 (215,093) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 3,020,628 3,235,721 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 3,400,482 $ 3,020,628 The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 11 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) 1. GENERAL INFORMATION Sunplus Technology Company Limited (the “Company”) was established in August 1990. It researches, develops, designs, tests and sells high quality, high value-added consumer integrated circuits (ICs). Its products are based on core technologies in such areas as multimedia audio/video, single-chip microcontrollers and digital signal processors. These technologies are used to develop hundreds of products including various ICs: liquid crystal display, microcontroller, multimedia, voice/music, and application-specific. Sunplus’ shares have been listed on the Taiwan Stock Exchange since January 2000. Some of its shares have been issued in the form of global depositary receipts (GDRs), which have been listed on the London Stock Exchange since March 2001 (refer to Note 22). Following is a diagram of the relationship and ownership percentages between Sunplus and its subsidiaries (collectively, the “Group”) as of December 31, 2020: Sunplus Technology Company 13.69% 2.09% 100% 100% 100% 100% 100% 100% 55% 92.55% 58.21% 34.30% 100% 100% 100% Sunplus HK Ventureplus Sunplus Venture Lin Shih Sunplus Jumplux mMobile Technology Award Glory Sunplus Management 100% Consulting Sunny Fancy 100% Ventureplus Mauritius 7.64% Sunplus 2.60% mMedia 100% 100% 100% 100% 100% 62.50% Giant Best Worldplus Giant Giant Rock Ventureplus Genki Tek Kingdom Cayman 44.85% 100% Lingyao Technology Co., Ltd. (Shenzhen) $ 51.47% 100% 100% 100% 100% Sunplus App Sunplus Sunplus Sunplus SunMedia Technology Technology Prof-tek Shanghai Technology Co., Ltd. (Beijing) (Shenzhen) 43.33% 56.67% 100% Chongqing % CQPlus1 Jsilicon Technology Sunext 42.08% Sunplus Innovation 5.64% Generalplus Wei-Young Russell Magic Sky 100% Generalplus Samoa 100% Generalplus Mauritius 100% 100% Generalplus Shenzhen Generalplus HK 89.76% The consolidated financial statements are presented in the Group’s functional currency, the New Taiwan dollar. Technology Co., Co., Ltd. 2. APPROVAL OF FINANCIAL STATEMENTS Ltd. The consolidated financial statements were approved by the Company’s board of directors and authorized for issue on March 29, 2021. - 12 -  3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies: 1) Amendment to IFRS 16 “Covid-19-Related Rent Concessions” The Group elected to apply the practical expedient provided in the amendment to IFRS 16 with respect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The related accounting policies are stated in Note 4. Before the application of the amendment, the Group shall determine whether the abovementioned rent concessions shall be accounted for as lease modifications. The Group applied the amendment from January 1, 2020. Because the abovementioned rent concessions affect only in 2020, retrospective application of the amendment has no impact on the retained earnings as of January 1, 2020. b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2021 New IFRSs Effective Date Announced by IASB Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate January 1, 2021 Benchmark Reform - Phase 2” As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC New IFRSs Effective Date Announced by IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between January 1, 2022 (Note 2) January 1, 2022 (Note 3) To be determined by IASB an Investor and its Associate or Joint Venture” January 1, 2023 IFRS 17 “Insurance Contracts” Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” January 1, 2023 Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract” January 1, 2022 (Note 5) Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates. - 13 - Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022. Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022. Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022. Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023. Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023. 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” The amendments stipulate that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control of a subsidiary that contains a business but retains significant influence, the gain or loss resulting from the transaction is recognized in full. Conversely, when the Group sells or contributes assets that do not constitute a business to an associate, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate, i.e., the Group’s share of the gain or loss is eliminated. Also, when the Group loses control of a subsidiary that does not contain a business but retains significant influence over an associate, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate, i.e., the Group’s share of the gain or loss is eliminated. 2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” The amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date. - 14 - The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32 “Financial Instruments: Presentation”, the aforementioned terms would not affect the classification of the liability. 3) Amendments to IAS 1 “Disclosure of Accounting Policies” The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:   accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed; the Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and  not all accounting policy information relating to material transactions, other events or conditions is itself material. The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and: a) the Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements; b) the Group chose the accounting policy from options permitted by the standards; c) the accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies; d) the accounting policy relates to an area for which the Group is required to make significant judgements or assumptions in applying an accounting policy, and the Group discloses those judgements or assumptions; or e) the accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions. 4) Amendments to IAS 8 “Definition of Accounting Estimates” The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors. - 15 - Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Statement of Compliance The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed and issued into effect by the FSC. b. Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets. The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which 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 the 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 the asset or liability. c. Classification of current and non-current assets and liabilities Current assets include:  Assets held primarily for the purpose of trading;  Assets expected to be realized within 12 months after the reporting period; and  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:  Liabilities held primarily for the purpose of trading;  Liabilities due to be settled within 12 months after the reporting period; and  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. - 16 - 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 disposed of during the period are included in the consolidated statement of comprehensive income from the effective dates of disposal, 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 Group’s interests 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 11 and Tables 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, 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 period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of nonmonetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of nonmonetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary item 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 purpose of presenting consolidated financial statements, the financial statements of the Company’s foreign operations (including subsidiaries and associates) that are prepared using functional 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 as appropriate). - 17 - 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 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 raw materials, supplies, finished goods and work in progress 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. The inventories of Sunplus Technology Company Limited, Generalplus Technology Inc., Sunplus Innovation Technology Inc., Sunplus mMobile Inc., iCatch Technology Inc., Sunplus mMedia Inc., Jumplux Technology and Sunext Technology Co., Ltd. are generally recorded at standard cost. On the balance sheet date, the cost is adjusted to approximate weighted-average cost method. Other subsidiaries’ inventories are recorded at the weighted-average cost. g. Investments in associates An associate is an entity over which the Group has significant influence and that is not a subsidiary. The Group uses the equity method to account for its investments in associates. Under the equity method, investments in an associate is initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate 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 Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings. When the Group’s share of losses of an associate equals or exceeds its interest in that associate (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 Group’s net investment in the associate), the Group discontinues recognizing its share of further loss, if any. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate. The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. - 18 - Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate directly disposed of the related assets or liabilities. When the Group transacts with its associate, profits and losses resulting from the transactions with the associate is recognized in the Group’s consolidated financial statements only to the extent of interests in the associate that is not related to the Group. h. 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. The 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 period, with the effect of any changes in estimate 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. i. Investment properties Investment properties are properties held to earn rentals or for capital appreciation. (It includes right-of-use assets that meet the definition of investment properties.) 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. j. Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that are expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently whenever there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the - 19 - recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods. k. Intangible assets 1) Intangible assets acquired separately 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. 2) Derecognition of intangible assets 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. l. Impairment of property, plant and equipment, right-of-use asset, and intangible assets other than goodwill At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an 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 the individual cash-generating units on a reasonable and consistent basis of allocation. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired. 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 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 for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss. m. 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. - 20 - 1) Financial assets All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. a) Measurement category Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI. i. Financial assets at FVTPL Financial assets is classified as at FVTPL when such a financial asset is mandatorily classified or it is designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria. Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other 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 33: Financial Instruments. 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, other financial assets, notes and accounts receivable, other receivables and refundable deposits, 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, except for: i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and ii) Financial assets that have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets. Cash equivalents include time deposits with original maturities within 12 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. - 21 - 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 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, they 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 trade receivables). The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables. 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 a 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. The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account. c) Derecognition of financial assets The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and 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. - 22 - 2) Financial liabilities a) Subsequent measurement All financial liabilities are measured at amortized cost using the effective interest method. b) Derecognition of financial liabilities The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. n. Provisions Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. o. Revenue recognition The Group identifies a contract with a customer, allocates the transaction price to the performance obligations, and recognizes revenue when performance obligations are satisfied. Unearned receipts for merchandise sales would be recognized as contract liabilities before the Group fulfills its performance obligations. Revenue from the sale of goods Revenue from the sale of goods comes from the sale of ICs. Sales of ICs are recognized as revenue when the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and the price to sell the goods, has the primary responsibility for sales to future customers, and bears the risks of obsolescence. Trade receivables are recognized concurrently. The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control. Other Other mainly comes from software development. p. Lease At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. 1) The Group as lessor Leases are classified 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. When the Group subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease. 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. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis - 23 - over the lease terms. 2) The Group as lessee The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms. Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets, except for those that meet the definition of investment properties. With respect to the recognition and measurement of right-of-use assets that meet the definition of investment properties, refer to Note 4(9) for the accounting policies for investment properties. 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 and variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used. Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets. The Group requested the lessor for rent subsidy as a direct subsidy of the Covid-19 to change the lease payments. There is no substantive change to other terms and conditions. The Group elects to apply the practical expedient to all of the rent subsidy and, therefore, does not assess whether the rent subsidy are lease modifications. Instead, the Group recognizes the reduction in lease payment in profit or loss as a deduction of expenses of variable lease payments. q. Government grants Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to the grants and that the grants will be received. Government grants related to income are recognized in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate. 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. r. 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. - 24 - 2) Retirement benefits Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered service entitling them to the contributions. Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur, 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 liabilities (assets) represent the actual deficit (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. s. Share-based payment arrangements 1) Restricted shares for employees granted to employees The fair value at the grant date of the restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in non-controlling interests. The expense is recognized in full at the grant date if the grants are vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the board of directors approves the transaction. When restricted shares for employees are issued, other equity - unearned employee benefits is recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees. If restricted shares for employees are granted for consideration and the considerations received should be returned if employees resign in the vesting period, the amounts espected to be returned are recognized as payables. Dividends paid to employees on restricted shares that do not need to be returned if employees resign in the vesting period are recognized as expenses when the dividends are declared with a corresponding adjustment in retained earnings and capital surplus - restricted shares for employees. At the end of each reporting period, the Group revises its estimate of the number of restricted shares for employees that are expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to non-controlling interests. t. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. - 25 - 1) Current tax Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction. According to the Income Tax Law, an additional tax of inappropriate earnings is provided for as income tax in the year the shareholders approve to retain the 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 and unused loss carryforwards 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 only recognized 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 they 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 asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the 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 tax for the period Current and deferred tax 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 tax are also recognized in other comprehensive income or directly in equity respectively. 5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group’s accounting policies, management is required to make judgments, estimations, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. The Group considers the economic implications of the COVID-19 when making its critical accounting - 26 - estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods. Key Sources of Estimation Uncertainty a. Estimated impairment of financial assets The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Group uses 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. Where the actual future cash inflows are less than expected, a material impairment loss may arise. 6. CASH AND CASH EQUIVALENTS Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits in banks December 31 2020 2019 $ 5,781 1,168,558 $ 6,065 769,510 2,226,143 2,245,053 $ 3,400,482 $ 3,020,628 The market rate intervals of cash in bank and bank overdrafts at the end of the reporting period were as follows: December 31 2020 2019 Bank balance 0.001%-2.025% 0.001%-2.25% 7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS Financial assets at FVTPL - current Financial assets classified as at FVTPL Non-derivative financial assets - Mutual funds - Domestic unlisted shares - Domestic listed shares Hybrid financial assets Non-derivative financial assets December 31 2020 2019 $ $ 641,575 204,719 52,743 987,692 45,904 41,960 - Securities listed in the ROC and other countries - CB 2,820 15,123 $ 901,857 $ 1,090,679 (Continued) December 31 2020 2019 - 27 - Financial liabilities at FVTPL – non-current Financial assets classified as at FVTPL Non-derivative financial assets - Domestic and foreign unlisted shares - Private funds - Domestic and foreign listed shares - Mutual funds $ $ 686,366 327,856 35,190 14,849 658,431 260,140 33,755 75,119 $ 1,064,261 $ 1,027,445 (Concluded) 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Non-current Domestic and foreign investments Unlisted shares Listed shares 9. NOTES AND TRADE RECEIVABLE, NET December 31 2020 2019 $ 99,767 92,761 $ 98,915 90,472 $ 192,528 $ 189,387 December 31 2020 2019 Notes receivable Notes receivable - operating $ - $ 300 Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Trade receivable 1,204,901 (103) 1,204,798 832,662 (329) 832,333 $ 1,204,798 $ 832,633 The average credit period on sales of goods was 30 to 60 days without interest. The Group's exposure to credit risk and external credit ratings are continuously monitored. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced. The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the industry outlooks. As the Group’s historical credit loss experience does not show significantly - 28 - different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base. The Group writes off a trade receivable when there is evidence indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables 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. The Group’s current credit risk grading framework is shown in the following table: December 31, 2020 Not Overdue Overdue 1- 60 days Overdue 61-90 days Overdue 91-120 days Overdue 121 days or More Total Gross carrying amount Loss allowance (Lifetime ECLs) $ 1,204,689 - $ $ - - $ - - $ - - 212 (103 ) $ 1,204,901 (103 ) Amortized cost $ 1,204,689 $ - $ - $ - $ 109 $ 1,204,798 December 31, 2019 Not Overdue Overdue 1- 60 days Overdue 61-90 days Overdue 91-120 days Overdue 121 days or More Total Gross carrying amount Loss allowance (Lifetime ECLs) $ 832,233 - $ $ 90 - $ - - $ - - 339 (329 ) $ 832,662 (329 ) Amortized cost $ 832,233 $ 90 $ - $ - $ 10 $ 832,333 The movements of the loss allowance of trade receivables were as follows: Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Foreign exchange gains and losses Balance at December 31 10. INVENTORIES Finished goods Work in progress Raw materials For the Year Ended December 31 2020 2019 $ 329 (154) (73) 1 $ 504 (73) (76) (26) $ 103 $ 329 December 31 2020 2019 $ 272,667 378,943 209,430 $ 307,179 281,042 170,990 $ 861,050 $ 759,211 The costs of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 were $3,403,174 thousand and $3,053,155 thousand, respectively. The costs of inventories recognized as costs of goods sold for the years ended December 31, 2020 and 2019 were as follows: For the Year Ended December 31 2020 2019 - 29 - Inventory write - downs Income from scrap sales 11. SUBSIDIARIES $ (6,567) 81 $ (16,192) 103 $ (6,486) $ (16,089) a. The subsidiaries included in the consolidated financial statements The information of the subsidiaries at the end of reporting period was as follows: Name of Investor Name of Investee Main Businesses and Products 2020 2019 Note Percentage of Ownership December 31 Sunplus Sunplus Management Consulting Management Ventureplus Group Inc. Investment (“Ventureplus Group”) Sunplus Technology (H.K.) International trade Sunplus Venture Investment Lin Shih Investment (“Lin Shih”) Investment Sunplus mMobile Inc. Design of ICs Sunext Technology Co., Ltd. Design of ICs (“Sunext”) Sunplus Innovation Technology Design of ICs Generalplus Technology Inc. Design of ICs (“Generalplus”) Wei-Young Investment Inc. Investment Russell Holdings Limited Investment Magic Sky Limited Investment Sunplus mMedia Inc. Design of ICs Award Glory Investment Jumplux Technology Design of ICs Ventureplus Group Ventureplus Mauritius Ventureplus Mauritius Ventureplus Cayman Investment Investment 100.00 100.00 100.00 100.00 100.00 100.00 92.55 58.21 34.30 100.00 100.00 100.00 89.76 100.00 55.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 92.55 61.13 34.30 100.00 100.00 100.00 89.76 100.00 55.00 100.00 100.00 - - - - - - - - Sunplus and its subsidiaries owned 47.99% of the equity in Generalplus Technology, Inc. and the Group had controlling interest over Generalplus Technology, Inc.; the investee is included in the consolidated financial statements - - - - - - - - Ventureplus Cayman Ytrip Technology Web research and development - 38.47 Sunplus and its subsidiaries had a 90.71% stake in Ytrip on December 31, 2019. The liquidation of Ytrip Technology was completed on June 23, 2020. Please refer to Note 30. Sunplus App Technology Manufacturing and sale of 51.47 53.85 computer software; system integration services and information management and education. Sunplus Prof-tek Technology Development of computer 100.00 100.00 (Shenzhen) software, system integration services, building rental services and property management Sunplus Technology (Shanghai) Development of computer 100.00 100.00 software, system integration - 30 - - - - services and building rental services SunMedia Technology Development of computer 100.00 100.00 software, system integration services and building rental services Sunplus Technology (Beijing) Development of computer 100.00 100.00 software, system integration services and building rental services - - (Continued) - 31 - Name of Investor Name of Investee Main Businesses and Products 2020 2019 Note Sunplus Technology (Shanghai) Ytrip Technology Web research and development - 44.08 Sunplus and its subsidiaries had a Percentage of Ownership December 31 Jsilicon Technology Software Development and IC 100.00 100.00 Chongqing CQPlus1 Technology Software Development and IC 56.67 55.00 Design Design 90.71% stake in Ytrip on December 31, 2019. The liquidation of Ytrip Technology was completed on June 23, 2020. Please refer to Note 30. - - Sunplus Prof-tek (Shenzhen) Chongqing CQPlus1 Technology Software Development and IC 43.33 45.00 Sunplus and its subsidiaries owned Design 100% of the equity in Chongqing Shuangxin Co., Ltd. Ytrip Technology Cculture Communication Web Development and sale - 100.00 The liquidation of 1culture Communication was completed on May 29, 2020. Please refer to Note 30. Sunplus Venture Jumplux Technology Design of ICs 42.08 42.08 Sunplus and its subsidiaries owned Han Young Technology Co. Design of ICs - - The liquidation of Han Young 97.08% of the equity in Jumplux Technology. Technology Co. was completed on November 15, 2019. Please refer to Note 30. Sunplus mMedia Design of ICs 7.64 7.64 Sunplus and its subsidiaries owned 100% of the equity in Sunplus mMedia. Sunplus Innovation Design of ICs 5.64 5.64 Sunplus and its subsidiaries owned 65.94% of the equity in Sunplus Innovation Genki Tek Technology Co., Ltd. Development of computer 62.50 - The establishment registration was software completed on March 6, 2020 Lin Shih Generalplus Technology Inc. Design of ICs 13.69 13.69 Sunplus and its subsidiaries had 47.99% stake in Generalplus Technology, Inc. and the Group had controlling interest over Generalplus Technology, Inc.; the investee is included in the consolidated financial statements Sunplus mMedia Design of ICs 2.60 2.60 Sunplus and its subsidiaries owned 100% of the equity in Sunplus mMedia. Sunplus Innovation Design of ICs 2.09 2.09 Sunplus and its subsidiaries owned 65.94% of the equity in Sunplus Innovation. Generalplus Generalplus Samoa Generalplus Samoa Generalplus Mauritius Investment Investment Generalplus Mauritius Generalplus Shenzhen Design of IC product development, after sales service and market research Award Glory Sunny Fancy Generalplus HK Sales Sunny Fancy Giant Kingdom Giant Rock Investment Investment Investment WORLDPLUS HOLDINGS Investment 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - - - - - - - - - 32 - Sunny Fancy Giant Best Ltd. (Giant Best) Investment 100.00 100.00 At the end of December 2020, the L.L.C. (Worldplus) Giant Kingdom Ytrip Technology Web research and development - 8.16 Sunplus and its subsidiaries had a establishment registration was completed, but capital was not injected yet. 90.71% stake in Ytrip on December 31, 2019. The liquidation of Ytrip Technology was completed on June 23, 2020. Please refer to Note 30. Giank Rock Sunplus App Technology Manufacturing and sale of 44.85 42.31 Sunplus and its subsidiaries owned computer software; system integration services and information management and education 96.32% of the equity in Sunplus App. Worldplus Lingyao Technology Software development and rental 100.00 100.00 - sales (Concluded) The financial statements as of and for the years ended December 31, 2020 of the above subsidiaries except Sunplus Management Consulting and Generalplus HK, were audited by the auditors. The management of the Company believes that the financial statements of Sunplus Management Consulting and Generalplus HK will not be subject to major adjustments if it were audited. - 33 - b. Subsidiary excluded from the consolidated financial statements Company name Generalplus Technology Inc. Sunplus Innovation Technology The Voting Ratio of Non-controlling Equity December 31 2020 2019 52.01% 34.06% 52.01% 31.14% Refer to attachment 6 for registered countries and company information: Profits Attributed to Non-controlling Interests For the Year Ended December 31 2020 2019 Non-controlling Interests December 31 2020 2019 Company Name Generalplus Technology Inc. Sunplus Innovation Technology $ 146,699 151,224 $ 116,295 42,243 $ 1,123,045 462,772 $ 1,075,166 308,951 The summarized financial information below represents amounts before intragroup eliminations. Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to: Owners of the Company Non-controlling interests Operating revenue Net income Other comprehensive income December 31 2020 2019 $ 3,920,778 825,984 1,128,870 198,684 $ 3,190,003 790,554 792,198 214,644 $ 3,419,208 $ 2,973,715 $ 1,833,391 1,585,817 $ 1,589,598 1,384,117 $ 3,419,208 $ 2,973,715 For the Year Ended December 31 2020 2019 $ 4,723,614 $ 3,580,874 $ 749,706 3,156 $ 359,235 (19,486) Total other comprehensive income $ 752,862 $ 339,749 Equity attributable to: Owners of the Company Non-controlling interests $ 451,783 297,923 $ 200,697 158,538 $ 749,706 $ 359,235 (Continued) For the Year Ended December 31 2020 2019 - 34 - Total other comprehensive income attributable to: Owners of the Company Non-controlling interests $ 452,808 300,054 $ 191,123 148,626 $ 752,862 $ 339,749 Cash flows Operating activities Investing activities Financing activities Effect of exchange rate changes on the balance of cash held in foreign $ currencies $ 792,458 (320,928) (314,595) 512,134 57,606 (304,255) 3,465 1,452 Net cash inflow (outflow) $ 160,400 $ 266,937 Dividend paid to non-controlling interests $ (139,531) $ (157,520) (Concluded) 12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Investments in associates a. Investments in associates Listed companies Global View Co., Ltd. iCatch Technology Autsys Co., Ltd. Yizhiliang Accelerator Co., Ltd. December 31 2020 2019 $ 719,696 $ 695,028 December 31 2020 2019 $ 346,011 300,118 71,439 2,128 $ 297,640 320,180 77,208 - $ 719,696 $ 695,028 As the end of the reporting period, the proportion of ownership and voting rights in associates held by the Group were as follows: Name of Associate Global View Co., Ltd. iCatch Technology Autsys Co., Ltd. Yizhiliang Accelerator Co., Ltd. December 31 2020 2019 13% 35% 16% 25% 13% 36% 16% - Refer to Table 6 following these Notes to Consolidated Financial Statements for information on the associates’ business types, main operating locations and registered countries. Fair values (Level 1) of investments in associates with available published price quotations are summarized as follows: Name of Associate December 31 2020 2019 - 35 - Global View, Co., Ltd. $ 317,657 $ 239,889 Investments in the above jointly controlled entities are accounted for using the equity method. The summarized financial information of the Group’s associates is set out below: Total assets Total liabilities Revenue Loss for the period Comprehensive income Group’s share of profits of associates December 31 2020 2019 $ 2,739,685 298,421 $ $ 2,438,751 313,348 $ For the Year Ended December 31 2020 2019 $ $ $ $ 913,154 (83,932) 351,451 15,713 $ 1,088,383 (5,711) $ (14,131) $ (19,915) $ The financial statements as of and for the years ended December 31, 2020 of the above associates expect Yizhiliang Accelerator Co., Ltd., were audited by the auditors. The management of the Company believes that the financial statements of Yizhiliang Accelerator Co., Ltd. will not be subject to major adjustments if it were audited. 13. PROPERTY, PLANT AND EQUIPMENT a. Assets used by the Group Prepayments for Equipment and Auxiliary Machinery and Testing Transportation Furniture and Leasehold Other Construction Buildings Equipment Equipment Equipment Equipment Fixtures Improvements Equipment in Progress Total Cost Balance at January 1, 2020 $ 2,338,519 $ 187,290 $ 10,428 $ 517,417 $ 5,873 $ 250,019 $ 1,480 $ 23,847 $ 19,202 $ 3,354,075 Additions Disposals Reclassified Consolidated changes Effect of exchange rate 440 5,670 2,900 143,007 341 41,746 490 - - - (6,260 ) 4,073 - - - - (15,559 ) (1,661 ) (23,400 ) - - - - 1,200 (3,031 ) - - - 109 (33 ) - - 4,372 199,075 - (46,913 ) (5,273 ) - - (3,031 ) changes 26,289 (6,275 ) 8,161 (5,754 ) 54 2,227 1,153 223 (1,145 ) 24,933 Balance at December 31, 2020 $ 2,365,248 $ 184,498 $ 21,489 $ 639,111 $ 4,607 $ 268,761 $ 3,123 $ 24,146 $ 17,156 $ 3,528,139 Accumulated depreciation Balance at January 1, 2020 $ 555,243 $ 143,222 $ 7,229 $ 448,652 $ 4,018 $ 205,424 $ 1,239 $ 20,245 $ - $ 1,385,272 Depreciation expense 52,292 18,410 2,232 116,637 715 21,478 455 Disposals Consolidated changes Effect of exchange rate - - (6,260 ) - - - (15,538 ) (1,384 ) (23,136 ) - - (3,016 ) - - 599 (33 ) - 212,818 (46,351 ) (3,016 ) changes 8,801 (5,230 ) 3,151 (2,087 ) 45 2,044 (9 ) 1,449 - 8,164 Balance at December 31, 2020 $ 616,336 $ 150,142 $ 12,612 $ 547,664 $ 3,394 $ 202,794 $ 1,685 $ 22,260 $ - $ 1,556,887 Carrying amounts at $ 1,748,912 $ 34,356 $ 8,877 $ 91,447 $ 1,213 $ 65,967 $ 1,438 $ 1,886 $ 17,156 $ 1,971,252 - 36 - December 31, 2020 (Continued) - 37 - Prepayments for Equipment and Auxiliary Machinery and Testing Transportation Furniture and Leasehold Other Construction Buildings Equipment Equipment Equipment Equipment Fixtures Improvements Equipment in Progress Total Cost Balance at January 1, 2019 $ 2,383,245 $ 193,874 $ 13,729 $ 616,529 $ 5,904 $ 266,331 $ 2,782 $ 23,959 $ 2,940 $ 3,509,393 Additions Disposals Reclassified Consolidated changes Effect of exchange rate - - - - 442 5,446 102,304 773 17,700 457 (5,408 ) (6,486 ) (198,512 ) (1,076 ) (40,489 ) (1,716 ) - - - - - - - - 10,493 2,501 - - 234 (39 ) 9,900 137,256 - (253,726 ) - (10,720 ) (227 ) 205 17,088 19,794 changes (44,726 ) (1,618 ) (2,261 ) (2,904 ) 272 (6,517 ) (43 ) (512 ) (6 ) (58,315 ) Balance at December 31, 2019 $ 2,338,519 $ 187,290 $ 10,428 $ 517,417 $ 5,873 $ 250,019 $ 1,480 $ 23,847 $ 19,202 $ 3,354,075 Accumulated depreciation Balance at January 1, 2019 $ 507,818 $ 126,857 $ 12,759 $ 540,595 $ 3,633 $ 231,996 $ 2,331 $ 19,447 $ - $ 1,445,436 Depreciation expense 53,530 19,626 2,322 95,336 1,145 16,945 5,288 Disposals Consolidated changes Effect of exchange rate - - (5,408 ) (6,375 ) (195,243 ) (1,052 ) (39,515 ) (1,716 ) - - - - 2,273 - 601 (39 ) 85 - - - 194,793 (249,648 ) 2,358 changes (6,105 ) 2,147 (1,477 ) (3,534 ) 292 (5,975 ) (4,664 ) 151 - (19,165 ) Balance at December 31, 2019 $ 555,243 $ 143,222 $ 7,229 $ 437,154 $ 4,018 $ 205,424 $ 1,239 $ 20,245 $ - $ 1,373,774 Accumulated impairment Balance at December 31, 2019 $ - $ - $ - $ 11,498 $ - $ - $ - $ - $ - $ 11,498 Carrying amounts at December 31, 2019 $ 1,783,276 $ 44,068 $ 3,199 $ 68,765 $ 1,855 $ 44,595 $ 241 $ 3,602 $ 19,202 $ 1,968,803 (Concluded) The above items of property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives as follows: Buildings Auxiliary equipment Machinery and equipment Testing equipment Transportation equipment Furniture and fixtures Leasehold improvements Other equipment 10-56 years 3-11 years 3-10 years 1-6 years 4-10 years 1-6 years 5 years 3-10 years Refer to Note 35 for the carrying amounts of property, plant and equipment that had been pledged by the Group to secure borrowings. 14. LEASE ARRANGEMENTS a. Right-of-use assets December 31 - 38 - Carrying amounts Land Buildings Transportation equipment 2020 2019 $ 209,100 19,730 447 $ 215,922 25,098 894 $ 229,277 $ 241,914 - 39 - Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Transportation equipment For the Year Ended December 31 2020 2019 $ $ 2,924 6,856 8,765 447 $ $ 3,989 6,859 6,454 361 $ 16,068 $ 13,674 Income from the subleasing of right-of-use assets (presented in other income) $ 1,137 $ 1,093 Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the nine months ended December 31, 2020 and 2019. The other part of right-of-use assets-land in China is subleased by operating leases, and the relevant right-of-use assets are classified as investment properties. Please refer to Note 15. b. Lease liabilities Carrying amounts Current Non-current Range of discount rate for lease liabilities was as follows: Land Buildings Transportation equipment c. Material lease-in activities and terms December 31 2020 2019 $ 12,506 $ 219,510 $ 11,885 $ 230,251 December 31 2020 2.39% 2019 2.39% 1.575%-5.000% 1.575%-4.750% 1.575% 1.575% The Group leases land and buildings for the use of plants, offices and dormitory, also leases transportation equipment for the use of business travel with lease terms of 2 to 50 years. Lease terms of land in the ROC is 20 years, the lease contract for land located in the ROC specifies that lease payments will be adjusted on the basis of changes in announced land value prices. Lease terms of land in China is 50 years. The Group does not have bargain purchase options to acquire the leasehold land, buildings and transportation equipment at the end of the lease terms. The Group did not enter into significant lease contracts in the year ended December 31, 2019 and 2020. Because of the market conditions severely affected by COVID-19 in 2020, the Group requested the lessor for rent subsidy. The lessor agreed to provide unconditional 20% rent reduction from January 1 to December 31, 2020. The Group recognized in profit or loss the impact of rent concessions of $832 thousand (presented in a deduction of expenses of variable lease payments) for the year of 2020. - 40 - d. Subleases The Group subleases its right-of-use assets for buildings under operating leases with lease terms for 2 years. The maturity analysis of lease payments receivable under operating subleases was as follows: Year 1 e. Other lease information Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases December 31 2020 2019 $ - $ 1,153 For the Year Ended December 31 2020 2019 $ $ $ 6,530 444 22,636 $ $ $ 11,343 2,282 30,995 The Company leases certain transportation equipment and other leases which qualify as short-term leases. The Company has elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases. 15. INVESTMENT PROPERTIES Cost Completed Investment Properties Right-of-use Assets Total Balance at January 1, 2020 Additions Effect of exchange rate differences $ 1,401,007 5,073 23,026 $ 98,867 - 1,654 $ 1,499,874 5,073 24,680 Balance at December 31, 2020 $ 1,429,106 $ 100,521 $ 1,529,627 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Effect of exchange rate differences $ 430,601 $ 69,808 8,724 2,476 $ 2,308 94 433,077 72,188 8,818 Balance at December 31, 2020 $ 509,133 $ 4,950 $ 514,083 Carrying amount at December 31, 2020 $ 919,973 $ 95,571 $ 1,015,544 (Continued) - 41 - Cost Balance at January 1, 2019 Additions Effect of acquisition of subsidiary Effect of exchange rate differences Completed Investment Properties Right-of-use Assets Total $ $ 1,400,135 1,488 52,074 (52,690) 102,702 - - (3,835) $ 1,502,837 1,488 52,074 (56,525) Balance at December 31, 2019 $ 1,401,007 $ 98,867 $ 1,499,874 Accumulated depreciation Balance at January 1, 2019 Depreciation expense Effect of acquisition of subsidiary Effect of exchange rate differences $ $ 360,821 71, 513 14,691 (16,424) $ - 2,574 - (98) 360,821 74,087 14,691 (16,522) Balance at December 31, 2019 $ 430,601 $ 2,476 $ 433,077 Carrying amount at December 31, 2019 $ 970,406 $ 96,391 $ 1,066,797 (Concluded) The right-of-use assets in the investment properties are the use right of land signed by the Group and is subleased under operating lease. The lease terms of the investment properties are from 1 to 15 years, with extension option according to the original contract when exercising the renewal right. The lessee do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods. The maturity analysis of lease payments receivable under operating leases of investment properties is as follows: Year 1 Year 2 Year 3 December 31 2020 2019 $ 197,870 164,577 96,344 $ 216,645 136,228 96,651 $ 458,791 $ 449,524 The above items of investment properties are depreciated on a straight-line basis over their estimated useful lives as follows: Completed investment properties Right-of-use assets 5-26 years 35-39 years The fair value of the investment properties of Lingyao Technology Co., Ltd. in Shenzhen assesed in 2020 and 2019 had been determined on the basis of valuations carried out on December 31, 2020 and 2019 by Suzhou Fengzheng Renhe Estate Land Assets Appraisal Co., Ltd. and Guanhong Real Estate Appraisers Office, respectively. The valuation was arrived at by reference to the income approach. The significant unobservable inputs used include discount rates; the fair value as appraised is as follows: Fair value December 31 2020 2019 $ 45,471 $ 37,900 The fair value of the investment properties of SunMedia Technology assesed in 2020 and 2019 had been determined on the basis of valuations carried out on December 31, 2020 and 2019 by Sichuan Zongli Real Estate Land Assets Evaluation Co., Ltd. The valuation was arrived at by reference to the income approach. The significant unobservable inputs used include discount rates; the fair value as appraised is as follows: - 42 - December 31 2020 2019 Fair value $ 1,192,093 $ 1,182,963 The fair value of the investment properties of Sunplus Technology (Shanghai) Co., Ltd. assessed in 2020 and 2019 had been determined on the basis of valuations carried out on December 31, 2020 and 2019 by Suzhou Feng-Zheng Valuation Firm. The valuation was arrived at by reference to the income approach. The significant unobservable inputs used include discount rates; the fair value as appraised is as follows: Fair value $ 2,374,398 $ 2,295,816 December 31 2020 2019 16. INTANGIBLE ASSETS Cost For the Year Ended December 31, 2020 Technology License Fees Software Patents Goodwill Total Balance at January 1 Additions Decrease Effect of exchange rate differences Consolidated changes $ 809,249 218,688 (41,842) 517 - $ 312,600 23,140 (5,680) 433 (5,232) $ 114,494 2,000 - 4 - $ 30,596 - - - - $ 1,266,939 243,828 (47,522) 954 (5,232) Balance at December 31 $ 986,612 $ 325,261 $ 116,498 $ 30,596 $ 1,458,967 Accumulated amortization Balance at January 1 Amortization expense Decrease Effect of exchange rate differences Consolidated changes $ 583,858 65,167 (41,842) 347 - $ 289,553 23,277 (5,680) 313 (3,418) $ 84,582 1,504 - 2 - $ - - - - - $ 957,993 89,948 (47,522) 662 (3,418) Balance at December 31 $ 607,530 $ 304,045 $ 86,088 $ - $ 997,663 Accumulated deficit Balance at December 31 $ 111,136 $ - $ 21,577 $ - $ 132,713 Carrying amounts at December 31, 2020 $ 267,946 $ 21,216 $ 8,833 $ 30,596 $ 328,591 - 43 - For the Year Ended December 31, 2019 Technology License Fees Software Patents Goodwill Total Cost Balance at January 1 Additions Decrease Reclassified Effect of exchange rate differences $ 778,507 55,525 (23,509) (350) (924) $ 298,609 20,069 (6,026) - (52) $ 114,504 - - - (10) $ 30,596 - - - - $ 1,222,216 75,594 (29,535) (350) (986) Balance at December 31 $ 809,249 $ 312,600 $ 114,494 $ 30,596 $ 1,266,939 Accumulated amortization Balance at January 1 Amortization expense Decrease Reclassified Effect of exchange rate differences $ 556,915 51,139 (23,509) (175) (512) $ 270,852 25,302 (5,581) - (1,020) $ $ 83,215 1,371 - - (4) - - - - - $ 910,982 77,812 (29,090) (175) (1,536) Balance at December 31 $ 583,858 $ 289,553 $ 84,582 $ - $ 957,993 Accumulated deficit Balance at December 31 $ 111,136 $ - $ 21,577 $ - $ 132,713 Carrying amounts at December 31, 2019 $ 114,255 $ 23,047 $ 8,335 $ 30,596 $ 176,233 Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: Technology license fees Software Patents An analysis of depreciation by function Selling and marketing expenses General and administrative expenses Research and development expenses 1-10 years 1-10 years 8-18 years For the Year Ended December 31 2020 2019 $ 232 3,677 86,039 $ 106 5,894 71,812 $ 89,948 $ 77,812 - 44 - 17. OTHER ASSETS Current Other financial assets Pledged time deposits (a) Time deposits (b) Restricted assets (d) Other assets Prepaid technical licensing fee Prepayments for EDA tools Others Non-current Other financial assets Pledged time deposits (a) Time deposits (c) Other assets Refundable deposits Others December 31 2020 2019 $ 113,920 82,213 44,201 $ 119,920 - - $ 240,334 $ 119,920 $ 18,032 21,141 72,265 $ 9,103 21,374 58,440 $ 114,438 $ 88,917 $ 35,809 236,358 $ 10,899 129,150 $ 272,167 $ 140,049 $ 4,055 7,800 $ 6,247 7,800 $ 11,855 $ 14,047 a. Refer to Note 35 for information on pledged time deposits. b. Sunplus Technology (Shanghai) Company, Lingyao Company, Sunplus Prof-tek (Shenzhen) Company and Sunplus Technology (Beijing) Company made a fixed deposit of RMB$18,783 thousand at banks on December 31, 2020. The deposit period of time deposit is 6 months to 1 year, and interest can be charged at a certain interest rate during the deposit period. c. Shanghai Technology (Shanghai) Company , Lingyao Company and Shenzhen Lingjia Company made certificates of deposit of RMB$54,000 thousand and RMB$30,000 at the bank on December 31, 2020, and on December 31, 2019, respectively. The deposit period of the certificates of deposit is 2 to 3 years and 3 years respectively, and interest can be charged at a certain interest rate during the deposit period. d. Refer to Note 28 for information on restricted assets. - 45 - 18. BORROWINGS Short-term borrowings Secured borrowings Bank loans Unsecured borrowings Bank loans December 31 2020 2019 $ 97,102 $ 120,130 217,107 203,496 $ 314,209 $ 323,626 The range of weighted average effective interest rates on bank loans was 0.716%-2.800% and 1.745%-3.000% per annum at December 31, 2020 and 2019, respectively. Long-term borrowings The borrowings of the Group were as follows: Maturity Date Significant Covenant 2020 2019 December 31 Floating rate borrowings Unsecured bank borrowings 2025.08.21 Repayable quarterly from November 2021, the $ 200,000 $ Unsecured bank borrowings 2023.10.13 Repayable semiannually from October 2022, 30,000 the loan was repaid on maturity loan was repaid on maturity Less: Current portion Long-term borrowings (25,000 ) $ 205,000 $ - - - - The interval of effective borrowing rates as of December 31, 2020 was 1.250%-1.320%. In addition, in accordance with the provisions of the loan contract, the Group’s consolidated financial statements for the year ended 2020 are subject to current ratio, debt ratio, interest coverage ratio, etc., but they are not included in the examination of default items. The Group's financial ratios are in compliance with the contract requirements. 19. TRADE PAYABLES Accounts payable Payable - operating December 31 2020 2019 $ 450,216 $ 352,155 The average credit period on purchases of certain goods was 30-60 days. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. - 46 - 20. OTHER LIABILITIES Current Other payables Payables for salaries or bonuses Refund liabilities Payables for employees’ compensation and remuneration of directors Payable for royalties Labor/health insurance Payables for purchases of equipment Payables for labor costs Commissions payable Others December 31 2020 2019 $ 464,201 75,313 73,815 68,250 27,106 8,005 7,195 6,591 64,848 $ 299,871 46,591 46,467 46,676 26,629 5,552 6,105 6,920 91,290 $ 795,324 $ 576,101 Deferred revenue Deferred revenue Arising from government grants (Note 28) $ 46,098 $ 1,568 Non-current Other payable Long-term payables Payables for purchases of equipment Decommissioning liabilities Others $ 6,484 4,940 889 1,532 $ 4,470 3,198 889 - $ 13,845 $ 8,557 Deferred revenue Arising from government grants (Note 28) $ 58,300 $ 58,015 21. RETIREMENT BENEFIT PLANS a. Defined contribution plans Sunplus, Generalplus, Sunext, Sunplus Innovation, Sunplus mMedia and Jumplux Technology of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Group makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. - 47 - b. Defined benefit plans The defined benefit plans adopted by the Company, Generalplus, Sunplus Innovation and Jumplux Technology in accordance with the Labor Standards Act is operated by the government of the ROC. Under this plan, employees should receive either a series of pension payments with a defined annuity or a lump sum that is payable immediately on retirement and is equivalent to 2 base units for each of the first 15 years of service and 1 base unit for each year of service thereafter. The total retirement benefit is subject to a maximum of 45 units. The pension benefits are calculated on the basis of the length of service and average monthly salaries of the six month before retirement. In addition, the Group makes monthly contributions, equal to 2% of salaries, to a pension fund, which is administered by a fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name and are managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the company has no right to influence the investment policy and strategy. According to the letter of Zhuhuanzi No. 1090003642 issued by the Hsinchu Science Park Administration of the Ministry of Science and Technology, the Company ceased its retirement fund contribution temporarily from January 1, 2020 to December 31, 2020. The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans are as follows: December 31 2020 2019 Present value of funded defined benefit obligation Fair value of plan assets $ 244,805 (188,926) $ 267,360 (204,475) Net liabilities arising from defined benefit obligation $ 55,879 $ 62,885 Movements in net defined benefit liabilities were as follows: Present Value of Funded Defined Benefit Obligation Fair Value of Plan Assets Net Defined Benefit Liabilities (Assets) $ 268,025 $ 188,770 $ 79,255 Balance at January 1, 2019 Service cost Current service cost Net interest expense (income) Recognized gain and loss Remeasurement Return on plan assets Actuarial (gain) loss-experience adjustment Actuarial (gain) loss-changes in demographic assumptions Actuarial loss-changes in financial assumptions Recognized in other comprehensive income Contributions from the employer Benefit paid 805 3,051 3,856 - (2,387) 47 3,602 1,262 - (5,783) - 2,212 2,212 6,223 - - - 6,223 13,053 (5,783) 805 839 1,644 (6,223) (2,387) 47 3,602 (4,961) (13,053) - Balance at December 31, 2019 $ 267,360 $ 204,475 $ 62,885 (Continued) - 48 -  Present Value of Funded Defined Benefit Obligation Fair Value of Plan Assets Net Defined Benefit Liabilities (Assets) $ 267,360 $ 204,475 $ 62,885 Balance at January 1, 2020 Service cost Current service cost Net interest expense (income) Recognized gain and loss Remeasurement Return on plan assets Actuarial (gain) loss-experience adjustment Actuarial (gain) loss-changes in demographic assumptions Actuarial loss-changes in financial assumptions Recognized in other comprehensive income Contributions from the employer Benefit paid 563 2,556 3,119 - 2,240 (1,441) (1,502) (703) - (24,971) - 1,973 1,973 5,980 - - - 5,980 1,469 (24,971) 563 583 1,146 (5,980) 2,240 (1,441) (1,502) (6,683) (1,469) - Balance at December 31, 2020 $ 244,805 $ 188,926 $ 55,879 (Concluded) An analysis by function of the amounts recognized in profit or loss in respect of the benefit plans is as follows: Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses For the Year Ended December 31 2020 2019 $ 121 114 317 482 $ 155 176 431 936 Net liability arising from defined benefit obligation $ 1,034 $ 1,698 Through the defined benefit plans under the Labor Standards Law, the Group is 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 should 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 plan’s debt investments. 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation. - 49 - 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 were as follows: Discount rate(s) Expected rate(s) of salary increase Resignation rate December 31 2020 2019 0.30%-0.80% 3.625%-5.00% 0%-28% 0.80%-1.00% 4.00%-5.00% 0%-28% If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows: Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 1% increase 1% decrease December 31, 2020 December 31, 2019 $ $ $ $ (6,559) 6,818 27,669 (24,291) $ $ $ $ (7,703) 8,014 32,682 (28,567) The above sensitivity analysis may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions will occur in isolation of one another as some of the assumptions may be correlated. Expected contributions to the plan for the next year $ 1,170 $ 4,024 Average duration of the defined benefit obligation 13-16 years 13-16 years December 31 2020 2019 22. EQUITY a. Share capital 1) Ordinary shares: December 31 2020 2019 Shares authorized (in thousands of shares) Value of authorized shares Number of shares issued and fully paid (in thousands) Shares issued and fully paid 1,200,000 $ 12,000,000 591,995 5,919,949 $ 1,200,000 $ 12,000,000 591,995 5,919,949 $ Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends. Of the Company’s authorized shares, 80,000 thousand shares had been reserved for the issuance of convertible bonds and employee share options. 2) Global depositary receipts - 50 - In March 2001, Sunplus issued 20,000 thousand units of global depositary receipts (GDRs), representing 40,000 thousand ordinary shares that consisted of newly issued and originally outstanding shares. The GDRs are listed on the London Stock Exchange (ticker: SUPD) with an issuance price of US$9.57 per unit. As of December 31, 2020, the outstanding 175 thousand units of GDRs represented 350 thousand ordinary shares. b. Capital surplus December 31 2020 2019 May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (a) Arising from the issuance of ordinary shares Arising from the acquisition of a subsidiary The difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition $ 18,497 157,423 $ 196,095 157,423 207,316 140,184 May be used to offset a deficit only From treasury share transactions Changes in net equity of associates or joint ventures accounted for using the equity method 46,307 71,277 45,239 55,491 $ 500,820 $ 594,432 a) When the Company has no deficit, such capital surplus may be distributed as cash dividends, or may be transferred to share capital once a year and within a certain percentage of the Company’s capital surplus. c. Retained earnings and dividend policy Under the dividend policy as set forth in the amended Articles, Sunplus shall appropriate from annual net income less any accumulated deficit: (a) 10% as legal reserve; and (b) special reserve equivalent to the debit balance of any accounts shown in the shareholders’ equity section of the balance sheet, other than deficit. Under the approved shareholders’ resolution, the current year’s net income less all the foregoing appropriations and distributions, plus the prior years’ unappropriated earnings may be distributed as additional dividends. Sunplus’ policy is that cash dividends should be at least 10% of total dividends distributed. However, cash dividends will not be distributed if these dividends are less than NT$0.5 per share. Under the regulations promulgated, a special reserve equivalent to the debit balance of any account shown in the shareholders’ equity section of the balance sheet (for example, unrealized loss on financial assets and cumulative translation adjustments) should be allocated from unappropriated retained earnings. For the policies on distribution of employees’ compensation and remuneration to directors before and after amendment, refer to Note 24-(h). Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. 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 Company appropriates or reverses a special reserve in accordance with Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive entitled “Questions and Answers on Special Reserves Appropriated Following the Adoption of IFRSs”. Distributions can be made out of any subsequent reversal of the debit to other equity items. The appropriations of earnings for 2019 approved in the shareholders’ meeting on June 10, 2019, as follows: - 51 - Legal reserve Special reserve For Year 2018 $ 562 $ 241,173 The appropriations of earnings for 2020 approved in the shareholders’ meeting on June 12, 2020, as follows: Special reserve reversed Legal reserve deficits compensated For Year 2019 32,263 $ $ 229,998 The Company’s shareholders resolved in the shareholders’ meetings on June 12, 2020, June 10, 2019 to issue and cash dividends of $177,598 thousand and $213,118 thousand from the capital surplus, respectively. The earnings distribution proposal for 2020 in the board of directors meeting proposed on March 29, 2021 as follows: Legal reserve Special reserve reversed Cash dividend Cash dividend per share (NT$) For the Year 2020 32,889 $ $ 15,111 $ 311,093 0.53 $ The appropriation of earnings for 2020 is subject to resolution in the shareholders’ meeting to be held on June 7, 2021. d. Special reserve Beginning at January 1 Appropriations to the special reserve Special reserve reversed Balance at December 31 For the Year Ended December 31 2020 2019 $ 308,452 - (32,263) $ 62,279 241,173 - $ 276,189 $ 308,452 - 52 - e. Other equity items 1) Exchange differences on translating the financial statements of foreign operations: Balance at January 1 Exchange differences on translating foreign operations Share of exchange differences of associates accounted for using equity method Reclassification adjustments Disposal of foreign operations For the Year Ended December 31 2020 2019 $ (218,780) (1,032) $ (138,875) (75,511) 2,072 (4,394) (10,283) - Balance at December 31 $ (228,023) $ (218,780) 2) Unrealized gain (loss) from investments in equity instruments measured at FVTOCI: Balance at January 1 Current Unrealized gain (loss) Share of unrealized gain (loss) on associates accounted for using the equity method Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal Disposal of partial interests in subsidiaries For the Year Ended December 31 2020 2019 $ (42,246) $ (303,968) (1,354) (20,881) 7,261 1,172 2,112 3,089 279,514 - Balance at December 31 $ (33,055) $ (42,246) f. Non-controlling interests Balance at January 1 Attributable to non-controlling interests: Share of profit for the year Exchange difference on translation foreign operations Unrealized gain (loss) on financial assets at FVTOCI Actuarial gains on defined benefit plans Cash dividends from subsidiaries Non-controlling interests related to outstanding vested share options Disposal of partial interests in subsidiaries Equity instruments held by the employees of subsidiaries Others For the Year Ended December 31 2020 2019 $ 1,394,158 $ 1,401,664 295,424 4,165 (1,861) (96) (139,531) 12,000 31,770 9,408 (199) 159,443 (9,377) (563) 225 (157,520) - - - 286 Balance at December 31 $ 1,605,238 $ 1,394,158 - 53 - g. Treasury shares Purpose of Buyback Number of shares as of January 1, 2019 Decrease Number of shares as December 31, 2019 Number of shares as of January 1, 2020 Decrease Number of shares as December 31, 2020 Shares Transferred to Employees (In Thousands of Shares) Shares Held by Its Subsidiaries (In Thousands of Shares) Total (In Thousands of Shares) - - - - - - 3,560 - 3,560 3,560 - 3,560 3,560 - 3,560 3,560 - 3,560 The Group’s shares held by its subsidiaries at the end of the reporting periods were as follows: Purpose of Buyback December 31, 2020 Shares Transferred to Employees (in Thousands of Shares) Shares Held by Its Subsidiaries (in Thousands of Shares) Total (in Thousands of Shares) Lin Shin Investment Co Ltd 3,560 $ 63,401 $ 65,148 December 31, 2019 Lin Shin Investment Co., Ltd 3,560 $ 63,401 $ 48,238 The subsidiaries holding treasury shares, however, are bestowed shareholders’ rights, except the rights to participate in any share issuance for cash and to vote. 23. REVENUE Revenue from the sale of goods Rental income from property Other a. Contract information Revenue from the sale of goods For the Year Ended December 31 2020 2019 $ 6,084,210 230,273 99,657 $ 5,085,074 265,330 136,256 $ 6,414,140 $ 5,486,660 IC products are sold to agents and customers. The Group determines the sales price of products based on orders. It takes into consideration the past purchases of agents and customers in order to estimate the most likely discount amount and return rate. Based on the determination of revenue, the Group recognizes the amount and the liabilities for refunds (accounted for as other current liabilities). Other income - 54 - Other income mainly comes from software development and royalties. b. Contract balances December 31, 2020 December 31, 2019 January 1, 2019 Trade receivables (Note 9) $ 1,204,798 $ 832,633 $ 954,030 Contract liabilities - current $ 26,181 $ 24,912 $ 7,511 c. Disaggregation of revenue Primary geographical markets Asia Taiwan Others Timing of revenue recognition Satisfied at a point in time Satisfied over time 24. NET PROFIT Net profit included the following items: a. Interest income Bank deposits Others Reportable Segments Direct Sales 2020 2019 $ 3,816,229 2,536,578 61,333 $ 3,474,148 1,955,083 57,429 $ 6,414,140 $ 5,486,660 $ 6,176,425 237,715 $ 5,210,466 276,194 $ 6,414,140 $ 5,486,660 For the Year Ended December 31 2020 2019 $ 24,052 - $ 24,536 42 $ 24,052 $ 24,578 - 55 - b. Other income Dividend income Subsidy income (Note 28) Others c. Other gains and losses Net gain (loss) on financial assets and liabilities Net gain (loss) on financial assets designated as at FVTPL (Note 7) Net foreign exchange loss Gain (loss) on disposal of subsidiary Others d. Finance costs Interest on bank loans Interest on lease liabilities Other finance costs e. Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses For the Year Ended December 31 2020 2019 $ 29,412 40,135 48,257 $ 28,815 27,107 75,616 $ 117,804 $ 131,538 For the Year Ended December 31 2020 2019 $ 122,742 (10,900) 7,795 7,711 $ 17,879 (27,640) (43) 10,931 $ 126,748 $ 1,127 For the Year Ended December 31 2020 2019 $ 7,527 5,555 2,664 $ 15,721 5,674 3,454 $ 15,746 $ 24,849 For the Year Ended December 31 2020 2019 $ 79,253 221,821 $ 81,393 201,161 $ 301,074 $ 282,554 $ 89,948 $ 77,812 - 56 - f. Operating expenses directly related to investment properties Direct operating expenses from investment property that generated rental income $ 85,869 $ 77,547 For the Year Ended December 31 2020 2019 g. Employee benefit expense Short-term benefits Post-employment benefits Defined contribution plans Defined benefit plans (Note 21) Other employee benefits Share-based payments Equity-settled Other employee benefits For the Year Ended December 31 2020 2019 $ 1,661,037 $ 1,494,942 46,178 1,034 47,212 9,408 35,402 45,278 1,698 46,976 - 30,602 Total employee benefit expense $ 1,753,059 $ 1,572,520 An analysis of employee benefit expense by function Operating costs Operating expenses $ 101,951 1,651,108 $ 98,052 1,474,468 $ 1,753,059 $ 1,572,520 h. Employees’ compensation and remuneration of directors and supervisors The Company resolved amendments to its Articles of Incorporation to distribute employees’ compensation and remuneration directors at rates of no less than 1% and no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2020 and 2019 were as follows: Accrual rate Employees’ compensation Remuneration of directors Amount For the Year Ended December 31 2020 1.00% 1.50% 2019 1.00% 1.50% For the Year Ended December 31 2020 2019 Cash Shares Cash Shares Employees’ compensation Remuneration of directors $ 3,317 4,975 $ $ - - $ 206 309 - - If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate and will be adjusted in next fascial year. - 57 - The actual amounts of employee’ compensation and remuneration of directors are different from the amounts recognized in the annual consolidated financial statements. Therefore, on April 22, 2020, the board of directors resolved that the differences will be adjusted to the profit or loss for 2020. For the Year Ended December 31, 2019 Employees’ Compensation Remuneration of Directors and Supervisors The actual amount resolved by the board of directors Recognized amount in annual financial statements $ $ - 206 $ $ - 309 There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2018. Information on the employees’ compensation 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. i. Gain or loss on exchange rate changes Exchange rate gains Exchange rate losses Net loss 25. INCOME TAXES a. Income tax recognized in profit or loss The major components of tax expense were as follows: Current tax In respect of the current year Adjustments for prior periods Deferred tax In respect of the current year For the Year Ended December 31 2020 2019 $ 130,878 (141,778) $ 87,093 (114,733) $ (10,900) $ (27,640) For the Year Ended December 31 2020 2019 $ 179,824 (9,630) 170,194 $ 90,323 (22,355) 67,968 (4,283) 1,500 Income tax expense recognized in profit or loss $ 165,911 $ 69,468 - 58 - A reconciliation of accounting profit and current income tax expenses is as follows: Profit before tax Income tax expense at the statutory rate Different statutory rate in other jurisdictions Tax effect of adjusting items: Nondeductible expenses in determining taxable income Temporary differences Unrecognized temporary differences Current investment credit Effects of consolidated income tax filing Tax-exempt income Loss carryforwards Differences in income basic tax Current income tax expense Deferred income tax expense Temporary differences Unrecognized loss carryforwards Adjustments for prior years’ tax Foreign income tax expense For the Year Ended December 31 2020 2019 $ 784,738 $ 244,220 $ 156,948 716 $ 48,844 2,344 (27,165) 5,916 - (12,857) (34) (4,618) (993) 283 118,196 (4,283) 61,126 (9,630) 502 3,163 (11,475) (419) (6,650) (42) - - - 35,765 1,500 49,771 (22,355) 4,787 Income tax expense recognized in profit or loss $ 165,911 $ 69,468 In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. b. Current tax assets and liabilities Current tax assets Tax refund receivable (classified as other receivable) Prepaid income tax (classified as other current assets) $ 415 - $ 516 24 December 31 2020 2019 Current tax liabilities Income tax payable c. Deferred tax assets and liabilities $ 415 $ 540 $ 155,138 $ 52,169 The Group offset certain deferred tax assets and deferred tax liabilities that met the offset criteria. - 59 - The movements of deferred tax assets and deferred tax liabilities were as follows: For the year ended December 31, 2020 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Closing Balance Temporary differences Unrealized loss on inventories Fixed assets Unrealized sales Exchange (gains) losses Other For the year ended December 31, 2019 $ 12,120 4,947 883 (226) 11,030 $ (326) (1,509) (883) (1,168) 8,169 $ 11,794 3,438 - (1,394) 19,199 $ 28,754 $ 4,283 $ 33,037 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Closing Balance Temporary differences Unrealized loss on inventories Fixed assets Unrealized sales Exchange (gains) losses Other $ 12,102 4,063 675 (1,003) 14,417 $ 18 884 208 777 (3,387) $ 12,120 4,947 883 (226) 11,030 $ 30,254 $ (1,500) $ 28,754 d. Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets Loss Carryforwards Expiry in 2020 Expiry in 2021 Expiry in 2022 Expiry in 2023 Expiry in 2024 Expiry in 2025 Expiry in 2026 Expiry in 2027 Expiry in 2028 Expiry in 2029 Expiry in 2030 December 31 2020 2019 $ $ - 530,904 536,364 1,467,084 65,199 49,489 55,551 88,194 130,320 391,411 83,032 251,700 535,328 536,364 1,467,084 65,199 49,489 55,551 88,194 130,320 75,674 - $ 3,397,548 $ 3,254,903 Deductible temporary differences $ 117,978 $ 113,956 - 60 - e. Unused loss carryforwards and tax-exemptions Loss carryforwards as of December 31, 2020 pertaining to Sunplus: Unused Amount $ 322,509 394,894 1,144,831 24,228 329,899 46,749 $ 2,263,110 Loss carryforwards as of December 31, 2020 pertaining to Sunplus Venture: Unused Amount $ 4,863 92,197 $ 97,060 Loss carryforwards as of December 31, 2020 pertaining to Lin Shin: Unused Amount $ 39,908 Loss carryforwards as of December 31, 2020 pertaining to Sunext: Unused Amount $ 99,355 100,760 159,490 31,147 975 $ 391,727 Loss carryforwards as of December 31, 2020 pertaining to Genki Tek： Unused Amount $ 7,971 Expiry Year 2021 2022 2023 2027 2029 2030 Expiry Year 2022 2023 Expiry Year 2023 Expiry Year 2021 2022 2023 2024 2025 Expiry Year 2030 - 61 - Loss carryforwards as of December 31, 2020 pertaining to Sunplus mMedia: Unused Amount Expiry Year $ 109,040 35,847 30,658 29,360 27,164 11,155 9,369 57,427 25,045 335 $ 335,400 Loss carryforwards as of December 31, 2020 pertaining to Jumplux: Unused Amount $ 4,692 21,350 44,396 54,597 72,893 36,467 27,977 $ 262,372 f. Income tax assessments 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Expiry Year 2024 2025 2026 2027 2028 2029 2030 The income tax returns of Sunplus and Sunplus mMobile through 2017 and Sunplus Innovation Technology, Generalplus, Sunext ,Jumplux, Lin Shih, Sunplus mMedia ,Wei-Young, Sunplus Management Consulting and Sunplus Venture through 2018 have been assessed by the tax authorities. 26. EARNINGS PER SHARE Basic gain per share Diluted earnings per share Unit: NT$ Per Share For the Year Ended December 31 2020 2019 $ $ 0.55 0.55 $ $ 0.03 0.03 - 62 - The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows: Net profit for the year Profit for the year attributable to owners of the Company Effect of potentially dilutive ordinary shares Bonuses for employees For the Year Ended December 31 2020 2019 $ 323,403 $ 15,309 - - Earnings used in the computation of diluted EPS from continuing operations $ 323,403 $ 15,309 The weighted average number of ordinary shares outstanding (in thousand shares) is as follows: For the Year Ended December 31 2020 2019 Weighted average number of ordinary shares used in the computation of basic earnings per shares Effect of dilutive potential ordinary shares: Bonuses issued to employees 588,435 588,435 181 16 Weighted average number of ordinary shares used in the computation of diluted earnings per share 588,616 588,451 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 are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year. 27. SHARE-BASED PAYMENT ARRANGEMENTS a. Restricted shares for employees In the shareholders’ meeting of Sunplus Innovation Technology Company on June 22, 2020, the shareholders approved a restricted share plan for employees with a total amount of NT$20,000 thousand, consisting of 2,000 thousand shares. The aforementioned resolution was declared effectively by the FSC on October 12, 2020. The restricted share plan was approved by the board of directors in a total amount of NT$10,000 thousand, consisting of 1,000 thousand shares and the issuing price of each share was NT$0. The Company set October 28, 2020 as the grant date and November 5, 2020 as the record date of capital increase. The fair value of granted share was $75.26 per share. - 63 - After the restricted shares are allocated to employees in accordance with the Company’s regulations, and they are still working after the expiration of the following vested terms while they meet the performance conditions, the proportions of vested shares are as follows: 1) Those who served in the Company for a year after the grant date with recent personal performance rating before the expiration date reaches the top 35% (included) of the Company, will receive 50% of the number of allocated shares. 2) Those who served in the Company for two year after the grant date with recent personal performance rating before the expiration date reaches the top 35% (included) of the Company, will receive 50% of the number of allocated shares. When the employee fails to meet the vesting conditions: 1) Resignation (voluntary resignation/retirement/layoff/dismissal): The employee that has not fulfilled the vesting conditions will be deemed to have not met the vesting conditions from the day of resignation. The Company will buy back and cancel the employee’s restricted shares at the original issuing price according to the laws. 2) Unpaid leave: The employee that has not fulfilled the vesting conditions will be restored to the rights and interests from the date of reinstatement, but the vesting period shall be deferred according to the period of unpaid leave. 3) Death: The employee that has not fulfilled the vesting conditions will be deemed to have not met the vesting conditions from the day of death. The Company will buy back and cancel the employee’s restricted shares at the original issuing price according to the laws. 4) Occupational injury: a) Those who are unable to continue their employment due to occupational injury and have not fulfilled the vesting conditions shall still fulfill the vesting conditions according to regulation 3) Death. b) Death due to occupational injury may cause the employee not fulfilling the vesting conditions which shall be fulfilled by the heirs from the day of the death of the inherited employee according to regulation 3) Death. 5) Transfer employeement: If an employee is requested to transfer to an affiliate company or other company (except tranferring to a subsidiary), the restricted shares shall be proceed according to the regulation of "Resignation". However, due to Sunplus Innovation Technology Comapany’s operation need, employees for those who were assigned by Sunplus Innovation Technology Company to be transferred to the company's affiliates or other companies will not be affected. 6) Employees or their heirs shall receive the transferred shares according to the trust agreement. 7) Share dividends and cash dividends that have been allocated to employees who have not fulfilled the vesting conditions during the vesting period shall not be returned. The restrictions on the rights of the employees who acquire the restricted shares but have not met the vesting conditions are as follows: 1) The employees cannot sell, pledge, transfer, donate or, in any other way, dispose of these shares. 2) The employees holding these shares are not entitled to receive cash dividends and share dividends. - 64 - 3) Employees should immediately place the restricted shares under the trust or custody after the issuance of restricted shares. They shall not request the trustee or custodian to return the restricted shares for any reason before the vesting conditions are fulfilled. Other agreements were as follow: Sunplus Innovation Technology Company shall act on behalf of employees to negotiate with trust institutions or custodian institutions. It may include but not limited to negotiate, sign, revise, extend, cancel and terminate the trust contracts or custody contracts and instructions for the delivery, use and disposal of trust or custody property during the period of trust or custody. Information on employee restricted share was as follows: Outstanding shares at January 1 Shares granted Outstanding shares at December 31 For the Year Ended December 31, 2020 Number of Options (In Thousands of Units) - 1,000 1,000 Compensation costs recognized were NT$9,408 thousand for the years ended December 31, 2020. 28. GOVERNMENT GRANTS In August 2013, Sun Media Technology Co., Ltd. received a government grant amounting to RMB$16,390 thousand (NT$79,213 thousand) for the purchase of land on which to build a plant. The amount was recognized as deferred revenue and subsequently transferred to profit or loss over the useful life of the related asset. The total revenue recognized as profit for the years ended December 31, 2020 and 2019 was $1,559 and $1,629 thousand, respectively. The Company applied for subsidy under the "Salary and Working Capital Subsidies for Difficult Businesses Affected by Serious Special Infectious Pneumonia" program of the Ministry of Economic Affairs in June 2020. The subsidy period is from April 2020 to June 2020, and the Group has received a subsidy of $21,034 thousand. The total revenue recognized as profit amounted to $21,034 thousand for the year ended December 31, 2020 as other income. Jumplux Technology Co., Ltd. applied for subsidy under the "Salary and Working Capital Subsidies for Difficult Businesses Affected by Serious Special Infectious Pneumonia" program of the Ministry of Economic Affairs in June 2020. The subsidy period is from April 2020 to June 2020, and the Group has received a subsidy of $2,057 thousand. The total revenue recognized as profit amounted t $2,057 thousand for the year ended December 31, 2020 as other income. The Company applied for the AI on Chip R&D subsidy program of the Ministry of Economic Affairs, and the “Shared Intelligent Computing Chiplet Architecture R&D Program” was reviewed and approved on November 20, 2020. The approved total subsidy amounted to NT$ 115,356 thousand. As of December 31, 2020, the accumulated subsidy received is NT$ 44,201 thousand (recognized as other financial assets), and the income from the recognized subsidy is NT$ 0. In addition, the Company has a special account for subsidies in accordance with regulations, and the monthly withdrawal amount should be withdrawn according to the monthly expenditure summary statement, and the withdrawal amount shall not be higher than the expenditure amount. 29. CONSOLIDATION OF SUBSIDIARIES - 65 - a. Subsidiaries acquired Subsidiary Principal Activity Date of Acquisition Proportion of Voting Equity Interests Acquired (%) Consideration Transferred Worldplus and its subsidiaries Investment, development of computer software, system integration services and building rental b. Consideration transferred September 2, 2019 100 $ 112,669 Cash c. Assets acquired and liabilities assumed at the date of acquisition Current assets Cash and cash equivalents Trade and other receivables Non-current assets Property, plant and equipment Construction in progress Investment properties Current liabilities Trade and other payables Long-term payables d. Net cash outflow on the acquisition of subsidiaries Consideration paid in cash Less: Cash and cash equivalent balances acquired e. Impact of acquisitions on the results of the Group Net revenue Net loss Worldplus and Its Subsidiaries $ 112,669 Worldplus and Its Subsidiaries $ 64,454 428 377 17,088 37,383 (2,303) (4,758) $ 112,669 Worldplus and Its Subsidiaries $ 112,669 (64,454) $ 48,215 Worldplus and Its Subsidiaries $ $ 2,053 (2,582) If the merger of Worldplus and its subsidiaries occurred on January 1, 2019, the Japanese company’s proposed operating income and proposed operating net profit were $5,516,431 and $125,834, respectively, from January 1 to December 31, 2019. It is reflected that the actual revenue and operating results of the Company should not be used - 66 - as a predictor of future operating results. The original accounting treatment of Worldplus and its subsidiaries is only tentative on the balance sheet date. For the purpose of taxation, the tax base of Worldplus and its subsidiaries’ assets is subject to re-determination based on the market value of such assets and the taxable value of the company’s management. In determining the pro-forma revenue and profit of the Group had Worldplus and its subsidiaries been acquired at the beginning of the financial year, the management considered the following: 1) The fair values of property, plant and equipment, rather than their carrying amounts recognized in the respective pre-acquisition financial statements at the initial accounting for the business combination, were used as a basis for the depreciation of property, plant and equipment. 30. DISPOSAL OF SUBSIDIARIES 2020 a. Analysis of assets and liabilities from liquidation The Group completed the liquidation of its subsidiary, Ytrip Technology Co., Ltd. and its subsidiary 1culture Communication Co., Ltd. on June 23 and May 29, 2020, respectively. Current assets Cash and cash equivalents Other receivables Non-current assets Property, plant and equipment Intangible assets Current liabilities Others Net assets disposed of Ytrip Technology Co., Ltd. and Its Subsidiaries $ 2,106 281 15 1,814 (106) $ 4,110 - 67 - b. Gain on liquidation of subsidiaries Consideration received Net assets disposed of Reclassification of other comprehensive income in respect of the subsidiaries Non-controlling interests Gain on disposals c. Net cash inflow on liquidation of subsidiaries Consideration received Less: Cash and cash equivalent balances disposed of Ytrip Technology Co., Ltd. and Its Subsidiaries $ 1,240 (4,110) 10,283 382 $ 7,795 Ytrip Technology Co., Ltd. and Its Subsidiaries $ 1,240 (2,106) $ (866) 2019 The Group completed the liquidation on its subsidiary, Han Young Technology Co., Ltd. on November 15, 2019. a. Analysis of assets and liabilities from liquidation Current assets Cash and cash equivalents Other receivables Non-current assets Property, plant and equipment Refundable deposits Current liabilities Others Net assets disposed of Hanyang Technology Co., Ltd. $ 2,481 7 29 55 (29) $ 2,543 - 68 - b. Loss on liquidation of subsidiaries Consideration received Net assets disposed of Non-controlling interests Loss on disposal c. Net cash inflow on liquidation of subsidiaries Consideration received Less: Cash and cash equivalent balances disposed of Hanyang Technology Co., Ltd. $ 1,737 (2,543) 763 $ (43) Hanyang Technology Co., Ltd. $ 1,737 (2,481) $ (744) 31. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS From January to March, April and September, 2019, Sunplus purchased the equity from the external shareholders of Sunext Technology Co., Ltd. increasing its controlling interest from 91.40% to 91.47%, 91.47% to 91.53% and 91.53% to 92.55%, respectively. In February, May and December 2019 and June 2020 Giant Rock subscribed for additional new shares of Sunplus APP Technology, and increased Giant Rock’s controlling interest from 93.33% to 95.00%, 95.00% to 95.65%, 95.65% to 96.16% and 96.16% to 96.32%, respectively. In September 2020, Sunplus disposed of its 2.92% share in Sunplus Innovation Technology Company, resulting in a decrease in its controlling interest from 68.86% to 65.94%. The above transactions were accounted for as equity transactions since the Group did not cease to have control over these subsidiaries. 2020 Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Reattribution of other equity from non-controlling interests Unrealized loss on financial assets at FVTOCI Sunplus Innovation Technology Inc. Sunplus App Technology $ 101,014 $ - (31,770) (2,112) (183) - Differences recognized from equity transactions $ 67,132 $ (183) - 69 - Line items adjusted for equity transactions Retained earnings Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition 2019 Sunplus Innovation Technology Inc. Sunplus App Technology Total $ - $ (183) $ (183) 67,132 - 67,132 $ 67,132 $ (183) $ 66,949 Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary transferred to non-controlling interests Sunext Technology Co., Ltd. Sunplus App Technology $ (2,184) $ - 2,346 (3,394) Differences recognized from equity transactions $ 162 $ (3,394) Line items adjusted for equity transactions Retained earnings Capital surplus - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Sunext Technology Co., Ltd. Sunplus App Technology Total $ - $ (3,394) $ (3,394) 162 - 162 $ 162 $ (3,394) $ (3,232) 32. 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 stakeholders through the optimization of the debt and equity balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Group (comprising issued capital, reserves, retained earnings and other equity) attributable to owners of the Group. The Group is not subject to any externally imposed capital requirements. - 70 - 33. FINANCIAL INSTRUMENTS a. Fair value of financial instruments that are not measured at fair value The management of the Group considers that the fair values of financial assets and financial liabilities that are not measured at fair value approximate their fair values. b. Fair value of financial instruments that are measured at fair value on recurring basis. 1) Fair value hierarchy December 31, 2020 Financial assets at FVTPL Mutual funds Domestic/foreign unlisted shares Domestic/foreign listed shares Securities listed in the ROC and other countries - CB Private funds Financial assets at FVTOCI Domestic listed shares Domestic private listed shares Domestic/foreign unlisted shares December 31, 2019 Financial assets at FVTPL Mutual funds Domestic/foreign listed shares Domestic/foreign unlisted shares Securities listed in the ROC and other countries - CB Private funds Level 1 Level 2 Level 3 Total $ 656,424 $ - $ - $ 656,424 144,984 87,933 2,820 - - - - - 746,101 891,085 - 87,933 - 327,856 2,820 327,856 $ 892,161 $ - $ 1,073,957 $ 1,966,118 $ 81,506 $ - $ - $ 81,506 - 32,323 - - 11,255 67,444 11,255 99,767 $ 113,829 $ - $ 78,699 $ 192,528 Level 1 Level 2 Level 3 Total $ 1,062,811 $ - $ - $ 1,062,811 75,715 7,864 15,123 - - - - - - 75,715 696,471 704,335 - 260,140 15,123 260,140 $ 1,161,513 $ - $ 956,611 $ 2,118,124 (Continued) - 71 - Level 1 Level 2 Level 3 Total Financial assets at FVTOCI Domestic listed shares Domestic/foreign unlisted shares $ 90,472 $ - $ - $ 90,472 18,680 - 80,235 98,915 $ 109,152 $ - $ 80,235 $ 189,387 (Concluded) There were no transfers between Levels 1 and 2 in the current and prior periods. 2) Reconciliation of Level 3 fair value measurements of financial instruments For the Year Ended December 31, 2020 Financial Assets Financial Assets at FVTPL Financial Assets at FVTOCI Total Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Purchases Disposals and proceeds from return of capital $ of investments Transfer out of Level 3 Effect of exchange rate changes $ 956,611 140,724 - 116,624 (5,548) (131,355) (2,739) 80,235 - (7,386) 10,004 $ 1,036,846 140,724 (7,386) 126,268 (2,628) - (1,526) (8,176) (131,355) (4,265) Balance at December 31, 2020 $ 1,073,957 $ 78,699 $ 1,152,656 For the Year Ended December 31, 2019 Financial Assets Financial Assets at FVTPL Financial Assets at FVTOCI Total Balance at January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income Purchases Disposals and proceeds from return of capital $ of investments Reclassified Effect of exchange rate changes $ $ 662,584 (25,062) - 328,054 (5,963) - (3,002) 110,671 - (35,402) - (24,604) 30,001 (431) 773,255 (25,062) (35,402) 328,054 (30,567) 30,001 (3,433) Balance at December 31, 2019 $ 956,611 $ 80,235 $ 1,036,846 3) Valuation techniques and inputs applied for Level 3 fair value measurement a) The fair values of unlisted equity securities - in the ROC and other countries were determined using the market approach. The market approach is based on the comparable transaction price of the target, based on the financial data of the target company and its peers, and analyzes and evaluates by market multipliers such as P/E ratio, P/B ratio, price-to-sales ratio or other financial ratios. The significant unobservable inputs used are as follows. An increase in the price-to-book ratio or price-sales ratio or a decrease in the discount for lack of marketability used in isolation would result in increases in fair value. December 31 - 72 - Price-to-book ratio Price-to-sales ratio Discount for lack of marketability 2020 2019 2.41-5.78 1.86-13.46 10%-20% 1.85-4.42 2.27-6.37 10%-20% b) The fair values of unlisted shares and emerging market shares were determined using the asset-based approach. The Group assesses that the amount of its net assets attributable to its investment approaches the fair value of the equity investment. The Group assesses the total value of the individual assets and liabilities covered by the target to reflect the overall value of the business. c) The fair values of unlisted shares and emerging market shares were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees. The significant unobservable inputs used are listed in the table below. An increase in long-term revenue growth rates or a decrease in the weighted average cost of capital (WACC) or discount for lack of marketability used in isolation would result in increases in fair value. c. Categories of financial instruments Financial assets Fair value through profit or loss (FVTPL) Financial assets at amortized cost (1) Financial assets at fair value through other comprehensive income Equity instruments Financial liabilities December 31 2020 2019 $ 1,966,118 5,179,818 $ 2,118,124 4,147,636 192,528 189,387 Measured at amortized cost (2) 1,214,367 889,360 1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes and trade receivables, other receivable, other financial assets and refundable deposits. 2) The balances include financial liabilities at amortized cost, which comprise short-term and long-term loans, trade payables, long-term loans due within one year and guarantee deposits. d. Financial risk management objectives and policies The Group’s major financial instruments included mutual funds equity and debt investments, convertible notes, trade receivable, trade payables, borrowings and lease liability. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Corporate Treasury function reported quarterly to the Group's risk management committee. 1) Market risk The Group's activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). The Group entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including: - 73 - a) Foreign currency risk A part of the Group’s cash flows is in foreign currency, and the use by management of derivative financial instruments is for hedging adverse changes in exchange rates, not for profit. For exchange risk management, each foreign-currency item of net assets and liabilities is reviewed regularly. In addition, before obtaining foreign loans, the Group considers the cost of the hedging instrument and the hedging period. The carrying amounts of the Group's foreign currency-denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period were refer to Note 36. Sensitivity analysis The Group was mainly exposed to the USD and RMB. The following table details the Group sensitivity to a US$1.00 and RMB1.00 increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies. The sensitivity analysis considers the currencies of USD and RMB in circulation, and adjusts the end-of-term conversion to exchange rate change of $1.00. The sensitivity analysis covers cash and cash equivalents, notes and accounts receivable, other receivables, other financial assets, long-term and short-term loans, accounts payable, other accounts payable and deposit margins. A negative number below indicates a decrease in post-tax profit associated with the New Taiwan dollar strengthening $1.00 against USD and RMB. For a $1.00 weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on post-tax profit, and the balances below would be positive. Profit or loss $ (13,719) $ (18,017) USD Impact For the Year Ended December 31 2020 2019 Profit or loss b) Interest rate risk RMB Impact For the Year Ended December 31 2020 2019 $ 4,320 $ 244 The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts and forward interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows: Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets - 74 - December 31 2020 2019 $ 2,585,743 518,255 $ 2,505,022 565,762 1,321,455 769,506 Financial liabilities Sensitivity analysis 258,000 - The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. Basis points of 0.125% increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates. If interest rates had been increased/decreased by 0.125% and all other variables held constant, the Group’s post-tax profit for the years ended December 31, 2020 and 2019 would increase/decrease by $1,329 thousand and $962 thousand, respectively. c) Other price risk The Group was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments. The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period. Had the prices of financial assets at FVTPL been 1% higher/lower, post-tax profit for the year ended December 31, 2020 and 2019 would have increased/decreased by $19,661 and $21,181 thousand, respectively. Had the prices of financial assets at FVTOCI been 1% higher/lower, post-tax profit for the year ended December 31, 2020 and 2019 would have increased/decreased by $1,925 and $1,894 thousand, respectively. 2) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group is arising from the carrying amount of the respective recognized financial assets as stated in the balance sheets. In order to minimize credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Group consider that the Group’s credit risk was significantly reduced. The credit risk on liquid funds and derivatives was limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of trade receivables and, where appropriate, credit guarantee insurance cover is purchased. The Group’s concentration of credit risk of 65% and 75% in total trade receivables as of December 31, 2020 and 2019, respectively, was related to the five largest customers within the property construction business segment. 3) Liquidity risk - 75 - 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. The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2020 and 2019, the Group had available unutilized overdraft and financing facilities refer to the following instruction. a) Liquidity and interest risk rate tables The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had 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 tables included both interest and principal cash flows. December 31, 2020 Non-derivative financial liabilities On Demand or Less than 1 Month 1-3 Months More than 3 Months to 1 Year Over 1 Year to 5 Years 5+ Years Non-interest bearing Lease liabilities Variable interest rate liabilities Fixed interest rate liabilities $ 337,374 $ 196,200 $ 308 $ 1,506 96 189,117 3,413 - - 13,651 25,000 125,102 36,114 $ 53,085 205,000 5,041 - 256,641 - 140,367 $ 528,093 $ 199,613 $ 164,061 $ 299,240 $ 397,008 Additional information about the maturity analysis for lease liabilities: Less than 1 Year 1-5 Years 5-10 Years 10-15 Years 15-20 Years 20+ Years Lease liabilities $ 18,570 $ 53,085 $ 49,046 $ 49,046 $ 41,689 $ 116,860 December 31, 2019 Non-derivative financial liabilities On Demand or Less than 1 Month 1-3 Months More than 3 Months to 1 Year Over 1 Year to 5 Years 5+ Years Non-interest bearing Lease liabilities Fixed interest rate liabilities $ 271,434 $ 172,191 $ - $ - $ 1,414 179,756 3,109 23,984 13,074 120,130 58,541 4,922 - 266,450 142,928 $ 452,604 $ 199,284 $ 133,204 $ 63,463 $ 409,378 Additional information about the maturity analysis for lease liabilities: Less than 1 Year 1-5 Years 5-10 Years 10-15 Years 15-20 Years 20+ Years Lease liabilities $ 17,597 $ 60,032 $ 49,046 $ 49,046 $ 43,896 $ 122,971 - 76 - b) Financing facilities Unsecured bank overdraft facility, review annually and payable on demand Amount used Amount unused December 31 2020 2019 $ 588,140 4,361,912 $ 323,626 4,515,381 $ 4,950,052 $ 4,839,007 34. TRANSACTIONS WITH RELATED PARTIES Balances and transactions between the Company and its subsidiaries had been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. a. Name and relationship of related parties Name Relationship with the Group Global View Co., Ltd. Beijing Golden Global View Co., Ltd. iCatch Technology, Inc. Advanced Vehicle Systems Co., Ltd. Associate Associate (Note 1) Associate Associate (Note 2) Note 1: It is an associate of the Company; subsidiary of Global View Co., Ltd. Note 2: It is an associate of the company; subsidiary of AutoSys Co., Ltd. - 77 - b. Sales of goods Line Items Related Party Categories 2020 2019 For the Year Ended December 31 Sales Associates $ 54,743 $ 54,712 Sales price to related parties is based on cost and market price. The sales terms to related parties were similar to those with external customers. c. Receivables from related parties (excluding loans to related parties) Account Item Related Party December 31 2020 2019 Trade receivables Associates $ 9,740 $ 11,645 Other trade receivable Associates $ 243 $ 280 There were no guarantees on outstanding receivables from related parties. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for trade receivables from related parties. d. Prepayments (excluding loans to related parties) Line Item Related Party Category 2020 2019 December 31 Other current assets Associate $ 108 $ - e. Other transactions with related parties Account Item Related Parties Types 2020 2019 December 31 Operating expenses Associates $ 394 $ 139 Non-operating income and Associates $ 4,504 $ 10,228 expenses Administrative support services price between the Group and the related parties were negotiated and were thus not comparable with those in the market. There are no other available transactions to be compared with. The pricing and the payment terms of the lease contract between the Group and the related parties were similar to those with external customers. f. Compensation of key management personnel Short-term employee benefits Post-employment benefits For the Year Ended December 31 2020 2019 $ 48,716 1,193 $ 50,100 1,297 $ 49,909 $ 51,397 The remuneration of directors and other key management personnel was determined by the Compensation Committee in accordance with individual performance and market trends. 35. PLEDGED OR MORTGAGED ASSETS - 78 - The following assets of the Company have been pledged or mortgaged as guarantees for endorsement, loan, purchase quota, leased land and customs clearance: Buildings, net Pledged time deposits (classified as other financial assets, including current and non-current) December 31 2020 2019 $ 576,333 $ 595,735 149,729 130,819 $ 726,062 $ 726,554 36. EXCHANGE RATE OF FINANCIAL 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 of the entities in the Group and the related exchange rates between the foreign currencies and the respective functional currencies were as follows: December 31, 2020 Financial assets Monetary items USD CNY JPY HKD GBP EUR Nonmonetary items CHF Financial liabilities Monetary items USD CNY Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 40,747 1,519 371 152 3 1 28.4800 4.3770 0.2763 3.6730 38.9000 35.0200 $ 1,160,475 6,649 103 558 117 35 560 32.305 18,089 27,028 5,839 28.4800 4.3770 769,757 26,083 - 79 - December 31, 2019 Financial assets Monetary items USD CNY JPY HKD GBP EUR Nonmonetary items USD CHF Financial liabilities Monetary items USD CNY JPY Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 44,893 1,399 391 173 3 1 28 734 26,876 1,643 241 29.980 4.305 0.276 3.849 39.360 33.590 30.620 30.925 $ 1,345,892 6,023 108 666 118 34 848 22,705 29.980 4.305 0.276 805,742 7,073 67 For the years ended December 31, 2020 and 2019, (realized and unrealized) net foreign exchange losses were NT$10,900 thousand and NT$27,640 thousand, respectively. It is impractical to disclose net foreign exchange losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group. 37. ADDITIONAL DISCLOSURES a. Information about significant transactions and investees and b. Information on investees: 1) Financings provided: Table 1 (attached) 2) Endorsement/guarantee provided: Table 2 (attached) 3) Marketable securities held: Table 3 (attached) 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4 (attached) 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: No. 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: No. 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: No. 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: No. 9) Trading in derivative instruments: No. - 80 - 10) Intercompany relationships and significant intercompany transactions: Table 5 (attached) 11) Information on investee: Table 6 (attached) 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 period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7) 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (Table 8) a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. c) The amount of property transactions and the amount of the resultant gains or losses. d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes. e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds. f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services. d. Information of major shareholders：List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 9) Except for Table 1 to Table 9, there’s no further information about other significant transactions. 38. SEGMENT INFORMATION Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on types of goods provided. Since all products have similar economic characteristics and product selling is centralized, the Group reports information as referring to one segment. Thus, the information of the operating segment is the same as that presented in the accompanying financial statements. That is, the revenue by sub segment and operating results for the years ended December 31, 2020 and 2019 are shown in the accompanying consolidated income statements, and the assets by segment as of December 31, 2020 and 2019 are shown in the accompanying consolidated balance sheets. - 81 - a. Segment revenues and results The following was an analysis of the Group’s operating revenue and results by reportable segment. IC design Income from lease of property, plant, and equipment Other income Segment Revenue For the Year Ended December 31 2020 2019 $ 6,084,210 230,273 99,657 $ 5,085,074 265,330 136,256 $ 6,414,140 $ 5,486,660 b. Geographical information The Group operates in two principal geographical areas - the Asia and Taiwan. The Group’s revenue from external customers by location of operations and information about its non-current assets by location of assets is detailed below. Revenue from External Customers For the Year Ended December 31 Non-current Assets For the Year Ended December 31 2020 2019 2020 2019 Asia Taiwan Others $ 3,816,229 2,536,578 $ 3,474,148 1,955,083 $ 2,099,018 1,445,646 $ 2,159,216 1,294,531 61,333 57,429 - - $ 6,414,140 $ 5,486,660 $ 3,544,664 $ 3,453,747 Non-current assets exclude non-current assets held for sale, financial instruments, deferred tax assets, post-employment benefits assets, and assets result from insurance contracts. c. Information about major customers Single customers contributing 10% or more to the Group’s revenue were as follows: Customer A Customer B Customer C For the Year Ended December 31 2020 2019 $ 1,011,656 790,658 697,017 $ 844,237 Note 651,715 Note: The amount of revenue does not reach 10% of the company’s net revenue. - 82 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES FINANCINGS PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) No. Lender Borrower Financial Statement Account Related Parties Highest Balance for the Period Ending Balance Actual Borrowing Amount Interest Rate Nature of Financing Business Transaction Amounts Reasons for Short-term Financing Allowance for Bad Debt Collateral Item Value Financing Limit for Each Borrower Aggregate Financing Limit 2 Sunplus Technology (Shanghai) Co., Ltd. 3 Russell Holdings Ltd. Sunplus APP Technology Sun Media 4 Sunplus Venture Capital Co., Ltd. Technology Co., Ltd. Sun Media Technology Co., Ltd. 5 Sunplus Prof-tek Technology (Shenzhen) 6 Lin Shih Investments co., Sunplus APP Technology Sun Media Ltd. Technology Co., Ltd. Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties Yes $ 12,522 $ 12,256 $ 12,256 1.80% Note 1 $ Yes 379,155 242,080 242,080 - Note 1 Yes 307,005 158,064 158,064 0.65% Note 1 Yes Yes 39,354 36,986 36,986 1.80% Note 1 220,157 102,528 102,528 0.65% Note 1 - - - - - Note 2 $ 12,256 Note 3 Note 4 Note 5 Note 6 - - 36,986 - - - - - - $ - $ - - - - $ 45,678 (Note 7) 442,278 (Note 8) 348.080 (Note 9) 75,045 (Note 10) 334,800 (Note 11) 45,678 (Note 7) 442,278 (Note 8) 348.080 (Note 9) 75,045 (Note 10) 334,800 (Note 11) TABLE 1 Note 1: Short-term financing. Note 2: Sunplus Technology (Shanghai) Co., Ltd. provided funds for the operating needs of Sunplus APP Technology. Note 3: Russell Holdings Ltd. provided funds for the operating needs of Sun Media Technology Co., Ltd. Note 4: Sunplus Venture Capital provided funds for the operating needs of Sun Media Technology Co., Ltd. Note 5: Sunplus Prof-tek Technology (Shenzhen) provided funds for the operating needs of Sunplus APP Technology. Note 6: Lin Shin Investments Co., Ltd. provided funds for the operating needs of Sun Media Technology Co., Ltd. Note 7: The total amount of all guarantees issued and the individual amount of each guarantee should not exceed 10% Sunplus Technology (Shanghai) Co., Ltd.’s net equity as of its latest financial statement. Note 8: Russell Holdings Ltd. and the loans are all foreign companies whose parent company directly and indirectly holds 100% of the voting shares. When the short-term financing funds need to be engaged in capital lending, the capital loan and the individual amount and total amount should not exceed the capital loan. The enterprise's net worth should not exceed to 80%, and its period should not exceed more than 2 years. Note 9: The total amount of all guarantees issued and the individual amount of each guarantee should not exceed 40% of Sunplus Venture Capital Co., Ltd.’s net equity as of its latest financial statements. Note 10: The total amount of all guarantees issued and the individual amount of each guarantee should not exceed 10% of Sunplus Prof-tek Technology (Shenzhen)’s net equity as of its latest financial statement. Note 11: The total amount of all guarantees issued and the individual amount of each guarantee should not exceed 40% of Lin Shih Investments Co., Ltd.’s net equity as of its latest financial statement. - 83 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Endorsee/Guarantee No. Endorser/ Guarantor Name Nature of Relationship Limits on Endorsement/ Guarantee Given on Behalf of Each Party Maximum Balance for the Period Ending Balance Actual Borrowing Amount Value of Collateral Property, Plant, or Equipment Percentage of Accumulated Amount of Collateral to Net Equity as of the Latest Financial Statements 0 (Note 1) 1 (Note 2) Sunplus Sun Media Technology Co., Ltd. 3 (Note 3) RUSSELL Sun Media Technology Co., Ltd. 3 (Note 3) HOLDINGS LTD. $ 841,376 (Note 4) 331,708 (Note 6) $ 169,365 $ - $ - $ - - 122,860 113,920 113,920 113,920 20.61 Note 1: Issuer. Note 2: Investee. Note 3: Sunplus and its subsidiaries jointly hold more than 50% of the ordinary shares of the endorsee. Note 4: For each transaction entity, the guarantee amount should not exceed 10% of the endorsement/guarantee provider’s net equity based on the provider’s latest financial statements. Note 5: The guarantee amount should not exceed 20% of the endorsement/guarantee provider’s net equity based on the provider’s latest financial statements. TABLE 2 Maximum Collateral/ Guarantee Amounts Allowable $ 1,682,753 (Note 5) 331,708 (Note 6) Provided by the Company Guarantee Provided by the Subsidiary Guarantee Provided to a Subsidiary Located in Mainland China Yes No No No Yes Yes Note 6: Russell Holdings Ltd. and the endorsement guaranty object are the parent company which holds 100% voting rights directly or indirectly. For each transaction entity, the guarantee amount should not exceed 60% of the endorsement/guarantee provider’s net equity. - 84 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES MARKETABLE SECURITIES HELD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise, U.S. Dollars and Renminbi in Thousands) Holding Company Name Type and Name of Marketable Security Relationship with the Holding Company Financial Statement Account Shares or Units (In Thousands) Carrying Amount Percentage of Ownership (%) Market Value or Net Asset Value December 31, 2020 Sunplus Technology Company Limited (the “Company”) Lin Shih Investment Co., Ltd. Yuanta USD Money Market USD Yuanta Emerging Asia USD Bond Fund Pine Bridge Muliti-Income Fund Taishin 1699 Money Market Evergreen Steel Co., Ltd. Triknight Capital Corporation Marvest Series 1 Fund Yuanta Emerging Indonesia and India 4 years Bond Fund Taiwan Mask Corp. UPI Semiconductor Corp. A-Spine Asia Co., Ltd. Enterex International Limited - CB Yong Feng Yu Inc. Minton Optic Industry Co., Ltd. Genius Vision Digital Co., Ltd. Sanjet Technology Corporation Ortery Technologies, Inc. Lead Sun Corporation Chain Sea Information Integration Co., Ltd. AIII CO., Ltd. GEMFOR Leading Financial Solution Provider Fund Ability Enterprise Co., Ltd. Sunplus Technology Co., Ltd. Prine Rich International Co., Ltd. - - - - - - - - - - - - - - - - - - - - - Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current - Parent company - Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current $ 99 139 95 2,200 1,500 29,825 2 1,500 101 300 197 30 642 4,272 300 8 103 1,000 48 26 13 5,434 3,560 33 29,943 44,044 30,818 30,027 69,090 311,021 - 14,849 4,075 48,600 11,135 2,820 29,834 - - - - 28,130 474 431 216 81,506 65,148 4,260 - - - - - 5 - - - - - - - 7 4 - 1 12 1 - - 2 1 - $ 29,943 44,044 30,818 30,027 69,090 311,021 - 14,849 4,075 48,600 11,135 2,820 29,834 - - - - 28,130 474 431 216 81,506 65,148 4,260 TABLE 3 Note Note 3 Note 3 Note 3 Note 3 Note 4 Note 1 Note 1 Note 3 Note 2 Note 1 Note 1 Note 2 Note 4 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 Note 2 Note 1 (Continued) - 85 - Holding Company Name Type and Name of Marketable Security Relationship with the Holding Company Financial Statement Account Shares or Units (In Thousands) Carrying Amount Percentage of Ownership (%) Market Value or Net Asset Value December 31, 2020 Russell Holdings Limited Sunplus Venture Capital Co., Ltd. Synerchip Inc. OZ Optics Limited Ortega InfoSystem, Inc. Innobrige International Inc. Ether Precision Inc. Asia Tech Taiwan Venture, L.P. Asia B2B on Line Inc. AMED Ventures I, L.P. Intudo Ventures II, L.P. GeneOne Diagnostics Corporation Charles Schwab - Money Fund Taiwan Mask Corp. eWave System, Inc. VenGlobal International Fund Book4u Company Limited Sanjet Technology Corp. Simple Act Inc. Minton Optic Industry Co., Ltd. Genius Vision Digital Co., Ltd. Ortery Technologies, Inc. CYBERON Corporation Grand Fortune Venture Capital Co., Ltd. Huijia Health Life Technology San Neng Group Holding Co., Ltd. Raynergy Tek Inc. - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTOCI - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL- non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current $ 6,452 1,000 2,557 4,000 1,250 - 1,000 - - 1,710 - 108 1,833 1 9 49 1,900 5,000 375 68 786 5,000 1,000 900 5,210 - - - - - - - 14,100 57,045 19,651 1,934 4,358 - - - - - - - - 24,080 55,735 17,280 35,190 75,962 12 8 - 15 1 5 3 2 6 13 - - 22 - - - 10 8 5 1 8 7 5 1 15 $ - - - - - - - 14,100 57,045 19,651 1,934 4,358 - - - - - - - - 24,080 55,735 17,280 35,190 75,962 Note Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 Note 1 (Continued) - 86 - Holding Company Name Type and Name of Marketable Security Relationship with the Holding Company Financial Statement Account Shares or Units (In Thousands) Carrying Amount Percentage of Ownership (%) Market Value or Net Asset Value December 31, 2020 Sunplus Venture Capital Co., Ltd. Wei-Young Investment Inc. Fuyou Venture Capital Limited Partnership CDIB Capital Growth Partners L.P. TIEF Fund LP Intudo Ventures I, L.P. Promise Technology Inc. Feature Integration Technology Inc. Qun-Kin Venture Capital Protect Life International Biomedical Inc. ASE Industrial Holding Co., Ltd. LITE-ON Technology Corporation Sunplus Technology (Shanghai) Co., Ltd. GF Live Treasury Currency B GF Every Day The Red Haired Type Money Market Fund B Chongqing CYIT Communication Technology Co., Ltd. Ready Sun Investment Group Fund Xiamen Xm-plus Technology Ltd. Franklin Templeton SinoAm Money Market Mega Diamond Money Market Yuata De-Bao Money Market Fund Yuanta Wan Tai Money Market Fund Fuh Hwa You Li Money Market Taishin Ta-Chong Money Market Fund Taishin 1699 Money Market Advanced Silicon SA Advanced NuMicro System, Inc. PointGrab Ltd. GTA Co., Ltd. Xiamen Xm-plus Technology Ltd. Evergeen Steel Co., Ltd. Generalplus Technology Inc. Sunplus Innovation Technology Inc. Magic Sky Limited Giant Rock Inc. Sunext Technology Co., Ltd. - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTOCI - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current Financial assets at FVTPL - current $ - - - - 962 1,247 3,000 1,364 300 400 5,100 900 - - - 8,725 810 6,610 3,933 6,658 4,192 5,877 1,000 2,000 182 1,413 - 1,000 34,649 67,035 40,506 44,862 11,255 32,323 22,114 3,330 24,390 19,200 22,339 3,980 - 41,529 39,692 90,988 10,246 80,043 60,003 90,402 60,029 80,192 18,089 - - - 161,475 46,060 10 2 7 8 - 4 6 4 - - - - 3 16 3 - - - - - - - 10 8 1 - 13 - - 87 - Note Note 1 Note 1 Note 1 Note 1 Note 1 Note 4 Note 1 Note 1 Note 2 Note 2 Note 3 Note 3 $ 34,649 67,035 40,506 44,862 11,255 32,323 22,114 3,330 24,390 19,200 22,339 3,980 - Note 1 41,529 39,692 90,988 10,246 80,043 60,003 90,402 60,029 80,192 18,089 - - - 161,475 46,060 Note 1 Note 1 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 1 Note 1 Note 1 Note 1 Note 1 Note 4 (Continued) Holding Company Name Type and Name of Marketable Security Relationship with the Holding Company Financial Statement Account Shares or Units (In Thousands) Carrying Amount Percentage of Ownership (%) Market Value or Net Asset Value Note December 31, 2020 Jslilicon Technology Co., Ltd. (Ru Dong) GF Live Treasury Currency A GF Every Day The Red Haired Type Money Market Fund B GF Purse Money Market Fund A - - - Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current $ 500 500 500 2,196 2,196 2,195 - - - $ 2,196 2,196 Note 3 Note 3 2,195 Note 3 Note 1: The market value was based on the carrying amount as of December 31 2020. Note 2: The market value was based on the closing price as of December 31, 2020. Note 3: The market value was based on the net asset value of the fund as of December 31, 2020. Note 4: The market value was based on the average quoted price as of December 31, 2020. (Concluded) - 88 - SUMPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Company Name Type and Name of Marketable Securities Financial Statement Account Counterparty Relationship Beginning Balance Acquisition (Note 1) Disposal (Note 2) Ending Balance (Note 3) Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Disposal Number of Shares Amount Sunplus Innovation Technology Inc. Yuanta De-Bao Money Financial assets at fair Market Fund value through profit or loss-current - $ - - $ - 13,227 $ 160,000 6,617 $ 80,028 $ 80,000 $ 28 6,610 $ 80,043 Note 1: The cumulative amount of buying and selling should be calculated separately at market price whether it reaches NT$ 300 million or 20% of the paid-in capital。 Note 2: Paid-in capital refers to the paid-in capital of Sunplus Innovation Technology Inc. Note 3: The amount of ending balance includes the amount of unrealized gains and losses。 TABLE 4 - 89 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Company Name Counterparty Sunplus Technology Co., Ltd. (the “Company”) Generalplus Technology Inc. Sunext Technology Co., Ltd. Sunplus Innovation Technology Inc. Jumplux Technology Co., Ltd. Genki Tek Co. Chongqing CQPlus1 Technology Co., Ltd. Sunplus Innovation Technology Inc. Sun Media Technology Co., Ltd. Generalplus Technology Inc. Generalplus Technology (H.K.) Inc. Sunplus Prof-tek (Shenzhen) Co., Ltd. Generalplus Technology (Shenzhen) Inc. Sunplus Innovation Technology Inc. Sunplus Technology (Shanghai) Co., Ltd. SunMedia Technology Co., Ltd. Jumplux Technology Co., Ltd. TABLE 5 Flow of Transactions (Note 5) Financial Statement Account Item Amount Terms Percentage of Consolidated Total Gross Sales or Total Assets Intercompany Transactions 1 1 1 1 1 1 2 2 2 2 2 2 2 Sales Notes and accounts receivable Other receivable Non-operating income Sales Non-operating income Notes and accounts receivable Other receivable Cost of goods sold Sales Non-operating income Research and development expenses Notes and accounts receivable Other receivables Sales Non-operating income Notes and accounts receivable Other receivables Other receivables Non-operating income Cost of goods sold Other payables Other payables Marketing expenses Other payables Marketing expenses Marketing expenses Other payables Sales Research and development expenses Other payables Sales Notes and accounts receivable Other payables Research and development expenses Sales - 90 - $ 4,458 Note 1 954 Note 1 3 Note 3 141 Note 3 181 Note 1 1,692 Note 2 58 Note 1 301 Note 3 60 Note 2 376 Note 1 3,827 Note 2 35 Note 2 63 Note 1 281 Note 3 3,090 Note 1 16,938 Notes 2 and 4 330 Note 1 1,253 Note 3 100 Note 3 885 Note 2 2,346 Note 2 525 Note 1 1,120 Note 3 4,149 Note 2 8,716 Note 3 23,833 Note 2 12,292 Note 2 2,867 Note 3 16,796 Note 2 70,195 Note 2 16,646 Note 3 18 Note 1 9 Note 3 1,640 Note 3 1,610 Note 2 3,368 Note 1 0.07% 0.01% - - - 0.03% - - - 0.01% 0.06% - - - 0.05% 0.26% - 0.01% - 0.01% 0.04% - 0.01% 0.06% 0.07% 0.37% 0.19% 0.02% 0.26% 1.09% 1.32% - - 0.01% 0.03% 0.05% (Continued) Company Name Counterparty Sunplus Technology (Shanghai) Co., Ltd. Sunplus Technology (Beijing) Chongqing CQPlus1 Technology Co., Ltd. Jumplux Technology Co., Ltd. Lin Shih Investment Co., Ltd. Jsilicon Technology Co., Ltd. (Ru Domng) Sun Media Technology Co., Ltd. Sunplus Venture Capital Co., Ltd. Sun Media Technology Co., Ltd. Russell Holdings Limited Sunplus Technology (Beijing) Sunplus App Technology Sun Media Technology Co., Ltd. Chongqing CQPlus1 Technology Co., Ltd. Sunplus Technology (Beijing) Flow of Transactions (Note 5) Financial Statement Account Item Amount Terms Percentage of Consolidated Total Gross Sales or Total Assets Intercompany Transactions 2 2 2 2 2 2 2 2 Other payables Research and development expenses Other payables Research and development expenses Sales Other receivables Interest revenue Other receivables Interest revenue Other receivables Sales Management expenses Refundable deposits Other current assets $ 294 Note 3 366 Note 2 1,377 Note 3 1,331 Note 2 23,636 Note 1 102,836 Note 3 1,343 Note 2 158,530 Note 3 2,498 Note 2 242,756 Note 3 701 Note 1 783 Note 2 52 Note 2 104 Note 2 - 0.01% 0.01% 0.02% 0.37% 0.81% 0.02% 1.26% 0.04% 1.92% 0.01% 0.01% - - Note 1: The transactions were based on normal commercial prices and terms. Note 2: The prices were based on negotiations; the payment period and related terms were not comparable to market terms. Note 3: The transaction payment terms were similar to normal commercial terms. Note 4: Lease transaction terms were based on negotiations, and were thus not comparable to market terms. The transactions between the Company and counterparty were made under normal terms. Note 5: 1 - From parent company to subsidiary. 2 - Between subsidiaries. (Concluded) - 91 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Investor Investee Location Main Businesses and Products Investment Amount Balance as of December 31, 2020 December 31, 2020 December 31, 2019 Shares (In Thousands) Percentage of Ownership (%) Carrying Amount Net Income (Loss) of the Investee Investment Gain (Loss) Note TABLE 6 Sunplus Technology Company Limited Ventureplus Group Inc. Award Glory Ltd. Belize Belize Investment Investment Global View Co., Ltd. Hsinchu, Taiwan Consumer electronics, components and rental Lin Shih Investment Co., Ltd. Generalplus Technology Inc. Sunplus Venture Capital Co., Ltd. Sunplus Innovation Technology Inc. Russell Holdings Limited iCatch Technology, Inc. Sunext Technology Co., Ltd. Sunplus mMedia Inc. Sunplus Management Consulting Inc. Sunplus Technology (H.K.) Co., Ltd. Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Cayman Islands, British West Indies Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Kowloon Bay, Hong Kong Magic Sky Limited Samoa Sunplus mMobile Inc. Wei-Young Investment Inc. Jumplux Technology Co., Ltd. Generalplus Technology Inc. Sunplus Innovation Technology Inc. iCatch Technology, Inc. Sunplus mMedia Inc. Yizhiliang Accelerator Co., Ltd. Jumplux Technology Co., Ltd. Sunplus Innovation Technology Inc. iCatch Technology, Inc. Sunplus mMedia Inc. Genki Tek Co. Yizhiliang Accelerator Co., Ltd. Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Taipei, Taiwan Hsinchu, Taiwan of buildings Investment Design of ICs Investment Design of ICs Investment Design of ICs Design of ICs Design of ICs Management International trade Investment Design of ICs Investment Design of ICs Design of ICs Design of ICs Design of ICs Design of ICs Investment management consultant Design of ICs Design of ICs Design of ICs Design of ICs Software development Investment management consultant Lin Shih Investment Co., Ltd. Sunplus Venture Capital Co., Ltd. Russell Holdings Limited Autosys Co., Ltd. Cayman Islands, British West Indies Investment Ventureplus Group Inc. Ventureplus Mauritius Inc. Mauritius Investment - 92 - 2,290,639 $ ( US$ 74,605 RMB$ 37,900 ) 222,400 ( US$ 5,642 RMB$ 14,100 ) 315,658 2,290,639 $ ( US$ 74,605 RMB$ 37,900 ) 219,336 ( US$ 5,642 RMB$ 13,400 ) 315,658 ( US$ ( US$ 699,988 281,001 829,982 382,894 715,133 25,110 ) 207,345 983,237 407,565 5,000 40,678 11,075 ) 291,635 10,240 ) 2,596,792 70,157 132,000 699,988 281,001 999,982 414,663 702,317 24,660 ) 207,345 983,237 407,565 5,000 40,678 11,075 ) 289,357 10,160 ) 2,596,792 70,157 132,000 ( HK$ ( HK$ ( US$ ( US$ 86,256 15,701 9,645 19,408 1,250 101,000 57,388 33,439 44,878 20,000 1,250 86,256 15,701 9,645 19,408 - 101,000 57,388 33,439 44,878 - - 71,200 2,500 ) ( US$ 71,200 2,500 ) ( US$ 2,290,639 ( US$ 74,605 RMB$ 37,900 ) 2,290,639 ( US$ 74,605 RMB$ 37,900 ) - - 100 $ 1,460,438 $ 70,116 $ 70,116 Subsidiary 100 268,500 107,601 107,601 Subsidiary 8,229 13 346,011 399,236 52,151 Investee 70,000 37,324 83,000 29,949 25,110 20,735 58,778 22,441 500 11,075 100 34 100 58 100 29 93 90 100 100 771,853 713,447 870,199 746,919 552,847 245,579 211,723 23,327 3,578 30 73,864 282,037 (11,787 ) 467,669 (4,795 ) (76,538 ) 18,896 (334 ) (190 ) (4 ) 72,796 Subsidiary 96,740 Subsidiary (11,787 ) Subsidiary 280,285 Subsidiary (4,795 ) Subsidiary (Note 2) (25,750 ) Investee 17,489 Subsidiary (300 ) Subsidiary (190 ) Subsidiary (4 ) Subsidiary - 100 2,435 (31,245 ) (31,245 ) Subsidiary 16,240 5,400 13,200 14,892 1,075 965 650 125 10,100 2,904 3,332 1,909 2,000 125 5,000 100 100 55 14 2 1 3 13 42 6 5 8 63 13 16 29,406 59,391 (10,042 ) 285,983 24,585 12,244 5,340 1,064 (7,683 ) 73,405 42,295 431 15,018 1,064 (170 ) 9,789 (25,900 ) 282,037 467,669 (76,538 ) (334 ) (1,487 ) (25,900 ) 467,669 (76,538 ) (334 ) (7,971 ) (1,487 ) (170 ) Subsidiary 9,789 Subsidiary (14,246 ) Subsidiary 38,598 Subsidiary 9,768 Subsidiary (1,034 ) Investee (9 ) Subsidiary (186 ) Investee (10,899 ) Subsidiary 26,392 Subsidiary (3,573 ) Investee (26 ) Subsidiary (4,982 ) Subsidiary (186 ) Investee 71,439 (35,131 ) (5,709 ) Investee - 100 1,460,436 70,117 70,117 Subsidiary Ventureplus Mauritius Inc. Ventureplus Cayman Inc. Cayman Islands, British West Indies Investment Generalplus Technology Inc. Generalplus International (Samoa) Inc. Samoa Investment Generalplus International (Samoa) Inc. Generalplus (Mauritius) Inc. Mauritius Investment Generalplus (Mauritius) Inc. Generalplus Technology (Hong Kong) Co., Ltd. Hong Kong Sales 2,290,639 ( US$ 74,605 RMB$ 37,900 ) 2,290,639 ( US$ 74,605 RMB$ 37,900 ) 543,683 19,090 ) ( US$ 543,683 19,090 ) ( US$ 543,683 19,090 ) ( US$ 543,683 19,090 ) ( US$ 11,107 390 ) ( US$ 11,107 390 ) ( US$ - 100 1,460,415 70,118 70,118 Subsidiary 19,090 100 499,149 15,407 15,407 Subsidiary 19,090 100 499,292 15,407 15,407 Subsidiary - 100 6,001 1,576 1,576 Subsidiary (Continued) - 93 - Investor Investee Location Main Businesses and Products Investment Amount Balance as of December 31, 2020 December 31, 2020 December 31, 2019 Shares (In Thousands) Percentage of Ownership (%) Carrying Amount Net Income (Loss) of the Investee Investment Gain (Loss) Note Award Glory Ltd. Sunny Fancy Ltd. Seychelles Investment 222,400 $ ( US$ 5,642 RMB$ 14,100 ) 219,336 $ ( US$ 5,642 RMB$ 13,400 ) Sunny Fancy Ltd. Giant Kingdom Ltd. Giant Rock Inc. Worldplus Holdings L.L.C. Giant Best Ltd. Seychelles Anguilla America Seychelles Investment Investment Investment Investment Note 1: The initial exchange rate was based on the exchange rate as of December 31, 2020. Note 2: The amount of remittances in this period has not completed registration of capital changes. Note 3: The establishment registration has been completed at the end of December 2020, but the actual remittance has not been completed yet. - - - - 100 $ 268,500 $ 107,601 $ 107,601 Subsidiary 100 100 100 301 167 167 Subsidiary 163,631 112,579 112,579 Subsidiary 104,569 (5,146 ) (5,146 ) Subsidiary ( US$ 21,987 772 ) 97,885 ( US$ 1,270 RMB$ 14,100 ) 102,528 3,600 ) ( US$ ( US$ 21,987 772 ) 94,821 ( US$ 1,270 RMB$ 13,400 ) 102,528 3,600 ) ( US$ (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) Subsidiary (Concluded) - 94 - TABLE 7 SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Investee Company Name Main Businesses and Products Total Amount of Paid-in Capital Investment Type Sunplus Technology (Shanghai) Co., Ltd. Sunplus Prof-tek (Shenzhen) Co., Ltd. Sun Media Technology Co., Ltd. Development of computer software, system integration services and building rental Development of computer software, system integration services and building rental Development of computer software, system integration services and building rental Sunplus App Technology Co., Ltd. Ytrip Technology Co., Ltd. Manufacturing and sale of computer software; system integration services and information management and education Computer system integration services and supplying general advertising and other information services Sunplus Technology (Beijing) Development of computer software, system integration services and building rental 1culture Communication Co., System development Ltd. JSilicon Technology Co., Ltd. Development of computer software, system (Ru Domg) integration services Lingyao Technology Co., Ltd. (Shenzhen) Chongqing CQPlus1 Development of computer software, system integration services and building rental Development of computer software, system Technology Co., Ltd. integration services $ (US$ (US$ (US$ (RMB (RMB (RMB (RMB (RMB (RMB (RMB 489,856 17,200 918,480 32,250) 569,600 20,000) 119,054 27,200) 268,091 61,250) 118,179 27,000) 14,225 3,250) 87,540 20,000) 83,334 19,039) 131,310 30,000) Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 3 Note 4 Note 6 Note 5 Accumulated Outflow of Investment from Taiwan as of January 1, 2020 $ (US$ (US$ (US$ (US$ RMB (US$ (RMB (US$ 502,814 17,655) 918,480 32,250) 569,600 20,000) 108,606 586 21,000) 128,473 4,511) 118,179 27,000) - - 102,528 3,600) - Investment Flows Outflow Inflow $ - $ - - (RMB 5,252 1,200) - - - - - - Accumulated Outflow of Investment from Taiwan as of December 31, 2020 $ (US$ (US$ (US$ (US$ RMB (US$ (RMB (US$ 502,814 17,655) 918,480 32,250) 569,600 20,000) 113,859 586 22,200) 128,473 4,511) 118,179 27,000) - - 102,528 3,600) - - - - - - - - - - - % Ownership of Direct or Indirect Investment Net Income (Loss) of the investee Investment Loss (Note 2) Carrying Value as of December 31, 2020 Accumulated Inward Remittance of Earnings as of December 31, 2020 100% $ 21,637 $ 21,637 $ 456,784 $ 100% 100% 96% - 100% - 100% 100% 100% (19,319) (19,319) 750,454 60,077 60,077 194,410 (4,656) (4,480) 4,623 168 1,747 153 Note 7 1,747 51,826 (72) (72) Note 8 (43,990) (43,990) 27,323 (3,813) (5,146) 104,569 (38,399) (38,399) 81,133 - - - - - - - - - - Accumulated Investment in Mainland China as of December 31, 2020 Investment Amounts Authorized by the Investment Commission, MOEA Limit on Investment $ ( US$ RMB 2,498,419 79,872 51,100) $ ( US$ RMB 2,509,959 78,602 62,000) $ 5,048,258 Sunplus Venture Capital Co., Ltd. Accumulated Investment in Mainland China as of December 31, 2020 Investment Amounts Authorized by Investment Commission, MOEA Limit on Investment $ ( US$ 35,885 1,260) $ ( US$ 35,885 1,260) $ 522,119 - 95 - (Continued) Generalplus Technology (Nature of Relationship: 1) Investee Company Name Main Businesses and Products Total Amount of Paid-in Capital Investment Type (e.g., Direct or Indirect) Accumulated Outflow of Investment from Taiwan as of January 1, 2020 Investment Flows Outflow Inflow Accumulated Outflow of Investment from Taiwan as of December 31, 2020 % Ownership of Direct or Indirect Investment Net Loss of the investee Investment Loss (Note 2) Carrying Value as of December 31, 2020 Accumulated Inward Remittance of Earnings as of December 31, 2020 Generalplus Shenzhen Design of ICs, after sales service and marketing research $ (US$ 523,576 18,700) Note 1 $ (US$ 523,576 18,700) $ - $ - $ (US$ 523,576 18,700) 100% $ 13,831 $ 13,831 $ 493,271 $ - Accumulated Investment in Mainland China as of December 31, 2020 Investment Amount Authorized by the Investment Commission, MOEA Limit on Investment $ ( US$ 523,576 18,700 ) $ ( US$ 523,576 18,700 ) $ 1,265,588 Note 1: Indirect investment in a company located in mainland China through investment in a company located in a third country. Note 2: Based on the reviewed financial statements of investees in the same period. Note 3: Ytrip Technology Co., Ltd.’s indirect investment in a company located in mainland China. Note 4: Sunplus Technology (Shanghai) Co., Ltd.’s indirect investment in a company located in mainland China. Note 5: Sunplus Technology (Shanghai) and Sunplus Prof-tek (Shenzhen) Technology Co., Ltd. reinvested in a company located in mainland China. Note 6: It is a company located in mainland China that acquired the investment of the third regional investment company on September 2, 2019. Note 7: The liquidation of Ytrip Technology was completed on June 23, 2020. Note 8: The liquidation of 1Culture Communication was completed on May 29, 2020. Note 9: The Ministry of Economic Affairs approved an investment in the shares of San Neng Group Holding Co., Ltd., which is accounted for under the financial assets at fair value through profit or loss- non-current. Note 10: The original foreign currency was derived from the exchange rate on December 31, 2020. (Concluded) - 96 - SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Investee Company Transaction Type Research and Development Expense Amount % Price Transaction Details Payment Terms Comparison with Market Transactions Notes/Trade Receivables (Payables) Ending Balance % Unrealized (Gain) Loss Generalplus Technology (Shenzhen) Development and $ 70,195 15 Based on contract Based on contract Not comparable with market $ 16,646 85.16 $ - Corp. processing services Sales 16,796 0.58 Based on contract Based on contract Not comparable with market - - (344) transactions transactions Note NA NA TABLE 8 - 97 - TABLE 9 SUNPLUS TECHNOLOGY COMPANY LIMITED AND SUBSIDIARIES INFORMATION OF MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Name of Major Shareholder Chou-chye, Huang Shares Number of Shares Percentage of Ownership (%) 92,737,817 15.66 Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis. Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual truster who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System. 98 7.5 Financial Difficulties Impact to the Company or subsidiaries if any turnover problems: None 99 VIII. Financial Analysis 7.6 Financial Status 7.6.1 Financial Analysis Comparison 2018 vs. 2019 Unit: NT$K Variation Year 2019 2020 14 - 86 4 10 36 35 36 3 YoY % 6,777,941 1,971,252 328,591 3,542,805 12,620,589 1,824,672 776,916 2,601,588 5,940,147 1,968,803 176,233 3,404,584 11,489,767 1,342,416 574,660 1,917,076 Increase (Decrease) 837,794 2,449 152,358 138,221 1,130,822 482,256 202,256 684,512 Item Current Assets Property, Plant & Equipment Intangible Assets Other Assets Total Assets Current Liabilities Non-Current Liabilities Total Liabilities Equity Attributed to Shareholder of the parent Capital Stock Capital Surplus Retained Earnings Equity : Others Treasury Stock Minor interest Total Shareholder’s Equities Remark: 1. The increase in intangible assets was mainly due to the increase in technology licensing. 2. The increase in current liabilities was mainly due to the increase in salaries and bonuses, accounts payable and current income tax liabilities. 3. The increase in non-current liabilities was mainly due to the increase in long-term loans. 4. The increase in total liabilities was mainly due to the increase in salaries and bonuses, accounts payable, current income tax liabilities and long-term loans. 5,919,949 500,820 2,317,473 (261,078) (63,401) 1,605,238 10,019,001 5,919,949 594,432 1,988,579 (261,026) (63,401) 1,394,158 9,572,691 - (93,612) 328,894 (52) - 211,080 446,310 8,178,533 8,413,763 235,230 - (16) 17 - - 15 5 100 7.7 Operational Results 7.7.1 Operation Results Comparison 2019 vs. 2020 Unit: NT$K Variation Year 2019 2020 139 221 YoY % 784,738 618,827 174,752 244,220 268,571 112,479 174,752 444,075 156,092 540,518 17 25 292 6,414,140 2,925,096 516,167 5,486,660 2,348,905 131,741 Increase (decrease) 927,480 576,191 384,426 Item Net Sales Gross Profit Income (Loss) From Operating Non-Operating Income (Expense) Income (Loss) Before Tax Income (Loss) From Operations of Continued Segments Net Revenue (Loss) for the period Other Comprehensive Income (Loss) for the period Total Comprehensive Profit (Loss) for the period Remarks: 1. The increase in operating gross profit was mainly due to the growth in revenue this year and the optimization of the sales mix. 2. The increase in operating net profit was mainly due to the increase in revenue this year. 3. The net increase in non-operating income and expenses was mainly due to the increase in the net profit of financial assets measured at fair value through profit and loss this year. 4. The increase in net profit before tax and net profit after tax in the current period was mainly due to the increase in operating profit and non-operating income this year. 5. The increase in other comprehensive gains and losses in the current period was mainly due to the decrease in the conversion losses in the financial statements of foreign operating institutions this year. 6. The increase in total comprehensive profit and loss for the current period was mainly due to the increase in net profit for the year. (102,073) 444,075 551,866 107,791 618,827 624,545 72,679 5,718 (106) 254 254 759 101 7.8 Cash Flow 7.8.1 Cash Flow Analysis a) Cash Flow Analysis 2018 vs. 2019 Year 2019 2020 YoY % Item Cash flow ratio Cash flow adequacy ratio Cash flow reinvestment ratio 1. The increase in cash reinvestment ratio was mainly due to the increase in net cash flow from operating activi ties. 48.54 81.59 2.44 43.41 79.28 3.85 (11) (3) 58 b) Cash Flow Forecast Cash Balance, beginning of the year (1) Net Cash Flow from Operating Activities (2) Estimated net cash inflow (outflow) from investment and financing activities throughout the year (3) Net Cash Balance (1)+(2)+(3) Unit: NT$K Remedial Measure if cash not enough Investment plan Financial leverage plan $3,400,482 1,342,831 (467,538) 4,275,775 - - 1. Analysis of Cash Flow: (1) From Operating: Cash flow in for predicting making profits in 2021. (2) From Investing: Cash flow in for purchasing properties, IPs and R&D tools. (3) From Financing: Cash flow in for expected to repay bank loans and distribute dividends, etc. 2. Remedies and Liquidity Analysis of Inadequate Cash: None. 7.9 Major Capital Expenditure 7.9.1 Major Capital Expenditure and Sources: None. 7.9.2 Benefits from the Capital Expenditure: None. 7.10 Long-Term Investment Not applicable 7.11 Risk Management 7.11.1 The Impact of Inflation, Foreign Exchange and Interest Rate Fluctuation and Measures to Cope With 1. Interest Rate: The Company will get more interest expenses when the interest rate rises. The finance division will collect information and evaluate the variation for hedge. Vice versa, the low interest rate will impact interest income. The company will put more cash on highly- returned short-term investment. 2. Exchange Rate: The selling products are quoted in US dollars. Most of the costs are quoted in US dollars but still some in NT dollars. So the New Taiwan Dollars appreciation will impact the company sales and gross margin. Our major foreign-currency assets are account receivable and time deposits. The company already utilizes mainly forward currency and option contracts to hedge its foreign exchange exposure, so the impact from floating exchange rate will be minimized. Inflation: The material costs vary timely. The higher manufacture cost and selling pricing which would impact the consumers’ budget for the high-end consumer electronic products. But Sunplus is working hard to develop new products for add-on value and cost-down, and expand the market shares in the emerging markets to relief the slow-down from developed countries. 3. 102 7.11.2 Internal Policies and Procedure Exist with Respect to High Risk/High Leveraged Investment, Lending/Endorsements and Guarantees for Other Parties, Financial Derivatives Transaction 1. There is no high risk/high leveraged investment. 2. The company has made and followed “Sub-procedure of Extension of Monetary Loans to Others”, The loans are made with risk evaluation which follows the procedures. After the loan is granted, the Company follows and traces financial status, business and credit status of the borrower and guarantor frequently, and asks equal collaterals or takes proper actions to secure. 3. The company has made and followed “Procedure of Endorsement and Guarantees”, and the Endorsement and Guarantees will only be made under well evaluation before granted. 4. The company has made and followed “Procedure of Engaging in Derivatives Trading “. The financial transactions of a derivatives nature that Sunplus enters into are strictly for hedging purposes and not for any trading or speculative purposes and under well evaluation. 7.11.3 R&D Plan and Execution Sunplus Group will keep investing in research and development, therefore, the consolidated R&D costs will account for 25% ~ 35% of consolidated revenues. Company Sunplus Technology Generalplus Technology Sunplus Innovation Technology Jumplux Technology New Products (1) Automotive entertainment system chip (2) Smart Cockpit System Chip for Vehicle (3) Vehicle navigation and driving assistance system platform (4) Medium and high-end Soundbar system chip (5) High-speed interface IP (6) High-performance data converter IP (7) Analog IP (8) Industrial control system chip based on Sunplus Plus1 architecture (1) A new generation of speech synthesis control chip (a) High sound quality and high volume PWM driver (b) OTP /Flash memory, can quickly update the code (2) Digital audio and voice recognition control IC: (a) High-resolution Sigma-Delta ADC recording device (b) High sound quality Class-D broadcast drive device (c) Flash memory, can quickly update the code (3) LCD control IC: (a) Low-power platform capable of single battery operation (b) OTP memory, can quickly update the code (4) Multimedia application control IC: (a) High-performance Cortex-A series 32-bit platform (b) More display technologies and interfaces (CVBS, HDMI, MIPI) (c) Advanced image processing (ISP, GPU, H.264, computer vision and AI deep learning) (d) DDR2/DDR3 DRAM interface (5) Microcontroller: (a) Cortex-M0 motor drive control IC (b) Highly integrated wireless charging IC (c) High-sensitivity touch IC (6) Other ICs: (a) Various peripheral chips supporting the main control IC (b) More complete power control IC (c) Higher quality audio amplifier IC (1) Very low power USB image processing IC (2) USB3.0 4K image processing IC (3) Image processing IC with intelligent image detection function (1) Front-mounted vehicle specification USB3.2 TYPE C MediaHUB IC (2)USB3.2 10Gbps x 2 PHY IP (3) MIPI APHY TX/RX IP 103 7.11.4 Political and Regulatory Environment: We will keep watch for any further updates and take actions to reduce the impacts on the company. 7.11.5 Advanced Technology The wafer process technology is moving to smaller geometry. The migrated process technology could keep the chip production cost down but R&D cost up. The company tries to develop higher add-on value and mainstream multimedia products, which mainstream means to produce in huge volume and to share the research and development cost. 7.11.6 Corporate Identify and Image Change The company takes corporate image seriously. Being people-oriented and having integrity are our top priorities when running our business. We disclose our operation and financial statements to public periodically and transparently in order to save the rights of our shareholders. 7.11.7 Mergers & Acquisitions None 7.11.8 Expansion of Facilities None 7.11.9 Suppliers & Customers The Company separately purchases raw materials from several different suppliers, encapsulation and testing of the foundry is also adopted scattered strategy, to ensure that the output is no problem. The Company's largest sales customers in 2019 and 2020 accounted for 15% and 16% of the total net revenue for the year, no sales focus on the risk of a single customer. 7.11.10Major Shareholding Change None 7.11.11Ownership Change None 7.11.12Litigation Proceedings None 7.11.13Other Risks The principle of the importance of corporate social responsibility, conduct risk assessment of important issues, and formulate relevant risk management policies or strategies based on the assessed risks: Major issues Risk assessment project Risk management policy or strategy surroundings Environmental protection and energy saving and carbon reduction The company is committed to environmental protection and energy saving. Located in the upstream of the semiconductor industry, the company exerts its excellent R&D technology and continues to promote high-end semiconductor process technology to save chip energy consumption, thereby driving the use of power energy in downstream consumer electronic terminal products. Through the implementation of environmental management (EMS) and the institutionalized PDCA management cycle, the impact on the environment the implementation plan and program are formulated every year, and the progress of each goal is tracked and reviewed regularly to ensure the goal Reach is effectively reduced; at the same time, society 1. Occupational Safety and Health 1. The company obtained two international and Taiwan occupational safety and health management system (ISO45001 and TOSHMS) dual certifications in 2019, and regularly holds fire drills and 104 occupational safety and health education and training every year to self-safety cultivate management capabilities employees' emergency response and 2. Product safety 2. The company's products comply with the government's product and service laws and regulations, and comply with the European Union's hazardous substances RoHS/REACH regulations. Through rigorous quality system management, we provide customers with stable product quality. At the same time, in order to ensure the quality of customer service and improve customer satisfaction, we set up customer service lines and communication websites. We actively conduct customer service satisfaction surveys on a regular basis every year to strengthen our relationship with customers. The cooperative relationship between the two parties, through the mutually beneficial and common prosperity relationship with customers, has become the sustainable development of the enterprise the cornerstone of Corporate Governance Socio-economic and legal compliance Through the establishment of a governance organization and implementation of internal control mechanisms, to ensure that all personnel and operations of the company actually comply with relevant laws and regulations 7.12 Other Remarks None 105 IX. SPECIAL NOTES 9.1 Affiliates 9.1.1 Affiliated Chart 106 JumplexTechnology0.70%100%9.55%VentureplusHan YuangVentureplus CaymanVentureplus MauritiusSunextGeneralplusMauritiusGeneralplus Shenzhen GeneralplusiCatchWei-Young Generalplus Samoa100%Sunplus Technology CompanySunplus mMobileSunplus InnovationSunplus Management ConsultingSunplus HK Generalplus HKSunplus mMedia100%100%100%100%100%70%100%61.15%5.29%100%3.25%100%5.64%34.30%37.64%61.13%100%100%100%100%3.95%2.09%6.98%13.69%RussellLin Shih1.75%6.05%Sunplus Venture0.10%0.03%Magic SkySunplus Shanghai93.33%Sunplus App Technology Co., Ltd.100%100%SunMedia Technology100%Sunplus Prof-tek (Shenzhen)1culture Communication Co,.Ltd100%Sunplus Technology (Beijing)100%100%72.14%22.86%Sunny Fancy100%Award GlaryGiant KingdomGiant Rock100%100%Ytrip Technology Co. Ltd.14.6%68.8%Xiamen Xm-plus100% 9.1.2 Affiliated Companies December 31, 2020 Unit: NT$K, unless other specified Company Date of Incorporation Place of Registration August 31, 1993 Kowloon, HK Sunplus Technology (HK) Co., Ltd. Lin Shih Investment Co., Ltd. Russell Holdings Ltd. Sunplus Venture Capital Co., Ltd. November 20, July 2, 1998 March 11, 1998 Cayman Hsinchu, Taiwan Hsinchu, Taiwan Belize 1999 July 27, 2001 August 2, 2001 Mauritius September 14, 2001 December 7, 2001 Cayman Shanghai, China Ventureplus Group Inc. Ventureplus Mauritius Inc. Ventureplus Cayman Inc. Shanghai Sunplus Technology Co., Ltd. Sunplus Prof-tek Technology (Shenzhen) Co., Ltd. Paid-in Capital Business Activities HK$11,075,000 (Note) International Trading 700,000 Investment US$24,660,000 (Note) Investment Investment 1,000,000 2,526,650 2,526,656 2,526,661 Investment Investment Investment US$17,200,000 (Note) Software development, customer technical services and rental business October 22, 2007 Shenzhen, China US$32,250,000 (Note) Software development, customer technical services and rental business Sunmedia Technology Co., Ltd. January 8, 2008 Chengdu, China US$20,000,000 (Note) IC Sales and Sunplus App Technology Co., Ltd. October 6, 2008 Beijing, China RMB26,000,000 (Note) After Service, Software and System Design IC Sales and After Service, Software and System Design December11, 2013 Beijing RMB27,000,000(Note) Software Beijing Sunplus-Ehue Tech Co., Ltd. Magic Sky Limited Sunext Technology Co., Ltd. Sunplus Management Consulting Inc. WeiYing Investment Co., Ltd. Generalplus Technology Inc. Generalplus International (Samoa) Inc. Generalplus (Mauritius) Inc. Generalplus Technology (Shenzhen) Inc. Generalplus Technology (HK) Inc. Sunplus mMobile Inc. Samoa September 22, 2010 March 13, 2003 Hsinchu, Taiwan October 2, 2003 Hsinchu, Taiwan Hsinchu, Taiwan February 13, 2004 March 30, 2004 Hsinchu, Taiwan November 12, 2004 November 25, 2004 March 24, 2005 Shenzhen, China Mauritius Samoa development, customer technical services and rental business Investment IC Design Consulting Investment US$10,160,000 635,091 5,000 54,000 1,088,158 IC Design US$19,090,000 (Note) Investment US$19,090,000 (Note) Investment US$18,700,000 (Note) Sales Service March 21, 2007 Hong Kong US$390,000 (Note) Sales Service December 20, 2006 Hsinchu, Taiwan 162,400 IC Design 107 Sunplus Innovation Technology Inc. Sunplus mMedia Inc. Jumplux Technology Inc, Hsinchu, Taiwan December 14, 2006 April 18, 2007 Hsinchu, Taiwan October 27,2014 Hsinchu, Taiwan 514,501 250,000 240,000 Award Glory Ltd. Sunny Fancy Ltd. Giant Kingdom Ltd. Giant Rock Inc. January 04, 2016 Belize October 29, 2014 Mahe , Republic of Seychelles January 21, 2016 Mahé, Seychelles July 3, 2014 Rudong Jiexin Electronic Technology Co., Ltd. February 06, 2019 The Mason Complex, Suites 19 & 20, The Valley, Anguilla. Rudong County, Nantong City, China IC Design IC Design Design & Trading 235,105 Investment 235,105 Investment 25,157 Investment 97,279 Investment RMB10,000,000(Note) Software development and integrated circuit design Chongqing Shuangxin Technology Co., Ltd. Worldplus Holdings L.L.C. Lingyao Technology (Shenzhen) Co., Ltd. July 26, 2019 Chongqing, China RMB20,000,000(Note) Software development and integrated circuit design September 7, 1999 3500 South Dupont Highway,Dover,Delaware 19901,U.S.A. US$3,600,000(Note) Investment Business January 18, 2000 Shenzhen, China RMB19,039,000(Note) Software development, rental business and property management 32,000 Software development GenkiTek March 06, 2020 6th Floor, No. 22, Alley 38, Lane 91, Section 1, Hu Road, Neihu District, Taipei City Note: End of 2020, exchange rate as ref.: HK$1=NT$3.673 US$1=NT$28.48 RMB$1=NT$4.377 108 9.1.3 Business Scope of Affiliated Companies Company Business Activities Business Relationship Sunplus Technology (HK) Co., Ltd. Lin Shih Investment Co., Ltd. Russell Holdings Ltd. Sunplus Venture Capital Co., Ltd. Ventureplus Group Inc. Ventureplus Mauritius Inc. Ventureplus Cayman Inc. Shanghai Sunplus Technology Co., Ltd. Sunplus Prof-tek Technology (Shenzhen) Co., Ltd. Sunmedia Technology Co., Ltd. Sunplus App Technology Co., Ltd. Beijing Sunplus-Ehue Tech Co., Ltd. Magic Sky Limited Sunext Technology Co., Ltd. Sunplus Management Consulting Inc. WeiYing Investment Co., Ltd. Generalplus Technology Inc. Generalplus International (Samoa) Inc. Generalplus (Mauritius) Inc. Generalplus Technology (Shenzhen) Inc. Generalplus Technology (HK) Inc. Sunplus mMobile Inc. Sunplus mMobile SAS Sunplus Innovation Technology Inc. Sunplus mMedia Inc. Jumplux Technology Inc. Award Glory Ltd. Sunny Fancy Ltd. Giant Kingdom Ltd. Giant Rock Inc. Rudong Jiexin Electronic Technology Co., Ltd. Chongqing Shuangxin Technology Co., Ltd. Worldplus Holdings L.L.C. Lingyao Technology (Shenzhen) Co., Ltd. GenkiTek N/A N/A N/A N/A N/A N/A N/A Trading Investment Investment Investment Investment Investment Investment Manufacture and Sales Service China branch China branch Manufacture, Sales Service and property management. Manufacture and Sales Service China branch Sales and IT Education Service China branch Manufacture and Sales Service China branch Investment IC Design Management Consulting Investment IC Design Investment Investment Sales Service Sales Service IC Design IC Design IC Design IC Design Software design7 trading Investment Investment Investment Investment Software development and integrated circuit design Software development and integrated circuit design Investment Business Software development, rental business and property management Software development N/A Subsidiary N/A N/A Subsidiary N/A N/A N/A N/A Subsidiary N/A Subsidiary Subsidiary Grandson- Subsidiary N/A N/A N/A N/A China branch N/A China branch Strategic subsidiary China branch 9.1.4 Directors, Supervisors, and Presidents of Affiliated Companies Company Title Name Sunplus Technology (HK) Co., Ltd. Lin Shih Investment Co., Ltd. Chairman Director Sunplus Technology Chou-Chye Huang (repr.) Ming-Cheng Hsieh Sunplus Technology Chairman & President Chou-Chye Huang (repr.) Russell Holdings Ltd. Sunplus Technology 109 December 31, 2020 Shareholding Amount (shares) *HK$11,075,000 - - 70,000,000 - - - - *US$24,060,000 Ratio (%) 100% - - 100% - - - - 100% Sunplus Venture Capital Co., Ltd. Director Chou-Chye Huang (repr.) Sunplus Technology Chairman & President Chou-Chye Huang (repr.) Ventureplus Group Inc. Sunplus Technology Ventureplus Mauritius Inc. Ventureplus Cayman Inc. Shanghai Sunplus Technology Co., Ltd. Director Director Director Chou-Chye Huang (repr.) Ventureplus Group Chou-Chye Huang (repr.) Ventureplus Mauritius Chou-Chye Huang (repr.) Ventureplus Cayman Chairman Director &President Chou-Chye Huang (repr.) Zai-De Wang Sunplus Prof-tek Technology (Shenzhen) Co., Ltd. Sunmedia Technology Co., Ltd. Sunplus App Technology Co., Ltd. Director Supervisor Chairman President Supervisor Chairman President Supervisor Chairman Supervisor Director Director Tang-Yi Huang Shu-Lan Wang Ventureplus Cayman Chou-Chye Huang (repr.) Tang-Yi Huang Shu-Lan Wang Ventureplus Cayman Chou-Chye Huang (repr.) Cheng-Cai Chang Shu-Lan Wang Ventureplus Cayman Chou-Chye Huang (repr.) Yu-Lun Liu Shu-Lan Wang Ya-Fei Luo E-Director& President Chen-Tsai Chang Supervisor Shao-Ling Chan - 100% - - - - 100% - 100% - 100% - 100% - 100,000,000 - - - - RMB37,900,000 & US74,605,000 (Note1) RMB37,900,000 & US74,605,000 (Note1) RMB37,900,000 & US74,605,000 (Note1) US$17,655,000 (Note1) - - - - *US$32,250,000 - 100% - *US$20,000,000 100% RMB10,000,000 & USD586,000 (Note1) - - - RMB438,000 93.33% - 1.68% - - - 110 *RMB$27,000,000 100% US$10,160,000 100% 58,778,442 - - - - - - 100% - - - - - - - 100% 500,000 - - - - - - - - 100% 5,400,000 - - - - - - - - 37,324,304 34.30% - - 0.46% 500,000 1.16% 1,266,752 - - - - - - - - - - 100% *US$19,090,000 - - 100% *US$19,090,000 - - (Continued) Beijing Sunplus-Ehue Tech Co., Ltd. Magic Sky Limited Sunext Technology Co., Ltd. Chairman Director Director Supervisor Director Chairman Director Ventureplus Cayman Inc. Chou-Chye Huang (repr.) Wayne Shen Shu-Lan Wang Yin-Chi Chu Sunplus Technology Chou-Chye Huang (repr.) Sunplus Technology Chou-Chye Huang (repr.) Shu-Lan Wang Director Mei-Juan Chen Supervisor Wayne Shen Sunplus Management Consulting Inc. Chairman Sunplus Technology Chou-Chye Huang (repr.) WeiYing Investment Co., Ltd. Chairman Sunplus Technology Chou-Chye Huang (repr.) Generalplus Technology Inc. Chairman Vice Chairman Sunplus Technology Chou-Chye Huang (repr.) Shi-Rong Wang (Repr.) Hou-Shien Chu Shi-Hao Liu Director Director Independent Director Chia-Ming Chai Independent Director Nai-Shin Lai Independent Director Jing-Min Chen Generalplus Technology Chou-Chye Huang (repr.) Generalplus International (Samoa) Chou-Chye Huang (repr.) Generalplus International (Samoa) Inc. Generalplus (Mauritius) Inc. Chairman Chairman 111 Company Title Name Lingjia Technology (Shenzhen) Inc. Chairman Director and General Manager Director Generalplus Technology (HK) Inc. Sunplus mMobile Inc. Director Chairman Generalplus International (Mauritius) Chou-Chye Huang (repr.) Zhi-yi Yang Jian-yi Liu Generalplus (Mauritius) Inc. Yi-Xing Jia (repr.) Sunplus Technology Chou-Chye Huang (repr.) Sunplus Innovation Technology Inc. Sunplus mMedia Inc. Jumplux Technology Award Glory Ltd. Chairman Director Director Director & President Director Supervisor Supervisor Sunplus Technology Chou-Chye Huang (repr.) Shu-Lan Wang (repr.) Wayne Shen (repr.) Chih-Hao Kung Lin-Shih Investment Chi-Ying Chiu Wen-Chin Li Sunplus Technology Chairman& President Chou-Chye Huang (repr.) Director Director Supervisor Wayne Shen (repr.) Shu-Lan Wang (repr.) Lin-Shih Investment Sunplus mMedia Chou-Chye Huang (repr.) Shu-Lan Wang Mei-Juan Chen Sunplus Venture Capital Sunplus Technology Chou-Chye Huang (repr.) Chairman Director Director Supervisor Chairman Sunny Fancy Ltd. Chairman Award Glory Ltd. Chou-Chye Huang (repr.) Giant Kingdom Ltd. Chairman Giant Rock Inc.. Chairman Sunny Fancy Ltd. Chou-Chye Huang (repr.) Sunny Fancy Ltd. Chou-Chye Huang (repr.) Rudong Jiexin Electronic Technology Co., Ltd. Chairman and General Manager Director Director Supervisor Shanghai Sunplus Technology Co., Ltd. Zai-De Wang He-xing Yang Yang Zhang 112 Shareholding Amount (shares) *US$18,700,000 Ratio (%) 100% - *US$390,000 - 100% - 16,240,000 - - - 100% - - 31,449,751 61.13% - - - - - - 4.81% 2,476,473 2.09% 1,074,664 1.03% 527,880 - - 22,440,723 89.76% - - - - - - 2.60% 650,185 55.00% 13,200,000 10,100,000 US$5,642,000 RMB13,400,000 (Note1) - US$5,642,000 RMB13,400,000 (Note1) - US$772,000 (Note1) - US$1,270,000 RMB13,400,000 (Note1) - RM10,000,000 (Note1) 42.08% 100% (Note1) - 100% (Note1) - 100% (Note1) - 100% (Note1) 100% (Note1) Shu-zhen Zheng Chongqing Shuangxin Technology Co., Ltd. Chairman Chairman and General Manager Director Supervisor Shanghai Sunplus Technology Co., Ltd. Chou-Chye Huang (repr.) Cheng-cai Zhang Tang-yi Huang Shu-lan Wang RM11,000,000 (Note1) 55% (Note1) Worldplus Holdings L.L.C. Chairman Sunny Fancy Ltd. Lingyao Technology (Shenzhen) Co., Ltd. Chairman General manager GenkiTek Chairman of the board Director Director Director and General Manager Director Supervisor Chou-Chye Huang (repr.) Worldplus Holdings L.L.C. Cheng-cai Zhang Tang-yi Huang Lingyang Venture Capital (Stock) Company Representative: Huang Zhoujie Guo Junde Zheng Shuzhen Shen Zhicong Wang Mingzheng Huang Yiwen *Note: the invested companies are listed the capital paid-in amount of investment US$3,600,000 (Note1) 100% (Note1) RM19,039,000 (Note1) 100% 2,000,000 62.50% 500,000 6.25% 15.63% 113 9.1.5 Common Shareholders of Sunplus and Its Subsidiaries or Its Affiliates with Actual of Deemed Control Not Applicable 9.1.6 Operation Highlights of Sunplus Affiliates December 31st, 2020 Unit: NT$K, except EPS (NT$) Company Capital Assets Liabilities Net Worth Net Sales Operation Income Net Income (After Tax) Sunplus Technology (HK) Co., Ltd. Lin Shih Investment Co., Ltd. Russell Holdings Ltd. Sunplus Venture Capital Co., Ltd. Ventureplus Group Inc. Ventureplus Mauritius Inc. Ventureplus Cayman Inc. Shanghai Sunplus Technology Co., Ltd. Sunplus Prof-tek Technology (Shenzhen) Co., Ltd. Sunmedia Technology Co., Ltd. Sunplus App Technology Co., Ltd. Beijing Sunplus-Ehue Tech Co., Ltd. Magic Sky Limited Sunext Technology Co., Ltd. Sunplus Management Consulting Inc. WeiYing Investment Co., Ltd. Generalplus Technology Inc. Generalplus International (Samoa) Inc. Generalplus (Mauritius) Inc. Generalplus Technology (Shenzhen) Inc. EPS (After Tax) not applicabl e 1.06 not applicabl e (0.14) not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e 40,678 700,000 30 838,226 0 30 1,225 837,001 0 81,731 (4) 80,438 (4) 73,864 702,317 830,000 552,897 877,982 50 7,783 552,847 870,199 0 20,761 (6,079) (5,663) (4,795) (11,787) 2,526,650 2,526,656 2,526,661 1,460,43 8 1,460,43 6 1,460,41 5 1,460,43 8 0 1,460,43 70,116 70,116 70,116 0 6 70,118 70,118 70,117 1,460,41 5 0 70,521 70,305 70,118 489,856 509,855 53,071 456,784 152,997 64,883 21,637 918,480 772,917 22,463 750,454 127,789 (12,379) (19,319) 569,600 917,130 722,720 194,410 211,519 25,501 60,077 119,054 4,883 83 4,800 1,294 (3,598) (4,656) 118,179 56,197 4,371 51,826 10,274 (4,640) 1,747 289,357 2,435 635,091 233,549 3,578 59,494 5,000 54,000 0 2,435 4,786 228,763 3,578 59,391 0 103 1,088,158 2,863,20 9 753,896 2,109,31 3 0 15,302 0 9,996 2,845,57 8 (31,248) 5,193 (205) 9,848 (31,245) 18,896 (190) 9,789 0.30 (0.38) 1.81 318,834 282,037 2.59 543,683 499,149 0 499,149 15,407 15,407 15,407 543,683 499,149 0 499,149 15,407 15,407 15,407 532,576 517,959 24,688 493,271 141,066 3,755 13,831 114 not applicabl e not applicabl e not applicabl e Generalplus Technology (HK) Inc. Sunplus mMobile Inc. Sunplus Innovation Technology Inc. Sunplus mMedia Inc. Jumplux Technology Inc. Award Glory Ltd. Sunny Fancy Ltd. Giant Kingdom Ltd. Giant Rock Inc. Rudong Jiexin Electronic Technology Co., Ltd. Chongqing Shuangxin Technology Co., Ltd. Worldplus Holdings L.L.C. Lingyao Technology (Shenzhen) Co., Ltd. GenkiTek 11,107 162,400 8,266 29,516 2,265 110 6,001 29,406 524,501 250,000 240,000 1,876,11 4 566,219 70 1,309,89 5 5,818 49,515 (18,257) 5,888 31,258 859 (168) 1,576 (170) not applicabl e (0.01) 574,132 (346) (26,757) 467,669 (334) (25,900) 9.09 (0.01) (1.08) 12,393 0 1,823,93 7 19 58,952 219,960 268,500 0 268,500 107,601 107,601 107,601 219,960 268,500 0 268,500 107,601 107,601 107,601 25,157 301 0 301 204 178 167 82,134 163,631 0 163,631 119,303 112,648 112,579 87,540 27,947 624 27,323 0 (44,680) (43,990) 131,310 103,679 22,546 81,133 61,534 (39,244) (38,399) 112,669 104,569 0 104,569 0 (5,146) (5,146) 83,334 32,000 63,706 26,692 8,983 2,663 54,723 24,029 8,111 307 (5,274) (8,036) (3,813) (7,971) not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e not applicabl e (2.49) Note: The financial information of the above business relationship is prepared using the International Financial Reporting Standards. 115 9.1.7 Consolidated Financial Statement of Sunplus Affiliates Relationship Statement of Consolidated Financial Statements The Company's 2020(as of January 1, 2020 to December 31, 2020) shall be included in the preparation of the Company's consolidated financial report in accordance with the Guidelines for the preparation of the consolidated financial report and relational report on the relationship between the business combination business report. In accordance with the International Financial Reporting Standards No. 10 should be included in the preparation of parent company consolidated financial report of the company are the same, and the relationship between the consolidated financial statements should be disclosed in the relevant information in the parent company's consolidated financial statements have been exposed, there is no further preparation of the relationship between the consolidated financial report. Company Name: Sunplus Technology Co., Ltd Person in charge: Chou-Chye Huang March 29, 2021 331 9.2 Private Placement Securities Not Applicable 9.3 Status of Sunplus Common Shares/GDRs Acquired, Disposed of, or Held by Subsidiaries Company Capital Source of Fund % Owned by Sunplus Transaction Date Amount of Acquisition Amount of Disposal Investment Income Unit: NT$K, shares Balance (by the Date of this Report Printed) Balance of Pledged Shares Balance of Guarantee Provided by Sunplus Balance of Financing Provided by Sunplus Lin Shih Investment Co., Ltd. $700,000 Self-owned reserves 100% 2001.12.25 2002.07.02 2003.07.13 2004.08.23 2005.08.23 2006.08.05 2007.03.26 2007.09.05 3,870,196 shares & $95,605 967,549 shares Capital increase from profits and capital surplus 483,774 shares Capital increase from profits and capital surplus 532,151 shares Capital increase from profits and capital surplus 290,614 shares Capital increase from profits and capital surplus 306,132 shares Capital increase from profits and capital surplus -3,220,429 shares decreased for capital reduction & 32,204 160,538 shares 331 - - - - - - None None None None None None - - - None None None - - - None None None - - - 2,503,705 shares Pledged None None - - - 500,741 shares Pledged None None - - - - - - None None None 380,000 shares None None Capital increase from profits and capital surplus 169,471 shares Capital increase from profits and capital surplus 2008.09.08 Pledged - - - 3,384,446 shares Solution None None By the date of this report printed - - - 3,559,996 shares $63,401 None None None 332 9.4 Special Notes None 9.5 Any Events Impact to Shareholders’ Equity and Share Price None 333 Sunplus Technology Co., Ltd. Person in charge: Chou-Chye Huang Published on May 15, 2021 334 

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