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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 |
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered | ||
| * | Traded in the form of American Depositary Receipts evidencing American Depositary Shares (the “ADSs”), each representing two Common Shares of ASE Technology Holding Co., Ltd. |
| ☒ | Accelerated Filer | ☐ | Non-accelerated Filer |
☐ | ||||||
| Emerging growth company | ||||||||||
| U.S. GAAP ☐ | |
Other ☐ | ||||||
| by the International Accounting Standards Board | ☒ |
| ** | As a result of the exercise of employee share options subsequent to December 31, 2023, as of January 31, 2024, we had 4,388,322,087 Common Shares outstanding. |
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| Item 1. Identity of Directors, Senior Management and Advisers |
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USE OF CERTAIN TERMS
Unless the context otherwise requires, references in this annual report to:
| • | “Advanced Shanghai” are to ASE Advanced Semiconductor (Shanghai) Limited, a company incorporated under the laws of the P.R.C. that spun off from ASESH AT in November 2020 and was disposed of in December 2021; |
| • | “AMPI” are to Advanced Microelectronic Products Inc., a company incorporated under the laws of the R.O.C.; |
| • | “ASDI” are to ASDI Assistance Direction S.A.S., a simplified limited liability company (societe par actions simplifiee) organized under the laws of France; |
| • | “ASE,” “ASE Inc.” or “ASE Group” are to Advanced Semiconductor Engineering Inc. and, unless the context requires otherwise, its subsidiaries; |
| • | “ASE Chung Li” are to ASE (Chung Li) Inc., a company previously incorporated under the laws of the R.O.C. that merged into ASE Inc. in 2004; |
| • | “ASE Electronics” are to ASE Electronics Inc., a company incorporated under the laws of the R.O.C.; |
| • | “ASE Japan” are to ASE Japan Co. Ltd., a company incorporated under the laws of Japan; |
| • | “ASE Korea” are to ASE (Korea) Inc., a company incorporated under the laws of the Republic of Korea; |
| • | “ASE Material” are to ASE Material Inc., a company previously incorporated under the laws of the R.O.C. that merged into ASE Inc. in 2004; |
| • | “ASE Shanghai” are to ASE (Shanghai) Inc., a company incorporated under the laws of the P.R.C.; |
| • | “ASE Test” are to ASE Test Limited, a company incorporated under the laws of Singapore; |
| • | “ASE Malaysia” are to ASE Electronics (M) Sdn. Bhd., a company incorporated under the laws of Malaysia; |
| • | “ASE Test Taiwan” are to ASE Test, Inc., a company incorporated under the laws of the R.O.C.; |
| • | “ASEH,” the “Company,” “ASE Technology Holding,” “we,” “us” or “our” are to ASE Technology Holding Co., Ltd. and, unless the context requires otherwise, its subsidiaries; |
| • | “ASEKS” are to ASE (Kunshan) Inc., a company incorporated under the laws of the P.R.C. and was disposed of in December 2021; |
| • | “ASEN” are to Suzhou ASEN Semiconductors Co., Ltd., a company incorporated under the laws of the P.R.C. and was disposed of in December 2021; |
| • | “ASESH AT” are to ASE Assembly & Test (Shanghai) Limited, formerly known as Global Advanced Packaging Technology Limited, or GAPT, a company incorporated under the laws of the P.R.C.; |
| • | “ASEWH” are to ASE (Weihai), Inc., a company incorporated under the laws of the P.R.C. and was disposed of in December 2021; |
| • | “Deposit Agreement” are to the deposit agreement, dated April 30, 2018, by and among ASE Technology Holding Co., Ltd., a company organized under the laws of the R.O.C. and previously known as “ASE Industrial Holding Co., Ltd.,” Citibank, N.A., as Depositary, and the Holders and Beneficial Owners of American Depositary Shares issued thereunder; |
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| • | “EMS” are to electronic manufacturing services; |
| • | “EU” are to the European Union; |
| • | “Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended; |
| • | “FAFG” or “FAFG Group” are to Financiere AFG, a simplified limited liability company (societe par actions simplifiee) organized under the laws of France and, unless the context requires otherwise, its subsidiaries; |
| • | “FSC” are to the Financial Supervisory Commission of the R.O.C.; |
| • | “HCC”, “HCC Group” or “Hirschmann” are to Hirschmann Car Communication Holding S.a.r.l., a company organized under the laws of Luxembourg and, unless the context requires otherwise, its subsidiaries; |
| • | “Hung Ching” are to Hung Ching Development & Construction Co. Ltd., a company incorporated under the laws of the R.O.C.; |
| • | “IFRS Accounting Standards” are to International Financial Reporting Standards, International Accounting Standards and Interpretations as issued by the International Accounting Standards Board; |
| • | “ISE Shanghai” are to ISE Labs, China, Ltd., a company incorporated under the laws of the P.R.C.; |
| • | “ISE Labs” are to ISE Labs, Inc., a corporation incorporated under the laws of the State of California; |
| • | “Initial SPIL Tender Offer” are to ASE’s offer to purchase 779,000,000 common shares (including common shares represented by outstanding American depositary shares) of SPIL through concurrent tender offers in the R.O.C. and the U.S., at a price of NT$45 per SPIL common share and NT$225 per SPIL American depositary share, commenced on August 24, 2015 and expired on September 22, 2015; |
| • | “Joint Share Exchange Agreement” are to the joint share exchange agreement entered into between ASE and SPIL on June 30, 2016; |
| • | “Korea” or “South Korea” are to the Republic of Korea; |
| • | “DIR” are to the Department of Investment Review of the R.O.C. Ministry of Economic Affairs; |
| • | “NYSE” are to New York Stock Exchange; |
| • | “PCAOB” are to the Public Company Accounting Oversight Board (United States); |
| • | “PowerASE” are to PowerASE Technology Inc., a company incorporated under the laws of the R.O.C., which was merged into ASE Inc. in 2012; |
| • | “PPA Effects” are to the earnings effects from purchase price allocation (the “PPA”). “PPA of SPIL Acquisition” is the allocation of ASEH’s purchase price of SPIL into identifiable assets acquired and liabilities assumed from SPIL based on their fair values. The fair value write-up results in earnings effects over time which generate increased operating costs, operating expenses, other operating income and expenses and non-operating expenses; |
| • | “P.R.C.” are to the People’s Republic of China; |
| • | “P.R.C. Regulations” are to the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors; |
| • | “QDII” are to qualified domestic institutional investors; |
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| • | “Republic of China,” “the R.O.C.” and “Taiwan” are to the Republic of China, including Taiwan and certain other possessions; |
| • | “R.O.C. Trading Day” are to a day when TWSE is open for business; |
| • | “SEC” are to the Securities and Exchange Commission of the United States; |
| • | “Second SPIL Tender Offer” are to ASE’s offer to purchase 770,000,000 common shares (including common shares represented by outstanding American depositary shares) of SPIL through concurrent tender offers in the R.O.C. and the U.S., at a price of NT$55 per SPIL common share and NT$275 per SPIL American depositary share, commenced on December 29, 2015 and expired on March 17, 2016 due to failure to obtain regulatory approval from the Taiwan Fair Trade Commission (the “TFTC”) prior to the expiration of the Second SPIL Tender Offer; |
| • | “Securities Act” are to the U.S. Securities Act of 1933, as amended; |
| • | “Share Exchange” are to the statutory share exchange pursuant to the laws of the Republic of China, through which ASEH (i) acquired all issued shares of ASE in exchange for shares of ASEH using the share exchange ratio and (ii) acquired all issued shares of SPIL using the cash consideration; |
| • | “SiP” are to system-in-package; |
| • | “SPIL” or “SPIL Group” are to Siliconware Precision Industries Co., Ltd., and, unless the context requires otherwise, its subsidiaries; |
| • | “SPIL Acquisition” are to ASEH’s effort to effect an acquisition of 100% of the common shares and American depositary shares of SPIL pursuant to the Joint Share Exchange Agreement; |
| • | “SZ” are to Siliconware Technology (Suzhou) Limited, a company incorporated under the laws of the P.R.C.; |
| • | “Taiwan-IFRS” are to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the IFRS Accounting Standards as well as related guidance translated by Accounting Research and Development Foundation and endorsed by the FSC; |
| • | “TWSE” are to Taiwan Stock Exchange; |
| • | “Universal Scientific Industrial” or “USI” are to Universal Scientific Industrial Co., Ltd., a company incorporated under the laws of the R.O.C.; |
| • | “USIFR” are to Universal Scientific Industrial (France), a simplified limited liability company (societe par actions simplifiee) organized under the laws of France; |
| • | “USI Shanghai” are to Universal Scientific Industrial (Shanghai) Co., Ltd., a company incorporated under the laws of the P.R.C.; |
| • | “U.S.” refers to the United States of America; |
| • | “USI Group” are to USI Inc. and its subsidiaries; |
| • | “USI Inc.” are to USI Inc., a company incorporated under the laws of the R.O.C.; |
| • | “Wuxi Tongzhi” are to Wuxi Tongzhi Microelectronics Co., Ltd., a company incorporated under the laws of the P.R.C. |
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We publish our financial statements in New Taiwan dollars, the lawful currency of the R.O.C. In this annual report, references to “United States dollars,” “U.S. dollars” and “US$” are to the currency of the U.S.; references to “New Taiwan dollars,” “NT dollars” and “NT$” are to the currency of the R.O.C.; references to “RMB” are to the currency of the P.R.C.; references to “JP¥” are to the currency of Japan; references to “MYR” are to the currency of Malaysia; references to “SGD” are to the currency of the Republic of Singapore; references to “KRW” are to the currency of the Republic of Korea; references to “EUR” are to the currency of the EU; references to “PLN” are to the currency of the Poland; and references to “VND” are to the currency of Vietnam. Unless otherwise noted, all translations from NT dollars to U.S. dollars were made at the exchange rate as set forth in the H.10 weekly statistical release of the Federal Reserve System of the United States (the “Federal Reserve Board”) as of December 29, 2023, which was NT$30.62=US$1.00, and all translations from RMB to U.S. dollars were made at the exchange rate as set forth in the H.10 weekly statistical release of the Federal Reserve Board as of December 29, 2023, which was RMB7.0999=US$1.00. All amounts translated into U.S. dollars in this annual report are provided solely for your convenience and no representation is made that the NT dollar, RMB or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or NT dollars/RMB, as the case may be, at any particular rate or at all. On March 15, 2024, the exchange rate between NT dollars and U.S. dollars as set forth in the H.10 weekly statistical release by the Federal Reserve Board was NT$31.66=US$1.00. On March 15, 2024, the exchange rate between RMB and U.S. dollars as set forth in the H.10 weekly statistical release by the Federal Reserve Board was RMB7.1953=US$1.00.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although these forward-looking statements, which may include statements regarding our future results of operations, financial condition, or business prospects, are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as they relate to us, are intended to identify these forward-looking statements in this annual report. Our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including risks associated with cyclicality and market conditions in the semiconductor or electronics industry; changes in our regulatory environment, including our ability to comply with new or stricter environmental regulations and to resolve environmental liabilities; demand for the outsourced semiconductor packaging, testing and EMS we offer and for such outsourced services generally; the highly competitive semiconductor or manufacturing industry we are involved in; our ability to introduce new technologies in order to remain competitive; international business activities; our business strategy; our future expansion plans and capital expenditures; the strained relationship between the R.O.C. and the P.R.C.; general economic and political conditions; the recent global economic crisis; possible disruptions in commercial activities caused by natural or human-induced disasters; fluctuations in foreign currency exchange rates; and other factors. For a discussion of these risks and other factors, see “Item 3. Key Information—Risk Factors.”
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PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
[RESERVED]
CAPITALIZATION AND INDEBTEDNESS
Not applicable.
REASON FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
RISK FACTORS
Below please find a summary of the principal risks we face, organized under relevant headings.
Risks Relating to Our Business
| • | Since we are dependent on the highly cyclical semiconductor and electronics industries and conditions in the markets for the end-use applications of our products, our revenues and net income may fluctuate significantly. |
| • | A reversal or slowdown in the outsourcing trend for semiconductor packaging and testing services and EMS could adversely affect our growth prospects and profitability. |
| • | If we are unable to compete favorably in the highly competitive markets of semiconductor packaging and testing and EMS, our revenues and net income may decrease. |
| • | Our profitability depends on our ability to respond to rapid technological changes in the semiconductor industry. |
| • | Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and ADSs. |
| • | Due to our high percentage of fixed costs, we may be unable to maintain our gross margin at past levels if we are unable to achieve relatively high capacity utilization rates. |
| • | We may not be successful in pursuing mergers and acquisitions. Any mergers or acquisitions we make may lead to a diversion of management resources. |
| • | The loss of a large customer or disruption of our strategic alliance or other commercial arrangements with semiconductor foundries and providers of other complementary semiconductor manufacturing services may result in a decline in our revenues and profitability. |
| • | We rely on a limited number of key customers in certain products for our revenues, and our results of operations may be adversely affected by a reduction of our key customers’ business. |
| • | Our revenues and profitability may decline if we are unable to obtain adequate supplies of raw materials and energy in a timely manner and at a reasonable price. |
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| • | If we are unable to manage our expansion or investments effectively, our growth prospects may be limited, and our future profitability and core business operations may be adversely affected. |
| • | If we are unable to obtain sufficient funding in a timely manner or on acceptable terms, our results of operations and financial conditions may be materially and adversely affected. |
| • | Any global political, economic, or financial crisis, as well as trade barriers, could adversely affect our business, financial condition, and results of operations. |
| • | Inflation and fluctuations in interest rates could adversely affect our business, financial condition, results of operations, and cash flows. |
| • | Fluctuations in exchange rates could adversely affect our business, results of operations, or financial condition. |
| • | Any impairment charges may have a material adverse effect on our income. |
| • | Cyber-attacks could harm our business, financial condition, and results of operations. |
Risks Relating to Taiwan, R. O. C.
| • | Strained relations between the R.O.C. and the P.R.C. and disruptions in Taiwan’s political environment caused by domestic political events could negatively affect our business and the market value of our Common Shares and ADSs. |
| • | As a substantial portion of our business and operations are located in Taiwan, we are vulnerable to natural disasters including earthquakes, typhoons, droughts, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations. |
Risks Relating to Ownership of Our Common Shares and the ADSs
| • | The market for our Common Shares and the ADSs may not be liquid. |
| • | If a non-R.O.C. holder of ADSs withdraws and holds Common Shares, such holder of ADSs will be required to appoint a tax guarantor, local agent, and custodian in the R.O.C. and register with the TWSE or the Taipei Exchange in order to buy and sell securities on the TWSE. |
| • | We may not continue to declare cash dividends in any particular amount. |
| • | Holders of Common Shares and ADSs may experience dilution if we issue stock bonuses, share options, or restricted stocks to employees or sell additional equity or equity-linked securities. |
Below please find the detailed analysis of the principal risks we face.
Risks Relating to Our Business
Since we are dependent on the highly cyclical semiconductor and electronics industries and conditions in the markets for the end-use applications of our products, our revenues and net income may fluctuate significantly.
Our business is affected by market conditions in the highly cyclical semiconductor and electronics industries. Most of our customers operate in this industry, and variations in order levels from our customers and service fee rates may result in volatility in our revenues and net income. From time to time, the semiconductor and electronics industries experience significant, and sometimes prolonged, downturns. As our business is, and will continue to be, dependent on the requirements for independent packaging, testing and EMS, any future downturn in the industry would reduce demand for our services. If we cannot reduce our costs or adjust our product mix to sufficiently offset any decline in sales volumes, our profitability will suffer, and we may incur losses.
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Market conditions in the semiconductor and electronics industries depend to a large degree on conditions in the markets for the end-use applications of various products, such as communications, computing, and consumer electronics products. Any deterioration of conditions in the markets for the end-use applications would reduce demand for our services and would likely have a material adverse effect on our financial condition and results of operations. In 2023, approximately 50.8%, 18.1% and 31.1% of our operating revenues from packaging and testing of semiconductors were attributed to communications, computing and consumer electronics/industrial/automotive/other applications, respectively. In the same year, approximately 35.9%, 8.9%, 31.6%, 13.3% and 10.3% of our operating revenues from EMS were attributed to communications, computing, consumer electronics applications, industrial, and automotive applications and others, respectively. Across end-use applications, our customers face intense competition and significant shifts in demand, which could put pricing pressure on our services and may adversely affect our revenues and net income.
A reversal or slowdown in the outsourcing trend for semiconductor packaging and testing services and EMS could adversely affect our growth prospects and profitability.
Semiconductor manufacturers that have their own in-house packaging and testing capabilities, known as integrated device manufacturers and original equipment manufacturers, have increasingly outsourced stages of the production process, including packaging, testing, electronic manufacturing, and assembly, to independent companies to reduce costs, eliminate product complexity, and meet fast-to-market requirements. In addition, the availability of advanced independent semiconductor manufacturing services has also enabled the growth of so-called “fabless” semiconductor companies that focus exclusively on design and marketing and outsource their manufacturing, packaging, and testing requirements to independent companies. We cannot ensure that these manufacturers and companies will continue to outsource their packaging, testing, and manufacturing requirements to third parties like us. Furthermore, during an economic downturn, these integrated device manufacturers typically rely more on their own in-house packaging and testing capabilities, therefore decreasing their need to outsource. A reversal of, or a slowdown in, this outsourcing trend could result in reduced demand for our services and adversely affect our growth prospects and profitability.
Any global economic downturn could adversely affect the demand for our products and services, and a protracted global economic crisis would have a material adverse effect on us.
Global economic growth in recent years has been slow and faces more uncertainty. Our revenue and net income are impacted to a significant extent by economic and financial conditions in Asia and globally, as well as economic and financial conditions specific to our business. The global economy, markets and levels of spending by businesses and consumers are influenced by many factors beyond our control, including pandemics and other natural disasters.
In addition, there have been concerns about the relationships among the P.R.C. and other Asian countries, the relationship between the P.R.C. and the U.S., as well as the relationship between the U.S. and certain other Asian countries such as North Korea, which may result in or intensify potential conflicts in relation to territorial, regional security and trade disputes. The Russia-Ukraine conflict has resulted in significant disruptions to supply chains, logistics and business activities in the region. The conflict has also caused, and continues to intensify, significant geopolitical tensions in Europe and across the globe. The resulting sanctions imposed are expected to have significant impacts on the economic conditions of the countries and markets targeted by such sanctions, and may have unforeseen, unpredictable secondary effects on global energy prices, supply chains, and other aspects of the global economy.
As of the date of this annual report, our business, results of operations, and financial condition have not been materially affected by the global trade tensions, military conflicts, or pandemics. Nevertheless, any economic downturn or crisis may cause our customers to cancel or reduce planned expenditures for our products and services. Any uncertainty or significant volatility in global economic conditions, including inflation, interest rates, the continuing global supply chain issue, and economic sanctions and restrictive measures in response to the Russia-Ukraine conflict, may negatively affect our business, results of operations, and financial condition.
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If we are unable to compete favorably in the highly competitive markets of semiconductor packaging and testing and EMS, our revenues and net income may decrease.
The markets of semiconductor packaging and testing and EMS are very competitive. We face competition from many sources, including other independent semiconductor packaging and testing companies, integrated device manufacturers, and other EMS providers with large-scale manufacturing capabilities who can quickly react to market changes. In addition, some foundry players have actively invested and expanded their advanced packaging capacity and gained some customer bases with their services and solutions.
We believe that the principal competitive factors in our industry are:
| • | technological expertise; |
| • | ability to provide total solutions to our customers, including integrated design, manufacturing, packaging and testing and EMS; |
| • | ability to offer interconnect technologies at an optimal scale for our businesses; |
| • | range of package types and testing platforms available; |
| • | ability to work closely with our customers at the product development stage; |
| • | responsiveness and flexibility; |
| • | fast-to-market product development; |
| • | capacity; |
| • | diversity in facility locations; |
| • | production yield; and |
| • | prices. |
We face increasing competition, as most of our customers obtain services from more than one source. Rapid technological advancements and aggressive pricing strategies by our competitors may continue to increase the level of competition. Our ability to successfully compete depends on factors both within and outside of our control and may be constrained by the distinct characteristics and production requirements of individual products. We cannot ensure that we will be able to continue to improve production efficiency and maintain reasonable profit for all our products.
In addition, some of our competitors may have superior financial, marketing, manufacturing, research and development and technological resources than we do. For example, the central government of the P.R.C., as well as provincial and municipal governments, have provided various incentives to domestic companies in the semiconductor industry, including major semiconductor testing and packaging providers, such as Jiangsu Changjiang Electronics Technology Co., Ltd. Similarly, our customers may face competition from their competitors in the P.R.C., and such competitors may also receive significant subsidies from the P.R.C. government. As we are upstream providers, the impact of such government policies on competition and price pressure of our customers may negatively impact our business. Increasing competition may lead to declines in product prices and profitability and could have a material adverse effect on our business, financial condition, results of operations, and future prospects.
Our profitability depends on our ability to respond to rapid technological changes in the semiconductor industry.
The semiconductor industry is characterized by rapid increases in the diversity and complexity of semiconductors. As a result, we expect that we will need to continually offer more sophisticated packaging and testing technologies and processes in order to respond to competitive industry conditions and customer requirements. We have successfully combined our packaging, testing, and materials technologies with the expertise of EMS at the systems level to develop our SiP business. Still, there is no assurance that we will be successful in achieving the features and benefits we expect.
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We continue to develop new products in anticipation of future demand. However, there is no assurance that the launch of any new product will be successful or that we will be able to produce enough of these products to meet market demand. If we fail to develop, or obtain access to, advances in packaging or testing technologies or processes, we may become less competitive and less profitable. In addition, advances in technology typically lead to declining average selling prices for semiconductors packaged or tested with older technologies or processes. As a result, if we cannot reduce the costs associated with our services, the profitability of a given service and our overall profitability may decrease over time.
Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and the ADSs.
Our operating results have varied significantly from period to period and may continue to vary in the future. Downward fluctuations in our operating results may result in decreases in the market price of our Common Shares and the ADSs. Among the more important factors affecting our quarterly and annual operating results are the following:
| • | changes in general economic and business conditions, particularly the cyclical nature of the semiconductor and electronics industries and the markets served by our customers; |
| • | our ability to quickly adjust to unanticipated declines or shortfalls in demand and market prices; |
| • | changes in prices for our products or services; |
| • | volume of orders relative to our packaging, testing and manufacturing capacity; |
| • | changes in costs and availability of raw materials, equipment and labor; |
| • | our ability to obtain or develop substitute raw materials with lower cost; |
| • | our ability to successfully develop or market new products or services; |
| • | our ability to successfully manage product mix in response to changes in market demand and differences in margin associated with different products; |
| • | timing of capital expenditures in anticipation of future orders; |
| • | our ability to acquire, or design and produce, cost-competitive interconnect materials, and provide integrated solutions for EMS; |
| • | fluctuations in the exchange rate; |
| • | fluctuations in interest rates; and |
| • | typhoons, earthquakes, droughts, epidemics, tsunamis and other natural disasters, as well as industrial and other incidents such as fires and power outages. |
Due to the factors listed above, our future operating results or growth rates may be below the expectations of research analysts and investors. If so, the market price of our Common Shares and the ADSs, and thus the market value of your investment, may fall.
Due to our high percentage of fixed costs, we may be unable to maintain our gross margin at past levels if we are unable to achieve relatively high capacity utilization rates.
Our operations, in particular our testing operations and leading-edge advanced packaging (3D packaging, Fan-out Chip-on-Substrate and 2.5D packaging), are characterized by relatively high fixed costs. We expect to continue to incur substantial depreciation and other expenses in connection with our acquisitions of equipment and facilities. Our profitability depends not only on the pricing levels for our services or products, but also on utilization rates for our machinery and equipment, commonly referred to as “capacity utilization rates.” Increases or decreases in our capacity utilization rates can significantly affect gross margins since the unit cost generally decreases as fixed costs are allocated over a larger number of units. In periods of low demand, we experience relatively low capacity utilization rates in our operations, which lead to reduced margins. We cannot ensure that we will be able to maintain or surpass our past gross margin levels if we cannot consistently achieve or maintain relatively high capacity utilization rates.
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We may not be successful in pursuing mergers and acquisitions. Any mergers or acquisitions we make may lead to a diversion of management resources.
Our future success may depend on acquiring businesses and technologies, making investments, or forming joint ventures that complement, enhance, or expand our current product offerings or otherwise offer growth opportunities. In pursuing such acquisitions, we may face competition from other companies in the semiconductor industry. Our ability to acquire or invest in suitable targets may be limited by applicable laws and regulations in the R.O.C., P.R.C., U.S., European countries, and other jurisdictions where we do business. Even if we are successful in making such acquisitions or investments, we may have to expend substantial amounts of cash, incur debt, assume loss-making divisions, and incur other types of expenses. We may also face challenges in successfully integrating any acquired companies into our existing organization or in creating the anticipated synergistic benefits. Each of these risks could have a material adverse effect on our business, financial condition, and results of operations.
The loss of a large customer or disruption of our strategic alliance or other commercial arrangements with semiconductor foundries and providers of other complementary semiconductor manufacturing services may result in a decline in our revenues and profitability.
Although we have a large customer base, we have derived, and expect to continue to derive, a large portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor and electronics industries. Our five largest customers together accounted for approximately 49.6%, 50.2%, and 48.0% of our operating revenues in 2021, 2022, and 2023, respectively. One customer accounted for more than 10.0% of our operating revenues in 2021, 2022, and 2023. The demand for our services from a customer is directly dependent upon that customer’s level of business activity, which could vary significantly from year to year. Our key customers typically operate in the cyclical semiconductor and electronic business and order levels have significantly varied from period to period in the past and may vary in the future. Some of these companies are relatively small, have limited operating histories and financial resources, and are highly exposed to the cyclicality of the industry. We cannot ensure that these customers or any other customers will continue to place orders with us in the future at the same levels as in past periods. The loss of one or more of our significant customers, or reduced orders by any one of them, and our inability to replace these customers or make up for such orders, could adversely affect our revenues and profitability. In addition, we have in the past reduced, and may in the future be requested to reduce, our prices to limit the level of order cancellations. Any price reduction would likely reduce our margins and profitability.
Since 1997, we have maintained a strategic alliance with Taiwan Semiconductor Manufacturing Company Limited, or TSMC, one of the largest dedicated semiconductor foundries in the world. TSMC designates us as its non-exclusive preferred provider of packaging and testing services for semiconductors manufactured by TSMC. Such strategic alliances, as well as our other commercial arrangements with providers of other complementary semiconductor manufacturing services, enable us to offer total semiconductor manufacturing solutions to our customers. These strategic alliances and other commercial arrangements may not achieve their anticipated commercial benefits and may be terminated at any time. Any failure in successfully maintaining such alliances, any termination of such alliances or our failure to enter substantially similar strategic alliances or commercial arrangements may adversely affect our competitiveness, revenues, and profitability.
We rely on a limited number of key customers in certain products for our revenues, and our results of operations may be adversely affected by a reduction of our key customers’ business.
Our results of operations also depend on the performance and business of our key customers. Accordingly, risks that could seriously harm our key customers could harm us as well, including:
| • | loss of market share for our key customers’ products; |
| • | recession in our key customers’ markets; |
| • | failure of their products to gain widespread commercial acceptance; and |
| • | our key customers’ inability to manage their operations efficiently and effectively. |
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The launch and market acceptance of our individual key customers’ products could significantly impact our product and customer mix, resulting in significant volatility in the demand for the solutions we offer and our results of operations. It is also possible that a key customer’s market share with respect to its product may decline as its competitors introduce new products, which could adversely affect our results of operations, particularly if we are unable to sell our solutions to such competitors. Furthermore, sales of our key customers’ products are subject to seasonal fluctuation.
Our revenues and profitability may decline if we are unable to obtain adequate supplies of raw materials and energy in a timely manner and at a reasonable price.
Our operations, such as packaging operations, substrate operations, and EMS require that we obtain adequate supplies of raw materials on a timely basis. Shortages in the supply of raw materials have in the past resulted in occasional price increases and delivery delays. In addition, the operations of some of our suppliers are vulnerable to natural disasters, such as earthquakes and typhoons, the occurrences of which may deteriorate and prolong the shortage or increase the uncertainty of the supply of raw materials. For example, after the Fukushima nuclear disaster in 2011, we experienced a disruption to the supply of raw materials from Japan for about three to four weeks due to the fear of radiation contamination and the reduction or postponement in production by some of our Japanese suppliers. Although the purchase of supplies from Japan has been restored to the previous level, we cannot ensure that we will not suffer long term impacts from future earthquakes and tsunamis.
Raw materials such as IC substrates are prone to supply shortages since such materials are produced by a limited number of suppliers, such as Kinsus Interconnect Technology Corporation, Nan Ya Printed Circuit Board Corporation, LG Innotek Co., Ltd., Toppan Photomask Co., Ltd., and Unimicron Technology Corporation. The growing demand for high-performance computing driven by artificial intelligence (or “AI”), and the supporting infrastructure such as servers, data centers, and networking equipment has resulted in increased demand for semiconductor chips. However, this demand has also led to greater complexity in chip and substrate design. Specifically, the Ajinomoto Build-up Film (ABF) substrate, a crucial component for manufacturing high-performance chips, may face a higher risk of supply shortages or extended lead times due to potential strong demand for AI, elevated manufacturing difficulty, and heavy capital requirements for capacity expansion.
Operations conducted through our wholly owned subsidiaries, ASE Electronics and ASE Shanghai, have improved our ability to obtain IC substrates on a timely basis and at a reasonable cost. In 2023, our interconnect materials operations supplied approximately 6.6% of our consolidated substrate requirements by value. We do not expect that these internal interconnect materials operations will be able to meet all our interconnect materials requirements for the foreseeable future. Consequently, we will remain dependent on market supply and demand for our substrates.
In addition, recent fluctuations in prices of precious metals, such as gold, have affected the price at which we have been able to purchase the principal raw materials we use in our packaging processes. We cannot guarantee that we will not experience shortages in the future or that we will be able to obtain adequate supplies of raw materials in a timely manner or at a reasonable price. Our revenues and net income could also decline under these circumstances, or if there are significant increases in the costs of raw materials that we cannot pass on to our customers.
Moreover, energy prices fluctuate based on events outside of our control. Rising global energy prices in recent years pose a significant challenge to our operations. As AI becomes more prevalent and developed, we expect the demand for and consumption of electricity to further increase. Any energy price increases may raise our costs and lower our margins. Although we may be able to pass through the impact of some energy price charges to some of our customers, we may not be able to pass all of these cost increases on to our customers. As a result, our results of operations and financial performance may be adversely impacted by such cost increases.
If we are unable to manage our expansion or investments effectively, our growth prospects may be limited, and our future profitability and core business operations may be adversely affected.
We have significantly expanded our operations through acquisitions and joint ventures in recent years. We anticipate that further expansion will be required as we adapt to the changing needs of customers. For our expansions and investments, see “Item 4. Information on the Company—Business Overview—Strategy—Strategically Expand and Streamline Production Capacity.”
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Expansion in general increases the complexity of operations and places significant strains on our management, operational, and financial resources. We also face uncertainties in creating strategic and operational synergies as we combine existing operations with the new sites. Furthermore, we may have limited experience in operating business in certain new countries or regions. As a result of our expansion, we may incur additional costs and expenses, such as hiring and training additional employees, devoting more of management’s attention to operations and compliance, and allocating additional resources in dealing with potential disputes relating to its operations. The expected growth and expansion of our business will place significant demands on our management and operations teams and require significant additional resources to meet our needs, which may not be available at a reasonable price. If we cannot effectively manage our expansion or investments, we may not be able to execute our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy customer requirements, or maintain high-quality product offerings, any of which could lead to inefficiencies, redundancies, and result in reduced growth prospects and profitability. We cannot ensure that we will be able to deploy and manage new business initiatives successfully or effectively.
If we are unable to obtain sufficient funding in a timely manner or on acceptable terms, our results of operations and financial conditions may be materially and adversely affected.
Our businesses regularly require significant capital investments in order to support the expansion of our facilities both domestically and globally. If we are required to rapidly increase our current geographical footprint to fulfill our customers’ needs, our capital requirements may increase suddenly and significantly. In addition to capacity expansion, we will also need increasing levels of resources to fund our research and development activities in order to remain competitive, and to support operations outside of its existing footprint. We believe that our existing cash and cash equivalents, marketable securities, expected cash flow from operations, and existing credit lines under our loan facilities will be sufficient to meet our capital expenditures, working capital, and cash obligations under our existing debt and lease arrangements, and other requirements for at least the next 12 months.
Our ability to obtain external financing in the future is subject to a variety of uncertainties, including:
| • | our future financial condition, results of operations, and cash flows; |
| • | general market conditions for financing activities by semiconductor or electronics companies; and |
| • | economic, political, and other conditions in Taiwan and elsewhere. |
If we are unable to obtain new or additional land or land use rights, additional equipment, or facilities in a timely manner and at a reasonable cost, our competitiveness and future profitability may be adversely affected.
In order to meet customer demand, we need to expand existing facilities or obtain suitable land for construction of new facilities. Both expansion and construction projects are currently underway or being contemplated. Such expansion or construction requires us to obtain land use or development rights. If we are unable to obtain new or additional land or use rights in a timely manner, we could experience significant fulfillment delays in our customers’ orders, resulting in negative impacts on our results of operations. In addition, semiconductor businesses are capital intensive and require significant investment in expensive equipment manufactured by a limited number of suppliers. The market for semiconductor equipment is characterized by intense demand, limited supply, and long delivery cycles. Our operations and expansion plans depend on our ability to obtain a significant amount of such equipment from a limited number of suppliers. From time to time, we have also leased equipment. We have no binding supply agreements with any of our suppliers and acquire our equipment on a purchase order basis, which exposes us to changing market conditions and other substantial risks. For example, shortages of capital equipment could result in an increase in the price of equipment and longer delivery times. Semiconductor products and services also require sizeable facilities. If we are unable to obtain equipment or facilities in a timely manner, we may be unable to fulfill our customers’ orders, which could adversely affect our growth prospects as well as financial condition and results of operations. See “Item 4. Information on the Company—Business Overview—Equipment.”
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Our global manufacturing and sales activities subject us to risks associated with legal, political, economic, or other conditions which could negatively affect our business, financial status, and the market value of our Common Shares and ADSs.
Our principal executive office and production facilities are in the R.O.C, and the majority of our net revenues are derived from our operations in the R.O.C. and the P.R.C. In addition, we have operations worldwide and a significant percentage of our revenue comes from sales to overseas locations. Changes in policies and laws, including environmental regulations, as well as general political and economic conditions, security risks, health conditions, and possible disruptions in transportation networks in the various countries in which we operate, could adversely affect our business, and negatively impact our results of operations as well as the market price and liquidity of our Common Shares and ADSs.
Any global political, economic, or financial crisis, as well as trade barriers, could adversely affect our business, financial condition, and results of operations.
Any future political turmoil could cause revenue or profits for the semiconductor industry as a whole to decline dramatically. If economic or financial conditions for our customers were to deteriorate, the demand for our products and services may decline, which could adversely affect our business, financial condition, and results of operations.
Political changes in the U.S. have created uncertainty regarding future U.S. trade policies. Recently, the U.S. government has called for changes to its domestic and foreign policy, including policies toward the P.R.C. and Russia. Specifically, U.S.-P.R.C. trade relations remain uncertain as the U.S. continues to add more P.R.C. companies to the entity list and implements more regulations aimed at advanced computing, semiconductor manufacturing, and AI. Further, the U.S. and other countries have imposed sanctions and revised export control and other regulations against Russia in response to the military aggression against Ukraine. If the U.S. expands licensing requirements and regulatory controls in the future, or if tariffs on foreign-sourced goods imported into the U.S. continue to rise, our U.S. customers may seek new suppliers in the U.S. or other countries, which could adversely affect our business, financial condition and results of operations. Also, in response to U.S. trade restrictions, the P.R.C. government has intensified its use of cash incentives and policy support for domestic semiconductor companies, as part of the drive to achieve greater self-sufficiency in semiconductor production amid heightened rivalry with the U.S., reducing reliance on foreign suppliers and adds to the uncertainty of our business related to the P.R.C. supply chain.
Furthermore, increasing economic uncertainty and the related investment risk in the P.R.C. resulting from trade tensions have heightened customers’ concerns regarding production in the region. We build flexible and resilient supply chains to address shifts in market conditions and to satisfy customer needs, broadening our markets through expansion of overseas operations, joint ventures, acquisitions, and other strategic investments. While we strive to maintain a cost-competitive manufacturing and attract customers through supply chain diversification, fragmented operations may increase our vulnerability to market disruptions and adversely affect our results of operations.
We do business within the P.R.C. This may expose us to additional political, regulatory, economic, and foreign investment risks.
We have packaging, testing, EMS, and real estate subsidiaries in the P.R.C. that require approval and compliance with regulatory requirements. However, P.R.C. laws and regulations are often subject to varying interpretations, means of enforcement, and additional approvals from the relevant governmental authorities, which may be delayed or denied. The P.R.C. government holds significant discretion in matters relating to foreign investment, which may adversely affect our operations.
In addition, our controlling interest in USI Shanghai, an entity currently listed on the Shanghai Stock Exchange under the symbol “601231,” makes us vulnerable to extreme price and volume fluctuations in the P.R.C. stock market that may indirectly affect the market price of our Common Shares and ADSs.
Furthermore, we have made several investments in the real estate development businesses in the P.R.C. The P.R.C. property market is volatile and may experience undersupply or oversupply, as well as property price fluctuations. Central and local governments frequently adjust monetary and other fiscal policies to prevent or curtail the overheating of the economy. Such policies may lead to changes in market conditions, including price instability, and imbalance of supply and demand in respect to office, residential, retail, entertainment, cultural, and intellectual properties. Our exposure to risks related to real estate development may also increase over time as a result of our expansion into such a business. We may continue to make investments in this area in the future and our diversification in this industry may put pressure on our managerial, financial, operational, and other resources. There can be no assurance that our investments in such a business will yield the anticipated returns and that our expansion into such a business, including the resulting diversion of management’s attention, will not adversely affect our core business operations.
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The escalation of tensions between South Korea and North Korea could have an adverse effect on our operations in South Korea and the market value of our shares.
The political relationship between South Korea and North Korea has been tense throughout Korea’s modern history. The level of tension between the two countries has heightened and may increase abruptly as a result of current or future events. In recent years, there have been increasing security concerns stemming from North Korea’s nuclear weapons and long-range missile testing, and uncertainty regarding North Korea’s actions and potential responses from the international community. Although we do not derive any revenue from, nor sell any products in, North Korea, any further rising tension on the Korean Peninsula could affect our results of operations. For example, if North Korea experiences a leadership crisis, high-level contacts between South Korea and North Korea break down or military conflicts occur, could have a material adverse effect on our South Korea subsidiary, our business, financial condition, results of operations, and the market value of our common stock.
We depend on select personnel and could be negatively affected by the loss of their services.
We depend on the continued service of our executive officers and skilled technical personnel. Our business could suffer if we lose the services of any of these personnel and cannot adequately replace them. Although some of these management personnel have entered into employment agreements with us, they may nevertheless leave before the expiration of these agreements. We are not insured against the loss of the services of any of our personnel. In addition, the resulting disruption may shift these and other employees’ attention from our business operations.
We may be required to increase substantially the number of employees as a result of our expansion plans, and there is intense recruiting and hiring competition in this industry. We may not be able to retain our present personnel or attract additional necessary qualified personnel. In addition, we may need to increase employee compensation levels in order to retain our existing officers and employees and attract the additional personnel that we expect to require. Recently, some companies have accelerated efforts to maliciously poach talented Taiwan semiconductor experts by offering high-level positions with substantial salaries. If the number of malicious acts involving technology theft increase, Taiwan’s semiconductor industry would be seriously affected and our business would be adversely jeopardized.
Furthermore, a portion of the workforce at our facilities in Taiwan is foreign workers employed under work permits, which are subject to government regulations on renewal and other terms. Consequently, our business could suffer if Taiwan’s regulations relating to the employment of foreign workers were to become significantly more restrictive or if we are otherwise unable to attract or retain these workers at a reasonable cost.
The ongoing legal proceeding involving Dr. Tien Wu may have an adverse impact on our business and cause our Common Shares and ADS price to decline.
Dr. Tien Wu, our director and chief operating officer, was involved in a criminal proceeding brought by the Taiwan Kaohsiung District Prosecutors Office. The indictment alleged that Dr. Tien Wu violated Article 157-1 of the R.O.C. Securities and Exchange Act for insider trading activities involving SPIL’s common shares conducted during the Initial SPIL Tender Offer, the Second SPIL Tender Offer, and negotiations of the memorandum of understanding in connection with the SPIL Acquisition. Dr. Tien Wu was accused of informing a friend about the aforementioned tender offers and negotiation ahead of the public announcements. After an investigation spanning over two years, the Taiwan Kaohsiung District Court, on February 5, 2020, found Dr. Tien Wu NOT guilty. On March 20, 2020, the Taiwan Kaohsiung District Prosecutors Office filed an appeal against the February 5, 2020 judgment, and the appeal was rejected by the Taiwan High Court Kaohsiung Branch Court on June 9, 2021 (the “June 9 judgment”). On July 2, 2021, the Kaohsiung Branch, Taiwan High Prosecutors Office filed another appeal against the June 9 judgment. The Supreme Court of the R.O.C. reversed the June 9 judgment and remanded this case to the Taiwan High Court Kaohsiung Branch Court on January 6, 2022. This matter is now being tried by the Taiwan High Court Kaohsiung Branch Court. We have strengthened internal control measures after this incident, and no other directors are expected to become a party to any current or future litigation in connection with Dr. Tien Wu.
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On October 26, 2018, the R.O.C. Securities and Futures Investors Protection Center (the “SFIPC”) filed a civil lawsuit against Dr. Tien Wu and ASEH, requesting the court to remove Dr. Tien Wu from ASEH’s board of directors based on Article 10-1 of the R.O.C. Securities Investor and Futures Trader Protection Act (the “Director Removal Case”). On August 25, 2020, the Taiwan Ciaotou District Court ruled in favor of Dr. Tien Wu. SFIPC filed an appeal against the August 25, 2020 judgment and the appeal was rejected by the Taiwan High Court Kaohsiung Branch Court on September 29, 2021 (the “September 29 judgment”). On October 20, 2021, SFIPC filed another appeal against the September 29 judgment. The Supreme Court of the R.O.C. reversed the September 29 judgment and remanded this case to the Taiwan High Court Kaohsiung Branch Court on May 25, 2022. This matter is now being tried by the Taiwan High Court Kaohsiung Branch Court. In addition to the Director Removal Case, on July 8, 2021, SFIPC filed an additional class action to request Dr. Tien Wu and other three defendants of the aforementioned criminal proceeding of insider trading to be jointly liable for the damages caused by the alleged insider trading activities. The Intellectual Property and Commercial Court of the R.O.C. ruled in favor of SFIPC and portion of the damages was awarded on August 18, 2022, and all defendants of this class action filed appeals against the August 18 judgment. The Supreme Court of the R.O.C. reversed the August 18 judgment and remanded the case to the Intellectual Property and Commercial Court on March 14, 2024, where it is now being tried. The proceedings in connection with this incident, or potential regulatory scrutiny, might attract further media attention. Any negative publicity in connection with the legal proceedings may adversely affect our brand and reputation, which might result in a material adverse impact on our business operations and prospects.
As we depend on the continuing service of our directors and executive officers, and we are not insured against the loss of service of any of our personnel, our business operations could suffer from the loss of services of any director or executive officer, including Dr. Tien Wu. There are no assurances that we will be able to find suitable replacement directors or executive officers.
Our insurance coverage may be inadequate to cover all our business risks.
Although we seek to obtain insurance for some of our primary operational risks, the amount of our insurance coverage may not be adequate to cover all potential claims or liabilities, and we may be forced to bear substantial costs resulting from the risks and uncertainties of our business. Especially in light of our increased focus on our automotive semiconductor business, there is also no guarantee that we will be able to obtain insurance coverage when desired or that insurance will be available on commercially attractive terms. Any failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, and results of operations.
Inflation and fluctuations in interest rates could adversely affect our business, financial condition, results of operations, and cash flows.
We are exposed to economic and political conditions in the countries and regions where we operate. We are also affected by governmental policies regarding spending and investment, exchange controls, regulatory and taxation changes, and other adverse political, economic, or social developments in the countries and regions in which we operate. Like all companies with extensive operations, we are exposed to risks from fluctuations in inflation.
High inflation rates may adversely affect our business by increasing the cost of the raw materials, energy, labor, and transportation. Current or future efforts by various governments to stimulate their economies may increase the risk of inflation. In the event of an increase in inflation, we may need to increase the sales prices of our services in order to maintain satisfactory profits; however, such increases may not be accepted by our customers, and may not sufficiently compensate for the negative impacts of inflation. At a macro level, inflation might reduce households’ disposable income and reduce people’s savings, which may decrease discretionary spending and negatively impact the sales of our customers’ products and, correspondingly, their demand for our manufacturing services. If we are unable to fully offset the effects of increased inflation, we may have material adverse impacts on our business, financial condition, results of operations, and cash flows.
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As a result of inflationary pressure and macroeconomic instability, various governments may adopt monetary policies that will lead to higher interest rates. Higher interest rates may adversely affect our financing costs, including the costs of our current debt and leasing payments. There is no assurance that we will be able to effectively mitigate the interest rate risk, even after utilizing certain financing instruments. Further, in higher interest rate environments, our customers may reduce their overall investment in product development by cutting their capital expenditures and R&D expenses. Such reductions in capital expenditures and R&D expenses by our customers may reduce the amount of business that we receive from them and adversely affect our results of operations.
Fluctuations in exchange rates could adversely affect our business, results of operations, or financial condition.
Within our global operations, significant transactions and balances are denominated in currencies other than the NT dollar. A significant portion of our revenues are denominated in U.S. dollars, with the remaining portion denominated in NT dollars and Japanese yen. Our operating costs and operating expenses are also incurred in several currencies, primarily NT dollars, U.S. dollars, RMB, Japanese yen, Korean won, EUR, as well as, to a lesser extent, Singapore dollars, Malaysian ringgit, and Polish zloty. In addition, a substantial portion of our capital expenditures, primarily for the purchase of equipment, has been, and is expected to continue to be, denominated in U.S. dollars, with the remainder in Japanese yen. As a result, fluctuations in exchange rates, primarily among the U.S. dollar and Japanese yen against the NT dollar, RMB and EUR, will affect our financial condition and results of operations. In addition, these fluctuations could result in exchange losses in NT dollar and other local currency terms, even if we have implemented hedging and mitigating techniques. We recorded net foreign exchange gains of NT$1,395.1 million in 2021, net foreign exchange losses of NT$2,459.5 million in 2022, and net foreign exchange gains of NT$998.1 million (US$32.6 million) in 2023, respectively. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk— Market Risk—Foreign Currency Exchange Rate Risk.”
The financial performance of our equity method investments could adversely affect our results of operations.
As part of our business strategy, we have and may continue to pursue acquisitions of businesses and assets, strategic alliances, and investments in associates and joint ventures. We currently have equity investments in certain entities and the accounting treatment applied for these investments varies depending on several factors, including, but not limited to, our percentage of ownership, our percentage of membership of the investee’s board, and the level of influence we have over the relevant entity. Any losses experienced by these entities could adversely affect our results of operations and the value of our investment. In addition, if these entities were to fail and cease operations, we may lose the entire value of our investment and the stream of any shared profits.
There can be no assurance that we will be able to maintain or enhance the value or performance of our investee companies or that we will achieve the returns or benefits sought from such investments. If our interests differ from those of other investors in our investee companies, we may not be able to enjoy synergies with the investee and it may adversely affect our financial results or condition.
We recognized impairment charges of nil in 2021, NT$61.2 million in 2022, and nil in 2023 in our investments under the equity method.
Any impairment charges may have a material adverse effect on our income.
Under IFRS Accounting Standards, we are required to evaluate our assets, such as property, plant and equipment, investment properties, intangible assets, including goodwill, and investments in financial instruments, for possible impairment at least annually or whenever there is an indication of impairment. If certain criteria are met, we are required to record an impairment charge.
With respect to assets, we recognized impairment charges of NT$126.8 million, NT$388.8 million, and NT$146.6 million (US$4.8 million) in 2021, 2022, and 2023, respectively, primarily as a result of impairment charges related to property, plant and equipment, and other intangible assets as well as investments under the equity method.
We are unable to estimate the extent and timing of any impairment charges for future years and we cannot give any assurance that impairment charges will not be required in periods subsequent to December 31, 2023. Any impairment charge could have a material adverse effect on our net income. The determination of an impairment charge at any given time is based significantly on our expected results of operations over several years in the future. As a result, an impairment charge is more likely to occur during a period in which our operating results and outlook are otherwise already depressed.
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Any failure to achieve and maintain effective internal controls could have a material adverse effect on our business and results of operations.
We are subject to reporting obligations under the U.S. securities laws. As required by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring every public company to include a management report on the effectiveness of such company’s internal control over financial reporting in its annual report. In addition, an independent registered public accounting firm must report on such company’s internal control over financial reporting.
Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. Our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 excluded the internal control over financial reporting of HCC Group, because HCC Group was acquired on October 27, 2023, which was close to the year end. HCC Group is expected to conduct certain measures to transition and integrate into our framework of internal controls over financial reporting. Please refer to “Item 15. Controls and Procedures” for details on our internal control over financial reporting. Any failure to maintain effective internal control over financial reporting could harm our business, erode investor confidence in our financial statements, and negatively impact the trading price of our Common Shares and ADSs. Furthermore, we may need to incur additional costs and use additional management and other resources in order to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.
Restrictive covenants and broad default provisions in our existing debt agreements may materially restrict our operations as well as adversely affect our liquidity, financial condition, and results of operations.
We are a party to numerous loans and other agreements relating to the incurrence of debt, which may include restrictive covenants and broad default provisions. Covenants in the agreements governing our existing debt, and debt we may incur in the future, may materially restrict our operations, including our ability to incur debt, pay dividends, and make certain investments and payments, other than in connection with restructurings of consolidated entities, and encumbering or disposing of assets. In addition, any global economic deterioration or ineffective expansion may cause us to incur significant net losses or force us to assume considerable liabilities. We cannot ensure that we will be able to remain in compliance with our financial covenants, which, as a result, may lead to a default. This may thereby restrict our ability to access unutilized credit facilities or the global capital markets to meet our liquidity needs. Furthermore, a default under any agreement by us or our subsidiaries may trigger cross-defaults under our other agreements. In the event of default, we may not be able to cure the default or obtain a waiver on a timely basis. An event of default under any agreement governing our existing or future debt, if not cured or waived, could have a material adverse effect on our liquidity, financial condition, and results of operations.
In 2023, one of our subsidiaries failed to meet the financial covenants under its loan agreement on a semi-annual basis, but it obtained a waiver from the relevant bank excusing this breach. The breach was cured as of December 31, 2023. Except for the aforementioned matter, we and our subsidiaries were in compliance with all of the financial covenants of our existing loan agreements. We cannot provide any assurance that we will not breach any such financial covenants under our loan agreements in the future or that we will obtain a waiver from the relevant bank for any future breaches in a timely manner.
We could potentially face tax uncertainties arising from our decisions, activities, and operations or any changes in tax laws in jurisdictions in which we operate, which may adversely affect our operations.
There are many activities in our daily operations that may give rise to tax issues, ranging from procurement, research and development activities, manufacturing to product storage and distribution, among others. Additional tax liabilities such as double taxation, inapplicability of tax incentives, tax adjustment, and related interest and penalties may arise if tax issues are not dealt with appropriately. The development and evolution of tax laws and regulations present considerable variations in interpretation and enforcement, which could result in more stringent compliance measures and tax audits in the jurisdictions in which we operate. Failure to comply with any change in tax laws could result in unfavorable tax consequences to us and have an adverse impact on our business, financial condition, and results of operations.
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We have business operations in multiple countries and our worldwide operations are taxed under the laws of the jurisdictions in which we operate. However, the integrated nature of our worldwide operations can produce conflicting claims from revenue authorities in different countries as to the profits to be taxed in the individual countries, which could increase our effective tax rate and adversely affect our reputation and operations. Furthermore, our tax expense and effective tax rate could be adversely affected by several other factors, including changes in tax laws and their interpretation, ongoing international tax reform work led by the Organization for Economic Co-operation and Development, such as the Global Minimum Tax under the Base Erosion and Profit Shifting Action Plan, as well as the impact of acquisitions, disposals, and any restructuring of our businesses.
We may be subject to intellectual property rights disputes, which could adversely affect our business.
Our ability to compete successfully and achieve future growth depends in part on developing and safeguarding our proprietary technologies while securing commercially acceptable terms for non-owned technologies. Our failure to do so may seriously harm our competitive position.
Our ability to compete successfully also depends in part on operating without infringing others’ proprietary rights. In particular, the semiconductor and electronics industries are characterized by frequent litigation regarding patent and other intellectual property rights. We have received communication alleging infringement of others’ technologies and may receive more in the future. Infringement claims have resulted in, or could result in acquiring licenses, discontinuing certain technologies, paying damages or settlement payments, or unfeasibly seeking to develop alternative technologies, which could result in financial consequences.
Any litigation, whether as plaintiff or defendant and regardless of the outcome, is costly and diverts company resources. Any of the foregoing could harm our competitive position and render us unable to fully provide our services operations.
Regulations related to conflict minerals could adversely affect our business, financial condition and results of operations.
In August 2012, the SEC adopted annual disclosure and reporting requirements, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, for companies that use conflict minerals in their products. These rules require companies that manufacture or contract to manufacture products for which conflict minerals are necessary for functionality or production to begin scrutinizing the origin of conflict minerals in their products. We filed a specialized disclosure report on Form SD in accordance with the requirements and we have retained an independent auditing firm to conduct audits on our due diligence framework to provide a private sector report for our specialized disclosure report on Form SD. There will be costs associated with complying with these disclosure requirements, including costs for diligence to determine the sources of conflict minerals used in our products and other potential changes to products, processes, or sources of supply as a consequence of the results of such verification activities. The implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in our products.
As there may be only a limited number of suppliers offering “conflict free” minerals, we cannot be sure that we will be able to obtain necessary “conflict free” minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face adverse effects to our reputation if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins for all conflict minerals used in our products.
Any environmental claims or failure to comply with any present or future environmental laws and regulations, as well as any fire or other industrial accident, may require us to spend additional funds and may materially and adversely affect our financial condition and results of operations.
We are subject to various laws and regulations relating to the use, storage, discharge, and disposal of chemical by-products of, and water used in, our packaging and interconnect materials production processes, and the emission of volatile organic compounds and the discharge and disposal of solid industrial wastes. In recent years, we have been subject to environmental administrative actions and judicial proceedings related to certain wastewater discharge incidents that occurred at our facilities. As a result of these proceedings, we have been subject to monetary fines as well as sanctions, including orders to suspend or limit our operations and criminal charges against us. For further details, see “Item 4. Information on the Company—Business Overview—Environmental Matters,” and “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings.”
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In addition, increasing global efforts to combat climate change may lead to the enactment of stricter laws and regulations aimed at reducing carbon emissions. With an increasing number of governments likely to adopt carbon tax mechanisms, we may be forced to incur significant expenses to comply with applicable environmental and climate-related laws and regulations. These potential expenses include, but are not limited to, paying any incurred carbon taxes if our emission levels exceed applicable thresholds; obtaining renewable energy sources, renewable energy certificates or carbon credits; and substituting more environmentally-friendly raw materials to use in our operations, which may be more costly or less readily available than our existing raw materials.
Climate change, water shortages and other environmental concerns could negatively affect our business and financial planning.
Anthropogenic greenhouse gas emissions could adversely and irreversibly affect the global economy if substantial remediation is not taken. Even a modest change in average global temperatures could result in increased coastal flooding, altered precipitation patterns, and increased risk of biodiversity loss for vulnerable species. Climate change can also cause extreme weather conditions, such as heat, droughts, and floods, that can impact business operations and financial performance. For example, our business operations depend on adequate supplies of water, so an extended drought may affect our ability to obtain sufficient amounts of water and threaten our production capability.
We believe that we should play our part in the mitigation of man-made climate change. For example, we have incorporated green design standards and building concepts into the construction of our facilities. Since 2012, we have transformed existing facilities and built new facilities and offices that comply with international low carbon building standards. Through quantifying and analyzing the entire life cycle of building carbon emissions, carbon reduction was driven from the design stage and promoted along the value chain to build sustainable factories.
Public expectations for reductions in greenhouse gas emissions could result in increased energy, transportation, and raw material costs. Changes in scientific findings, political attention, and regulations related to the existence and extent of man-made climate change may also result in increased production costs due to higher energy prices or the introduction of energy or carbon taxes. Regulations and further legislation aimed at reducing greenhouse gas emissions may require companies to purchase emission credits at higher cost, new equipment, or raw materials with lower carbon footprints, which could negatively affect our operations and financial performance. Additionally, changes in environmental regulations, such as those regarding the use of perfluorinated compounds (commonly known as the “PFCs”), could increase our production costs, which may adversely affect our results of operation and financial results.
Stable water supply of sufficient amounts of good-quality freshwater plays a critical role for us. Taiwan is also susceptible to typhoons and droughts, which may cause damage and business interruptions to facilities. Since our business operations depend on adequate supplies of water, an extended drought may affect our ability to obtain sufficient water and threaten our production capability. Although we have not yet been directly affected by droughts, we are dependent upon water for our packaging and substrate operations and a drought could interrupt such operations. To address related risks, we have established a wastewater reclamation recycling system and implemented three water use strategies, including reduce, reuse, and recycle, to prevent water shortages. These actions will enable us to respond effectively to climate change.
Considering the relatively high prices of renewable energy in Taiwan, transitioning towards net-zero emissions presents a significant challenge to us. However, in order to meet the demand for sustainable energy in our production processes and fulfill our commitments to our domestic and foreign customers, our major subsidiaries have established the Taiwan Renewable Energy Platform to negotiate renewable energy procurement. Through the platform, we plan to continue to purchase solar photovoltaic and onshore wind power, and negotiate with the government for purchases of Phase 3-1 and Phase 3-2 offshore wind power. We also purchase green power certificates from overseas facilities to increase our use of renewable energy. The implementation of these goals and initiatives may require considerable investments, and our goals, with all of their contingencies, dependencies, and in certain cases, reliance on third-party performance, are complex and may change. We cannot guarantee that our goals and initiatives will be fully realized in a timely manner or at all, and projects that are completed as planned may not achieve the results we anticipate. Any failure, or perceived failure, by us to adhere to our public statements, comply fully with developing interpretations of ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could harm our business, reputation, financial condition, and operating results.
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Cyber-attacks could harm our business, financial condition, and results of operations.
As technology advances, cyberattacks become more frequent and sophisticated. Attackers are organized, well-funded, and are developing increasingly sophisticated systems to attack and evade detection. While we take strict measures to protect our trade secrets and customer data, a security breach or failure could expose us and our customers, dealers, and suppliers to risks such as unauthorized access to information technology systems, misuse and compromise of confidential information, and manipulation and destruction of data. Such incidents could potentially disrupt our business operations, harm our reputation, weaken our competitive position, and adversely affect our financial condition and results of operations. Additionally, security breaches could lead to litigation with third parties, regulatory actions, and higher costs of implementing additional data protection measures. Furthermore, geopolitical tensions or conflicts may increase the risk of cyberattacks. While we continuously review and strengthen our information security policies and procedures, we cannot guarantee that we will be immune to new and emerging risks and attacks in the constantly evolving landscape of cybersecurity threats. For further details, see “Item 4. Information on the Company—Business Overview—Information Security Management” and “Item 16K. Cybersecurity.”
Negative publicity may adversely affect our brand and reputation, which may result in a material adverse impact on our business, results of operations and business prospects, and cause fluctuations in the trading price of our Common Shares and ADSs.
In addition, any change in policy or the direction in which we carry our corporate social responsibility or sustainability activities may also have an adverse effect on our business reputation. In recent years, we have experienced and may continue to experience negative publicity in connection with administrative penalties and criminal charges related to alleged violations of environmental regulations and laws. For further details, see “Item 4. Information on the Company—Business Overview—Environmental Matters,” and “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings.”
We face risks related to public health epidemics, natural disasters, and other disruptive events.
Our business could be materially and adversely affected by the outbreak of a 1) widespread health epidemic, such as COVID-19, swine flu, avian influenza, severe acute respiratory syndrome, Ebola, or Zika; 2) natural disasters, such as earthquakes, fires, floods, and the effects of climate change, such as drought, floods and increased storm severity; or 3) other events, such as wars, acts of terrorism, environmental accidents, power shortages, or communication interruptions. Disruptive events may have a material adverse effect on our business, financial condition, and results of operations. For example, these events could cause a temporary closure of the facilities we use for our operations, significantly disrupt supply chains and logistics services, or severely impact consumer behaviors and the operations of merchants, business partners, and other participants in our ecosystem. Our operations could also be disrupted if any of our employees or employees of our business partners contract or are suspected of contracting an epidemic disease, since this could require us or our business partners to quarantine some or all these employees or disinfect the facilities used for operations. In addition, our revenue and profitability could be materially reduced to the extent that a natural disaster, health epidemic, or other outbreak harms the global economy in general.
Failure to grasp the future development of AI could adversely affect our business, financial condition, and results of operations.
As the markets for AI solutions continue to develop rapidly, demand for these products may be unpredictable and may vary significantly over time. These factors may adversely impact demand for our products that support AI solutions. We dedicate substantial efforts to research and development in order to meet customers’ evolving needs. As we believe silicon photonics technology and Co-Packaged Optics will emerge as pivotal technologies for the next generation of advanced packaging and will lead the change in the industrial landscape, we continue to invest resources in research and development of these two technologies. However, there is no assurance that these investments will be successful. Any failure to respond effectively to industry developments may significantly impair our business operations.
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Risks Relating to Taiwan, R.O.C.
Strained relations between the R.O.C. and the P.R.C. and disruptions in Taiwan’s political environment caused by domestic political events could negatively affect our business and the market value of our Common Shares and ADSs.
Our principal executive offices and facilities are located in Taiwan and approximately 57.0%, 58.5%, and 55.4% of our operating revenues in 2021, 2022, and 2023, respectively, were derived from our operations in Taiwan. Accordingly, our business and financial condition may be affected by changes in local governmental policies and political and social instability.
The R.O.C. has a unique international political status. Although significant economic and cultural relations have been established in recent years between the R.O.C. and the P.R.C., relations have often been strained. Any major change in the Taiwanese political environment, including the outcome of presidential or municipal elections, or potential shifts in government policy, may affect the direction of economic and political developments and negatively impact the economic and political environment in Taiwan. Past developments related to the interaction between the two governments, domestic political events, or election results have on occasion depressed the market prices of the securities of Taiwanese or Taiwan-related companies, including our own. Relations between the R.O.C. and the P.R.C. and other factors affecting the political or economic conditions in Taiwan could have a material adverse effect on our financial condition and results of operations, as well as the market price and the liquidity of our Common Shares and ADSs.
We manufacture interconnect materials in the P.R.C. through our wholly owned subsidiary, ASE Shanghai. We also provide packaging and testing services, develop real estate, and manufacture computer peripherals and electronic components through our subsidiaries in the P.R.C. See “Item 4. Information on the Company—Organizational Structure—Our Consolidated Subsidiaries.” In the past, R.O.C. companies, including our own, were not allowed to invest in semiconductor packaging and testing facilities in the P.R.C. Although the prohibitions were relaxed in February 2010, the R.O.C. government currently still restricts certain types of investments in the P.R.C. We do not know when or if such laws and policies governing investment in the P.R.C. will be amended, and we cannot ensure that such R.O.C. investment laws and policies will permit us to make certain beneficial investments in the P.R.C. in the future. Our growth prospects and profitability may be adversely affected if we are restricted from making certain additional investments in the P.R.C. and are not able to fully capitalize on the growth of the semiconductor industry in the P.R.C.
To address customer concerns regarding potential operational impacts in Taiwan stemming from regional political risks, we conduct evaluations and planning for possible overseas plant expansions. These potential expansion locations may encompass Southeast Asia, Northeast Asia, Europe and the Americas in order to better accommodate our customers’ needs. However, there is no assurance that any of these expansions would be as effective as expected. Our growth prospects and profitability may be adversely affected if we could not effectively adjust our plant expansion in a timely manner, or at all. Despite our efforts to uphold cost-competitive manufacturing standards and enhance customer appeal through supply chain diversification, fragmented operations could heighten our susceptibility to market disruptions. Any failure to mitigate these disruptions could adversely affect our business, financial condition, and results of operations.
As a substantial portion of our business and operations are located in Taiwan, we are vulnerable to natural disasters including earthquakes, typhoons, droughts, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations.
Taiwan is in a region that is prone to typhoons and earthquakes, and these natural disasters have caused significant property damage, business disruptions at operating facilities, and loss of life in the past. The semiconductor and electronics industries are particularly vulnerable to disruptions caused by earthquakes. While we have not experienced any structural damage to our facilities or damage to our machinery and equipment due to earthquakes, we have experienced interruptions to our production schedule in the past, primarily as a result of power outages caused by earthquakes. In the event of a major earthquake, we could experience significant disruptions to our operations, which could have a material adverse effect on our business, financial condition, and results of operations. We seek to continuously enhance our disaster preparedness and business continuity plans to minimize the impact of earthquakes and other natural disasters on our operations, but we cannot guarantee that such plans will be effective in all circumstances. The supply of electrical power in Taiwan, which is primarily provided by Taiwan Power Company, is susceptible to power disruptions that could be prolonged and frequent, caused by overload as a result of high demand or other reasons. Such power disruptions could further be exacerbated with the government of Taiwan having set the target of being free of nuclear power by 2025. For example, on March 3, 2022, Taiwan experienced a massive power blackout, which left millions of homes, offices, and factories without power. Although the power blackout did not have a material impact on our operations, future power blackout may disrupt our business operations and adversely affect our results of operations.
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Additionally, Taiwan has experienced severe droughts in the past and future droughts could significantly impact our operations. Our manufacturing process is heavily reliant on freshwater. We primarily recycle using ultra-filtration systems, chemical mechanical polishing wastewater recycling, and reverse osmosis water recycling. We also collect rainwater for scrubbing and cooling towers. We regularly monitor our water storage and recycling equipment, and prepare truckloads of water to meet future water demand. We also refine our manufacturing capacity in response to water allocation to minimize the impact of water risks.
Although we have not experienced direct impacts from droughts, a drought could interrupt our packaging and substrate operations, which rely heavily on water. In addition, a drought could disrupt the manufacturing processes at other parts of the supply chain including our foundry partners, leading to potential production delays for our customers and a decline in demand for our services. While we are proactive in managing water risks and planning to mitigate their impact, we cannot guarantee that insufficient water storage will not affect our operations.
In addition, we are also subject to the risk of industrial and workplace accidents that could lead to injury or loss of life, damages to our facilities, and adversely impact our business reputation, commercial prospects, and operations.
Our production facilities, as well as many of our suppliers, customers, and providers of complementary semiconductor manufacturing services, including wafer foundries, are located in Taiwan. If our customers are impacted by natural disasters such as earthquakes, typhoons, droughts, or industrial incidents including power outage and labor strikes, these events could cause a decline in the demand for our services. If our suppliers or providers of complementary semiconductor manufacturing services are affected by such events, our production schedule could be interrupted, which might adversely impact our financial condition and results of operations.
Risks Relating to Ownership of Our Common Shares and the ADSs
The market for our Common Shares and the ADSs may not be liquid.
Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors, compared to less active and less liquid markets. Liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties.
There has been no trading market outside the R.O.C. for our Common Shares and the only trading market for our Common Shares is the TWSE. The outstanding ADSs are listed on the NYSE. There is no assurance that the market for our Common Shares or the ADSs will be active or liquid.
Although ADS holders are entitled to withdraw our Common Shares underlying the ADSs from the depositary at any time, the R.O.C. law requires that our Common Shares be held in an account in the R.O.C. or sold for the benefit of the holder on the TWSE. In connection with any withdrawal of Common Shares from our ADS facility, the ADSs evidencing these Common Shares will be canceled. Unless additional ADSs are issued, the effect of withdrawals will be to reduce the number of outstanding ADSs. If a significant number of withdrawals are affected, the liquidity of our ADSs will be substantially reduced. We cannot ensure that the ADS depositary will be able to arrange for a sale of deposited shares in a timely manner or at a specified price, particularly during periods of illiquidity or volatility.
If a non-R.O.C. holder of ADSs withdraws and holds Common Shares, such holder of ADSs will be required to appoint a tax guarantor, local agent, and custodian in the R.O.C. and register with the TWSE or the Taipei Exchange in order to buy and sell securities on the TWSE.
When a non-R.O.C. holder of ADSs elects to withdraw and hold Common Shares represented by ADSs, such holder of the ADSs will be required to appoint an agent for filing tax returns and making tax payments in the R.O.C. Such agent will be required to meet the qualifications set by the R.O.C. Ministry of Finance and, upon appointment, becomes the guarantor of the withdrawing holder’s tax payment obligations. Evidence of the appointment of a tax guarantor, the approval of such appointment by the R.O.C. tax authorities, and tax clearance certificates or evidentiary documents issued by such tax guarantor may be required as conditions to such holder repatriating the profits derived from the sale of Common Shares. We cannot ensure that a withdrawing holder will be able to appoint, and obtain approval for, a tax guarantor in a timely manner.
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In addition, under current R.O.C. law, such withdrawing holder is required to register with the TWSE or the Taipei Exchange and appoint a local agent in the R.O.C. to, among other things, open a bank account and open a securities trading account with a local securities brokerage firm, pay taxes, remit funds, and exercise such holder’s rights as a shareholder. Furthermore, such withdrawing holder must appoint a local bank or a local securities firm to act as custodian for confirmation and settlement of trades, safekeeping of securities and cash proceeds, and reporting and declaration of information. Without satisfying these requirements, non-R.O.C. withdrawing holders of ADSs would not be able to hold or otherwise subsequently sell our Common Shares on the TWSE or otherwise.
Pursuant to P.R.C. Regulations, only QDIIs or persons that have otherwise obtained the approval from the DIR and registered with the TWSE are permitted to withdraw and hold our shares from a depositary receipt facility. In order to hold our shares, such QDIIs are required to appoint an agent and custodian as required by the P.R.C. Regulations. If the aggregate amount of our shares held by any QDII or shares received by any QDII upon a single withdrawal or in the aggregate accounts for 10.0% of our total issued and outstanding shares, such QDII must obtain the prior approval from the DIR. We cannot ensure that such approval would be granted.
The market value of our ADSs may fluctuate due to the volatility of the R.O.C. securities market.
The trading price of our ADSs may be affected by the trading price of our Common Shares on the TWSE. The R.O.C. securities market is smaller and more volatile than the securities markets in the U.S. and in many European countries. The TWSE has experienced substantial fluctuations in the prices and volumes of sales of listed securities and there are currently limits on the range of daily price movements on the TWSE. During 2023, the TWSE Weighted Index peaked at 17,930.81 on December 29, 2023, and reached a low of 14,199.13 on January 4, 2023, and the trading price of our Common Shares ranged from NT$92.3 per Share to NT$136.5 per Share. On March 15, 2024, the TWSE Weighted Index closed at 19,682.50 and the closing value of our Common Shares was NT$153.0 per Share.
The TWSE is particularly volatile during times of political instability, including when relations between the R.O.C. and the P.R.C. are strained. Several investment funds affiliated with the R.O.C. government have also from time to time purchased securities from the TWSE to support the trading level of the TWSE. Moreover, the TWSE has experienced problems such as market manipulation, insider trading, and settlement defaults. The recurrence of these or similar problems could have an adverse effect on the market price and liquidity of the securities of R.O.C. companies, including our Common Shares and ADSs, in both the domestic and international markets.
We may not continue to declare cash dividends in any particular amount.
We intend to continue to pay dividends. However, future dividends may be affected by, among other things, the best interests of our Company and our shareholders, our results of operations, cash balances and future cash requirements, financial condition, investments and acquisitions, legal risks, and other factors that the board of directors may consider relevant. Our dividend payments may change occasionally, and we cannot ensure that we will continue to declare dividends in any particular amount. A reduction in, a delay of, or elimination of our dividend payments could adversely affect our share price.
Our major shareholders may take actions that are not in, or may conflict with, our public shareholders’ best interests.
Members of the Chang family own, directly or indirectly, a significant interest in our outstanding Common Shares. See “Item 7. Major Shareholders and Related Party Transactions— Major Shareholders.” Accordingly, these shareholders will continue to have the ability to exercise a significant influence over our business, including matters relating to:
| • | our operation, management, and policies; |
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| • | the timing and distribution of dividends; and |
| • | the election of our directors. |
Members of the Chang family may take actions that public shareholders may not agree with or that are not in alignment with our or our public shareholders’ best interests.
We are an R.O.C. company and, because the rights of shareholders under R.O.C. law differ from those under U.S. law and the laws of certain other countries, our shareholders may have difficulty protecting their shareholder rights.
Our corporate affairs are governed by our Articles of Incorporation and by the laws governing corporations incorporated in the R.O.C. The rights of shareholders and the responsibilities of management and the members of the board of directors under R.O.C. law are different from those applicable to a corporation incorporated in the U.S. and certain other countries. As a result, public shareholders of R.O.C. companies may experience increased difficulty in protecting their interests in connection with actions taken by management or members of the board of directors than they would as public shareholders of a corporation in the U.S. or certain other countries.
Holders of Common Shares and ADSs may experience dilution if we issue stock bonuses, share options, or restricted stocks to employees or sell additional equity or equity-linked securities.
Like other R.O.C. technology companies, we periodically issue bonuses in the form of Common Shares. Bonuses in the form of our Common Shares are valued at the closing price of our Common Shares on the day prior to our meeting of the board of directors. Therefore, the issuance of our Common Shares pursuant to stock bonuses, share options and restricted stock awards may have a dilutive effect on the holders of outstanding Common Shares and ADSs. In addition, the issuance of additional equity or equity-linked securities may result in additional dilution to our shareholders.
As of December 31, 2023, a total of approximately 217,205 thousand share options and restricted stocks assumed and issued by ASEH were outstanding. See “Item 6. Directors, Senior Management and Employees—Compensation—Share-Based Payment Arrangements.”
Restrictions on the ability to deposit our Common Shares into our ADS facility may adversely affect the liquidity and price of our ADSs.
The ability to deposit Common Shares into our ADS facility is restricted by R.O.C. law. A significant number of withdrawals of Common Shares underlying our ADSs would reduce the liquidity of the ADSs by reducing the number of ADSs outstanding. As a result, the prevailing market price of our ADSs may differ from the prevailing market price of our Common Shares on the TWSE. Under current R.O.C. law, no person or entity, including shareholders and ourselves, may deposit our Common Shares in our ADS facility without specific approval of the FSC, unless:
| (1) | we pay stock dividends on our Common Shares; |
| (2) | we make a free distribution of Common Shares; |
| (3) | holders of ADSs exercise preemptive rights in the event of capital increases; or |
| (4) | to the extent permitted under the deposit agreement and the relevant custody agreement and within the amount of depositary receipts which have been withdrawn, investors purchase our Common Shares, directly or through the depositary, on the TWSE, and deliver our Common Shares to the custodian for deposit into our ADS facility, or our existing shareholders deliver our Common Shares to the custodian for deposit into our ADS facility. |
With respect to item (4) above, the depositary may issue ADSs against the deposit of those Common Shares only if the total number of ADSs outstanding following the deposit will not exceed the number of ADSs previously approved by the FSC, plus any ADSs issued pursuant to the events described in items (1), (2) and (3) above.
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In addition, in the case of a deposit of our Common Shares requested under item (4) above, the depositary will refuse to accept deposit of our Common Shares if such deposit is not permitted under any legal, regulatory, or other restrictions notified by us to the depositary, which restrictions may include blackout periods during which deposits may not be made, minimum and maximum amounts, and frequency of deposits.
The depositary will not offer holders of ADSs preemptive rights unless the distribution of both the rights and the underlying Common Shares to our ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act.
Holders of ADSs will not have the same voting rights as our shareholders, which may affect the value of their ADSs.
The voting rights of a holder of ADSs as to our Common Shares represented by its ADSs are governed by the deposit agreement. Holders of ADSs will not be able to exercise voting rights on an individual basis. If holders representing at least 51% of the ADSs outstanding at the relevant record date instruct the depositary to vote in the same manner regarding a resolution, including the election of directors, the depositary will cause all Common Shares represented by the ADSs to be voted in that manner. If the depositary does not receive timely instructions representing at least 51% of the ADSs outstanding at the relevant record date to vote in the same manner for any resolution, including the election of directors, holders of ADSs will be deemed to have instructed the depositary or its nominee to authorize all our Common Shares represented by the ADSs to be voted at the discretion of our chairman or his designee, which may not be in the interest of holders of ADSs. Moreover, while shareholders who own 1% or more of our outstanding shares are entitled to submit one proposal to be considered at our annual general meetings of shareholders, only holders representing at least 51% of our ADSs outstanding at the relevant record date are entitled to submit one proposal to be considered at our annual general meetings of shareholders. Hence, only one proposal may be submitted on behalf of all ADS holders.
The right of holders of ADSs to participate in our rights offerings is limited, which could cause dilution to their holdings.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement, the depositary will not offer holders of ADSs those rights unless both the distribution of the rights and the underlying securities to all our ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act. Although we may be eligible to take advantage of certain exemptions under the Securities Act available to certain foreign issuers for rights offerings, we can give no assurances that we will be able to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement for any of these rights. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings.
If the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case holders of ADSs will receive no value for these rights.
Changes in exchange controls, which restrict the conversion of proceeds received from ownership of ADSs, may have an adverse effect on the value of these investments.
Under current R.O.C. law, the depositary, without obtaining approvals from the Central Bank of the Republic of China (Taiwan) or any other governmental authority or agency of the R.O.C., may convert NT dollars into other currencies, including U.S. dollars, for:
| • | the proceeds of the sale of Common Shares represented by ADSs or received as stock dividends from our Common Shares and deposited into the depositary receipt facility; and |
| • | any cash dividends or distributions received from our Common Shares. |
In addition, the depositary may also convert into NT dollars incoming payments for purchases of Common Shares for deposit in the ADS facility against the creation of additional ADSs. The depositary may be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan) on a payment-by-payment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights for new Common Shares. Although it is expected that the Central Bank of the Republic of China (Taiwan) will grant this approval as a routine matter, we cannot ensure that in the future any approval will be obtained in a timely manner, or at all.
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Under the R.O.C. Foreign Exchange Control Act, the Executive Yuan of the R.O.C. government may, without prior notice but subject to subsequent legislative approval, impose foreign exchange controls in the event of, among other things, a material change in international economic conditions. We cannot ensure that foreign exchange controls or other restrictions will not be introduced in the future.
The value of our Common Shares or ADSs may be reduced by possible future sales of Common Shares or ADSs by us or our shareholders.
While we are not aware of any plans by any major shareholders to dispose of significant numbers of Common Shares, we cannot ensure that one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our Common Shares or ADSs will not dispose of significant numbers of Common Shares or ADSs. In addition, several of our subsidiaries and affiliates hold Common Shares, depositary shares representing Common Shares, and options to purchase Common Shares or ADSs. They may decide to sell those securities in the future. See “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders” for a description of our significant shareholders and affiliates that hold our Common Shares.
We cannot predict the effect, if any, that future sales of Common Shares or ADSs, or the availability of Common Shares or ADSs for future sale, will have on the market price of our Common Shares or the ADSs at any time. Sales of substantial numbers of Common Shares or ADSs in the public market, or the perception that such sales may occur, could depress the prevailing market prices of our Common Shares or the ADSs.
Techniques employed by short sellers may drive down the trading price of the ADSs.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.
Public companies listed in the U.S. that have material operations in the P.R.C., among others, have on occasion been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto, and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.
It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we would have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would endeavor to defend against any such short seller attacks, we may be constrained in how we can oppose a relevant short seller by principles of freedom of speech, applicable state law, or issues of commercial confidentiality. Such a situation could be costly and time-consuming and could divert our management’s attention from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact the ADSs and their value could be greatly reduced or rendered worthless.
Item 4. Information on the Company
HISTORY AND DEVELOPMENT OF THE COMPANY
ASE Technology Holding Co., Ltd. was jointly established on April 30, 2018, as a company limited by shares under the R.O.C. Company Law, by the combination of Advanced Semiconductor Engineering, Inc., which was incorporated on March 23, 1984, and Siliconware Precision Industries Co., Ltd., which was incorporated on May 17, 1984.
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ASEH directly controls ASE Group, SPIL Group, USI Group, ASE Social Enterprise Co., Ltd., and ASE Global Integrated Solutions Co., Ltd. ASEH’s main manufacturing facilities are located in Taiwan, the P.R.C., South Korea, Japan, Singapore, Malaysia, Vietnam, Mexico, America, Poland, France, the United Kingdom, Germany, Tunisia, the Czech Republic, and Hungary. Our principal executive offices are located at 26, Chin 3rd Road, Nanzih District, Kaohsiung, Taiwan, R.O.C. and our telephone number at the above address is (886) 7-361-7131. Our Common Shares have been listed on the TWSE under the symbol “3711” and ADSs representing our Common Shares have been listed on the NYSE under the ticker symbol “ASX.”
We are subject to the informational requirements of the Exchange Act and are required to file reports and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. We also make available on our website’s investor relations page, free of charge, our annual report and the text of our reports on Form 6-K, including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The address for our investor relations page is https://ir.aseglobal.com/html/index.php. The information contained on our website is not incorporated by reference in this annual report.
SPIL Acquisition
In light of the increase in competition and the consolidation trends in the global semiconductor industry, ASE proposed a strategic plan to SPIL that involved consolidating the operations of the two companies. In 2015, ASE started purchasing SPIL shares through concurrent tender offers in the R.O.C. and the U.S. After a series of discussions and negotiations, in June 2016, ASE entered into the Joint Share Exchange Agreement with SPIL, pursuant to which ASEH was formed by means of a statutory share exchange pursuant to the laws of the Republic of China, and ASEH (i) acquired all issued shares of ASE in exchange for shares of ASEH, and (ii) acquired all issued shares of SPIL using cash consideration.
The Share Exchange consummated on April 30, 2018, and ASE and SPIL became privately held and wholly owned subsidiaries of ASEH concurrently.
USI Group and USI Group Restructuring
USI Group engages primarily in EMS in relation to computing, consumer electronics, communications, industrial and automotive, among other services and businesses.
We have been purchasing shares of Universal Scientific Industrial since 1999. Upon several acquisitions through cash and stock tender offer, Universal Scientific Industrial became our subsidiary in 2010. In 2012, USI Shanghai completed its IPO on the Shanghai Stock Exchange with the symbol “601231.” In 2015, Universal Scientific Industrial completed a spin-off of USI Inc. Following the completion of a series of share transfers, USI Inc. became the parent company of the USI Group in 2016.
In 2018, our board of directors and the board of director of USI Global, a spin-off from ASE’s investment department, resolved to merge USI Global and ASE Technology Holding Co., Ltd. The merger consummated in 2019 and ASE Technology Holding Co., Ltd. became the surviving entity after the merger and USI Global was thereby dissolved. Our financial position or financial performance was not materially affected by USI Global’s spin-off from ASE Inc. or USI Global’s merger with ASE Technology Holding Co., Ltd.
In 2019, USIFR, FAFG and the shareholders of FAFG entered into a share purchase agreement (the “FAFG Share Purchase Agreement”), and USI Shanghai and ASDI, one of the shareholders of FAFG and privately held company owned by FAFG’s founder, entered into a framework agreement for purchasing assets through issuing shares, pursuant to which USIFR and USI Shanghai would ultimately acquire 100.0% of the share capital of FAFG by way of a share purchase (the “FAFG Transaction”). The FAFG Transaction proposed a two-step transaction. In the first step, USIFR would directly purchase 89.6% of FAFG’s share capital in exchange for a cash payment. In the second step, USI Shanghai would acquire the remaining 10.4% of FAFG’s share capital from ASDI in exchange for newly issued shares of USI Shanghai. At the conclusion of both steps, USI Shanghai would directly or indirectly own 100% of the share capital of FAFG. In December 2020, the transaction was completed and as a result, USI acquired 100% of FAFG’s total issued shares.
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In March 2023, the board of directors of USI Shanghai resolved to establish a special purpose vehicle (“SPV”) with a registered capital of US$53.0 million, jointly owned by its wholly-owned subsidiary, Universal Global Technology Co., Limited, (“UGT”), and an unrelated party, Ample Trading, Co., Ltd. (“Ample Trading”), through a joint venture agreement. UGT obtained 75.1% ownership of the SPV and Ample Trading obtained the remaining 24.9% ownership of the SPV. The SPV then acquired the automotive wireless business (“Target Business”), carved out from an unrelated party, TE Connectivity Ltd. The Target Business was renamed as HCC Group upon completion of the acquisition. The consideration for the acquisition is to be adjusted for the net debt and net working capital of the Target Business at the settlement date and paid in cash. As of December 31, 2023, the SPV has paid US$41.4 million in consideration, while the portion of the consideration remaining to be paid has been accounted for in other payables.
China Site Dispositions
In 2021, ASEH and Beijing Wise Road Asset Management Co., Ltd. (the “Wise Road Capital”) entered into a Sale and Purchase Agreement by which ASEH to sell shares and equity interests in GAPT Holding Limited (GAPT Holding Limited directly or indirectly holds 100.0% equity interests in Global Advanced Packaging Test (HongKong) Limited, ASEWH, ASEN and Advanced Shanghai) and ASEKS to Wise Road Capital or its designated affiliate in exchange for a cash consideration in an aggregate amount of NT$36,939.1 million. The due date of outstanding receivables of the cash consideration (the “Receivables”), originally scheduled to be the business day following the expiration of 6 months from the settlement date, was initially postponed to the business day following the expiration of 15 months from the settlement date, which was March 17, 2023, by the resolution of the board of directors and the agreement with the counterparty. In March 2023, the board of directors of Global Advanced Packaging Technology Limited resolved to acquire around 19.0% shareholding of Hong Kong United Ascend Holdings Limited. The due date of the Receivables was further postponed by six months in January 2024 by resolution of the board of directors in order to cooperate with the schedule of reviewing authorities. The payment of all consideration will be made with the remaining proceed (US$380.0 million) from the disposal of subsidiaries. The investment is subject to the approval by relevant competent authorities.
For more information on our history and development, see “—Organizational Structure.”
BUSINESS OVERVIEW
ASEH is a leading provider of semiconductor manufacturing services in assembly and testing. Our services include semiconductor packaging, production of interconnect materials, front-end engineering testing, wafer probing, and final testing services, as well as integrated solutions for EMS in relation to computing, peripherals, communications, industrial, automotive, and server applications.
We believe that, as a result of the following strengths, we are able to compete effectively to meet customers’ requirements across a wide range of applications:
| • | our ability to provide a broad range of cost-effective semiconductor packaging and testing services on a large-scale turnkey basis within key centers of semiconductor manufacturing; |
| • | our expertise in developing and providing cost-effective packaging, interconnect materials, and testing technologies and solutions; |
| • | our ability to provide proactive original design manufacturing services using innovative solution-based designs; |
| • | our commitment to investing in capacity expansion and research and development, as well as selective acquisitions, that will benefit customers and our business; |
| • | our geographic presence in key centers of outsourced semiconductor and electronics manufacturing; and |
| • | our long-term relationships with providers of complementary semiconductor manufacturing services, including our strategic alliance with TSMC. |
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We believe that it is still the trend for semiconductor companies to outsource their packaging, testing, and manufacturing requirements as semiconductor companies rely on independent providers of foundry, packaging and testing, and EMS. In response to the increased pace of new product development and shortened product life and production cycles, semiconductor companies are increasingly seeking both independent packaging and testing companies that can provide turnkey services that reduce time to market and electronic manufacturing companies with proactive original design capabilities that can provide large-scale production. We believe that our technological expertise, scale, and our ability to integrate a broad range of solutions into turnkey services and EMS allow us to benefit from the accelerated outsourcing trend and better serve our existing and potential customers.
We believe that we have benefited, and will continue to benefit, from our geographic location in Taiwan. Taiwan is currently the largest center for outsourced semiconductor manufacturing in the world and has a high concentration of EMS providers. Our close proximity to foundries and other providers of complementary semiconductor manufacturing services is attractive to our customers who wish to take advantage of the efficiencies of a total semiconductor manufacturing solution by outsourcing several stages of their manufacturing requirements. We believe that, as a result, we are well positioned to meet the advanced semiconductor engineering and manufacturing requirements of our customers.
Industry Background
General
Semiconductors are the building blocks used to create an increasing variety of electronic products and systems. Continuous improvements in semiconductor process and design technologies have led to smaller, more complex, and more reliable semiconductors at a lower cost per function. These improvements have resulted in significant performance and price benefits to manufacturers of electronic products. As a result, semiconductor demand has grown substantially in our primary end-user markets for communications, computing and consumer electronics, and has experienced increased growth in other markets such as automotive products and industrial automation and control systems.
The semiconductor industry is characterized by strong long-term growth, with periodic and sometimes severe cyclical downturns. The Semiconductor Industry Association reported that worldwide sales of semiconductors increased from approximately US$51.0 billion in 1990 to approximately US$526.8 billion in 2023. We believe that overall growth and cyclical fluctuations will continue over the long term in the semiconductor industry.
EMS
EMS providers typically achieve large economies of scale in manufacturing by pooling together product design techniques and providing value-added services such as warranties and repairs. Companies who do not need to manufacture a constant supply of products have increasingly outsourced their manufacturing to these service providers so that they can respond quickly and efficiently to sudden spikes in demand without having to maintain large inventories of products.
EMS are sought by companies in a wide range of industries including, among others, information, communications, computing, consumer electronics, automotive electronics, medical treatment, industrial applications, aviation, navigation, national defense, and transportation. Although affected by global economic fluctuations, we expect the EMS industry to continue to grow in the long term, and we have enhanced our presence in the industry through USI Group.
Outsourcing Trends in Semiconductor Manufacturing
Historically, semiconductor companies designed, manufactured, packaged, and tested semiconductors primarily within their own facilities. However, there is a noticeable industry trend to outsource the manufacturing process. Virtually every significant stage of manufacturing can now be outsourced, with wafer foundry services, semiconductor packaging and testing services, and EMS comprising the largest segments of the independent semiconductor manufacturing services market.
The availability of technologically advanced independent manufacturing services has also enabled the growth of “fabless” semiconductor companies, focusing on design and marketing while outsourcing wafer fabrication, packaging, and testing to independent companies. We believe that the growth in the number and scale of fabless semiconductor companies that rely solely on independent manufacturers will continue to drive our growth. Similarly, the availability of technologically advanced independent manufacturing services has encouraged integrated device manufacturers, traditionally reliant on in-house manufacturing, to increasingly outsource their manufacturing requirements to independent semiconductor manufacturing companies.
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We anticipate a rise in semiconductor manufacturing outsourcing in the future due to several factors, including technological expertise, significant capital expenditure, focus on core competencies, and time-to-market pressure.
Trends of Mergers and Acquisitions in the Semiconductor Industry
The global semiconductor industry is highly competitive, and the competitive landscape is changing as a result of a trend toward consolidation within the industry. Packaging and testing service providers, in particular, have engaged in cross-border mergers and acquisitions in recent years as part of their expansion strategy, which have gradually changed the ecosystem of the semiconductor industry.
Examples of mergers and acquisitions by and among semiconductor design companies, integrated device and chips manufacturers, and software business providers include Intel Corporation’s acquisition of Altera Corporation, ON Semiconductor Corporation’s acquisition of Fairchild Semiconductor International, NXP Semiconductors’s acquisition of Freescale Semiconductor, Avago Technologies’s acquisition of Broadcom Corporation, several acquisitions of semiconductor design companies by MediaTek, Bain Capital’s acquisition of Toshiba Corporation’s memory chip business, Microchip Technology’s acquisition of Atmel Corporation and Microsemi Corporation, Qualcomm Incorporated’s attempted acquisition of NXP Semiconductors, Infineon’s acquisition of Cypress, NXP Semiconductors’s acquisition of Marvell’s Wi-Fi Connectivity Business, ON Semiconductor Corporation’s acquisition of Quantenna, NVIDIA’s acquisition of ARM Limited from SoftBank Group, Analog Devices’s acquisition of Maxim Integrated Products, AMD’s acquisition of Xilinx, Beijing Zhiguangxin Holding’s acquisition of Tsinghua Unigroup, AMD’s acquisition of Pensando, and Broadcom’s acquisition of VMware.
Examples of mergers and acquisitions by and among semiconductor packaging and testing companies include Jiangsu Changjiang Electronics Technology’s acquisition of STATS ChipPAC, Nantong Fujitsu Microelectronics’s acquisition of the packaging and testing factory of AMD, Amkor’s acquisition of J-Devices, and Tianshui Huatian Technology’s acquisition of Unisem.
Throughout our history, we have similarly undertaken several mergers and acquisitions, including the acquisitions of SPIL Group, Motorola’s semiconductor assembly and test sites, ISE Labs, EEMS Test Singapore, and the acquisition of Infineon’s subsidiaries in February 2024.
As a result of the aforementioned mergers and acquisitions, we and our competitors were able to further strengthen our competitive position by expanding product offerings and combining financial resources. We expect this consolidation trend to continue.
Overview of Semiconductor Manufacturing Process
The manufacturing of semiconductors is a complex process that requires increasingly sophisticated engineering and manufacturing expertise. The manufacturing process can be generally divided into the following stages:
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We are involved in all stages of the semiconductor manufacturing process except circuit design and wafer fabrication.
| Process |
Description | |
| 1.Circuit Design | The design of a semiconductor is developed by laying out circuit components and interconnections. | |
| 2.Engineering Test | Throughout and following the design process, prototype semiconductors undergo engineering testing, which involves software development, electrical design validation, and reliability and failure analysis. | |
| 3.Wafer Fabrication | Process begins with the generation of a photomask through the definition of the circuit design pattern on a photographic negative, known as a mask, by an electron beam or laser beam writer. These circuit patterns are transferred to the wafers using various advanced processes. | |
| 4.Wafer Probe | Each individual die is electrically tested, or probed, for defects. Dies that fail this test are marked to be discarded. | |
| 5.Packaging (or Assembly) | Packaging, also called assembly, is the processing of bare semiconductors into finished semiconductors and serves to protect the die and facilitate electrical connections and heat dissipation. | |
| 6.Final Test | Final testing is conducted to ensure that the packaged semiconductor meets performance specifications. Final testing involves using sophisticated testing equipment, known as testers, and customized software to electrically test several attributes of packaged semiconductors, including functionality, speed, predicted endurance, and power consumption. The final testing of semiconductors is categorized by the functions of the semiconductors tested into logic/mixed-signal/RF/3D IC/discrete final testing and memory final testing. Memory final testing typically requires simpler test software but longer testing time per device tested. | |
| 7.Module, Board Assembly, and Test | Module, board assembly, and test refers to the combination of one or more packaged semiconductors with other components in an integrated module or board to enable increased functionality. | |
| 8.Material | Material refers to the interconnection of materials which connect the input/output on the semiconductor dies to the printed circuit board, such as substrate, leadframe, and flip chip. | |
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Strategy
Our objective is to provide integrated solutions that set industry standards, including packaging, testing services, interconnect materials design and production capabilities, and to lead and facilitate the industry trend toward outsourcing semiconductor manufacturing requirements. The principal elements of our strategy are to:
Grow Our Packaging and Testing Services and Expand Our Range of Offerings
We believe that an important factor in attracting leading semiconductor companies to be our customers is our ability to fulfill the demand for a broad range of packaging and testing solutions on a large scale. We intend to continue to develop process and product technologies to meet the packaging and testing requirements of clients. Our expertise in packaging technology has enabled us to develop sophisticated solutions such as flip chip packaging, bump chip carrier packaging, stacked die packaging, leading-edge advanced packaging and fine-pitch wire bonding. We are continuously investing in research and development in response to and in anticipation of migrations in technology and intend to continue to acquire access to new technologies through strategic alliances and licensing arrangements.
We have been expanding our semiconductor testing business in response to growing demand for comprehensive testing solutions in the semiconductor industry. By offering testing turnkey solutions, we enable semiconductor companies to shorten product cycle times and improve product quality. We remain committed to expanding our testing business to meet the evolving needs of customers worldwide.
The increasing miniaturization of semiconductors and the growing complexity of interconnect technology have also resulted in the convergence of assembly processes at different levels of integration: chip, module, board, and system. In response to this miniaturization and growing complexity, we have focused on providing module assembly services and, in addition, our subsidiary USI Group has provided us with access to process and product technologies at the levels of module, board, and system assembly and testing, which helps us to better anticipate industry trends and take advantage of potential growth opportunities. We expect to continue to combine our packaging, testing, and materials technologies with the expertise of USI Group at the systems level to develop our SiP business.
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Strategically Expand and Streamline Production Capacity
To capitalize on growing industry demand, we intend to strategically expand our production capacity, both through internal growth and selective acquisitions and joint ventures, with a focus on providing cost-competitive and innovative services.
We intend to invest in trends that are essential to the development of the industry. We plan to expand our capacity to meet demand for smaller form factors, higher performance, and higher packaging density.
We expect to focus on providing cost-competitive services through better management of capacity utilization and efficiency improvements and offer our services on a large scale with the intention of driving more integrated device manufacturer outsourcing in the long run.
We evaluate acquisition and joint venture opportunities on the basis of access to new markets and technology, the enhancement of our production capacity, improvement of research and development capabilities, economies of scale and management resources, and closer proximity to existing and potential customers. In October 2023, we acquired HCC to expand our automotive wireless business. In February 2024, the board of directors of ASE resolved to acquire two subsidiaries of Infineon Group, which are located in the Philippines and Korea. These two Infineon subsidiaries will be acquired by ASE and ASE Korea, respectively.
Continue to Leverage Our Presence in Key Centers of Semiconductor and Electronics Manufacturing
We intend to continue leveraging our presence in key centers of semiconductor and electronics manufacturing to further grow our business. We have significant packaging, testing, and EMS operations in Taiwan, currently one of the leading centers for outsourced semiconductor and electronics manufacturing in the world. This presence enables our engineers to work closely with our customers as well as wafer foundries and other providers of complementary semiconductors and EMS early in the design process, enhances our responsiveness to the requirements of our customers, and shortens production cycles. In addition, as a turnkey service provider, we are able to offer our products to our customers and complementary service providers within relatively close geographic proximity. Besides our current operations in Taiwan, we intend to expand our operations in our other subsidiaries outside of Taiwan.
In addition to Taiwan, we have major operations in the following locations:
| • | P.R.C. — a fast-growing market for semiconductor and electronics manufacturing; |
| • | Korea — an important center for the manufacturing of memory and communications devices; |
| • | Malaysia, Singapore, and Vietnam — each a center for outsourced semiconductor and electronics manufacturing in Southeast Asia; |
| • | Silicon Valley in California — the preeminent center for semiconductor design, with a concentration of fabless customers; |
| • | Japan — an emerging market for packaging and testing outsourcing services as Japanese integrated device manufacturers increasingly outsource their semiconductor manufacturing requirements; |
| • | Mexico — a development and manufacturing center for electronic products across different industries with an auxiliary service depot to provide technical services; and |
| • | Europe — an original equipment manufacturing solutions center for the electronics industry that continues to grow, driven by the increasing demand for cost-competitive and flexible manufacturing solutions in various industries. |
Strengthen and Develop Strategic Relationships with Our Customers and Providers of Complementary Semiconductor Manufacturing Services
We intend to strengthen existing and develop new strategic relationships with our customers and providers of complementary semiconductor manufacturing services, such as wafer foundries, as well as equipment vendors, raw material suppliers, and technology research institutes, in order to offer our customers total semiconductor manufacturing solutions covering all stages of the manufacturing process from design to shipment. In addition, we are working with our customers to co-develop new packaging technologies and designs.
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Since 1997, we have maintained a strategic alliance with TSMC, which designates us as their non-exclusive preferred provider of packaging and testing services for semiconductors manufactured by TSMC. Through our strategic alliance with and close geographic proximity to TSMC, we are able to offer our customers a total semiconductor manufacturing solution that includes access to foundry services in addition to our packaging, testing, and direct shipment services.
Principal Products and Services
We offer a broad range of semiconductor packaging and testing services. In addition, we provide EMS through USI Group. Our package types generally employ either leadframes or substrates as interconnect materials. The semiconductors we package are used in a wide range of end-use applications, including communications, computing, consumer electronics, industrial, automotive, and other applications. Our testing services include front-end engineering testing, which is performed during and following the initial circuit design stage of the semiconductor manufacturing process, wafer probe, final testing, and other related semiconductor testing services. We focus on packaging and testing semiconductors. We offer our customers turnkey services, which consist of packaging, testing, and direct shipment of semiconductors to end users designated by our customers. Our EMS are used in a wide range of end-use applications, including, but not limited to, computing, peripherals, communications, industrial applications, automotive electronics, and server applications. In 2023, our revenues generated from packaging, testing, and EMS accounted for 44.1%, 8.6% and 46.1% of our operating revenues, respectively.
Packaging Services
We offer a broad range of package types to meet the requirements of our customers, including flip chip BGA, flip chip CSP, aCSP (advanced chip scale packages), quad flat packages (QFP), low profile and thin quad flat packages (LQFP/TQFP), bump chip carrier (BCC), quad flat no-lead (QFN) packages, aQFN (advanced QFN), and Plastic BGA. In addition, we provide 3D chip packages, such as aMAP POP (advanced, laser ablation type), which enable our customers to mount packages more easily, and HB PoP (High-Band package on Package) for higher performance orientation and marketing requirement. We also offer other forms of stacked die solutions in different package types, such as stacked die QFN, hybrid BGAs containing stacked wire bond, and FC die. Meanwhile, we are developing cost-effective solutions to 3D packages, such as FOCoS (Fan-out Chip-on-Substrate) and 2.5D (silicon interposer), to fulfill current low-cost and high-performance requirements in parallel with 3D IC with TSV (Through Silicon Via) technology. In addition, to meet current trends toward low-cost solutions, we provide copper wire bonding solutions which can be applied to traditional gold wire products. We also provide a high-volume manufacturing experience with silver wire bonding for FCCSP Hybrid packages. Furthermore, we are one of the key providers of IoT (Internet of Things), server and automotive services. We believe we are among the leaders in such packaging processes and technologies and are well positioned to lead the technology migration in the semiconductor packaging industry.
To address the new demands of 5G wireless technology, we survey new materials and structures based on developed package structures and focus our efforts on developing more integration solutions, such as Application Processor (AP) module and radio frequency (RF) front end (RFFE) with customized SiP services.
Wirebonding. We provide wirebonding, including leadframe-based packages and substrate-based packages. Leadframe-based packages are packaged by connecting the die, using wire bonders, to the leadframe with gold wire or copper wire. As packaging technology improves, the number of leads per package increases. In addition, improvements in leadframe-based packages have reduced the footprint of the package on the circuit board and improved the electrical performance of the package. To have higher interconnected density and better electrical performance, semiconductor packages have evolved from leadframe-based packages to substrate-based packages. The key differences of these package types are the size of the package; the density of electrical connections the package can support; flexibility at lower costs; the thermal and electrical characteristics of the package; and environmentally conscious designs. Substrate-based packages generally employ the BGA design. Whereas traditional leadframe technology places the electrical connection around the perimeter of the package, the BGA package type places the electrical connection at the bottom of the package surface in the form of small bumps or balls. These small bumps or balls are typically distributed evenly across the bottom surface of the package, allowing greater distance between individual leads and higher pin-counts. Our expertise in BGA packages also includes capabilities in stacked-die BGA, which assembles multiple dies into a single package.
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The following table sets forth our principal wirebonding packages.
| Package Types |
Number of Leads |
Description |
End-Use Applications | |||
| Advanced Quad Flat No-Lead Package (aQFN) | 104-276 | aQFN allows for leadless, multi-row, and fine-pitch leadframe packaging and is characterized by enhanced thermal and electrical performance. aQFN is a cost-effective packaging solution due to its cost-effective materials and simpler packaging process. | Telecommunications products, wireless local access networks, personal digital assistants, digital cameras, low to medium lead count packaging information appliances. | |||
| Quad Flat Package (QFP)/Low 44-256 profile and Thin Quad Flat Package (LQFP/TQFP) | 44-256 | Designed for advanced processors and controllers, application-specific integrated circuits, and digital signal processors. | Multimedia applications, cellular phones, personal computers, automotive and industrial products, hard disk drives, communication boards such as ethernet, integrated services digital networks, and notebook computers. | |||
| Quad Flat No-Lead Package (QFN)/ Dual-Row QFN (DR-QFN)/ Microchip Carrier (MCC) | 8-176 | QFN/DRQFN, also known as types of MCC, uses half-encapsulation technology to expose the rear side of the die pad and the tiny fingers, which are used to connect the chip and bonding wire with printed circuit boards. Dual-Row is to increase the lead counts for product requirement. | Cellular phones, wireless local access networks, personal digital assistant devices, and digital cameras. | |||
| Small Outline Plastic Package (SOP)/Thin Small Outline Plastic Package (TSOP) | 8-56 | Designed for memory devices including static random access memory, or SRAM, dynamic random access memory, or DRAM, fast static RAM, also called FSRAM, and flash memory devices. | Consumer audio/video and entertainment products, cordless telephones, pagers, fax machines, printers, copiers, personal computer peripherals, automotive parts, telecommunications products, recordable optical disks, and hard disk drives. | |||
| Small Outline Plastic J-Bend Package (SOJ) | 20-44 | Designed for memory and low pin-count applications. | DRAM memory devices, microcontrollers, digital analog conversions, and audio/video applications. | |||
| Plastic Leaded Chip Carrier (PLCC) | 28-84 | Designed for applications that do not require low-profile packages with high density of interconnects. | Personal computers, scanners, electronic games, and monitors. | |||
| Plastic Dual In-line Package (PDIP) | 8-64 | Designed for consumer electronic products. | Telephones, televisions, audio/video applications, and computer peripherals. | |||
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| Package Types |
Number of Leads |
Description |
End-Use Applications | |||
| Plastic BGA | 119-1520 | Designed for semiconductors which require the enhanced performance provided by plastic BGA, including personal computer chipsets, graphic controllers and microprocessors, application-specific integrated circuits, digital signal processors, and memory devices. | Telecommunications products, global positioning systems, notebook computers, disk drives, and video cameras. | |||
| Stacked-Die BGA | 120-1520 | Combination of multiple dies in a single package enables package to have multiple functions within a small surface area. | Telecommunications products, local area networks, graphics processor applications, digital cameras, and pagers. | |||
| Package-on-Package (POP, aMAP POP) | 136-904 | This technology places one package on top of another to integrate different functionalities while maintaining a compact size. It offers procurement flexibility, low cost of ownership, better total system cost and faster time to market. Designers typically use the topmost package for memory applications and the bottommost package for ASICs. By using this technology, the memory known good die issue can be mitigated and the development cycle time and cost can be reduced. | Cellular phones, personal digital assistants, and system boards. | |||
| Land Grid Array (LGA) | 10-72 | Leadless package, which is essentially a BGA package without the solder balls. Based on laminate substrate, land grid array packages allow flexible routing and are capable of multichip module functions. | High-frequency integrated circuits such as wireless communications products, computers servers, personal computer peripherals, and MEMS sensors. | |||
Advanced Packages. The semiconductor packaging industry has evolved to meet the requirements of high-performance electronics products. We believe that there will continue to be growing demand for packaging solutions with increased input/output density, smaller size, and a better heat dissipation characteristic.
We have focused on developing our capabilities in certain packaging solutions, such as aCSP (wafer-level chip scale package), flip chip BGA, Heat-Spreader FCBGA, flip-chip CSP, Hybrid FCCSP (Flip Chip + W/B), Flip Chip PiP (Package in Package), Flip Chip PoP (Package on Package), aS3TM (Advanced Single Sided Substrate), HB POP (High-Bandwidth POP), Fan-Out Wafer-Level Packaging, SESUB, and 2.5D. Flip-chip BGA technology replaces wire bonding with wafer bumping for interconnections within the package. Wafer bumping involves the placing of tiny solder balls, instead of wires, on top of dies for connection to substrates. As compared with more traditional packages, which allow input/output connection only on the boundaries of the dies, flip chip or wafer-level package solutions significantly enhance the input/output flow by allowing input/output connections over the entire surface of the dies.
Chip scale packages typically have an area no greater than 120% of the silicon die. For wafer-level packages, the electrical connections are plated or printed directly onto the wafer itself, resulting in a package very close to the size of the silicon die.
Wafer-Level MEMs (WL MEMs) is an advanced assembly technology for MEMs in wafer-level types instead of current LGA or leadframe types using TSV or chip-to-wafer technology. WL MEMs are mainly used in applications such as pressure, temperature, humidity, and gyroscope sensors, among others.
Fan-Out Wafer-Level Packages (FOWLP) provide an extended solution and package type to integrate different functional chips or packages, a reduction in resistance and inductance over FCCSP, better thermal performance, and smaller form factors of packages. FOWLP can be applied for different stack and SiP solutions.
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We provide numerous technologies to meet various customer demands. The following table sets forth our principal advanced packages.
| Package Types |
Number of Leads |
Description |
End-Use Applications | |||
| Wafer-Level Chip Scale Package (aCSP) | 4-792 | A wafer-level chip scale package that can be directly attached to the circuit board. Provides shortest electrical path from the die pad to the circuit board, thereby enhancing electrical performance. | Cellular phones, personal digital assistants, watches, MP3 players, digital cameras, and camcorders. | |||
| Flip Chip Scale Package (FC-CSP, a-fcCSP) | 16-1287 | A lightweight package with a small, thin profile provides better protection for chips and better solder joint reliability than other comparable package types. | RFICs and memory ICs such as digital cameras, DVDs, devices that utilize wireless technology, cellular phones, GPS devices, and personal computer peripherals. | |||
| Flip Chip PiP (Package in Package) (FC-CSP PiP) | 500-980 | System-in-Package for Flip Chip + Memory known good package inside with better electrical performance package types. | Application processor for smartphone and data modem on portable devices. | |||
| Flip Chip PoP (Package on Package) (FC-CSP PoP) | 500-1300 | SoC (System-on-Chip) die for Assembly to Bottom package and then applied for memory package on top inside with better electrical performance package types. | High-tier application processor for smartphones and data modem on portable devices. | |||
| Flip Chip BGA/ HF FCBGA(High Performance / Heat Spreader / FCBGA) | 16-5475 | Using advanced interconnect technology, the flip chip BGA packages allow higher density of input/output connection over the entire surface of the dies. HF FCBGA is designed for the semiconductor high-performance requirement of high density of interconnects. | High-performance networking, graphics, server, and data center processor applications. | |||
| Hybrid (Flip Chip and Wire Bonding) | 49-608 | A package technology that stacks a die on top of a probed good die to integrate ASIC and memory (flash, SRAM, and DDR) into one package and interconnects them with wire bonding and molding. This technology suffers from known good die issues (i.e., one bad die will ruin the entire module). Rework is also not an option in hybrid packages. | Digital cameras, smartphones, bluetooth applications, and personal digital assistants. | |||
| aS3 | up to 300 | Ultra-thin profile package which is an excellent middle pin-count alternative solution; standard BT material and manufacturing equipment; and lower cost via on pad. | High I/O and short wire length package solution in high-performance requirement. | |||
| Integrated Passive Device (IPD) | ~ 20 | IPD can provide a high-performance/high Q-factor inductor and single/double layers for lower cost and turnkey solutions and integrate passives into one IPD chip. IPD requires less involvement in the Surface Mount Technology (the “SMT”) process and is considered to be more compatible with current assembly process and suitable for all package solutions. | Cellular phones, Wi-Fi module, TV, and personal digital assistants. | |||
| HBPoP (High-Bandwidth Package On Package) | ~ 1300 | High-Bandwidth POP can provide a data rate and good signal integrity for Cellular AP, an integration solution for ASIC and memory, decoupling functions for multiple memory mount applications. | Cellular phones and application processors. | |||
| FOWLP (Fan-Out Wafer-Level Package) | ~ 1500+ | FOWLP provides an extended solution/package type to integrate most different functional chips or packages and to have good reduction in resistance and inductance over FCCSP, better thermal performance and smaller form factors of packages, and can be applied for different stack or SiP solutions. | Cellular phones, logic devices, power management, RF, Codec, IoT, wearables, and networking. | |||
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Heterogeneous Integration. Heterogeneous Integration refers to the integration of separately manufactured components into a higher-level assembly that, in the aggregate, provides enhanced functionality and improved operating characteristics:
| • | SiP and Modules. |
The drive towards semiconductor miniaturization and integration is expanding the commercial potential of SiP, a package or module containing a functional electronic system or subsystem that is integrated and miniaturized through IC greater assembly technologies. With attributes that deliver higher performance, cost-effectiveness, and shorter time to market, SiP technology is enabling functionality and creating more commercial opportunities across a broader variety of electronics applications.
ASEH is a market leader in SiP technologies from design to assembly and high-volume manufacturing. SiP involves the integration of multiple components from IC chips and components including ASICs, Memory, Analog & mixed signals devices, passives, MEMs, sensors, antennas, and other devices into one single package. SiP and Modules products are gaining significant traction within the industry, given growing demand for miniaturized electronic devices that deliver more functions and higher performance, lower power, greater speed, and increased bandwidth. ASEH’s SiP portfolio includes flip chip and wirebond multichip packaging, embedding technologies such as SESUB, and wafer-level technologies including fan-out and IPD. IPD uses a wafer-level process to integrate passive components on an individual substrate. Recent IPD innovation involves the extension of the RDL (Redistribution) process to build a high-quality factor (Q) inductor and RF circuits on top of silicon wafers. It can be used in the following three approaches to enhance product performance: 1) replace discrete components such as Balun and Filter, 2) integrate other passive components and act as interposer, and 3) replace PWB and act as a substrate of the module. In addition, we leverage some of our SMT-based technologies, such as compartment shielding, double-sided module, and antenna integration.
We also offer module assembly services, which combine one or more packaged semiconductors with other components in an integrated module to enable increased functionality for system-level assembly. End-use applications for modules include cellular phones and wireless LAN applications, Bluetooth applications, camera modules, automotive applications, toys, networking, storage, and power management.
| • | Leading-Edge Advanced Packages. |
As AI and high-performance computing continue to make inroads on a global basis, we believe there is an increased demand for semiconductor devices that deliver enhanced performance, lower latency, increased bandwidth, and greater power efficiency. ASEH strives to meet the increasing package complexity needs related to increasing I/O density, expanding power delivery requirements and providing more robust inter-die connectivity from AI & HPC products. We have established ourselves as a leader through the successful introduction of VIPack™ solutions, which have played a pivotal role in bringing advanced ASIC and HBM products to the marketplace.
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VIPack™ represents ASEH’s next generation 3D heterogeneous integration architecture, designed to enable vertically integrated package solutions. Leveraging advanced redistribution layer (RDL) processes, embedded integration, and 2.5D and 3D technologies, the platform facilitates unprecedented innovation in integrating multiple chips within a single package. Notable technologies include ASEH’s high-density RDL-based Fanout Package-on-Package (FOPoP), Fanout Chip-on-Substrate (FOCoS), Fanout Chip-on-Substrate-Bridge (FOCoS-Bridge), and Fanout System-in-Package (FOSiP), as well as Through Silicon Via (TSV)-based 2.5D and 3D IC and Co-Packaged Optics processing capabilities. VIPack™ equips customers with the capabilities necessary to develop highly integrated silicon packaging solutions, optimizing clock speed, bandwidth, and power delivery, while reducing co-design time, product development cycles, and time to market.
The following table sets forth the six pillars of VIPack™.
| Package Types |
Number of Leads |
Description |
End-Use Applications | |||
| Fanout Package-on-Package (FOPoP) | 1520 | An RDL-based package that integrates a fan-out bottom package with a standard package mounted on the top side, utilizing fine-pitch plated Cu posts for through-mold vertical interconnections. The bottom package features two RDLs (top and bottom routing planes) connected by the Cu posts, formed through wafer-level fan-out technology, enabling thinner and finer electrical traces. | Application processors for smartphone and antenna-in-packages for mobile/automotive. | |||
| Fanout Chip-on-Substrate (FOCoS) | 3000-7000 | A fan-out package flip-chip mounted on a high pin count BGA substrate. It incorporates an RDL facilitating shorter die-to-die interconnections between multiple chips. | ASICs and HBM for HPC, networking, server and AI/ML applications. | |||
| Fanout Chip-on-Substrate-Bridge (FOCoS-Bridge) | 3000-7000 | FOCoS—Bridge further utilizes tiny silicon bridge with routing layers as in-package interconnect between chiplets. The silicon bridges are embedded in the fan-out RDL layer to achieve faster data transfer rates. | Multi-die and HBM integration for AI, data center, server and networking applications. Memory and passive integration for APU/CPU/GPUs and chiplets for applications across AI, data center, mobile, auto processors, communication infrastructure, and networking. | |||
| Fanout System-in-Package (FOSiP) | Customized | FOSiP can achieve higher performance and smaller form factor through fan-out RDL. | Smartphones, tablets, RF infrastructures, edge computing, and IoT devices. | |||
| 2.5D and 3D IC | 3000-7000 | 2.5D/3D include multiple IC within the same package. In a 2.5D structure, two or more active semiconductor chips are placed side-by-side on a silicon interposer to achieve extremely high die-to-die interconnect density. In a 3D structure, active chips are integrated through die stacking to achieve shortest interconnects and smallest package footprint. | High-end GPUs, high-end FPGA, network switch / routers for data center & 5G infrastructure, AI accelerators for AI training. | |||
| Co-Packaged Optics | 3000-7000 | CPO/silicon photonics serve as a conduit for light propagation and leverage the established CMOS ecosystem, encompassing front-end and back-end processes, to realize high-density photonic integrated circuits. This approach enables the implementation of intricate optical functionalities, such as filtering or modulation, on a compact chip at a low cost. | ASICs on network switch and stand-alone laser engine for high speed. | |||
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Automotive Electronics. We assemble automotive electronic products based on our leading technology, good quality systems, and automation. We provide a variety of products, such as leadframe base, substrate base, Flip Chip, and Wafer-Level packages. We also provide robust package solutions to customers and end-users, including most types of industrial package solutions together with tailor-made solutions to meet customers’ and end-users’ requirements for automotive specifications.
Interconnect Materials. Interconnect materials connect the input/output on the semiconductor dies to the printed circuit board. Interconnect materials include substrate, which is a multilayer miniature printed circuit board, and is an important element of the electrical characteristics and overall performance of semiconductors. We produce substrates for use in our packaging operations.
The demand for higher-performance semiconductors in smaller packages will continue to spur the development of IC substrates that can support the advancement in circuit design and fabrication. As a result, we believe that the market for substrates will grow and the cost of substrates as a percentage of the total packaging process will increase. In the past, substrates we designed for our customers were produced by independent substrate manufacturers. Since 1997, we have been designing and producing a portion of our interconnect materials in-house. In 2023, our interconnect materials operations supplied approximately 6.6% of our consolidated substrate requirements by value.
The following table sets forth, for the periods indicated, the percentage of our packaging revenues accounted for by each principal type of packaging products or services.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Bumping, Flip Chip, WLP, and SiP |
41.2 | % | 50.5 | % | 51.3 | % | ||||||
| Wirebonding(1) |
48.5 | % | 41.6 | % | 39.8 | % | ||||||
| Discrete and others |
10.3 | % | 7.9 | % | 8.9 | % | ||||||
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| Total |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
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| (1) | Includes leadframe-based packages such as QFP/TQFP, QFN/MCC and PLCC/PDIP and substrate-based packages, such as various BGA package types and LGA. |
Testing Services
We provide a complete range of semiconductor testing services, including front-end engineering testing, wafer probing, final testing of logic/mixed-signal/RF semiconductors and SiP/MEMS/Discrete modules, and other test-related services.
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The testing of semiconductors requires technical expertise and knowledge of the specific applications and functions of the semiconductors tested as well as the testing equipment utilized. We believe that our testing services employ technology and expertise which are among the most sophisticated in the semiconductor industry. In addition to maintaining different types of testing equipment, which enables us to test a variety of semiconductor functions, we work closely with our customers to design effective testing solutions on multiple equipment platforms.
In recent years, complex, high-performance logic/mixed-signal/RF semiconductors and SiP/MEMS modules have accounted for an increasing portion of our testing revenues.
Front-End Engineering Testing. We provide front-end engineering testing services, including customized software development, electrical design validation, and reliability and failure analysis.
| • | Customized Software Development. Test engineers develop customized software or test programs to test semiconductors using automated test equipment. Each device generally requires a specialized test program in order to test the conformity of each particular semiconductor to its required functionality and specification. |
| • | Electrical Design Validation. A prototype of the designed semiconductor is subjected to electrical tests using advanced test equipment and customized software. These tests assess whether the prototype semiconductor complies with a variety of different operating specifications, including functionality, frequency, voltage, current, timing, and temperature range. |
| • | Reliability Analysis. Reliability analysis is designed to assess the long-term reliability of the semiconductor and its suitability of use for intended applications. Reliability testing can include “burn-in” services, which electrically stress a device, usually at high temperature and voltage, for a period of time long enough to cause the failure of marginal devices. |
| • | Failure Analysis. In the event that the prototype semiconductor does not function to specifications during either the electrical design validation or reliability testing processes, it is typically subjected to failure analysis to determine the cause of the failure to perform as anticipated. As part of this analysis, the prototype semiconductor may be subjected to a variety of analyses of electrical testing. |
Wafer Probing. Wafer probing is the step immediately before the packaging of semiconductors and involves visual inspection and electrical testing of the processed wafer for defects to ensure that it meets our customers’ specifications. Wafer probing services require expertise and testing equipment similar to that used in final testing, and most of our testers can also be used for wafer probing.
Logic/Mixed-signal/RF Module and SiP/Discrete Final Testing. We conduct final tests of a wide variety of logic/mixed-signal/RF semiconductor devices and SiP/MEMS/discrete modules, with the number of leads or bumps ranging from the single digits to over 30 thousand and operating frequencies of over 32 Gbps for digital semiconductors and 44 GHz for 5G mmWave semiconductors, which are at the high end of the range for the industry. The products we test include applications for wired, wireless, and mobile communications, satellite communications, automotive, home entertainment, IoT, personal computer, AI, and high-performance computing applications, as well as a variety of consumer and application-specific integrated circuits for various specialized applications.
Other Test-Related Services. We provide a broad range of additional test-related services, such as:
| • | Electric Interface Board and Mechanical Test Tool Design. Process of designing individualized testing apparatuses such as test load boards, sockets, handler change kits, and probe cards for unique semiconductor devices and packages. |
| • | Program Conversion. Process of converting a test program from one test platform to different test platforms. |
| • | Program Efficiency Improvement. Process of optimizing the program code. |
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| • | Burn-In Testing. Burn-in testing is the process of electrically stressing a device, usually at high temperature and voltage, for a period of time to simulate the continuous use of the device to determine whether this use would cause the failure of marginal devices. |
| • | Module and SiP Testing. We provide multi-die-module and SiP testing through integrated bench solutions or via automatic test equipment. |
Drop Shipment Services. We offer drop shipment services for shipment of semiconductors directly to end users designated by our customers. Drop shipment services are provided mostly in conjunction with our testing services. We provide drop shipment services to a significant percentage of our testing customers. A substantial portion of our customers at each of our facilities have qualified these facilities for drop shipment services. Since drop shipment eliminates the additional step of inspection by the customer before shipment to the end user, quality of service is a key consideration. We believe that our ability to successfully execute our full range of services, including drop shipment services, is an important factor in maintaining existing customers as well as attracting new customers.
The following table sets forth, for the periods indicated, the percentage of our testing revenues accounted for by each type of testing service.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Front-end engineering testing |
2.0 | % | 1.8 | % | 3.1 | % | ||||||
| Wafer probing |
33.5 | % | 38.6 | % | 35.4 | % | ||||||
| Final testing |
64.5 | % | 59.6 | % | 61.5 | % | ||||||
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| Total |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
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EMS
We provide integrated solutions for EMS in relation to computing, peripherals, communications, industrial, automotive, and server applications through USI Group. The key products and services we offer to our customers include:
| • | Computing: motherboards for server and desktop PCs; peripherals; port replicators; network attached systems; solid state drives; |
| • | Communications: Wi-Fi; SiP; |
| • | Consumer products: control boards for flat panel devices; SiP; |
| • | Automotive electronics: automotive EMS; automotive wireless solutions; car LED lighting; regulators/rectifiers; |
| • | Industrial products: point-of-sale systems; smart handheld devices; and |
| • | Others: field replacement units; return material authorization. |
Seasonality
See “Item 5. Operating and Financial Review and Prospects—Operating Results—Quarterly Operating Revenues, Gross Profit and Gross Margin.”
Sales and Marketing
Sales and Marketing Presence
We maintain sales and marketing offices in Taiwan, the U.S., Belgium, Singapore, the P.R.C., Korea, Malaysia, Japan, and a number of other countries. We also have sales representatives operating in certain other countries in which we do not have offices. Our sales and marketing offices in Taiwan are located in Hsinchu, Taichung and Kaohsiung. We conduct marketing research through our customer service personnel and through our relationships with our customers and suppliers we endeavor to keep abreast of market trends and developments. We also provide advice on production process technology to our major customers planning the introduction of new products. When placing orders, our customers specify which of our facilities will receive the order. Our customers conduct separate qualification and correlation processes for each of our facilities that they use. See “—Qualification and Correlation by Customers.”
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Customers
Our five largest customers together accounted for approximately 49.6%, 50.2%, and 48.0% of our operating revenues in 2021, 2022, and 2023, respectively. One customer accounted for more than 10.0% of our operating revenues in 2021, 2022, and 2023.
We package and test for our customers a wide range of products with end-use applications in the communications, computing, and consumer electronics/industrial/automotive sectors. The following table sets forth a breakdown of the percentage of our operating revenues generated from our packaging and testing services, for the periods indicated, by the principal end-use applications of the products that were packaged and tested.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Communications |
50.1 | % | 52.6 | % | 50.8 | % | ||||||
| Computing |
14.9 | % | 15.8 | % | 18.1 | % | ||||||
| Consumer electronics/industrial/automotive/others |
35.0 | % | 31.6 | % | 31.1 | % | ||||||
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100.0 | % | 100.0 | % | 100.0 | % | ||||||
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Our EMS provides a wide range of products with end-use applications. The following table sets forth a breakdown of the percentage of our operating revenues generated from our EMS for the periods indicated by the principal end-use applications.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Communications |
38.4 | % | 37.3 | % | 35.9 | % | ||||||
| Computing |
8.8 | % | 10.2 | % | 8.9 | % | ||||||
| Consumer electronics |
33.6 | % | 32.0 | % | 31.6 | % | ||||||
| Industrial |
13.0 | % | 12.8 | % | 13.3 | % | ||||||
| Automotive |
4.7 | % | 6.6 | % | 8.3 | % | ||||||
| Others |
1.5 | % | 1.1 | % | 2.0 | % | ||||||
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100.0 | % | 100.0 | % | 100.0 | % | ||||||
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We categorize our operating revenues geographically based on the country in which the customer is headquartered. The following table sets forth, for the periods indicated, the percentage breakdown by geographic regions of our operating revenues.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| U.S. |
62.0 | % | 66.5 | % | 63.6 | % | ||||||
| Taiwan |
16.6 | % | 12.5 | % | 12.1 | % | ||||||
| Asia |
11.0 | % | 11.3 | % | 13.0 | % | ||||||
| Europe |
10.2 | % | 9.5 | % | 11.2 | % | ||||||
| Others |
0.2 | % | 0.2 | % | 0.1 | % | ||||||
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100.0 | % | 100.0 | % | 100.0 | % | ||||||
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Qualification and Correlation by Customers
Customers generally require that our facilities undergo a stringent qualification process during which the customer evaluates our operations and production processes, including engineering, delivery control, and testing capabilities. The qualification process typically takes up to several weeks but can take longer depending on the requirements of the customer. In the case of our testing operations, after we have been qualified by a customer and before the customer delivers semiconductors to us for testing in volume, a process known as correlation is undertaken. During the correlation process, the customer provides us with sample semiconductors to be tested and either provides us with the test program or requests that we develop a conversion program. In some cases, the customer also provides us with a data log of results of any testing of the semiconductors that the customer may have conducted previously. The correlation process typically takes up to two weeks but can take longer depending on the requirements of the customer. We believe our ability to provide turnkey services reduces the amount of time spent by our customers in the qualification and correlation process. As a result, customers utilizing our turnkey services are able to achieve shorter production cycles.
Pricing
We price our packaging services and EMS by taking into account the actual costs and prevailing market prices. We price our testing services primarily on the basis of the amount of time, measured in central processing unit seconds, taken by the automated testing equipment to execute the test programs specific to the products being tested, as well as the cost of the equipment, with additional consideration of prevailing market prices. Prices for our packaging, testing, and EMS are confirmed at the time orders are received from customers, which is typically several weeks before delivery.
Raw Materials and Suppliers
Packaging
The principal raw materials used in our packaging processes are interconnect materials such as leadframes and substrates, gold wire, and molding compound. The silicon die, which is the functional unit of the semiconductor to be packaged, is supplied in the form of silicon wafers. Each silicon wafer contains a number of identical dies. We receive the wafers from customers or foundries on a consignment basis. Consequently, we generally do not incur inventory costs relating to the silicon wafers used in our packaging process.
We do not maintain large inventories of leadframes, substrates, bonding wire, or molding compound, but generally maintain sufficient stock of each principal raw material based on blanket orders and rolling forecasts of near-term requirements received from customers. In addition, several of our principal suppliers dedicate portions of their inventories as reserves to meet our production requirements. However, shortages in the supply of materials experienced by the semiconductor industry have in the past resulted in occasional price adjustments and delivery delays. In order to reduce adverse impacts caused by the price fluctuations of raw materials, we have developed substitute raw materials, such as copper wire, which costs much less than gold wire. However, we cannot guarantee that we will not experience shortages or price increases in the near future, or that we will be able to obtain adequate supplies of raw materials in a timely manner and at a reasonable price or to develop any substitute raw materials. In the event of a shortage and/or price increase, we generally inform our customers and work together to accommodate changes in delivery schedules and/or the price increase of raw materials. See “Item 5. Operating and Financial Review and Prospects—Operating Results—Raw Material Costs.”
We produce substrates for use in our packaging operations. In 2023, our interconnect materials operations supplied approximately 6.6% of our consolidated substrate requirements by value. See “—Principal Products and Services—Interconnect Materials.”
We have adjusted our purchases of raw materials and our production processes in order to use raw materials that comply with EU regulations, such as EU RoHS and EU REACH, for part of our production. This legislation restricts the use in the EU of certain substances that the EU deems harmful to consumers including certain grades of molding compounds, solder, and other raw materials that are used in our products. Manufacturers of electrical and electronic equipment must comply with this legislation in order to sell their products in an EU member state. Any failure to comply with regulatory environmental standards may have a material adverse effect on our results of operations.
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We established ASE Global Integrated Solutions Co., Ltd. to manage and implement procurement processes for certain packaging materials and equipment requirements. Leveraging the specialized expertise and advantages among certain subsidiaries, we aim to achieve significant cost reductions in the overall procurement process through the establishment of ASE Global Integrated Solutions Co., Ltd.
Testing
For the functional and burn-in testing of semiconductors, no other raw materials are needed. However, we often design and outsource the manufacturing of test interface products such as load boards, probe cards, and burn-in boards.
EMS
Our manufacturing processes use many raw materials. For 2023, raw materials costs accounted for 80.8% of our operating revenues from EMS. Our principal raw materials include, among others, printed circuit boards, integrated chips, ink, semiconductor devices, computer peripherals, and related accessories and electronic components. Our principal raw materials varied in the past, depending on the end-use products provided.
To ensure quality, on-time delivery and pricing competitiveness, we have established both a standardized supplier assessment system and an evaluation mechanism, continued to maintain close working relationships with our suppliers, and jointly created a stable and sustainable supply chain. In addition, we adjusted the procurement strategy in line with industry trends as well as the nature of raw materials, and decentralized the sources of raw materials to lower our supply concentration risk. However, we cannot ensure that we will not experience any shortages or price increases in the near future. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our revenues and profitability may decline if we are unable to obtain adequate supplies of raw materials and energy in a timely manner and at a reasonable price.”
Equipment
Packaging
The wire bonding process is important for routing the signal out of die to the system for the IC wire-bonding solutions. Thus, wire bonder is the important equipment used for such process. As products become finer and finer pitch, the bumping process will replace the wire bonding process for the signal routing purpose. Thus, sputter and plater will be the crucial equipment for this type of process.
Wire bonders connect the input/output terminals on the silicon die using extremely fine gold or copper wire to leads on leadframes or substrates. Typically, a wire bonder may be used, with minor modifications, for the packaging of different products. As of January 31, 2024, we operated an aggregate of 25,580 wire bonders, of which 25,003 were fine-pitch wire bonders. For the packaging of certain types of substrate-based packages, die bonders are used in place of wire bonders. The number of bonders at a given facility is commonly used as a measure of the packaging capacity of the facility. In addition to bonders, we maintain a variety of other types of packaging equipment, such as wafer grinds, wafer mounts, wafer saws, heat sink placement, automated molding machines, laser markers, solder plates, pad printers, dejunkers, trimmers, formers, substrate saws, and scanners. We purchase our packaging equipment from major international manufactures, including Kulicke and Soffa Industries, Inc., KLA Corporation, DISCO Corporation, CohPros International Co., Ltd., and Lam Research Corporation.
Testing
Testing equipment is the most capital-intensive component of the testing process. We generally seek to purchase testers from different suppliers with similar functionality and acquire the ability to test a variety of different semiconductors. We purchase testers from major international manufacturers, primarily Teradyne, Inc. and Advantest Corporation. Upon acquisition of new testers, we install, configure, calibrate, perform burn-in diagnostic tests on, and establish parameters for the testers based on the anticipated requirements of existing and potential customers and considerations relating to market trends. As of January 31, 2024, we operated an aggregate of 5,573 testers. In addition to testers, we maintain a variety of other types of testing equipment, such as automated handlers and probers (special handlers for wafer probing), scanners, reformers, and computer workstations for use in software development. Each tester may be attached to a handler or prober. Handlers attach to testers and transport individual packaged semiconductors to the tester interface. Probers similarly attach to the tester and align each individual die on a wafer with the interface to the tester.
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For the majority of our testing equipment, we typically base our purchases on prior discussions with our customers about their forecast requirements. The balance consists of testing equipment on consignment from customers, which is dedicated exclusively to the testing of these customers’ specific products.
Test programs, which consist of the software that drives the testing of specific semiconductors, are written for a specific testing platform. We sometimes perform test program conversions that enable us to test semiconductors on multiple test platforms. This portability between testers enables us to allocate semiconductors tested across our available test capabilities and thereby improve capacity utilization rates. In cases where a customer requires the testing of a semiconductor product that is not yet fully developed, the customer may provide computer workstations to us to test specific functions. In cases where a customer has specified testing equipment that was not widely applicable to other products that we test, we have required the customer to furnish the equipment on a consignment basis.
EMS
The SMT assembly line is the key facility of our electronic manufacturing operations and generally includes a printer and one or two high-speed mounters and/or a multifunction mounter. The SMT assembly process primarily consists of the following three manufacturing steps: (i) solder paste stencil printing, (ii) component placement, and (iii) solder reflow. High-speed SMT assembly systems offer both economic and technical advantages that may reduce both production cost and time while meeting quality requirements. Thus, SMT has become the most popular assembly method for sophisticated electronic devices. We had 229 SMT lines as of January 31, 2024.
Intellectual Property
As of January 31, 2024, we held 2,179 Taiwan patents, 2,015 U.S. patents, 2,088 P.R.C. patents, 104 Europe patents, and 47 patents in other countries related to various semiconductor packaging technologies and invention, utility, and design on our EMS. In addition, as of January 31, 2024, we had a total of 2,144 pending patent applications, 246 in Taiwan, 532 in the U.S., 1,288 in the P.R.C., 50 in Europe, and 28 in other countries. Moreover, we filed several trademarks applications in Taiwan, the U.S., the P.R.C., and the EU. For example, “ASE,” “aCSP,” “a-EASI,” “a-fcCSP,” “aQFN,” “a-QFN,” “a-S3, “ “a-TiV,” “aWLP,” “a-WLP,” “iSiP,” “iWLP,” “aSiM,” “SiP-id” “SPIL,” “HSiP,” “XnBay” and “Emerald” have been registered in Taiwan.
We have also entered into various non-exclusive technology license agreements with other companies involved in the semiconductor manufacturing process, including Infineon Technologies AG, TDK Corporation, and DECA Technologies Inc. The technology we license from these companies includes solder bumping, redistribution, ultra CSP assembly, advanced QFN assembly, wafer-level packaging, and other technologies used in the production of package types, such as BCC, flip chip BGA, film BGA, aQFN, and chip embedding. One of our license agreements with Infineon Technologies AG will remain in effect until expiration of the patents licensed by the agreement, and the other automatically renews each year unless the parties to the agreement agree otherwise. Our license agreement with TDK Corporation will remain in effect until expiration of TDK Corporation’s patents licensed by the agreement. Our license agreement with DECA will expire on January 13, 2026.
In addition, we improve our technological platform by licensing innovative package technologies. For example, through wafer bumping and redistribution technology, we are able to form and redistribute bumps on the chip to make a silicon die by directly attaching the substrate using bumps rather than wire bonding, and through wafer level CSP technology, we are able to produce a chip scale package at the stage of wafer level.
Our success depends in part on our ability to obtain, maintain, and protect our patents, licenses, and other intellectual property rights, including rights under our license agreements with third parties.
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Quality Control
We believe that our process technology and reputation for high quality and reliable services have been important factors in attracting and retaining leading international semiconductor companies as customers of our services and/or products. We maintain a quality control staff at each of our facilities. Our quality control staff typically includes engineers, technicians, and other employees who monitor the processes in order to ensure high quality. Our quality assurance systems impose strict process controls, statistical in-line monitors, supplier control, data review and management, quality controls, and corrective action systems. Our quality control employees operate quality control stations along production lines, monitor clean room environments, and follow up on quality through outgoing product inspection and interaction with customer service staff. We have established quality control systems that are designed to ensure high-quality products/service to customers, high testing reliability, and high production yields at our facilities. We also have established an environmental management system in order to ensure that we can comply with the environmental standards of our customers and the countries within which they operate. See “—Raw Materials and Suppliers—Packaging.” In addition, our facilities have been qualified by all of our major customers after satisfying stringent quality standards prescribed by these customers.
Our packaging and testing operations are undertaken in clean rooms where air purity, temperature, and humidity are controlled. To ensure stability and integrity of our operations, we maintain clean rooms at our facilities that meet U.S. Federal Standard 209E class 1,000, 10,000 and 100,000 standards.
ISE Labs’ testing facilities in Fremont, California are considered suitably equipped by the US Defense Logistics Agency to perform the MIL-STD-883 tests on monolithic microcircuits in accordance with the requirements of military specification MIL-PRF-38535.
We have also obtained many certifications on our packaging, testing, and interconnect materials facilities. Some of these certifications are required by some semiconductor manufacturers as a threshold indicator of a company’s quality control standards or by many countries in connection with sales of industrial products. The table below sets forth the main certifications or verifications we have for our packaging, testing and interconnect materials.
| Location |
IATF 16949(1) |
ISO 9001(2) |
ISO 14001(3) |
ISO 17025(4) |
ISO 14064-1(5) |
ISO 14067(6) |
IECQ HSPM QC 080000(7) |
Sony Green Partner(8) |
OHSAS 18001/ ISO 45001(9) |
TOSHMS(10) | ISO 50001(11) |
ISO 13485(12) |
ISO 28000(13) |
ISO 26262(14) |
ISO 15408- EAL6(15) |
TL 9000(16) |
ISO 22301(17) |
RBA Edition(18) |
ISO/IEC 27001(19) |
GSMA- SAS for UICC Production(20) |
ISO 46001(21) |
ISO 21434(22) |
IEC 62443-2-1(23) | |||||||||||||||||||||||
| Taiwan | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||
| P.R.C. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||
| Korea | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
| Japan | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||
| Malaysia | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
| Singapore | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||
| U.S. | ✓ | ✓ | ✓ |
| (1) | IATF 16949 standards were originally created by the International Automotive Task Force in conjunction with the International Standards Organization (ISO). These standards provide for continuous improvement with an emphasis on the prevention of defects and reduction of variation and waste in the supply chain. |
| (2) | ISO 9001 quality standards are related to quality management systems and designed to help organizations ensure that they meet the needs of customers and other stakeholders while meeting statutory and regulatory requirements related to the product. |
| (3) | ISO 14001 sets out the criteria for an environmental management system. It can be used by any organization that wants to improve resource efficiency, reduce waste and drive down costs. |
| (4) | ISO 17025 is the main ISO standard used by testing and calibration laboratories. |
| (5) | ISO 14064-1 standard provides governments, businesses, regions and other organizations with a complementary set of tools for programs to quantify, monitor, report and verify greenhouse gas emissions. |
| (6) | ISO 14067 is a standard for the quantification and communication of the carbon footprint of a product based on International Standards on life cycle assessment for quantification and on environmental labels and declarations for communication. |
| (7) | IECQ HSPM QC080000 is a certification designed to manage, reduce and eliminate hazardous substances. |
| (8) | “Sony Green Partner” indicates our compliance with the “Sony Green Package” standard requirements. |
| (9) | ISO 45001 is a standard for an occupational health and safety management system that gives guidance for organizations to provide safe and healthy workplaces by preventing work-related injury and ill health and proactively improving its occupational health and safety performance. It replaced OHSAS 18001 over three years following its publication in March 2018. |
| (10) | TOSHMS is the Taiwan Occupational and Health Management System. |
| (11) | ISO 50001 is a standard for an energy management system. It can be used by any organization that wants to reduce energy costs and use energy more efficiently. |
| (12) | ISO 13485 quality management system sets forth the quality requirements for organizations that are required to consistently meet customers’ requirements and regulatory requirements in the medical devices and related services industry. |
| (13) | ISO 28000 is a standard for security management system dealing with security assurance in a supply chain. |
| (14) | ISO 26262 is a standard for functional safety of electrical and electronic systems in production automobiles. |
| (15) | ISO 15408-EAL6 is a framework that outlines the criteria for globally recognized standards and security inspections for IT products. It is designed for products and applications that are targeted for high-security-intensive markets, such as the government, banking, or defense sector. |
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| (16) | TL 9000 quality management system sets forth the supply chain quality requirements of the global communications industry. |
| (17) | ISO 22301 is a standard for requirements to plan, establish, implement, operate, monitor, review, maintain and continually improve a documented management system to protect against, reduce the likelihood of occurrence, prepare for, respond to, and recover from disruptive incidents when they arise. |
| (18) | The Responsible Business Alliance (RBA) is the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains. |
| (19) | ISO/IEC 27001 is a standard for information security. |
| (20) | The GSMA Security Accreditation Scheme (SAS) for Universal Integrated Circuit Card (UICC) Production is a scheme through which UICC suppliers subject their production sites to a comprehensive security audit which ensures that UICC suppliers have implemented adequate security measures to protect the interests of mobile network operators. |
| (21) | ISO 46001 is a standard for water resource management. |
| (22) | ISO 21434 is a standard for engineering requirements for cybersecurity risk management. |
| (23) | IEC 62443-2-1 is a standard to establish an industrial automation and control system security program |
We also have strict process controls in our EMS business. Universal Global Scientific Industrial Co., Ltd.’s facilities in Nantou, Taiwan, are considered suitably equipped by the US Defense Logistics Agency to perform the MIL-STD-883 tests on assemble, seal, and test hybrid microcircuits in compliance with MIL-PRF-38534 Classes H and K. Universal Scientific Industrial Poland Sp. z o.o. is in compliance with VDA 6.3 audit, which focuses on process audit for planning and manufacturing of products and services, and VDA 6.5, which is a qualification for product audit. The table below sets forth the certifications or verifications we have obtained for our EMS facilities.
| Location |
IATF 16949 |
ISO 9001 |
ISO 14001 |
ISO 17025 |
ISO 14064-1 |
TISAX(1) | IECQ HSPM QC 080000 |
ISO 45001 |
TOSHMS | ISO 50001 |
ISO 13485 |
ISO 22301 |
ISO 26262 |
TL 9000 |
RBA Edition |
ISO 21434 |
ISO/ IEC 27001 |
AS/ EN 9100: 2016(2) |
IRIS ISO/TS 22163(3) | |||||||||||||||||||
| Taiwan |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||
| P.R.C. |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||
| Mexico |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||
| Poland |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||
| United |
✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||
| U.S. |
✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||
| France |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||
| Germany |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||
| Czech |
✓ | ✓ | ||||||||||||||||||||||||||||||||||||
| Tunisia |
✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||
| Vietnam |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||
| Hungary |
✓ | ✓ | ✓ | ✓ | ✓ |
| (1) | TISAX quality standard is an assessment and exchange mechanism for information security in the automotive industry. |
| (2) | AS/EN 9100: 2016 quality standards are for aviation, space, and defense industry in management of development, production, manufacturing, installation, construction, and maintenance as well as trade and distribution. |
| (3) | IRIS ISO/TS 22163 quality standards define quality management system requirements for the rail sector that can be applied throughout the supply chain—including design and development, manufacturing, and maintenance. |
The global market for semiconductor packaging and testing markets is highly competitive. We face competition from a number of sources and integrated device manufacturers with in-house packaging and testing capabilities and fabless semiconductor design companies with their own in-house testing capabilities. Some of these integrated device manufacturers have commenced, or may commence, in-house packaging and testing operations in Asia. Substantially all of packaging and testing companies that compete with us have established operations in Taiwan and across the region.
Integrated device manufacturers that use our services continuously evaluate our performance against their own in-house packaging and testing capabilities. These integrated device manufacturers may have access to more sophisticated technologies and greater financial and other resources than we do. We believe, however, that we can offer greater efficiency at lower cost while maintaining equivalent or higher quality for several reasons. First, as we benefit from specialization and economies of scale by providing services to a large base of customers across a wide range of products, we are better able to reduce costs and shorten production cycles through high-capacity utilization and process expertise. Second, as a result of our customer base and product offerings, our equipment generally has a longer useful life. Third, as a result of the continuing reduction of investments in in-house packaging and testing capacity and technology at integrated device manufacturers, we are better positioned to meet their packaging and testing requirements on a large scale.
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Our packaging and testing business also faces actual and potential competition from companies at other levels of the supply chain, which have the financial resources and technical capabilities to enter into and effectively compete within the industry. For example, TSMC has offered advanced packaging technologies such as integrated fan-out (the “InFO”) technology since 2016.
Our EMS business faces significant competition from other EMS providers, such as Hon Hai Precision Industry Co., Ltd., with comprehensive integration, wide geographic coverage, and large production capabilities that enable them to achieve economies of scale. We believe, however, that we can still achieve satisfactory performance in the market given that we have been able to provide products with high quality and we are capable of designing new products by cooperating with our customers.
Environmental Matters
Our operations of packaging, interconnect materials, and EMS generate both hazardous and non-hazardous wastes. We have installed various types of anti-pollution equipment for the treatment of liquid and gaseous chemical waste and adopted comprehensive antipollution measures for the effective management of environmental protection that we believe are consistent with international standards. In addition, we believe we are in compliance in all material respects with present environmental laws and regulations applicable to all our operations and facilities. Our estimated environmental capital expenditures for 2024 will be approximately US$29.4 million, of which 46.9% will be used in climate change adaptation.
In order to demonstrate our commitment to environmental protection, in December 2013, ASE’s board of directors approved contributions to environmental protection efforts in Taiwan in a total amount of not less than NT$3,000.0 million (US$98.0 million), to be made in the following 30 years. On November 13, 2020, we established the ASE Environmental Protection and Sustainability Foundation for the promotion of public interest related to environmental protection. We have made contributions in the amount of NT$100.0 million for each of the years 2021, 2022 and 2023 through the ASE Environmental Protection and Sustainability Foundation to continuously implement the activities related to environmental protection projects and charitable activities in Taiwan.
Our operations involving wafer-level process and requiring wastewater treatment at our Kaohsiung facility have been subject to scrutiny by the Kaohsiung City Environmental Protection Bureau as a result of alleged water pollution violations that occurred in 2013. In addition, five employees of a China subsidiary were accused by a People’s Procuratorate of the P.R.C. (the “Procuratorate”) for committing the crime of environmental pollution that occurred in 2018 and such case was concluded on April 7, 2021. For additional details of these administrative actions and judicial proceedings related to our environment claims, see “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings.”
Defending against any of the pending or future actions will likely be costly and time-consuming and could significantly divert our management team’s efforts and resources. Any future suspension of operations at our facilities may adversely affect our business, financial condition, results of operations and cash flows. See “Item 3. Key Information—Risk Factors— Risks Relating to Our Business—Any environmental claims or failure to comply with any present or future environmental laws and regulations, as well as any fire or other industrial accident, may require us to spend additional funds and may materially and adversely affect our financial condition and results of operations.”
Climate Change Management
The board of directors of ASEH serves as the supervisory and governance body for climate-related issues. It is responsible for approving risk policies, overseeing climate-related risks, and making decisions pertaining to climate matters. The board of directors has established the risk management committee and the corporate sustainability committee (the “CSC”) as bodies responsible for managing climate-related risks and opportunities. Each committee consists of directors and senior executives who are separately responsible for managing climate risks and climate sustainability strategies, promoting sustainable development, of risk management mechanisms, and implementing decisions made by the board of directors. We report on the management and execution status of climate-related issues to the board of directors on a quarterly basis, enabling the board of directors to understand the impact of climate change on our business operations and develop corresponding strategies. We conduct annual assessments of climate-related physical and transition risks. We utilize questionnaires to identify extreme weather events, including but not limited to heavy rainfall, drought, and significant temperature changes. Additionally, we assess the potential impact and influence of these weather events on our business operations and finances. In order to effectively implement our climate-related policies, the executive secretariat of the risk management committee collaborates with our subsidiaries to conduct an identification and assessment of climate-related physical and transition risks. This process involves using questionnaires and collecting data to identify physical and transition risks or events that could affect our business objectives, as well as their financial and operational implications. Based on the findings of this process, countermeasures and management strategies are proposed, and the results of climate risk identification are reported to the board of directors annually, which tracks the implementation status of our climate measures regularly.
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ASEH has passed a compliance review by the Science Based Targets initiative and also committed to Net-Zero emission targets to exert positive social influence. We have planned mid- and long-term absolute carbon reduction goals. Using 2016 as the base year for the completion of Scopes 1 and 2 verification, we plan to reduce absolute Scope 1 and 2 GHG emissions 35% by 2030 and commit to reduce absolute Scope 3 GHG emissions 15% by 2030 from a 2020 base year.
We are committed to reducing the emission of greenhouse gases from our business operations. We aim to address and integrate climate change into our business strategies by investing in carbon credits, expanding the use of renewable energy and low-carbon transportation, developing low-carbon products, and supply chain engagement. We are committed to continuously revising and updating our targets, while tracking and monitoring the progress of our existing climate-related goals.
Transition to Low-Carbon Economy
Our climate leadership stems from bringing low carbon solutions to the global market and through balancing operational growth and low-carbon transformation targets that meet stakeholders’ expectations.
We explore potential pathways with environmental specialists to achieve carbon reduction targets and establish response systems to adapt to climate change. We are dedicated to providing high efficiency products as well as investing in the research and development of eco-friendly design. Starting from the product design stage, we actively incorporate environmentally friendly materials into production processes. We have also maintained a multi-site certification for ISO 14001, ISO 14064-1, and ISO 50001, which regularly examines the effectiveness of our environment and energy management systems. Global warming and climate change are contributing to extreme weather patterns and causing more stress to the environment. As global citizens, we are taking measurable actions to support and promote environmental sustainability. We have signed up with a major customer’s “Supplier Clean Energy Program” to increase our energy efficiency and transition to clean and renewable electricity. We have also joined the Semiconductor Climate Consortium (SCC) which is the first global collaborative of semiconductor ecosystem companies focused on reducing greenhouse gas emissions across the value chain, and Taiwan Institute for Sustainable Energy’s Net-zero Emission Alliance in pledging commitment to Net-zero 2030/2050, to build a supply chain that is resilient, transformative, and progressive.
We believe proactively engaging in supplier development is key to the sustainable development of our supply chain. We provide trainings, workshops, seminars, and face-to-face consultation to reinforce our suppliers’ capabilities to address sustainability issues and enhance their awareness of best practices for sustainability. In 2015, we joined the RBA, previously known as the Electronic Industry Citizens Coalition, and every year all of our facilities complete the RBA’s Self-Assessment Questionnaire to identify the labor, environmental, and ethical risks in their respective operations. For internal management, we have adopted the guidelines set out by the United Nations Framework Convention on Climate Change and encourage all our sites to submit self-initiated goals that are set according to their respective operation scale and capabilities.
To improve overall energy management, we established a green energy platform composed of multiple departments of our Group as well as teams based in Taiwan. We have allocated resources to support our suppliers in establishing GHG and product carbon footprint management systems that accelerate their efforts to meet emission regulatory requirements. In 2022, we collaborated with third party consultants on a medium to long term supplier low carbon guidance program which was conducted both online and in-person. The program not only supports suppliers to obtain external certifications such as ISO 14064-1certification and ISO 14067 (carbon footprint verification) but also facilitates carbon inventory management across the supply chain. During the guidance process, we identify carbon hotspots within suppliers’ operational processes and execute relevant emission reduction plans. By expanding the scope of engagement with our supply chain, we work with suppliers to enhance their carbon management capabilities and leverage our influence in the industry. As part of our strategic efforts to build a stable and more sustainable supply chain, we typically hold the Supplier Sustainability Awards every two or three years, which recognizes suppliers with outstanding performance in sustainability. In 2020 and 2023, the award program was jointly organized by all three ASEH subgroups. A new supplier incentive program focusing on ASEH’s Low Carbon, Circular, Collaborative and Inclusive strategies was launched, and the number of participating suppliers expanded. The program encourages suppliers to submit sustainability partnership projects of a 1-3 year duration for review by ASEH and independent third parties. The submitted projects will undergo a rigorous selection process based on the implementation timeframe and efficacy, and selected projects will be funded by the ASE Environmental Protection and Sustainability Foundation.
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Sustainability Activities
We are committed to pursuing a win-win sustainable future and achieving our vision of contributing to society through a range of sustainability activities. In 2021, we established our long-term sustainability targets for 2030 based on major sustainability topics and their relative importance to our business operations. These targets serve to strengthen the correlation between the United Nations’ Sustainable Development Goals (SDGs) and our sustainability strategies, leading to the ultimate fulfillment of our commitment to corporate social responsibility.
We currently focus our sustainability efforts in sustainability governance, integrity and accountability, green transformation, sustainable supply chain, inclusive workplace, and corporate citizenship.
Moreover, in 2022, we established ASE Social Enterprise Co., Ltd. as a channel for us to advance social progress and promote sustainable development.
Information Security Management
We rely on the efficient and uninterrupted operation of complex information technology applications, systems, and networks to operate our business. Our systems are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, cyberattacks, computer viruses, denial of service attacks, or other attempts to harm our system, and similar events. Cybersecurity threats continue to expand and evolve globally, and the risks we face from cyberattacks have increased significantly in recent years. Some of these attacks originate from well-organized, highly skilled organizations. Although we maintain robust cybersecurity protocols to guard against these threats and there have not been reported major cyberattacks against our systems in recent years, any such attack or system or network disruption could result in a loss of our intellectual property, the release of commercially sensitive information and customer or employee personal data. Failures to protect the privacy of customer and employee confidential data against breaches of network security could result in damage to our reputation. For further details on our cybersecurity measures, see “Item 16K. Cybersecurity.” For more information about these risks, see “Risk Factors – Cyber-attacks could harm our business, financial condition, and results of operations.”
Furthermore, some of our data centers are located in areas with a high risk of major earthquakes. Our data centers are also subject to break-ins, sabotage, and intentional acts of vandalism, and to potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, or a decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems at our data centers could result in loss of production capabilities and lengthy interruptions in our service. Any damage to or failure of our systems could result in interruptions in our service. Interruptions in our service could materially and adversely affect our business, financial condition, and results of operations.
Risk Management
Our board of directors established a risk management committee and approved the “Risk Management Policies and Procedures” as the ultimate guiding risk management principle. Awareness in risk management forms an integral part of our management, and risk management has been duly incorporated into our business strategies and organizational culture. To effectively review and oversee the overall sustainability-related opportunities and risks of ASEH, the CSC assigns a supervisory role to the chief administration officer of ASEH. Because chief administration officer concurrently serves as a member of the risk management committee and the chief risk officer of ASEH, in addition to performing a rolling review of the company’s internal sustainability strategies and approaches, the chief administration officer is also responsible for monitoring changes in the external environment and providing simultaneous feedback on the company’s risk management when analyzing sustainability-related opportunities and risks. On an annual basis, the chief administration officer reports the progress of strategies and implementation status directly to the board of directors and risk management committee, ensuring concise visibility of the environmental, social, and governance risk management at ASEH and its subsidiaries. We conduct risk assessments on an annual basis. For major risks, we formulate specific management plans covering goals, organizational structure and responsibilities, and risk management procedures. These plans have been developed to identify, measure, monitor and control various risk exposures effectively. We also conduct a comprehensive evaluation on the probability impacts of various risks faced during the ordinary course of business and take appropriate measures to continuously make improvements to better respond to natural disasters and other disruptive events such as cyberattacks or energy crises that could adversely affect the operation of our business. We proactively implement risk management plans and report to the board of directors on a yearly basis. For a discussion of these risks and other factors, see “Item 3. Key Information—Risk Factors.”
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Insurance
We have insurance policies covering property damage and damage to our production facilities, buildings, and machinery. We also have liability insurance policies, including but not limited to general liability insurance policies, product liability insurance policies for specified clients and products, and directors’ and officers’ insurance policies. In addition, considering the cybersecurity risks and challenges facing business entities, we adopted a cyber liability insurance policy, which is expected to help us respond to and control the impact of a cybersecurity incident.
We are not insured against the loss of key personnel.
ORGANIZATIONAL STRUCTURE
The following chart illustrates our corporate structure, including our principal packaging, testing, and EMS manufacturing subsidiaries as of January 31, 2024. Except for USI Inc., the following chart does not include intermediate holding subsidiaries, internal trading subsidiaries, or those subsidiaries without manufacturing operations and in the process of construction. For complete information on our subsidiaries, see Note 4 to our consolidated financial statements included in this annual report.
Our Consolidated Subsidiaries
ASE Group
ASE Inc., which was established on March 23, 1984, is headquartered in Taiwan and provides packaging and testing services, wafer sort testing, final testing services, substrate design, and manufacturing. Major subsidiaries of ASE Group include ASE Test Taiwan, ASE Malaysia, ISE Labs, ASE Singapore, ASE Electronics, ASE Chung Li (branch), ASE Korea, ASE Japan, ASE Shanghai, Wuxi Tongzhi, and ISE Shanghai.
SPIL Group
Siliconware Precision Industries Co., Ltd., which was established on May 17, 1984, is our wholly owned subsidiary. SPIL offers a full range of packaging and testing solutions, including advanced packages, substrate packages and leadframe packages, as well as testing for logic and mixed signal devices. SPIL also provides turnkey services, from packaging and testing services. See “Item 4. Information on the Company—Information on the Company—History and Development of the Company—SPIL Acquisition” for more information.
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USI Group
USI Group engages primarily in EMS in relation to computing, consumer electronics, communications, industrial, and automotive, among other services and businesses.
As of January 31, 2024, we held 100.0% interest in USI Inc., 77.8% interest in USI Shanghai through our subsidiaries USI Inc. and ASE Shanghai, 100.0% interest in FAFG through our subsidiaries USIFR and USI Shanghai, and 57.8% interest in HCC Group. See “Item 4. Information on the Company—Information on the Company—History and Development of the Company—USI Group and USI Group Restructuring” for more information.
PROPERTY, PLANTS AND EQUIPMENT
We operate a number of packaging, testing, and electronic manufacturing facilities globally. Our facilities provide varying types or levels of services with respect to different end-product focus, customers, technologies, and geographic locations. With our diverse facilities we are able to tailor our packaging, testing, and electronic manufacturing solutions closely to our customers’ needs. The following table sets forth the location, commencement of operation, primary use, approximate floor space, and ownership of our principal manufacturing facilities in operation as of January 31, 2024. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources” for more information.
| Facility |
Location |
Commencement |
Primary Use |
Approximate Floor |
Owned or Leased | |||||
| ASE Inc. | Kaohsiung, R.O.C. |
March 1984 | Our primary packaging facility, which offers complete semiconductor manufacturing solutions in conjunction with ASE Test Taiwan and foundries. Focuses primarily on packaging services such as flip chip, wafer bumping, and fine-pitch wire bonding. | 8,363,000 | Land: leased Buildings: owned and leased | |||||
| Chung Li, R.O.C. | Acquired in July 1999 | An integrated packaging and testing facility that specializes in semiconductors for communications and consumer applications. | 4,429,000 | Land and buildings: owned | ||||||
| ASE Test Taiwan | Kaohsiung, R.O.C. | Acquired in April 1990 | Our primary testing facilities, which offer complete semiconductor manufacturing solutions in conjunction with ASE Inc.’s facility in Kaohsiung and foundries located in Taiwan. Focuses primarily on advanced logic/mixed-signal/RF/3D IC testing for integrated device manufacturers, fabless design companies, and system companies. | 1,304,000 | Land: leased Buildings: owned and leased |
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| Facility |
Location |
Commencement |
Primary Use |
Approximate Floor |
Owned or Leased | |||||
| ASE Malaysia | Penang, Malaysia | February 1991 | An integrated packaging and testing facility that focuses primarily on the requirements of integrated device manufacturers. | 1,102,000 | Land: leased Buildings: owned | |||||
| ASE Korea | Paju, Korea | Acquired in July 1999 | An integrated packaging and testing facility that specializes in semiconductors for radio frequency, sensor, and automotive applications. | 1,374,000 | Land and buildings: owned | |||||
| ISE Labs | California, U.S. | Acquired in May 1999 | A front-end engineering and final testing facility located in Northern California in close proximity to some of the world’s largest fabless design companies. | 144,000 | Land and buildings: owned | |||||
| ASE Singapore Pte. Ltd. | Singapore | Acquired in May 1999 | An integrated packaging and testing facility that specializes in semiconductors for communication, computers, and consumer applications. | 443,000 | Land: leased Buildings: owned and leased | |||||
| ASE Shanghai | Shanghai, P.R.C. | June 2004 | Design and production of semiconductor packaging materials. | 1,717,000 | Land: leased Buildings: leased | |||||
| ASE Japan | Takahata, Japan | Acquired in May 2004 | An integrated semiconductor packaging and testing facility that specializes in cellular phone, household appliance, and automotive applications. | 108,000 | Land and buildings: leased | |||||
| ASE Electronics | Kaohsiung, R.O.C. | August 2006 | Facilities for the design and production of interconnect materials such as substrates used in semiconductor packaging. | 612,000 | Land: leased Buildings: owned | |||||
| Wuxi Tongzhi | Wuxi, P.R.C. | Acquired in May 2013 | An integrated semiconductor packaging and testing facility that specializes in consumer applications. | 78,000 | Land and buildings: leased | |||||
| ISE Shanghai | Shanghai, P.R.C. | October 2018 | A semiconductor testing facility. | 127,000 | Land and buildings: leased | |||||
| Universal Scientific Industrial | Nantou, R.O.C. | Acquired in February 2010 | Manufacture and sales of electronic components and related accessories. | 418,000 | Land and buildings: owned | |||||
| Universal Scientific Industrial De Mexico S.A. De C.V. | Guadalajara, Mexico | Acquired in February 2010 | Manufacture of motherboard manufacture and computer components. | 1,399,000 | Land and buildings: owned | |||||
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| Facility |
Location |
Commencement |
Primary Use |
Approximate Floor |
Owned or Leased | |||||
| USI Shanghai | Shanghai, P.R.C. | Acquired in February 2010 | Design, manufacture, and sales of electronic components. | 1,301,000 | Land: leased Buildings: owned and leased | |||||
| Universal Global Technology (Kunshan) Co. Ltd. | Kunshan, P.R.C. | August 2011 | Design and manufacture of electronic components. | 1,113,000 | Land and buildings: leased | |||||
| Universal Global Scientific Industrial Co., Ltd. | Nantou, R.O.C. | February 2010 | Manufacture of electronic components of telecommunication products and cars, and provision of related R&D services. | 1,360,000 | Land: owned Buildings: owned and leased | |||||
| Universal Global Technology (Shanghai) Co., Ltd. | Shanghai, P.R.C. | Established in September 2013 | Sales and processing of computer and communication peripherals as well as business in import and export of goods and technology. | 968,000 | Land and buildings: leased | |||||
| Universal Scientific Industrial Poland Sp. z o.o. | Wroclaw-Kobierzyce, Poland | Acquired in October 2019 | Design and manufacture of electronic components and new electronic applications. | 377,000 | Land and buildings: owned | |||||
| Universal Global Technology (Huizhou) Co., Ltd. | Huizhou, P.R.C. | October 2021 | Research and manufacture of new electronic applications, communications, computers, and other electronics products; provides auxiliary technical services as well as import and export services. | 1,967,000 | Land: leased Buildings: owned | |||||
| UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED | Haiphong, Vietnam | July 2021 | Manufacture of IC assembly for wearable devices. | 1,286,000 | Land: leased Buildings: owned | |||||
| Hirschmann Car Communication Kft. | Bekescsaba, Hungary | Acquired in October 2023 | Manufacture and sales of antenna products and RF amplifiers, connectors and wave straps. | 344,000 | Land and buildings: owned | |||||
| Hirschmann Car Communication GmbH | Neckartenzlingen, Germany | Acquired in October 2023 | Manufacture, sales as well as research and development of printed circuit board assemblies (PCBAs) and tuners. | 372,000 | Land and buildings: leased | |||||
| ASTEELFLASH (BEDFORD) LIMITED | Bedford, United Kingdom | Acquired in December 2020 | Design and manufacture of electronic components, such as industrial, telecommunication, IoT, data processing, consumer electronics, and aerospace related devices. | 51,000 | Land and buildings: leased |
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| Facility |
Location |
Commencement |
Primary Use |
Approximate Floor |
Owned or Leased | |||||
| ASTEELFLASH FRANCE | Soissons, Normandie, Lorraine, Duttlenhei, Langon and Grenoble, France | Acquired in December 2020 | Design and manufacture of electronic components, such as complex mechatronic subsets, electronic boards and mechatronic subsets engineering. | 910,000 | Land and buildings: owned and leased | |||||
| ASTEELFLASH TUNISIE S.A. | La Soukra, Tunisia | Acquired in December 2020 | Design and manufacture of electronic components, such as PCBA assembly, coating, varnishing, and in-circuit testing capabilities. | 236,000 | Land and buildings: leased | |||||
| ASTEELFLASH TECHNOLOGIE |
Alencon, France | Acquired in December 2020 | Design and manufacture of industrial components as well as projection of plastic. | 173,000 | Land and buildings: owned | |||||
| Asteelflash Suzhou Co., Ltd. | Suzhou, P.R.C. | Acquired in December 2020 | Design and manufacture of electronic components, such as in SMT assembly for PCBA and system assembly/box build for module/final product in different segments. | 1,452,000 | Land and buildings: owned | |||||
| Asteelflash Germany GmbH. (formerly named Asteelflash Hersfeld GmbH) | Bad Hersfeld, Eberbach, and Bonn, Germany | Acquired in December 2020 | Design and manufacture of electronic components, such as PCB assembly and high/medium mix to low/medium volume electronic manufacturing services. | 918,000 | Land and buildings: owned and leased | |||||
| ASTEELFLASH DESIGN SOLUTIONS HAMBOURG GmbH | Hamburg, Germany | Acquired in December 2020 | Design and manufacture of electronic components, such as low/mid volumes with mid/high complexity products. | 38,000 | Buildings: leased | |||||
| ASTEELFLASH PLZEN S.R.O. | Pilsen, Czech Republic | Acquired in December 2020 | Design and manufacture of electronic components, such as solder paste printers and in-line solder paste inspection. | 40,000 | Land and buildings: leased | |||||
| ASTEELFLASH USA CORP. | California, U.S. | Acquired in December 2020 | Design and manufacture of electronic components, such as solder paste printers and in-line solder paste inspection. | 130,000 | Land and buildings: leased | |||||
| ASTEELFLASH MEXICO S.A. de C.V. | Tijuana, Mexico | Acquired in December 2020 | Design and manufacture of electronic components such as automotive and commercial products. | 133,000 | Land and buildings: leased | |||||
| Siliconware Precision Industries Co., Ltd. | Taichung, Changhua and Hsinchu, R.O.C. | Acquired in April 2018 | Packaging and testing facility, which offers semiconductor packaging and testing services. | 9,567,000 | Land: owned and leased Buildings: owned | |||||
| SZ | Suzhou, P.R.C. | Acquired in April 2018 | Packaging and testing facility, which offers semiconductor packaging and testing services. | 1,609,000 | Land: leased Buildings: owned |
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We have leased land in the Kaohsiung Nanzih Technology Industrial Park from the Export Processing Zone Administration (the “EPZA”) with different lease terms for several years that will expire in August 2061. We have leased land from the Central Taiwan Science Park Administration in Taichung with 19-year to 20-year terms that will expire in December 2041. We have leased land from Hsinchu Science Park Administrations in Hsinchu with 14-year to 40-year terms that will expire in December 2034. We have leased land in Taichung from EPZA for 10 years that will expire in March 2032. No sublease or lending of the land is allowed. The EPZA, the Central Taiwan Science Park Administration and the Hsinchu Science Park Administrations have the right to adjust the rental price in the event the government revalues the land. The leases are typically renewable with one-month to three-month notice prior to the termination date.
Smart Factories
To enhance factory efficiency, improve manufacturing process quality, and meet customer delivery time demands, we have invested in automated, lights-out factories since 2015. Automation, heterogeneous integration in machine and production systems, and heterogeneous integration in SiP are 3 major forces driving smart factories and digital transformation. At the end of 2023, we had 46 smart factories in operation and we will continue to make further investment into automating manufacturing capacity.
Our Kaohsiung facility is our operation headquarters and houses our industry-leading R&D center, which is dedicated to providing world-class assembly, wafer bumping, and test services and also offers full turnkey services, including substrate design and manufacturing capabilities. Our 5G smart factory, the world’s first, which is supported by the Industrial Development Bureau and Qualcomm Technologies, Inc. and was developed through a strategic multi-organizational collaborations, has commenced operation at Kaohsiung facility. The smart factory features the digital transformation of factory processes that are highly secured and highly reliable through facilitating 5G wireless infrastructure integration, smart heterogeneous equipment integration, and OT security system integration.
We continuously evaluate our need for future expansion based on market condition and future demand requirements to meet our expected future growth. For information on the aggregate capacity of our facilities we operate, see “—Business Overview—Equipment.” For administrative actions and judicial proceedings related to Kaohsiung Facility, see “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings.”
Item 4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial Review and Prospects
OPERATING RESULTS
The following discussion of our business, financial condition, and results of operations should be read in conjunction with our consolidated financial statements, which are included elsewhere in this annual report. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of any number of factors, such as those set forth under “Item 3. Key Information—Risk Factors” and elsewhere in this annual report. See “Special Note Regarding Forward-Looking Statements.” Please refer to our Form 20-F dated April 10, 2023 (File No. 001-16125) for our discussion of financial information and operating results for 2022.
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Overview
We offer a broad range of semiconductor packaging and testing services, and we offer EMS through USI Group. In addition to offering each service separately, we also offer turnkey services, which include integrated packaging, testing, and direct shipment of semiconductors to end users designated by our customers and solution-based proactive original design manufacturing. In addition, we have been generating revenues from our real estate business and the manufacturing of integrated circuits. Our operating revenues decreased from NT$670,872.6 million in 2022 to NT$581,914.5 million (US$19,004.4 million) in 2023.
Discussed below are several factors that have had a significant influence on our financial results in recent years.
Pricing and Revenue Mix
We price our services taking into account the actual costs involved in providing these services, with consideration of prevailing market prices. The majority of our prices and revenues is denominated in U.S. dollars. Any significant fluctuation in exchange rates, especially between NT dollars and U.S. dollars, will affect our costs and, in turn, our revenues.
In the case of semiconductor packaging, the cost of the silicon die, typically the most costly component of the packaged semiconductor, is usually not reflected in our costs (or revenues) since it is generally supplied by our customers on a consignment basis.
The semiconductor industry is characterized by a general trend toward declining prices for products and services of a given technology over time. In addition, during periods of intense competition and adverse conditions in the semiconductor industry, the rate of this decline may be more rapid than in other years. The average selling prices of our packaging and testing services have experienced sharp declines during such periods as a result of intense price competition from other market participants that attempt to maintain high-capacity utilization levels in the face of reduced demand.
Declines in average selling prices have historically been partially offset by changes in our revenue mix, and typically the selling price is largely dependent on the complexity of the services. Revenues derived from more advanced package types, such as flip chip BGA, higher-density packages with finer lead-to-lead spacing, or pitch, and testing of more complex, high-performance semiconductors have particularly increased as a percentage of total revenues. We intend to continue to focus on package types such as bumping, flip chip BGA and SiP, developing and offering new technologies in packaging and testing services, and expanding our capacity to achieve economies of scale, as well as improving production efficiencies for older technologies, in order to mitigate the effects of declining average selling prices on our profitability.
Our profitability for a specific package type does not depend linearly on its average selling price. Some of our more traditional package types, which typically have low average selling prices, may well command steadier and sometimes higher margins than more advanced package types with higher average selling prices.
High Fixed Costs
Our operations, in particular our testing operations, are characterized by relatively high fixed costs. We expect to continue to incur substantial depreciation and other expenses, especially from our acquisitions of packaging and testing equipment and facilities. Our profitability depends in part not only on absolute pricing levels for our products/services, but also on utilization rates on equipment, commonly referred to as “capacity utilization rates.” Increases or decreases in our capacity utilization rates could have a significant effect on gross margins since the unit cost of our products and/or services generally decreases as fixed costs are allocated over a larger number of units. The capacity utilization rates of the machinery and equipment installed at our production facilities typically depend on factors such as the volume and variety of products, the efficiency of our operations in terms of the loading and adjustment of machinery and equipment for different products, the complexity of the different products to be packaged or tested, the amount of time set aside for the maintenance and repair of the machinery and equipment, and the experience and schedule of work shifts of operators.
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In 2022 and 2023, our depreciation, amortization, and rental expenses included in operating costs as a percentage of operating revenues was 7.6% and 9.0%, respectively. The increase in depreciation, amortization, and rental expenses as a percentage of operating revenues in 2023 compared to 2022 was primarily a result of the depreciation of new equipment. In general, these costs do not decline when customer demand or our capacity utilization rates drop. A relatively modest increase or decrease in revenue can have a significant effect on our operating margins and on depreciation, amortization, and rental expenses as a percentage of revenue. We begin depreciating our equipment when the machinery is placed into service. There may sometimes be a time lag between when our equipment is available for use and when it achieves high levels of utilization. In particular, the capacity utilization rates for our testing equipment are more severely affected during an industry downturn as a result of a decrease in outsourcing demand from integrated device manufacturers, which typically maintain larger in-house testing capacity than in-house packaging capacity.
In addition to purchasing testers, we also lease a portion of our testers, which we believe allows us to better manage our capacity utilization rates and cash flow. Since leased testers can be replaced with more advanced testers upon the expiration of the lease, we believe that these leases have enabled us to improve our capacity utilization rates by allowing us to better align our capacity with changes in equipment technology and the needs of our customers. For more information about our testers, including the number of testers under lease, see “Item 4. Information on the Company—Business Overview—Equipment—Testing.”
Raw Material Costs
Substantially all of our raw material costs are accounted for by packaging, the production of interconnect materials, and EMS. Our EMS in particular requires more significant quantities of raw materials than our packaging and production of interconnect materials. In 2023, raw material costs accounted for 80.8% of our operating revenues from EMS, and our revenues generated from EMS contributed to 46.1% of our operating revenues. In 2022 and 2023, raw material cost as a percentage of our operating revenues was 52.1% and 53.3%, respectively.
We have developed copper wire to gradually replace gold wire in the packaging processes in order to benefit from the lower material cost of copper. However, gold wire is still and will continue to be one of the principal raw materials for our packaging processes. It may be difficult for us to adjust our average selling prices to account for fluctuations in the price of gold. Thus, we expect our raw material costs to continue to be affected by fluctuations in the price of gold.
Recent Accounting Pronouncements
Please refer to Note 3 to our consolidated financial statements included in this annual report.
Critical Accounting Estimates
Impairment of goodwill. We only monitor goodwill for financial reporting purposes, not for internal management purposes. Therefore, goodwill is allocated to the following cash-generating units for evaluation of impairment: packaging segment, testing segment, EMS segment and other segment. We perform an evaluation of goodwill for impairment annually, or whenever events and circumstances indicate that segment impairment may exist. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The calculation of the value in use requires management to estimate the future cash flows expected to be generated from the cash-generating units and use a suitable discount rate in order to calculate the present value. Where changes in facts and circumstances results in downward revision of actual future cash flows or upward revision of discount rates, a material impairment loss may arise. In conducting the future cash flow valuation, we make assumptions about future operating cash flows, the discount rate used to determine present value of future cash flows, and capital expenditures. Future operating cash flow assumptions include sales growth assumptions, which are based on our historical trends and industry trends, and gross margin and operating expenses growth assumptions, which are based on the historical relationship of those measures compared to sales as well as certain cost-cutting initiatives. An impairment charge is incurred to the extent the carrying amount exceeds the recoverable amount. Significant estimates include the determination of the value in use of cash-generating units and assessments of the reasonableness of future sales forecasts. These estimates change from year-to-year based on operating results, semiconductor industry market conditions, as well as other factors and could materially affect the determination of the value in use of each cash-generating unit. We perform sensitivity analysis to support the assumptions and inputs and to test the reasonableness of the discount rate used for each cash-generating unit. As of December 31, 2023, we had goodwill of NT$52,404.4 million (US$1,711.4 million). For the years ended December 31, 2021, 2022 and 2023, no impairment loss was recognized. Our conclusion could, however, change in the future if actual results differ from our estimates and judgments are made under different assumptions and conditions. See notes 5 and 18 to our consolidated financial statements included in this annual report for further information.
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In addition, HCC was acquired on October 27, 2023, which was close to the year end. As we had not completed the identification of the difference between the cost of the investment and our share of the net fair value of HCC’s identifiable assets and liabilities, the difference was provisionally recognized as goodwill as of December 31, 2023. We will continuously review the fair value of acquired assets and liabilities during the measurement period. If additional information related to facts and circumstances existing at the acquisition date that will lead to an adjustment to the provisional goodwill or the recognition of any liability provision is obtained in the one-year measurement period starting from the acquisition date, the accounting treatment for the business combination will be retroactively adjusted. See note 29 to our consolidated financial statements included in this annual report for further information.
Results of Operations
The following table sets forth, for the periods indicated, selected financial data from our consolidated statements of comprehensive income.
| Year Ended December 31, | ||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||||||
| NT$ | Percentage | NT$ | Percentage | NT$ | US$ | Percentage | ||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||
| Operating revenues |
569,997.1 | 100.0 | % | 670,872.6 | 100.0 | % | 581,914.5 | 19,004.4 | 100.0 | % | ||||||||||||||||||
| Operating costs |
(459,628.3 | ) | (80.6 | )% | (535,942.6 | ) | (79.9 | )% | (490,157.4 | ) | (16,007.8 | ) | (84.2 | )% | ||||||||||||||
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| Gross profit |
110,368.8 | 19.4 | % | 134,930.0 | 20.1 | % | 91,757.1 | 2,996.6 | 15.8 | % | ||||||||||||||||||
| Operating expenses |
(48,244.4 | ) | (8.5 | )% | (54,754.4 | ) | (8.2 | )% | (51,429.4 | ) | (1,679.6 | ) | (8.8 | )% | ||||||||||||||
| Other operating income and expenses, net |
1,189.8 | 0.2 | % | 1,014.3 | 0.2 | % | 1,321.8 | 43.2 | 0.1 | % | ||||||||||||||||||
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| Profit from operations |
63,314.2 | 11.1 | % | 81,189.9 | 12.1 | % | 41,649.5 | 1,360.2 | 7.1 | % | ||||||||||||||||||
| Non-operating income, net |
16,879.6 | 3.0 | % | 573.7 | 0.1 | % | 962.3 | 31.4 | 0.2 | % | ||||||||||||||||||
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| Profit before income tax |
80,193.8 | 14.1 | % | 81,763.6 | 12.2 | % | 42,611.8 | 1,391.6 | 7.3 | % | ||||||||||||||||||
| Income tax expense |
(17,943.8 | ) | (3.1 | )% | (17,145.5 | ) | (2.5 | )% | (5,304.0 | ) | (173.2 | ) | (0.9 | )% | ||||||||||||||
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| Profit for the year |
62,250.0 | 11.0 | % | 64,618.1 | 9.7 | % | 37,307.8 | 1,218.4 | 6.4 | % | ||||||||||||||||||
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| Attributable to |
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| Owners of the Company |
60,150.2 | 10.6 | % | 61,501.6 | 9.2 | % | 35,457.9 | 1,158.0 | 6.1 | % | ||||||||||||||||||
| Non-controlling interests |
2,099.8 | 0.4 | % | 3,116.5 | 0.5 | % | 1,849.9 | 60.4 | 0.3 | % | ||||||||||||||||||
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| 62,250.0 | 11.0 | % | 64,618.1 | 9.7 | % | 37,307.8 | 1,218.4 | 6.4 | % | |||||||||||||||||||
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| Other comprehensive income for the year, net of income tax |
406.0 | 0.0 | % | 8,632.5 | 1.3 | % | 449.4 | 14.7 | 0.1 | % | ||||||||||||||||||
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| Total comprehensive income for the year |
62,656.0 | 11.0 | % | 73,250.6 | 11.0 | % | 37,757.2 | 1,233.1 | 6.5 | % | ||||||||||||||||||
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| Attributable to |
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| Owners of the Company |
60,630.2 | 10.6 | % | 69,706.9 | 10.4 | % | 36,020.6 | 1,176.4 | 6.2 | % | ||||||||||||||||||
| Non-controlling interests |
2,025.8 | 0.4 | % | 3,543.7 | 0.6 | % | 1,736.6 | 56.7 | 0.3 | % | ||||||||||||||||||
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| 62,656.0 | 11.0 | % | 73,250.6 | 11.0 | % | 37,757.2 | 1,233.1 | 6.5 | % | |||||||||||||||||||
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The following table sets forth, for the periods indicated, earnings per Common Share and ADS.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Earnings per Common Share (NT$)(1): |
||||||||||||
| Basic |
13.97 | 14.39 | 8.25 | |||||||||
| Diluted |
13.54 | 13.81 | 8.04 | |||||||||
| Earnings per equivalent ADS (NT$)(1): |
||||||||||||
| Basic |
27.94 | 28.77 | 16.51 | |||||||||
| Diluted |
27.07 | 27.61 | 16.08 | |||||||||
| Number of Common Shares (in million shares)(2): |
||||||||||||
| Basic |
4,305.3 | 4,274.7 | 4,295.9 | |||||||||
| Diluted |
4,365.7 | 4,323.4 | 4,347.7 | |||||||||
| Number of equivalent ADSs (in million shares)(3) |
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| Basic |
2,152.7 | 2,137.3 | 2,147.9 | |||||||||
| Diluted |
2,182.8 | 2,161.7 | 2,173.8 | |||||||||
| (1) | The denominators for diluted earnings per Common Share and diluted earnings per equivalent ADS are calculated to account for the potential diluted factors, such as employees’ compensation, the exercise of options, and the issuance of employee restricted stock awards. |
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| (2) | Represents the weighted average number of shares after retroactive adjustments to give effect to stock dividends. Common shares held by consolidated subsidiaries are classified as “treasury stock,” and are deducted from the number of Common Shares outstanding. |
| (3) | For the computation of earnings per ADS, the denominators were the half of the aforementioned weighted average outstanding shares (one ADS represents two ordinary shares). |
The following table sets forth, for the periods indicated, segment results. Gross margin is calculated by dividing gross profit by their respective operating revenues.
| Year Ended December 31, | ||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||||||
| NT$ | Percentage | NT$ | Percentage | NT$ | US$ | Percentage | ||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||
| Operating revenues: |
||||||||||||||||||||||||||||
| Packaging |
272,543.9 | 47.8 | % | 303,947.5 | 45.3 | % | 256,805.9 | 8,386.9 | 44.1 | % | ||||||||||||||||||
| Testing |
49,978.7 | 8.8 | % | 55,960.2 | 8.3 | % | 49,879.9 | 1,629.0 | 8.6 | % | ||||||||||||||||||
| EMS |
239,488.3 | 42.0 | % | 301,966.8 | 45.0 | % | 268,218.0 | 8,759.6 | 46.1 | % | ||||||||||||||||||
| Gross profit: |
||||||||||||||||||||||||||||
| Packaging |
69,985.5 | 25.7 | % | 82,327.0 | 27.1 | % | 52,571.0 | 1,716.9 | 20.5 | % | ||||||||||||||||||
| Testing |
17,404.5 | 34.8 | % | 21,043.5 | 37.6 | % | 15,303.2 | 499.8 | 30.7 | % | ||||||||||||||||||
| EMS |
21,384.7 | 9.0 | % | 28,947.4 | 9.6 | % | 23,203.1 | 757.8 | 8.7 | % | ||||||||||||||||||
The following table sets forth, for the periods indicated, a breakdown of our total operating costs and operating expenses, expressed as a percentage of operating revenues.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Operating costs |
||||||||||||
| Raw materials |
49.3 | % | 52.1 | % | 53.3 | % | ||||||
| Labor |
11.5 | % | 10.1 | % | 10.4 | % | ||||||
| Depreciation, amortization and rental expense |
8.7 | % | 7.6 | % | 9.0 | % | ||||||
| Others |
11.1 | % | 10.1 | % | 11.5 | % | ||||||
| Total operating costs |
80.6 | % | 79.9 | % | 84.2 | % | ||||||
| Operating expenses |
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| Selling |
1.2 | % | 1.0 | % | 1.1 | % | ||||||
| General and administrative |
3.6 | % | 3.5 | % | 3.3 | % | ||||||
| Research and development |
3.7 | % | 3.7 | % | 4.4 | % | ||||||
| Total operating expenses |
8.5 | % | 8.2 | % | 8.8 | % | ||||||
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Operating Revenues. Operating revenues decreased by 13.3% to NT$581,914.5 million (US$19,004.4 million) in 2023 from NT$670,872.6 million in 2022, primarily due to a decrease in revenue from our packaging and EMS businesses. Revenues from our export sales, based on the country in which the customer is headquartered, were NT$587,217.5 million and NT$511,422.0 million (US$16,702.2 million) in 2022 and 2023, respectively, which contributed 87.5% and 87.9% of our total sales for those years. Packaging revenues decreased 15.5% to NT$256,805.9 million (US$8,386.9 million) in 2023 from NT$303,947.5 million in 2022, primarily due to a decrease in demand for advanced packaging services such as Bumping, Flip Chip, WLP, and SiP as well as wirebonding services. Testing revenues decreased 10.9% to NT$49,879.9 million (US$1,629.0 million) in 2023 from NT$55,960.2 million in 2022, primarily due to a decrease in our provision of wafer probing testing services and final testing services. Revenues from our EMS business decreased 11.2% to NT$268,218.0 million (US$8,759.6 million) in 2023 from NT$301,966.8 million in 2022, primarily due to lower sales in our communications, consumer, and computing businesses, partially offset by growth in our automotive business.
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Gross Profit. Gross profit decreased by 32.0% to NT$91,757.1 million (US$2,996.6 million) in 2023 from NT$134,930.0 million in 2022. Our gross profit as a percentage of operating revenues, or gross margin, was 15.8% in 2023 compared to 20.1% in 2022, which was primarily driven by electronics industry downturns affecting our packaging, testing and EMS businesses, and the result of lower factory utilization in 2023. Our operating costs consist primarily of raw material costs and labor costs as well as depreciation, amortization, and rental expenses. Raw material costs in 2023 were NT$310,179.3 million (US$10,130.0 million) compared to NT$349,813.9 million in 2022, primarily due to a change in the product mix of our EMS business. As a percentage of operating revenues, raw material costs increased to 53.3% in 2023 from 52.1% in 2022. Labor costs in 2023 were NT$60,762.0 million (US$1,984.4 million) compared to NT$68,024.3 million in 2022, primarily due to a decrease in employee bonuses and profit-sharing expenses in relation to business performance as well as lower employee headcount. As a percentage of operating revenues, labor cost increased to 10.4% in 2023 from 10.1% in 2022. Depreciation, amortization, and rental expenses in 2023 were NT$52,485.4 million (US$1,714.1 million) compared to NT$50,766.6 million in 2022. As a percentage of operating revenues, depreciation, amortization, and rental expenses increased to 9.0% in 2023 from 7.6% in 2022. The decrease in revenue resulted in an increase in raw material, labor, depreciation and amortization as well as rental expenses as percentages of revenue. Our gross margin for packaging business decreased to 20.5% in 2023 from 27.1% in 2022, our gross margin for testing business decreased to 30.7% in 2023 from 37.6% in 2022, which was primarily attributable to prolonged inventory corrections. Our gross margin for EMS business decreased to 8.7% in 2023 from 9.6% in 2022, which was primarily attributable to weakness in the electronics market leading to lower operating leverage.
Profit from Operations. Profit from operations decreased by 48.7% to NT$41,649.5 million (US$1,360.2 million) in 2023 compared to NT$81,189.9 million in 2022. Our profit from operations as a percentage of operating revenues decreased to 7.1% in 2023 from 12.1% in 2022, primarily due to lower operating leverage and weaker economies of scale during the economic downturn in 2023. General and administrative expenses decreased 17.5% to NT$19,360.5 million (US$632.3 million) in 2023 from NT$23,464.0 million in 2022. General and administrative expenses as a percentage of our operating revenues was 3.3% in 2023 compared to 3.5% in 2022. Research and development expenses increased 4.6% to NT$25,499.4 million (US$832.8 million) in 2023 compared to NT$24,369.9 million in 2022. Research and development expenses as a percentage of our operating revenues was 4.4% in 2023 compared to 3.7% in 2022. Selling and marketing expenses decreased 5.1% to NT$6,569.5 million (US$214.5 million) in 2023 from NT$6,920.5 million in 2022. Selling and marketing expenses as percentages of operating revenues was 1.1% in 2023 compared to 1.0% in 2022. The decreases in the operating expenses were primarily due to decreases in employee bonus and profit sharing expenses in relation to business performance, partially offset by an increase in research and development expenses due to our continued investment in advanced research projects.
We had a net other operating income of NT$1,321.8 million (US$43.2 million) in 2023 compared to NT$1,014.3 million in 2022. The increase was primarily due to a decrease in impairment loss on property, plant and equipment.
Non-Operating Income and Expenses. We had a net non-operating income of NT$962.3 million (US$31.4 million) in 2023 compared to NT$573.7 million in 2022. This increase was primarily due to a gain of NT$529.7 million (US$17.3 million) from the disposal of subsidiaries (whereas no such transactions occurred in 2022), an increase in gain on valuation of financial instruments and foreign exchange gains, partially offset by an increase in finance costs.
Net Profit. Net profit, excluding non-controlling interests, decreased by 42.3% to NT$35,457.9 million (US$1,158.0 million) in 2023 compared to NT$61,501.6 million in 2022. Our diluted earnings per ADS decreased to NT$16.08 (US$0.53) in 2023 compared to NT$27.61 in 2022. Our income tax expenses decreased by 69.1% to NT$5,304.0 million (US$173.2 million) in 2023 compared to NT$17,145.5 million in 2022. This decrease was primarily attributed to the lower additional income tax imposed on unappropriated earnings in the R.O.C. during the economic downtown in 2023.
In relation to the SPIL Acquisition, we identified the difference between investment cost and our share of net fair value of SPIL’s identifiable assets and liabilities, or PPA effects of SPIL Acquisition, which caused the increase in the total of NT$4,529.5 million and NT$4,508.7 million (US$147.2 million), of which an increase of NT$3,507.5 million and NT$3,496.3 million (US$114.2 million) to depreciation and amortization in operating costs NT$1,000.0 million and NT$1,000.0 million (US$32.6 million) to amortization in operating expenses and NT$22.0 million and NT$12.4 million (US$0.4 million) to other operating income and expenses, net in 2022 and 2023, respectively.
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Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
For a detailed description of the comparison of our operating results for the year ended December 31, 2022 to the year ended December 31, 2021, please refer to “Item 5. Operating and Financial Review and Prospects— Operating Results and Trend Information—Results of Operations—Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” of our annual report on Form 20-F filed with the Securities and Exchange Commission on April 10, 2023.
Quarterly Operating Revenues, Gross Profit and Gross Margin
The following table sets forth our unaudited consolidated operating revenues, gross profit, and gross margin for the quarterly periods indicated. The unaudited quarterly results reflect all adjustments, consisting of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the amounts, on a basis consistent with the audited consolidated financial statements included elsewhere in this annual report. You should read the following table in conjunction with the audited consolidated financial statements and related notes included elsewhere in this annual report.
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Our operating revenues, gross profit, and gross margin for any quarter are not necessarily indicative of the results for any future period. Our unaudited quarterly operating revenues, gross profit and gross margin may fluctuate significantly.
| Quarter Ended, | ||||||||||||||||||||||||||||||||
| Mar. 31, | Jun. 30, | Sep. 30, | Dec. 31, | Mar. 31, | Jun. 30, | Sep. 30, | Dec. 31, | |||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||
| NT$ | NT$ | NT$ | NT$ | NT$ | NT$ | NT$ | NT$ | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
| Operating Revenues |
||||||||||||||||||||||||||||||||
| Packaging |
68,382.7 | 78,393.7 | 80,541.3 | 76,629.8 | 60,029.5 | 61,845.7 | 68,709.3 | 66,221.4 | ||||||||||||||||||||||||
| Testing |
12,582.6 | 13,759.8 | 14,941.5 | 14,676.3 | 11,407.1 | 12,291.6 | 12,818.6 | 13,362.6 | ||||||||||||||||||||||||
| EMS |
61,162.7 | 66,212.5 | 90,660.0 | 83,931.6 | 57,730.9 | 60,384.1 | 70,947.6 | 79,155.4 | ||||||||||||||||||||||||
| Others |
2,262.8 | 2,073.1 | 2,482.7 | 2,179.5 | 1,723.6 | 1,753.9 | 1,691.3 | 1,841.9 | ||||||||||||||||||||||||
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|||||||||||||||||
| Total |
144,390.8 | 160,439.1 | 188,625.5 | 177,417.2 | 130,891.1 | 136,275.3 | 154,166.8 | 160,581.3 | ||||||||||||||||||||||||
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|||||||||||||||||
| Gross Profit |
||||||||||||||||||||||||||||||||
| Packaging |
18,135.9 | 22,184.1 | 21,966.5 | 20,040.5 | 11,278.2 | 12,147.3 | 14,439.9 | 14,705.6 | ||||||||||||||||||||||||
| Testing |
4,387.3 | 5,063.0 | 5,960.1 | 5,633.1 | 3,168.5 | 3,782.6 | 3,934.3 | 4,417.8 | ||||||||||||||||||||||||
| EMS |
5,364.9 | 6,627.2 | 9,171.1 | 7,784.2 | 4,570.0 | 5,583.9 | 6,430.1 | 6,619.1 | ||||||||||||||||||||||||
| Others |
583.1 | 513.3 | 874.2 | 641.5 | 322.7 | 227.0 | 111.3 | 18.8 | ||||||||||||||||||||||||
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|
|||||||||||||||||
| Total |
28,471.2 | 34,387.6 | 37,971.9 | 34,099.3 | 19,339.4 | 21,740.8 | 24,915.6 | 25,761.3 | ||||||||||||||||||||||||
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| Gross Profit (%) |
||||||||||||||||||||||||||||||||
| Packaging |
26.5 | % | 28.3 | % | 27.3 | % | 26.2 | % | 18.8 | % | 19.6 | % | 21.0 | % | 22.2 | % | ||||||||||||||||
| Testing |
34.9 | % | 36.8 | % | 39.9 | % | 38.4 | % | 27.8 | % | 30.8 | % | 30.7 | % | 33.1 | % | ||||||||||||||||
| EMS |
8.8 | % | 10.0 | % | 10.1 | % | 9.3 | % | 7.9 | % | 9.2 | % | 9.1 | % | 8.4 | % | ||||||||||||||||
| Overall |
19.7 | % | 21.4 | % | 20.1 | % | 19.2 | % | 14.8 | % | 16.0 | % | 16.2 | % | 16.0 | % | ||||||||||||||||
Our results of operations are affected by seasonality. In general, our first quarter operating revenues have historically decreased over the preceding fourth quarter, primarily due to the combined effects of holidays in the U.S., Taiwan, and elsewhere in Asia. Moreover, the increase or decrease in operating revenues of a particular quarter as compared with the immediately preceding quarter varies significantly. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and ADSs.”
Exchange Rate Fluctuations
Fluctuations in the exchange rate between NT dollars and U.S. dollars will affect the U.S. dollar equivalent of the NT dollar price of our Common Shares on the TWSE and, as a result, will likely affect the market price of the ADSs. Fluctuations will also affect the U.S. dollar conversion by the depositary under our ADS deposit agreement referred to below of cash dividends paid in NT dollars on, and the NT dollar proceeds received by, the depositary from any sale of Common Shares represented by ADSs, in each case, according to the terms of the deposit agreement dated April 30, 2018, Citibank N.A. as depositary, and the holders and beneficial owners from time to time of the ADSs, which we refer to as the deposit agreement.
For quantitative and qualitative disclosure of our exposure to foreign currency exchange rate risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Market Risk—Foreign Currency Exchange Rate Risk.”
Taxation
We have filed a consolidated corporate income tax return and a consolidated undistributed earnings tax for all qualified domestic subsidiary companies with the tax authority in accordance with the Article 45 of the R.O.C. Business Mergers and Acquisitions Act. The corporate income tax rate and tax rate on unappropriated earnings in the R.O.C. are 20% and 5%, respectively.
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We were entitled to tax credits under the R.O.C. Statute for Industrial Innovation Act for qualifying research and development expenses related to innovation activities but limits the amount of tax credit to only up to 15% of the total research and development expenses for the year, subject to a cap of 30% of the income tax payable for the year in which the expenses were incurred. Moreover, we are eligible for tax credits under amendment to the Article 10-1 of the R.O.C. Statute for investments in smart machinery, 5G mobile networks, and cyber security products/services, with expenditure of more than NT$1 million and under NT$1 billion in the same taxable year. We can select to claim the tax credit within three years using a 3% tax credit rate or within the current year using a 5% tax credit rate, subject to a cap of 30% of the income tax payable for the year in which the expenses were incurred. In addition, effective from January 1, 2023, we are eligible for tax credits under amendment to the Article 10-2 of the R.O.C. Statute for qualifying research and development expenses related to innovation activities and possess leading position in global supply chain but limits the amount of tax credit up to 25% of the total qualifying research and development expenses, and up to 5% on acquisition of machinery and equipment used in advanced manufacturing processes, both of which are subjected to a cap of 30% of the income tax payable for the fiscal year. The total amount of tax credits shall not exceed 50% of the income tax payable for the fiscal year. We apply for investment credits to increase effects of tax benefits.
The R.O.C. government enacted the alternative minimum tax (the “AMT”) Act, which is a supplemental income tax which is taxable if the amount of regular income tax calculated pursuant to the R.O.C. Income Tax Act and relevant laws and regulations is below the amount of basic tax prescribed under the R.O.C. AMT Act. The taxable income for calculating the AMT includes most sources of income that are exempted from income tax under various legislations such as investment tax credits. However, there are grandfathered treatments for the tax holidays approved by the tax authority before the AMT Act took effect. The AMT rate for us is generally 12%.
Beginning with the undistributed earnings with the addition of the income tax declaration from for-profit enterprises of 2018, within three years of the year following the occurrence of the earnings, the earnings are used to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation as needed up to a certain amount. The investment amount calculated from the undistributed earnings for the year in accordance with the provisions of Article 66-9 of the R.O.C. Income Tax Act may be listed as a deduction item. We have only deducted the amount of capital expenditure from the unappropriated earnings that has been reinvested when calculating the tax on unappropriated earnings. However, we did not deduct such investment amounts from the undistributed earnings in calculation of income tax on unappropriated earnings in 2022 and 2023.
We are subject to the R.O.C. Controlled Foreign Company (“CFC”) rules, which were enacted in 2016 and have been taken effect on January 1, 2023, pursuant to which certain profits retained at a CFC located in a low-tax jurisdiction and without commercial substance would be taxed in advance at the Taiwan parent company level, subject to certain exemptions.
Our non-R.O.C. subsidiaries are subject to taxation in their respective jurisdiction. Some of our P.R.C. subsidiaries qualified as high technology enterprises were entitled to a reduced income tax rate of 15% and were eligible to deduct certain research and development expenses from their taxable income.
In 2023, our effective income tax rate decreased to 13% from 21% in 2022 primarily due to lower additional income tax imposed on unappropriated earnings in the R.O.C. during the economic downtown in 2023. We believe that our future estimated taxable income will be sufficient to utilize our deferred tax assets recorded as of December 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, our primary source of liquidity was NT$67,284.5 million (US$2,197.4 million) of cash and cash equivalents and NT$4,084.7 million (US$133.4 million) of financial assets – current, consisting mainly of quoted ordinary shares, open-end mutual funds, convertible notes, swap contracts, and forward exchange contracts. As of December 31, 2023, we had total unused credit lines of NT$373,763.4 million (US$12,206.5 million). As of December 31, 2023, we had working capital of NT$35,673.5 million (US$1,165.0 million).
As of December 31, 2023, we had total debts of NT$191,733.7 million (US$6,261.7 million), of which NT$53,041.5 million (US$1,732.2 million) were short-term debts, NT$29,678.5 million (US$969.3 million) were current portions of long-term debts and NT$109,013.7 million (US$3,560.2 million) were long-term debts. In 2023, the maximum amount of our short-term and current portion of long-term debts was NT$101,228.2 million (US$3,306.0 million) and the average amount of our short-term and current portion of long-term debts was NT$78,700.4 million (US$2,570.2 million). The fluctuation was primarily because our working capital balance periodically fluctuated during 2023. The annual interest rate for borrowings under our short-term borrowings ranged from 1.55% to 7.57% during the year ended December 31, 2023. Our short-term debts consist of bank loans, bills payable and financial liabilities for hedging – current. Our short-term bank loans are primarily revolving facilities with a term of one year, each of which may be extended on an annual basis with lender consent. Our long-term debts consist of bonds payable, long-term debts (including bank borrowings), and lease liabilities – non-current. Our long-term bank loans and bonds payable typically carried variable annual interest rates which ranged from 0.20% to 5.91% in the year ended December 31, 2023. For the maturity information and interest rates by currencies, see “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Market Risk—Interest Rate Risk.”
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We operate in a capital-intensive industry. Serving our current and future customers may require that we incur additional operating expenses and make significant investments in equipment and facilities, which may increase our exposure to payment obligations. We may consider making substantial investments to expand our manufacturing capabilities and technology advancements, which may lead to an increase in our funding requirements.
We have historically been able to satisfy our working capital needs from our cash flow from operations. We have also historically funded our capacity expansion from internally generated cash and, to the extent necessary, the issuance of equity securities and borrowings. To the extent we do not generate sufficient cash flow from our operations to meet our cash requirements, we will have to rely on external financing. If adequate funds are not available on satisfactory terms, we may be forced to curtail our expansion plans. Moreover, our ability to meet our working capital needs from cash flow from operations will be affected by the demand for our packaging services, testing services, and EMS, which in turn may be affected by several factors. Many of these factors are outside of our control, such as economic downturns and declines in the prices of our services or products caused by a downturn in the industry. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and ADSs.”
We have provided a portion of our assets, with a carrying value of NT$22,037.7 million (US$719.7million) as of December 31, 2023, as collateral to secure our obligations under our bank borrowings, tariff guarantees of imported raw materials, or collateral.
Cash Flows
| Year Ended December 31, | ||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||
| NT$ | NT$ | NT$ | US$ | |||||||||||||
| (in millions) | ||||||||||||||||
| Capital expenditures |
(70,905.7 | ) | (72,639.9 | ) | (54,158.2 | ) | (1,768.7 | ) | ||||||||
| Net cash flows generated from (used in): |
||||||||||||||||
| Operating activities |
81,733.9 | 111,001.0 | 114,421.8 | 3,736.8 | ||||||||||||
| Investing activities |
(49,091.6 | ) | (73,951.9 | ) | (55,122.0 | ) | (1,800.2 | ) | ||||||||
| Financing activities |
(5,870.8 | ) | (62,458.8 | ) | (49,101.0 | ) | (1,603.6 | ) | ||||||||
Net cash generated by operating activities amounted to NT$114,421.8 million (US$3,736.8 million) in 2023, primarily from (i) our operating performance with profit before income tax of NT$42,611.8 million (US$1,391.6 million), (ii) our non-cash items of depreciation and amortization of NT$58,101.9 million (US$1,897.5 million), and (iii) the net changes in inventories of NT$25,401.8 million (US$829.6 million) and trade receivables of NT$15,868.8 million (US$518.3 million), partially offset by (i) the net changes in trade and other payables of NT$17,319.1 million (US$565.6 million), and (ii) the income tax payment of NT$15,474.6 million (US$505.4 million). Net cash generated by operating activities amounted to NT$111,001.0 million in 2022, primarily from (i) our operating performance with profit before income tax of NT$81,763.6 million, and (ii) our non-cash items of depreciation and amortization of NT$55,451.9 million and foreign currency exchange loss of NT$6,318.3 million, partially offset by (i) the changes in inventories of NT$21,669.1 million, and (ii) income tax payment of NT$14,250.5 million. The decrease in net cash generated from operating activities in 2023 compared to 2022 was primarily due to a decrease in profit before income tax, partially offset by the cash inflows resulting from a decrease in inventories.
Net cash used in investing activities amounted to NT$55,122.0 million (US$1,800.2 million) in 2023, primarily due to our net payment for property, plant and equipment of NT$53,682.9 million (US$1,753.2 million). Net cash used in investing activities amounted to NT$73,951.9 million in 2022, primarily due to our net payment for property, plant and equipment of NT$71,890.1 million. The decrease in net cash used in investing activities in 2023 compared to 2022 was primarily due to decreased payments relating to property, plant and equipment. Payments for property, plant and equipment can fluctuate based on the timing of the purchase, receipt and acceptance of the equipment.
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Net cash used in financing activities amounted to NT$49,101.0 million (US$1,603.6 million) in 2023. This amount comprises net proceeds from short-term and long-term bank loans, bills payable, and bonds payable in the amount of NT$10,817.4 million (US$353.3 million) and the payments of cash dividends in the amount of NT$37,840.6 million (US$1,235.8 million). Net cash used in financing activities amounted to NT$62,458.8 million in 2022. This amount comprises net proceeds from short-term and long-term bank loans, bills payable, and bonds payable in the amount of NT$31,189.6 million and the payments of cash dividends in the amount of NT$29,990.8 million. The decrease in net cash used in financing activities in 2023 compared to 2022 was primarily due to an increase in short- and long-term borrowings, partially offset by an increase in payment of cash dividends.
Contractual Obligations
The following table sets forth the maturity of our contractual obligations as of December 31, 2023.
| Payments due to period | ||||||||||||||||||||
| Total | Less than 1 Year |
1 to 3 Years | 3 to 5 Years | More than 5 Years |
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| (in NT$ millions) | ||||||||||||||||||||
| Contractual Obligations: |
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| Short-Term debts(1) |
53,416.5 | 53,416.5 | — | — | — | |||||||||||||||
| Long-term debts(2) |
140,242.0 | 32,090.3 | 94,417.5 | 4,949.1 | 8,785.1 | |||||||||||||||
| Lease liabilities(3) |
9,600.3 | 1,227.7 | 1,721.1 | 1,146.4 | 5,505.1 | |||||||||||||||
| Capital purchase obligations(4)(5) |
25,803.5 | 25,803.5 | — | — | — | |||||||||||||||
| Other purchase obligations |
146.5 | 29.3 | 58.6 | 58.6 | — | |||||||||||||||
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| Total(6)(7) |
229,208.8 | 112,567.3 | 96,197.2 | 6,154.1 | 14,290.2 | |||||||||||||||
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| (1) | Includes short-term borrowings, bills payable, and financial liabilities for hedging – current (before the deduction of unamortized discounts) and interest payments. |
| (2) | Includes long-term and current portion of borrowings, and bonds payable (before the deduction of unamortized discounts) and interest payments. |
| (3) | Represents our commitments under leases liabilities and imputed interest which are mainly from land and buildings and improvements. See Note 16 to our consolidated financial statements included in this annual report. |
| (4) | Represents material commitments to purchase machinery and equipment of approximately NT$26,762.5 million (US$874.0 million), of which NT$959.0 million (US$31.3 million) had been paid as of December 31, 2023. |
| (5) | Excludes material commitments for construction of approximately NT$30,181.1 million (US$985.7 million), of which NT$8,057.4 million (US$263.2 million) had been paid as of December 31, 2023, since the schedule of payments is difficult to determine. |
| (6) | Excludes our unfunded defined benefit obligation since the schedule of payments is difficult to determine. Under our defined benefit pension plans, we made pension contributions of approximately NT$597.9 million (US$19.5 million) in 2023, and we estimate that we will contribute approximately NT$600.4 million (US$19.6 million) in 2024. See note 23 to our consolidated financial statements included in this annual report. |
| (7) | Excludes uncertain tax liabilities. We recognized additional taxes payable of NT$246.0 million (US$8.0 million) and accrued interest and penalties of NT$20.2 million (US$0.7 million) related to uncertain tax positions as of or for the year ended December 31, 2023. Because we were unable to make a reasonable estimate of the timing of the tax audits, such balances were not included in the table. |
In 2023, one of our subsidiaries failed to meet the financial covenants under its loan agreement on a semi-annual basis, but it obtained a waiver from the relevant bank excusing this breach. This breach was cured as of December 31, 2023. Except for the aforementioned matter, we and our subsidiaries were in compliance with all of the financial covenants of our existing loan agreements. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Restrictive covenants and broad default provisions in our existing debt agreements may materially restrict our operations as well as adversely affect our liquidity, financial condition, and results of operations.”
As of December 31, 2023, we had no contingent obligations, which normally consist of guarantees provided by us to our subsidiaries.
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Capital Expenditures
Our capital expenditures for the years ended December 31, 2021, 2022, and 2023 for property, plant, and equipment were NT$74,417.5 million, NT$75,800.6 million, and NT$48,758.7 million (US$1,592.4 million), respectively. We had commitments for capital expenditures of approximately NT$56,943.6 million (US$1,859.7 million), of which NT$9,016.4 million (US$294.5 million) had been prepaid as of December 31, 2023, mainly in connection with the expansion of our worldwide operations. In addition, we are adaptable to changing customer needs and will be able to expand our footprint to other countries and regions as needed in the future. Any future expansion of our operating activities could result in additional capital expenditures. We anticipate our capital expenditures in 2024 will be financed through existing cash, expected cash flow from operations, and existing credit lines under our loan facilities and will consist of, among other things, additional machinery and equipment procurements for our capacity expansions. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources” for more information.
We have made, and expect to continue to make, substantial capital expenditures in connection with the expansion of our production capacity. The table below sets forth our principal capital expenditures incurred for the years indicated.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| NT$ | NT$ | NT$ | ||||||||||
| (in millions) | ||||||||||||
| Land |
1,126.0 | 1,453.8 | 424.1 | |||||||||
| Building and improvements |
56,546.4 | 24,241.9 | 19,948.2 | |||||||||
| Machinery and equipment |
16,745.1 | 50,104.9 | 28,386.4 | |||||||||
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|
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| Total |
74,417.5 | 75,800.6 | 48,758.7 | |||||||||
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|
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We had commitments for capital expenditures of approximately NT$56,943.6 million (US$1,859.7 million), of which NT$9,016.4 million (US$294.5 million) had been prepaid as of December 31, 2023, primarily in connection with the expansion of our operations. We estimate that our environmental capital expenditures for 2024 will be approximately US$29.4 million, of which 46.9% will be used in climate change adaptation. We may adjust our capital expenditures based on market conditions, the progress of our expansion plans, and cash flow from operations. Due to the rapid changes in technology in the semiconductor industry, we frequently need to invest more in land, buildings, factories as well as machinery and equipment, which may require us to raise additional capital. As we are responsive to changing customer needs and could expand our footprint to other countries and regions if needed in the future, we cannot ensure that we will be able to raise additional capital should it become necessary on terms acceptable to us, or at all. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—If we are unable to obtain sufficient funding in a timely manner or on acceptable terms, our results of operations and financial conditions may be materially and adversely affected.”
We believe that our cash and cash equivalents, short-term investments, expected cash flow from operations, and existing credit lines under our loan facilities will be sufficient to meet our capital expenditures, purchase commitments, working capital, cash obligations under our existing debts and lease arrangements, and other business requirements associated with existing operations, over the next 12 months and beyond. We currently hold cash primarily in U.S. dollars, RMB, NT dollars, Korean Won, Japanese yen, and EUR. As of December 31, 2023, we had contractual obligations of NT$208,764.5 million (US$6,817.9 million) due in the next three years. We currently expect to meet our payment obligations through the expected cash flow from operations, long-term borrowings, and the issuance of additional equity. We will continue to evaluate our capital structure and periodically may decide to increase or decrease our financial leverage through equity offerings or borrowings. The issuance of additional equity securities may result in additional dilution to our shareholders.
We regularly evaluate possible investments, acquisitions, or divestments and may, if a suitable opportunity arises, make an investment, acquisition, or divestment.
Our exposure to financial market risks relates primarily to changes in foreign currency exchange rates that arise from ordinary business operations. To mitigate these risks, we utilize derivative instruments. All derivative transactions entered into by us were designated as either hedging or trading. We have sometimes entered into interest rate swap transactions to hedge our interest rate exposure. In addition, we have sometimes entered into forward exchange contracts, swap contracts, cross-currency swap contracts, and foreign currency options contracts to hedge our existing assets and liabilities denominated in foreign currencies. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and Notes 7, 8 and 34 to our consolidated financial statements included in this annual report.
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RESEARCH AND DEVELOPMENT
For 2022 and 2023, our research and development expenditures totaled approximately NT$24,369.9 million and NT$25,499.4 million (US$832.8 million), respectively. These expenditures represented approximately 3.7% and 4.4% of operating revenues in 2022 and 2023, respectively. As of December 31, 2023, we had a research and development team of 12,125 employees. We cultivate and maintain a research and development engineering team that continuously surveys and adapts to the latest trends in technology. Our research and development activities are primarily directed toward optimizing relevant technologies in key components, manufacturing processes, and product development. Our research and development objectives are to enhance the performance of our products and drive greater business growth. To incentivize innovation and encourage our employees to engage in research and development, we offer cash rewards to employees that contribute significantly to our research efforts.
Packaging
We centralize our research and development efforts in packaging technology in our Kaohsiung and Taichung facilities in Taiwan. After initial phases of development, we conduct pilot runs in one of our facilities before new technologies or processes are implemented commercially at other sites. Facilities with special product expertise, such as ASE Korea, also conduct research and development of these specialized products and technologies at their sites. One of the areas of emphasis for our research and development efforts is improving the efficiency and technology of our packaging processes, and these efforts are expected to continue. We are also investing significant research and development efforts into the development and adoption of innovative technology. We work closely with manufacturers of our packaging equipment and materials in designing and developing the equipment and materials used in our production process. We also collaborate with our significant customers to jointly develop new product and process technologies.
In addition to investing in the development of more advanced packaging technology and improving production efficiency, some portion of our research and development efforts is focused on the development of IC substrate. Substrate is the principal raw material for BGA packages. Development and production of IC substrates involve complex technology. We are currently working closely with certain first-tier substrate suppliers in Asia, primarily including those located in Japan, Taiwan, Korea, and the P.R.C. We believe that our successful cooperation with substrate suppliers to enhance overall substrate production capability and meet future package requirements has enabled us to capture an increasingly important value-added component of the packaging process and helped ensure a stable and cost-effective supply of substrates for our BGA packaging operations and shortened time to market.
Testing
Our research and development efforts in testing have focused primarily on developing advanced testing solutions for mmWave, SiP, silicon photonics, and optical sensor modules; characterization of semiconductors, layout design and electrical simulation for high-frequency test board and developing software of parametric test data analysis. With the maturity of advanced processes, reliability becomes increasingly significant. We have developed a high-power cooling system of “burn in” to improve the reliability of products for customers. We also develop WiFi6e low-cost test technology, optical communication, and millimeter wave test technology to meet the development needs of today’s wireless communication technology. Besides working closely with our customers on the leading-edge test technologies, our research and development operations also include an equipment development group, which currently designs testing hardware and software for specific semiconductors to offer our customers cost-effective test solutions.
EMS
To further enhance the quality of our services and products and increase competitiveness, we focus on developing diversified and innovative products. By leveraging our proprietary research and development expertise, we are able to optimize our product design, engineering, and manufacturing capabilities to provide our customers with high-performance and cost-effective products and services. During the process of designing, as well as developing, the technology for our software and hardware, our research and development team also dedicates itself to discovering new information and applying it to create new, advanced, and improved products, processes, methodology, and services. We are currently investing in the development of products used in EMS in relation to computing and peripherals, communications, consumer products, automotive, industrial, and server applications.
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TREND INFORMATION
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material effect on our operating revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to not be indicative of future operating results or financial conditions.
SAFE HARBOR
Please see the section entitled “Special Note Regarding Forward-Looking Statements.”
Item 6. Directors, Senior Management and Employees
DIRECTORS AND SENIOR MANAGEMENT
Directors
Our board of directors is elected by our shareholders in a shareholders’ meeting at which a quorum, consisting of a majority of all issued and outstanding Common Shares, not including treasury stocks and Common Shares held by our subsidiaries, is present. The chairman is elected by the board from among the directors. Our 13-member board of directors, including three independent directors, is responsible for the management of our business.
We currently have 13 directors, each serving a three-year term. The current board of directors was elected in an annual general shareholders’ meeting on August 12, 2021 and began serving on August 13, 2021. Directors may serve any number of consecutive terms and may be removed from office at any time by a resolution adopted at a meeting of shareholders. Normally, all board members are elected at the same meeting of shareholders, except where the posts of one-third or more of the directors are vacant, at which time an extraordinary general shareholders’ meeting shall be convened to elect directors to fill the vacancies. We and our subsidiaries do not have service contracts with our directors that provide for benefits upon termination of employment.
Audit Committee
Our audit committee currently consists of Shen-Fu Yu, the chairman of our audit committee, and Mei-Yueh Ho and Wen-Chyi Ong, who are independent under Rule 10A-3 and the R.O.C. Securities and Exchange Act and are financially literate with accounting or related financial management expertise. Our audit committee is entrusted with the same duties and responsibilities as set out in Rule 10A-3(b) under the Exchange Act. Pursuant to the Article 14-4 of the R.O.C. Securities and Exchange Act, our audit committee was established on June 22, 2018 in lieu of supervisors to exercise the powers and duties of supervisors stipulated in the R.O.C. Company Law and other applicable laws and regulations. Our audit committee meets at least once every quarter but may meet at any time deemed necessary. Our board of directors has adopted a committee charter for the audit committee. Our audit committee’s responsibilities and powers include, but are not limited to, assistance with the board of directors in fulfilling its quality and integrity in supervising the implementation of relevant accounting, internal auditing, financial reporting procedures, and financial controls. In addition, in order to enhance corporate governance, the audit committee also takes responsibility for overseeing the policy and procedures for complaints and concerns regarding accounting, internal accounting controls, auditing matters, violations of Code of Business Conduct and Ethics, or unethical conduct.
Compensation Committee
Our compensation committee currently consists of Shen-Fu Yu, the chairman of our compensation committee, Wen-Chyi Ong, and Hsiao-Ying Ku. Our board of directors established a compensation committee to satisfy the requirements under the R.O.C. Securities and Exchange Act. As stipulated by relevant R.O.C. regulations, a majority of the committee members shall be independent directors, and the committee members shall elect an independent director to serve as meeting chairman and convener, who will represent the committee externally. We do not assess the independence of our compensation committee member(s) under the independence requirements of the NYSE listing standards but adopt the independence standard as promulgated under the R.O.C. Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock Is Listed on the TWSE or the Taipei Exchange. Our compensation committee meets at least twice a year. Our board of directors has adopted a compensation committee charter for our compensation committee. The compensation committee shall exercise the due care of a good administrator and faithfully perform the duties listed below, and shall submit its recommendations to the board of directors for discussion. (i) Prescribe and periodically review the performance review and remuneration policy, system, standards, and structure for directors and managerial officers. (ii) Periodically evaluate and prescribe the remuneration of directors managerial officers. (iii) The compensation committee shall exercise the care of a good administrator to examine remuneration system for directors, supervisors and managerial officers adopted by the board of directors of a subsidiary and the reference data related to the remuneration of directors, supervisors, and managerial officers submitted by the subsidiary and submit its opinion to the board of directors.
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Risk Management Committee
Our risk management committee currently consists of Shen-Fu Yu, the chairman of our risk management committee, Mei-Yueh Ho, and Du-Tsuen Uang. In December 2019, our board of directors passed a resolution to establish a risk management committee, which has no less than half of its membership comprised of independent directors, and approved its charter to enable us to discover and preempt internal and external operational risks. The risk management committee is responsible for overseeing overall risk management, implementing the decisions of the board of directors in connection to risk management, coordinating and promoting interdepartmental risk management plans, supervising and managing overall risk control and remedial mechanisms, and auditing and integrating each risk control report. Our risk management committee convenes regular meetings at least twice a year and files an annual report to our board of directors to inform the board about the status of risk management implementation and share insights for optimization. In July 2023, our risk management system passed BSI verification according to ISO 31000 and received the Risk Management Framework Compliance statement of conformity.
The following table sets forth information regarding all of our directors as of January 31, 2024. In accordance with R.O.C. law, each of our directors is elected either in his or her capacity as an individual or as an individual representative of a corporation or government. Persons designated to represent corporate or government shareholders as directors are nominated by such shareholders at the shareholders’ meeting and may be replaced as representatives by such shareholders at will. Of the current directors, nine represent ASE Enterprises Limited. The remaining directors serve in their capacity as individuals.
| Name |
Position |
Director Since |
Age | Other Significant Positions Held Outside of | ||||
| Jason C.S. Chang(1)(2) |
Director and Chairman | 2018 | 79 | None | ||||
| Richard H.P. Chang(1)(2) |
Director, Vice Chairman and President | 2018 | 77 | Chairman, Sino Horizon Holdings Ltd. | ||||
| Chi-Wen Tsai(2) |
Director; Chairman and President, SPIL | 2018 | 76 | None | ||||
| Yen-Chun Chang(2) |
Director; Chief Operating Officer, SPIL | 2021 | 68 | None | ||||
| Tien Wu(2) |
Director and Chief Operating Officer | 2018 | 66 | None | ||||
| Joseph Tung(2) |
Director and Chief Financial Officer | 2018 | 65 | None | ||||
| Raymond Lo(2) |
Director; General Manager, Kaohsiung packaging facility | 2018 | 69 | None | ||||
| Tien-Szu Chen(2) |
Director; General Manager, ASE Inc. Chung-Li branch | 2018 | 62 | None | ||||
| Jeffrey Chen(2) |
Director; Chairman, Universal Scientific Industrial (Shanghai) Co., Ltd. | 2018 | 59 | Independent Director, and a member of the compensation committee and audit committee, Mercuries & Associates Holding Ltd. | ||||
| Rutherford Chang(3) |
Director; General Manager, China Region of ASE Inc. | 2018 | 44 | None | ||||
| Shen-Fu Yu |
Independent Director and Member, Audit Committee, Compensation Committee, and Risk Management Committee | 2018 | 79 | Independent Director, TaiGen Biopharmaceuticals Holdings Ltd. | ||||
| Mei-Yueh Ho |
Independent Director and Member, Audit Committee, and Risk Management Committee | 2018 | 73 | Independent Director, Center Laboratories, Inc., Onward Therapeutics SA and Acer Inc.; Director, KINPO Electronics Inc. | ||||
| Wen-Chyi Ong |
Independent Director and Member, Audit Committee, and Compensation Committee | 2021 | 64 | Independent Director, Formosa Plastics Corporation |
| (1) | Jason C.S. Chang and Richard H.P. Chang are brothers. |
| (2) | Representative of ASE Enterprises Limited, a company organized under the laws of Hong Kong, which held 15.59% of our total outstanding shares as of January 31, 2024. All of the outstanding shares of ASE Enterprises Limited are held through intermediary holding companies and under a revocable trust established under the laws of the Bailiwick of Guernsey for the benefit of our Chairman, Jason C.S. Chang, and his family. |
| (3) | Rutherford Chang is the son of Jason C.S. Chang. |
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Audit Committee
For a discussion of our audit committee, see “—Directors and Senior Management—Directors.”
Executive Officers
The following table sets forth information regarding all of our executive officers as of January 31, 2024.
| Name |
Position |
Years with the Company |
Age | |||||
| Jason C.S. Chang |
Chairman | 39 | 79 | |||||
| Richard H.P. Chang |
Vice Chairman and President | 39 | 77 | |||||
| Chi-Wen Tsai |
Chairman and President, SPIL | 39 | 76 | |||||
| Yen-Chun Chang |
Director and Chief Operating Officer, SPIL | 39 | 68 | |||||
| Tien Wu |
Chief Operating Officer | 23 | 66 | |||||
| Joseph Tung |
Chief Financial Officer | 29 | 65 | |||||
| Raymond Lo |
General Manager, ASE Test Taiwan and Kaohsiung packaging facility | 37 | 69 | |||||
| Tien-Szu Chen |
General Manager, ASE Inc. Chung-Li branch | 35 | 62 | |||||
| Rutherford Chang |
General Manager, China Region of ASE Inc. | 18 | 44 | |||||
| Du-Tsuen Uang |
Chief Administration Officer | 21 | 64 | |||||
| Andrew Tang |
Chief Procurement Officer; Vice Chairman, ASE Inc. | 9 | 48 | |||||
| Chun-Che Lee |
General Manager, ASE Electronics | 39 | 64 | |||||
| Chung Lin |
General Manager, ASE Shanghai | 19 | 60 | |||||
| Gichol Lee |
General Manager, ASE Korea | 26 | 61 | |||||
| Chih-Hsiao Chung |
General Manager, ASE Japan and Wuxi Tongzhi | 24 | 59 | |||||
| Kwai Mun Lee |
President, ASE South-East Asia operations | 25 | 61 | |||||
| Yean Peng Chen |
General Manager, ASE Singapore Pte. Ltd. | 25 | 52 | |||||
| Heng Ee Ooi |
General Manager, ASE Malaysia | 29 | 55 | |||||
| Kenneth Hsiang |
Chief Executive Officer, ISE Labs and ISE Shanghai | 24 | 53 | |||||
| Chi-Pin Chang |
General Manager, Siliconware USA, Inc. | 34 | 56 | |||||
| Kevin Yu |
General Manager, SZ | 28 | 50 | |||||
| Jeffrey Chen |
Chairman, Universal Scientific Industrial (Shanghai) Co., Ltd. | 29 | 59 | |||||
| Chen-Yen Wei |
Chairman, Universal Scientific Industrial Co., Ltd.; President, Universal Scientific Industrial (Shanghai) Co., Ltd.; General Manager, Universal Global Scientific Industrial Co., Ltd. | 44 | 69 | |||||
| Jing Cao |
General Manager, Universal Global Technology (Shanghai) Co., Ltd. | 8 | 64 | |||||
| Ta-I Lin |
General Manager, Universal Global Technology (Kunshan) Co. Ltd. | 36 | 60 | |||||
| Yueh-Ming Lin |
General Manager, Universal Global Technology (Huizhou) Co., Ltd. | 28 | 58 | |||||
| Hui-Min Liu |
General Manager, UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED | 20 | 51 | |||||
| Bernardo Santos Balderrama |
General Manager, Universal Scientific Industrial De Mexico S.A. De C.V. | 4 | 55 | |||||
| Nicolas Denis |
Chief Executive Officer, Financière AFG | 3 | 52 | |||||
| Ying Pin Wu |
General Manager, Asteelflash Suzhou Co., Ltd. | 15 | 57 | |||||
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Biographies of Directors and Executive Officers
Jason C.S. Chang has served as chairman and principal executive officer of ASEH since its founding in April 2018. He is also chairman of ASE Inc. Dr. Chang holds a bachelor’s degree in Electrical Engineering from National Taiwan University in Taiwan and a master’s degree from Illinois Institute of Technology. Dr. Chang received an Honorary Degree of Doctor of Engineering from National Sun Yat-sen University in Taiwan in November 2018 and an Honorary Degree of Doctor of Engineering from National Cheng Kung University in Taiwan in July 2022. He is the brother of Richard H.P. Chang, our vice chairman and president.
Richard H.P. Chang has served as vice chairman and president of ASEH since its founding in April 2018. Mr. Chang holds a bachelor’s degree in Industrial Engineering from Chung Yuan Christian University in Taiwan. He is the brother of Jason C.S. Chang, our chairman.
Chi-Wen Tsai has served as a director of ASEH since its founding in April 2018. Mr. Tsai has been SPIL’s director since August 1984. Mr. Tsai is currently chairman and president of SPIL. Mr. Tsai holds a bachelor’s degree in Electrical Engineering from National Taipei Institute of Technology in Taiwan.
Yen-Chun Chang has served as a director of ASEH since August 2021. He is currently a director and chief operating officer of SPIL. Mr. Chang was a (senior) vice president of SPIL from March 2000 to February 2021. Mr. Chang had worked as an engineer at Lingsen Precision Industries, Ltd. Mr. Chang holds a bachelor’s degree in Electronic Engineering from Southern Taiwan University of Science and Technology.
Tien Wu has served as a director and chief operating officer of ASEH since its founding in April 2018. Dr. Wu is currently the chief executive officer of ASE Inc. Prior to joining ASE Inc. in March 2000, Dr. Wu had worked at IBM. In 2024, Dr. Wu was elected to the United States National Academy of Engineering for work in sustainable electronics manufacturing and advancements in the high-volume production of semiconductor packaging. Dr. Wu holds a bachelor’s degree in Civil Engineering from National Taiwan University in Taiwan, and a master’s and a doctorate degree in Mechanical Engineering and Applied Mechanics from the University of Pennsylvania. In 2015, Dr. Wu received an Honorary Degree of Doctor of Science from Binghamton University in New York.
Joseph Tung has served as a director and chief financial officer of ASEH since its founding in April 2018. He was a director of ASE Inc. from April 1997 to December 2020 and chief financial officer of ASE Inc. from December 1994 to July 2020. He was an independent director of Ta Chong Bank Ltd. from October 2007 to December 2017. Before joining ASE Inc., Mr. Tung was a vice president at Citibank, N.A. Mr. Tung holds a bachelor’s degree in Economics from National Chengchi University in Taiwan and a master’s degree in Business Administration from the University of Southern California.
Raymond Lo has served as a director of ASEH since its founding in April 2018 and general manager of our packaging facility in Kaohsiung, Taiwan since April 2006. Mr. Lo also served as a supervisor of ASE Inc. between July 2000 and May 2006 and director of ASE Inc. since May 2006. Before joining ASE Inc., Mr. Lo was a director of quality assurance at Zeny Electronics Co. Mr. Lo holds a bachelor’s degree in Electronic Physics from National Chiao Tung University in Taiwan.
Tien-Szu Chen has served as a director of ASEH since its founding in April 2018. Mr. Chen has served as a director of ASE Inc. since June 2015 and general manager of ASE Inc. Chung-Li branch since August 2015. He has also served as a supervisor of ASE Inc. from June 2006 to June 2015 and president of PowerASE Technology Inc. from June 2006 to May 2012. Prior to joining ASE Inc. in June 1988, Mr. Chen worked at TSMC and Philips Semiconductor Kaohsiung. Mr. Chen holds a bachelor’s degree in Industrial Engineering from Chung Yuan Christian University in Taiwan.
Jeffrey Chen has served as a director of ASEH since its founding in April 2018 and he has also served as a director of ASE Inc. since June 2003. Mr. Chen has served as chairman of Universal Scientific Industrial (Shanghai) Co., Ltd. since June 2018. Prior to joining ASE Inc., he worked in the corporate banking department of Citibank, N.A. in Taipei and as a vice president of corporate finance at Bankers Trust in Taipei. Mr. Chen holds a bachelor’s degree in Finance and Economics from Simon Fraser University in Vancouver, Canada and a master’s degree in Business Administration from the University of British Columbia in Canada.
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Rutherford Chang has served as a director of ASEH since its founding in April 2018. He has also served as a director of ASE Inc. since June 2009 and general manager of China Region of ASE Inc. since June 2010. Mr. Chang holds a bachelor’s degree in Psychology from Wesleyan University in Connecticut. He is the son of Jason C.S. Chang, our chairman.
Shen-Fu Yu has served as an independent director of ASEH since June 2018. Mr. Yu is also a member of the audit committee, compensation committee, and risk management committee of ASEH. He is an independent director, and a member of the audit committee and compensation committee of TaiGen Biopharmaceuticals Holdings Ltd. He worked at the Deloitte & Touche accounting firm as a consultant from June 2003 to November 2006. Mr. Yu holds a bachelor’s degree in Accounting from National Taiwan University in Taiwan and a master’s degree in Accounting from National Chengchi University in Taiwan.
Mei-Yueh Ho has served as an independent director of ASEH since June 2018. She is also a member of the audit committee and risk management committee of ASEH. Ms. Ho is an independent director of Center Laboratories, Inc., Onward Therapeutics S.A., and Acer Inc., and is a member of the audit committee of Center Laboratories, Inc. and Onward Therapeutics SA. She is also a member of the compensation committee of Center Laboratories, Inc. and a board director of KINPO Electronics Inc. Ms. Ho served as Minister of Ministry of Economic Affairs, R.O.C. from May 2004 to January 2006. She was also Chairperson of the Council for Economic Planning and Development, R.O.C. from May 2007 to May 2008. Ms. Ho holds a bachelor’s degree in Agricultural Chemistry from National Taiwan University in Taiwan.
Wen-Chyi Ong has served as an independent director of ASEH since August 2021. Mr. Ong is also a member of the audit committee and compensation committee. Mr. Ong is now an adjunct professor of finance at the Business School of National Chengchi University in Taipei. In July 2017, Mr. Ong was invited by the board of the SinoPac Financial Holding Company to lead the distressed financial institution. Spending three years with the bank, Mr. Ong successfully turned the bank around in terms of profitability and corporate governance. Prior to this private sector job, Mr. Ong was chairman of the state-owned Chunghwa Post Company. Before returning to Taipei, Mr. Ong was Taiwan’s representative to India between 2008 and 2012. With ambassadorial ranking, he played a critical role in enhancing India-Taiwan’s economic and cultural relations. In 2005, Mr. Ong was appointed by Taiwan’s Financial Supervisory Commission (FSC) to set up a representative office in New York where he worked closely with U.S. financial regulators for cross-border supervision. Prior to New York, Mr. Ong was a Trade Negotiator representing Taiwan at the World Trade Organization. He spent three years in Geneva. In Taiwan, Mr. Ong was a financial regulator for foreign banks for two years and director for the QFII (Qualified Foreign Institutional Investors) business for four years. In his earlier career, he spent six years in Washington, DC as a junior Foreign Service Officer. Mr. Ong graduated from the National Taiwan University in 1981, majoring in international relations. In 1998, Mr. Ong enrolled in the Cass Business School of the City University, London, where he earned an MS degree in investment and risk management.
Du-Tsuen Uang has served as chief administrative officer of ASEH since its founding in April 2018. He also has served as chief corporate governance officer of ASEH since March 2019, and chief risk officer of ASEH since February 2020. As one of ASEH’s managing team members, Mr. Uang has also served as chief administrative officer of ASE Inc. since August 2017. Other than the aforementioned positions, Mr. Uang has also served as the chairman/ general manager of Advanced Semiconductor Engineering (China) Ltd., general manager/ director of ASE Social Enterprise Co., Ltd. and ASE Assembly & Test (Shanghai) Limited, and a director of ASE Environmental Protection and Sustainability Foundation, ASE Inc., USI Shanghai, Hung Ching and Sino Horizon Holdings Ltd. Outside of ASEH, Mr. Uang is also an independent director of Bank of Kaohsiung. He is an honorary professor in the law department at Ming Chuan University. Prior to joining ASEH, Mr. Uang was the dean and professor in the law department at Ming Chuan University. Mr. Uang was also a senior chief secretary of the Taiwan Ministry of Economic Affairs Central Bureau of Standards, commissioner of Taiwan FTC, and an independent director of First Commercial Bank. Mr. Uang received his Ph.D. in Law from National Cheng-Chi University in Taiwan.
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Andrew Tang holds the positions of chief procurement officer for ASEH since September 2023 and vice-chairman and deputy chief executive officer for ASE Inc. Mr. Tang is also a director of ASE Inc., ASE Cultural & Education Foundation, and ASE Environmental Protection and Sustainability Foundation. Prior to joining ASE in August 2014, Mr. Tang worked at privately-held and publicly-held investment firms, including Morgan Stanley in New York. Mr. Tang holds a bachelor’s degree in Mathematics and Economics from Yale University. Mr. Tang is the son-in-law of Mr. Jason C.S. Chang, our chairman.
Chun-Che Lee has served as general manager of ASE Electronics since August 2011, prior to which he was vice president, director, and manager of research and development of ASE Inc. since 1984. Mr. Lee holds a bachelor’s degree in Aeronautics from Tamkung University in Taiwan.
Chung Lin has served as general manager of ASE Shanghai since May 2018 and vice president of ASESH AT since May 2012, after serving as vice president of ASEWH since 2010 and ASE Shanghai since May 2005. Mr. Lin holds a master’s degree in Computer Science from Columbia University.
Gichol Lee has served as general manager of ASE Korea since November 2019. Mr. Lee was previously the vice president of Business Systems with Motorola and then ASE Korea. Prior to his current position, he has held various managerial positions with DuPont and Unilever. He holds a master’s degree from Columbia University.
Chih-Hsiao Chung has served as general manager of ASE Japan since March 2011 and general manager of Wuxi Tongzhi since June 2013. Mr. Chung has also managed the sales and marketing of the ASE Japan region since April 2007. Before joining ASE Inc., Mr. Chung was a senior manager of sales and marketing at Kimberly Clark Co., Taiwan. He holds a master’s degree in Business Administration from the University of Wisconsin-Madison.
Kwai Mun Lee has served as president of our Southeast Asia operations, with responsibility for the operations of our Penang, Malaysia, and Singapore manufacturing facilities, since March 2006 and as general manager of ASE Singapore from May 1999 to February 2006. Before joining ASE Inc., Mr. Lee held senior management positions at Chartered Semiconductor and STATS ChipPAC. He started his career as an engineer at Intel. He holds a degree in Engineering from Swinburne Institute of Technology in Australia.
Yean Peng Chen has served as general manager of ASE Singapore Pte. Ltd. since January 2019. He has also worked at ISE Labs before being appointed as vice president of operations in ASE Singapore in July 2015. He started his career as an equipment engineer at STATS ChipPAC Ltd. Mr. Chen holds a diploma in Electronic and Computer Engineering from Ngee Ann Polytechnic in Singapore.
Heng Ee Ooi has served as general manager of ASE Malaysia since July 2016 after serving as vice president of operations since July 2015. He joined ASE Inc. in July 1994. Before joining ASE Inc., he worked as a process engineer at AMD, Penang. Mr. Ooi holds a bachelor’s degree in Chemical Engineering from Universiti Teknologi Malaysia.
Kenneth Hsiang has served as chief executive officer of ISE Labs and ISE Shanghai since 2019 and served as general manager of ISE Labs from June 2004 to 2019. Prior to joining ASE Inc. in November 1999, Mr. Hsiang worked in various management positions within finance and strategic analysis in the healthcare and biotech industries in the San Francisco Bay area in California. He also worked for Price Waterhouse LLP as a certified public accountant. Mr. Hsiang received a bachelor’s degree in Economics and Rhetoric from the University of California, Berkeley.
Chi-Pin Chang has joined SPIL in 1989 and served as R&D engineer. In 1993, he joined SPIL’s new established Technical Service department serving North America accounts and transferred to Siliconware USA, Inc. in 2001, as Director of FAE in North America. In 2003 he took over as Senior Director of Sales and FAE, eventually becoming Senior Vice President of Business Management in 2018. He was appointed as president and chief executive officer of Siliconware USA, Inc. in December 2022. Mr. Chang holds a bachelor’s degree in Electrical Engineering from National Yunlin Institute of Technology.
Kevin Yu has served as general manager of SZ since December 2021. He holds a bachelor’s degree in Electrical Engineering from Minghsin University in Taiwan.
Chen-Yen Wei has served as chairman of Universal Scientific Industrial Co., Ltd. since July 2014 and president of Universal Scientific Industrial (Shanghai) Co., Ltd. since April 2008. He joined Universal Scientific Industrial as an engineer in August 1979. He holds a bachelor’s degree in Communication Engineering from National Chiao Tung University in Taiwan.
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Jing Cao serves as Sr. vice president, General Manager of USI Asia Region, SiM Business Unit, and Smart Manufacturing of Universal Scientific Industrial Co. Ltd. (USI). He joined USI on April 15, 2015 as Sr. VP of Operations and Smart Manufacturing, expanded his responsibilities to GM of Zhangjing Site in January 2018 then to GM of SiM BU and USI Shanghai in March, 2020. Prior to joining USI, he worked as Senior Vice President of Operations of UTAC Group and other executive positions at several public semiconductor companies in the United States. Jing Cao holds a master’s degree in mechanical engineering and a master’s degree in industrial engineering from Arizona State University in the United States.
Ta-I Lin has served as general manager of Universal Global Technology (Kunshan) Co. Ltd. since August 2011. He joined USI as an engineer in August 1987. He holds a bachelor’s degree in Electrical Engineering from National Cheng Kung University in Taiwan and an executive master’s degree in Business Administration from Peking University in China.
Yueh-Ming Lin has served as general manager of Universal Global Technology (Huizhou) Co. Ltd. since April 2019 and vice president of the Global Operation Management (Shenzhen) Division of USI Electronics (Shenzhen) Co. Ltd. since February 2017. He joined USI as a section manager in October 1995. He holds a bachelor’s degree in Electrical Engineering from Feng Chia University in Taiwan.
Hui-Min Liu has served as general manager of UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED since May 2021 and vice president of ALCMM group of USI since December 2020. He joined USI as an assistant manager in October 2003. He holds a master’s degree in Mechanical Engineering from YUNLIN University of Science and Technology in Taiwan.
Bernardo Santos Balderrama has served as Universal Scientific Industrial De Mexico S.A. De C.V. assistant vice president since September 2019 and general manager since May 2020. He worked in various OEM companies including Visteon Electronics in Chihuahua Chih. Mexico, Delphi Mechatronics Systems in Matamoros, Tamaulipas, Mexico, and he became the operations director of Jabil Guadalajara, which is Jabil’s largest site in the Americas, where he stayed until he joined Universal Scientific Industrial De Mexico S.A. De C.V. He holds a bachelor’s degree in Mechanical Design Engineering, a second degree in Electronics Engineering and a master’s degree in Business Administration from Universidad Autonoma de Nuevo Leon. He is also certified as a Six Sigma Black Belt by the ASQ.
Nicolas Denis has served as chief executive officer of Financière AFG since December 2023. He joined Asteelflash in July 2020, where he held various positions within Asteelflash, serving as chief executive officer of Asteelflash France and Senior Vice-President, EMEA. Prior to joining Asteelflash, he held various leadership positions in OEM companies including Sagemcom. He holds master’s degrees in engineering from Ecole Polytechnique and Ecole des Mines ParisTech in France.
Ying Pin Wu has served as general manager of Asteelflash Suzhou Co., Ltd. since January 2009. He joined Asteelflash Group in 2008 via the acquisition of Flash Electronics, Inc. by ASTEEL. He previously served in a variety of finance positions within Flash Electronics, Inc. and now is responsible for business management & operations in the APAC region for FAFG, operations at USI Kunshan’s site, and business management in USI’s Visual Product business unit. He holds a master’s degree in Business Administration from California State University.
The business address of our directors and executive officers is our registered office.
COMPENSATION
In 2023, we recorded expenses of approximately NT$1,415.0 million (US$46.2 million) as remuneration to our directors and executive officers. In 2023, we accrued pension costs of NT$11.9 million (US$0.4 million) for retirement benefits for our management.
Our Articles of Incorporation stipulates to distribute employees’ compensation and remuneration to directors at the rates of 0.01%-1.00% and no higher than 0.75%, respectively, of net profit before income tax, employees’ compensation and remuneration to directors. We recorded NT$127.0 million (US$4.1 million) as compensation to our directors for the year ended December 31, 2023. On March 28, 2024, our board of directors approved the directors’ compensation in the amount of NT$125.0 million (US$4.1 million). The differences are recorded as a change in accounting estimate and will be adjusted in 2024.
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In addition, our Articles of Incorporation sets the renumeration of our independent directors at NT$3.0 million (US$0.1 million) per year.
We have not provided any loans to, or guarantees for, the benefit of any of our directors or executive officers. For information regarding our pension and other retirement plans and those of our subsidiaries, see Note 23 to our consolidated financial statements included in this annual report.
Employee Compensation
We award bonuses to employees of ASEH and its subsidiaries who are located in Taiwan based on overall income and individual performance targets. Employees are eligible to receive bonuses in the form of our Common Shares valued at the closing price (after adjustment with consideration of the effects on the share price, if any, brought by cash and stock dividends resolved at shareholders’ meetings) of our Common Shares on the day prior to our meeting of the board of directors. Actual amounts of compensation to individual employees are determined based upon the employee meeting specified individual performance objectives. We recorded NT$79.4 million (US$2.6 million) as compensation to our employees for the year ended December 31, 2023. On March 28, 2024, our board of directors approved the employees’ compensation in the amount of NT$79.5 million (US$2.6 million) in cash. The differences are recorded as a change in accounting estimate and will be adjusted in 2024.
Share-Based Payment Arrangements
ASEH Employee Share Option Plans
ASEH assumed ASE’s obligations of outstanding employee stock option plans on April 30, 2018, including the 2015 employee share option plan. In addition, ASEH adopted the first and the second employee share option plans in November 2018 and August 2023, respectively. As a result, as of December 31, 2023, ASEH maintained three employee stock option plans, adopted in 2015, 2018, and 2023, respectively.
Pursuant to these plans, our full-time employees are eligible to receive share options. Under the 2015, 2018 and 2023 plans, each share option represents the right to purchase one ordinary share of the Company when exercised. The right of those share options granted under the plan is valid for 10 years, non-transferable and exercisable at certain percentages subsequent to the second anniversary of the grant date. For any subsequent changes in certain prescribed criteria stipulated in these employee share option plans, the exercise price is accordingly adjusted.
As of December 31, 2023, 5,229 thousand options were outstanding with an exercise price of NT$73.0 per Share under the 2015 plan, 57,486 thousand options were outstanding with an exercise price of NT$44.1 per Share under the 2018 plan, and 149,525 thousand options were outstanding with an exercise price of NT$107.0 per Share under the 2023 plan.
ASEH Employee Restricted Stock Awards Plan
In 2021, ASEH adopted the 2021 restricted stock awards plan, or the 2021 RSA Plan, and grant 15,000 thousand Common Shares, or the 2021 RSAs, as a token of gratitude, to its employees, including domestic and foreign subsidiaries. Directors who are non-employees and/or individual(s) holding more than 10% of the Common Shares of ASEH are not eligible to participate in the 2021 RSA Plan. The 2021 RSAs granted to eligible participants will be issued in the name of a custodian and deposited in a trust account pursuant to (i) a custodian agreement entered into between the trustee and ASEH and (ii) a power of attorney issued by the eligible participant to ASEH in relation to the custodian agreement.
The 2021 RSAs deposited in the trust account are subject to forfeiture restrictions, for example, they are non-transferrable, redeemable or revocable by ASEH upon termination of employment and/or upon material breach of employment agreement, or if the eligible participant fails to reach specific performance targets. Vesting of the 2021 RSAs to the eligible participant is subject to personal performance targets and ASEH’s operation objectives, as specified under the 2021 RSA Plan. In three years after the date of issuance, the maximum number of 2021 RSAs that can vest each year is limited to one-third of the total 2021 RSAs granted for each participant. Eligible participants will be entitled to certain economic benefits, same as the other Common Shares holders, of the unvested 2021 RSAs, including stock dividends, cash dividends, rights to receive from legal reserve and capital surplus, and share options at cash capital increase, which benefits will be accrued in the trust account and transfer to the participant upon vesting. All of the 2021 RSAs under the 2021 RSA Plan have been granted to the eligible participants and issued pursuant to the custodian agreement. As of December 31, 2023, 4,965 thousand shares of 2021 RSAs remain restricted.
On March 28, 2024, our board of directors resolved to issue an employee restricted stock award plan and grant up to 16,500 thousand Common Shares of ASEH to our full-time employees in order to promote employee retention and provide rewards.
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AMPI Share Option Plans
In May 2021, AMPI adopted an employee share option plan with the issuance of 10,000 thousand units. The options are valid for 10 years, non-transferable and exercisable at certain percentages subsequent to the second anniversary of the grant date. For any subsequent changes in AMPI’s capital structure, the exercise price will be adjusted accordingly. AMPI’s board of directors resolved a capital reduction which record date was determined at July 25, 2022, and the exercise price of its share options was adjusted from NT$7.5 to NT$30.0 accordingly. As of December 31, 2023, 3,100 thousand options were outstanding with an exercise price of NT$30.0 per share.
USI Shanghai Share Option Plans
Under the share option plan USI Shanghai adopted in 2015, each unit represents the right to purchase one ordinary share of USI Shanghai when exercised. The options are valid for 10 years, non-transferable and exercisable at certain percentages subsequent to the second anniversary of the grant date, subject to certain performance conditions. For any subsequent changes in USI Shanghai’s capital structure, the exercise price is accordingly adjusted.
In 2019, USI Shanghai adopted a new share option plan and granted 17,167 thousand share options to its employees. Each unit represents the right to purchase one ordinary share of USI Shanghai when exercised. The options are valid for 3.0 years, 4.0 years and 5.0 years, respectively, and are exercisable at certain percentages within 12 months subsequent to the second, the third and the fourth anniversary of the grant date subject to the satisfaction of certain performance conditions within each respective vesting period. In the event that USI Shanghai increases share capital by capital surplus or by cash, or distributes share dividends or cash dividends, the exercisable share option units and the exercise price are accordingly adjusted.
In 2020, USI Shanghai adopted another share option plan and granted 1,140 thousand share options to its employees. The conditions of these issued share options are the same as the share options plan that issued in 2019, except that the options are valid for 2.2 years, 3.2 years, and 4.2 years, respectively and with each respective vesting period of 1.2 years, 2.2 years, and 3.2 years.
In September 2023, an extraordinary general shareholders’ meeting of USI Shanghai resolved to adopt another share option plan. In October 2023, the board of directors resolved to grant 14,506 thousand share options to its employees. The conditions attached to issued 2023 share options are the same as those under the 2019 share options plan, except that the options are valid for 2 years and 3 years, respectively, with respective vesting periods of 1 year and 2 years.
As of December 31, 2023, 11,649 thousand options were outstanding with an exercise price of RMB15.5 per Share under the 2015 plan, 3,364 thousand options were outstanding with an exercise price of RMB12.0 per Share under the 2019 plan, 297 thousand options were outstanding with an exercise price of RMB20.5 per Share under the 2020 plan, and 14,418 thousand options were outstanding with an exercise price of RMB14.5 per Share under the 2023 plan.
USI Shanghai Restricted Stock Plans
In 2019, USI Shanghai adopted a restricted stock plan and granted 6,156 thousand ordinary shares to its directors (excluding independent directors), supervisors and employees. In April 2020, the board of directors further resolved to grant 6,403 thousand ordinary shares instead, while other terms remained constant. The plan was of three phases starting from 2019 and each phase lasts for one year with a valid period of 4.5 years, 3.5 years, and 2.5 years, respectively. Upon satisfaction of certain performance conditions in each phase, participants are entitled to subscribe a certain percentage of the total USI Shanghai’s ordinary shares issued under the plan with a lock-up period of one year. The valid period may be terminated early or extended prior to one month of the expiration date depending on the conditions of ordinary shares granted. In the event that USI Shanghai increases share capital by capital surplus or by cash, or distributes share dividends or cash dividends, the exercise price is accordingly adjusted. All stocks granted under this restricted stock plan have been exercised during 2023.
In 2020, USI Shanghai adopted another restricted stock plan and granted 425 thousand ordinary shares to its employees. The conditions of these issued restricted stocks are the same as the restricted stock plan that was issued in 2019, except that the restricted stocks are valid for 2 years and the ordinary shares that USI Shanghai would issue to participants come with a lock-up period of 1.3 years. All stocks granted under this restricted stock plan have been forfeited, expired, or exercised during 2022.
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In 2021, USI Shanghai adopted another restricted stock plan and granted 281 thousand ordinary shares to its expatriate staff. The conditions of issued 2021 restricted stocks are the same as those under the 2020 restricted stock plan. All stocks granted under this restricted stock plan have been forfeited or exercised during 2023.
In September 2023, an extraordinary general shareholders’ meeting of USI Shanghai resolved to adopt a restricted stock plan, and granted 372 thousand shares and 5,722 thousand shares in November 2023 and January 2024, respectively, to its directors (excluding independent directors), supervisors and employees. The options are valid for 3 years. The validity period may be terminated or extended prior to one month of the expiration date, subject to the conditions of ordinary shares granted. Upon satisfaction of certain performance conditions in each phase specified under the plan, participants are entitled to subscribe to USI Shanghai’s ordinary shares issued under the plan at a certain percentage at the end of the applicable lock-up period. The plan consists of 2 phases with a lock-up period of 1 year and 2 years, respectively.
As of December 31, 2023, USI Shanghai maintained one restricted stock plan adopted in 2023, pursuant to which 372 thousand options were outstanding with an exercise price of RMB14.5 per share.
BOARD PRACTICES
General
For a discussion of the term of office of the board of directors, see “—Directors and Senior Management.” No benefits are payable to members of the board or the executive officers upon termination of their relationship with us. Our board of directors established the audit committee, compensation committee, and risk management committee, to convene meetings and perform duties as prescribed in the charters and/or within applicable laws and regulations. The committees also submit proposals for board resolution, and report the status of matters relating to their respective functions to the board of directors. In parallel, our internal audit department conducts periodical audits and presents audit results to the audit committee and the board of directors. In 2019, Du-Tsuen Uang, chief administration officer, was appointed as the corporate governance officer by the board of directors to facilitate the operation of the board of directors. In addition, we have established the resource integration and decision-making committee to strengthen resource integration and decision-making efficiency across all subsidiaries, with the goal of maximizing shareholder and stakeholder value. For discussions of our committees, see “—Directors and Senior Management—Audit Committee”, “—Directors and Senior Management—Compensation Committee”, and “—Directors and Senior Management—Risk Management Committee.”
EMPLOYEES
The following table sets forth certain information concerning our employees as of the dates indicated.
| As of December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Total |
95,727 | 97,079 | 92,894 | |||||||||
| Function |
||||||||||||
| Direct labor |
50,352 | 49,631 | 45,826 | |||||||||
| Indirect labor (manufacturing) |
27,446 | 28,242 | 29,933 | |||||||||
| Indirect labor (selling and administration) |
8,001 | 8,173 | 8,010 | |||||||||
| Research and development |
9,928 | 11,033 | 12,125 | |||||||||
| Location |
||||||||||||
| Taiwan |
59,315 | 61,908 | 58,230 | |||||||||
| P.R.C. and Hong Kong |
21,816 | 19,895 | 17,855 | |||||||||
| Korea |
2,638 | 2,480 | 2,399 | |||||||||
| Malaysia |
3,590 | 3,724 | 3,410 | |||||||||
| Mexico |
2,776 | 2,873 | 3,760 | |||||||||
| Singapore |
797 | 884 | 907 | |||||||||
| Japan |
545 | 566 | 446 | |||||||||
| Vietnam |
573 | 768 | 746 | |||||||||
| U.S. |
560 | 611 | 664 | |||||||||
| Poland |
159 | 303 | 399 | |||||||||
| Tunisia |
1,155 | 1,248 | 1,182 | |||||||||
| Germany |
561 | 547 | 872 | |||||||||
| France |
955 | 971 | 1,100 | |||||||||
| Czech Republic |
182 | 169 | 156 | |||||||||
| United Kingdom |
100 | 127 | 138 | |||||||||
| Belgium |
5 | 5 | 5 | |||||||||
| Hungary |
— | — | 625 | |||||||||
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Eligible employees may participate in our and our subsidiaries’ employee share options plans and restricted stock plans. See “—Compensation.”
We have never experienced a work stoppage caused by our employees. We believe that our relationship with our employees is good.
SHARE OWNERSHIP
The following table sets forth certain information with respect to our Common Shares and options of ASEH exercisable for our Common Shares held by our directors and executive officers as of January 31, 2024. Percentage of beneficial ownership is based on 4,388,322,087 Common Shares outstanding as of January 31, 2024.
| Director or Executive Officer |
Number of ASEH Common Shares Beneficially Held(1) |
Percentage of ASEH Total Common Shares Issued and Outstanding |
Number of Options Exercisable(2) |
Exercise Price of Options (NT$) |
Expiration Date of Options |
|||||||||||||||
| Jason C.S. Chang |
949,352,706 | (3) | 21.63 | % | 3,000,000 | 44.1 | 2028/11/23 | |||||||||||||
| Richard H. P. Chang |
124,175,228 | 2.83 | % | 3,000,000 | 44.1 | 2028/11/23 | ||||||||||||||
| Chi-Wen Tsai |
14,730,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Yen-Chun Chang |
1,700,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Tien Wu |
6,477,473 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Joseph Tung |
3,715,411 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Raymond Lo |
3,083,430 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Tien-Szu Chen |
2,181,821 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Jeffrey Chen |
1,683,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Rutherford Chang |
1,832,647 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Shen-Fu Yu |
2,388 | * | 0 | — | — | |||||||||||||||
| Mei-Yueh Ho |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Wen-Chyi Ong |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Du-Tsuen Uang |
530,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Andrew Tang |
140,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Chun-Che Lee |
3,027,251 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Chung Lin |
70,278 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Gichol Lee |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Chih-Hsiao Chung |
489 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Kwai Mun Lee |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Yean Peng Chen |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Heng Ee Ooi |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Kenneth Hsiang |
80,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Chi-Pin Chang |
15,475 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Kevin Yu |
305,000 | * | * | 44.1 | 2028/11/23 | |||||||||||||||
| Chen-Yen Wei |
366,115 | * | 0 | — | — | |||||||||||||||
| Jing Cao |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Ta-I Lin |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Yueh-Ming Lin |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Hui-Min Liu |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Bernardo Santos Balderrama |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Nicolas Denis |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| Ying Pin Wu |
0 | 0.00 | % | 0 | — | — | ||||||||||||||
| (1) | Including shares directly held and shares beneficially owned through spouse and minor children, as well as shares held in the form of 2021 RSAs. |
| (2) | Each option may be converted into one of our Common Shares. The figures referred to herein include options convertible into our Common Shares scheduled to vest within 60 days as of the date hereof. |
| (3) | Including 684,327,886 Common Shares Jason C.S. Chang beneficially owned through ASE Enterprises Limited, Aintree Limited and JC Holdings Limited and 265,024,820 Common Shares beneficially owned through Value Tower Limited and JC Holdings Limited. See “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.” |
| * | The sum of the number of Common Shares held and the number of Common Shares issuable upon exercise of all options held is less than 1.00% of our total outstanding shares. |
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DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION
None.
Item 7. Major Shareholders and Related Party Transactions
MAJOR SHAREHOLDERS
The following table sets forth information known to us with respect to the beneficial ownership of our Common Shares, as of January 31, 2024, by each shareholder known by us to beneficially own more than 5.0% of our total outstanding shares.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Percentage of beneficial ownership is calculated based on 4,388,322,087 Common Shares outstanding as of January 31, 2024. In addition, when computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
| Name of Shareholder |
Common Shares Beneficially Owned |
|||||||
| Number | Percentage | |||||||
| Jason C.S. Chang(1) |
949,352,706 | 21.63 | % | |||||
| (1) | Jason C.S. Chang is our chairman. Jason C.S. Chang beneficially owned 684,327,886 Common Shares through ASE Enterprises Limited, Aintree Limited, and JC Holdings Limited, and 265,024,820 Common Shares through Value Tower Limited and JC Holdings Limited. As a result, Jason C.S. Chang beneficially owned 949,352,706 Common Shares, representing 21.63% of our total outstanding shares (based on 4,388,322,087 Common Shares as of January 31, 2024). ASE Enterprises Limited is a company organized under the laws of Hong Kong. All of the outstanding shares of ASE Enterprises Limited are held by Aintree Limited. Aintree Limited is a company organized under the laws of the British Virgin Islands. All of the shares of Aintree Limited are held by JC Holdings Limited. Value Tower Limited is a company organized under the laws of the British Virgin Islands. Jason C.S. Chang is the sole director of Value Tower Limited and JC Holdings Limited is the sole shareholder of Value Tower Limited. The shares of JC Holdings Limited are held through intermediary holding companies and under a revocable trust established under the laws of the Bailiwick of Guernsey for the benefit of our chairman, Jason C.S. Chang, and his family. There were no significant changes in the percentage of ownership beneficially owned by Jason C.S. Chang in 2021, 2022, and 2023. |
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The following table sets forth information relating to our Common Shares held directly by our consolidated subsidiaries and our equity method investee as of January 31, 2024.
| Name of Shareholder |
Common Shares Beneficially Owned |
|||||||
| Number | Percentage | |||||||
| ASE(1)(3) |
67,452,117 | 1.54 | % | |||||
| ASE Test Taiwan(2)(3) |
5,489,388 | 0.13 | % | |||||
| Hung Ching(4) |
44,130,751 | 1.01 | % | |||||
| (1) | ASE is our wholly owned subsidiary. ASE’s ownership of our Common Shares is the result of the merger, subsequent dividends upon shares received in connection with merger and capital reduction. |
| (2) | ASE Test Taiwan is our wholly owned subsidiary. ASE Test Taiwan’s ownership of our Common Shares is mainly the result of the merger of ASE Material with and into ASE in August 2004, and subsequent dividends upon shares received in connection with this merger. In order to comply with Singapore Companies Act, a trust had been established to hold and dispose of our Common Shares issued to ASE Test Taiwan, which had been a subsidiary of ASE Test, upon completion of the merger. In December 2014, the trust established to hold the Common Shares issued to ASE Test Taiwan had been terminated because ASE Test Taiwan was no longer a subsidiary owned by ASE Test and therefore no longer subject to Singapore Companies Act requirements. As a result, ASE Test Taiwan directly owned 5,489,388 of our Common Shares. |
| (3) | In order to comply with Singapore law and other applicable laws and regulations, trusts organized under R.O.C. law were established to hold and dispose of our Common Shares issued to ASE Test and ASE Test Taiwan in connection with the merger of ASE Chung Li and ASE Material into our company in August 2004. Under Section 76(1)(b)(ii) of Singapore’s Companies Act, Chapter 50, ASE Test, a Singapore company, may not purport to acquire, directly or indirectly, shares or units of shares in our company, ASE Test’s parent company. Pursuant to the applicable trust agreements, the trustee under each trust is (1) the registered owner of our Common Shares, (2) authorized to exercise all of the rights as a shareholder of our Common Shares, (3) authorized to sell our Common Shares, subject to market conditions, when such Common Shares become available for resale under R.O.C. law and in accordance with volume limitations under R.O.C. law, at its sole discretion; provided such Common Shares are sold (i) in compliance with R.O.C. laws and regulations, (ii) in an orderly manner in order to minimize the impact on the trading price of our Common Shares, and (iii) in a manner consistent with its fiduciary duties owed to ASE Test, and (4) able to transfer and deliver to ASE Test or ASE Test Taiwan the proceeds from the sale of our Common Shares and any cash dividends distributed, as the case may be. In 2010, to complete the tender offer to acquire Universal Scientific Industrial, ASE Test transferred 141,808,499 shares to the shareholders of Universal Scientific Industrial. Neither ASE Test nor ASE Test Taiwan have any rights with respect to our Common Shares held in trust pursuant to the applicable trust agreements other than the right to receive the proceeds from the sale of such Common Shares and cash dividends declared while the shares remain in trust. In 2014, the trust established to hold the Common Shares issued to ASE Test Taiwan had been terminated because ASE Test Taiwan was no longer a subsidiary owned by ASE Test and therefore no longer subject to the Singapore Companies Act requirements. In 2022, ASE Test and J&R Holding Limited reduced capital by remitting 44,100,236 and 23,351,881 of our Common Shares, respectively, to their shareholders, ASE. As a result, ASE Test Taiwan owned 5,489,388 of our Common Shares and ASE held 67,452,117 of our Common Shares. |
| (4) | Hung Ching is our equity method investee. As of January 31, 2024, we held 26.22% of the outstanding shares of Hung Ching. Hung Ching acquired our Common Shares in open market transactions, subsequent dividends upon the acquired shares and shares purchased pursuant to the rights offered by the Company. |
As of January 31, 2024, none of our major shareholders had voting rights different from those of our other shareholders. We are not aware of any arrangement that may at a subsequent date result in a change of controlling interests. Furthermore, other than as disclosed above, we are not aware of any significant changes in the percentage of ownership held by our major shareholders in 2021, 2022, and 2023.
As of January 31, 2024, a total of 4,388,322,087 Common Shares were outstanding. With certain limited exceptions, holders of Common Shares that are not R.O.C. persons are required to hold their Common Shares through a brokerage account in the R.O.C. As of January 31, 2024, 314,328,442 Common Shares were registered in the name of a nominee of Citibank, N.A., the depositary under our ADS deposit agreement. Citibank, N.A. has advised us that, as of January 31, 2024, 157,163,815 ADSs, representing 314,327,630 Common Shares, were held of record by Cede & Co., and 55 ADSs, representing 110 Common Shares, were held by 3 other U.S. persons.
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RELATED PARTY TRANSACTIONS
In order to demonstrate our commitment to environmental protection, in December 2013, ASE’s board of directors approved contributions to environmental protection efforts in Taiwan in a total amount of not less than NT$3,000.0 million (US$98.0 million), to be made in the next 30 years. In 2023, we have made contributions in the amount of NT$100.0 million (US$3.3 million) through the ASE Environmental Protection and Sustainability Foundation to continuously implement the activities related to environmental protection projects. In 2023, we have made contributions in the amount of NT$25.0 million (US$0.8 million) through the ASE Cultural and Educational Foundation to continuously promote activities related to cultural and educational public welfare. In December 2023, the board of directors of ASE resolved for disbursements of NT$100.0 million (US$3.3 million) in 2024 to the ASE Environmental Protection and Sustainability Foundation for promoting environmental protection and charitable activities in Taiwan.
In August 2021, ASE entered into a joint construction and housing unit allocation agreement with Hung Ching. The agreement stipulated that ASE and Hung Ching were to provide both a parcel of land located in Kaohsiung and funding for the joint construction of a plant. The agreement also included consultations with professional appraisal firms to evaluate the apportionment ratio of the joint construction project between the two companies. Pursuant to the agreement, ASE and its affiliates would have priority to purchase the property upon completion based upon the agreed joint construction apportionment. In August 2023, ASE’s board of directors resolved to purchase 74.46% interest in the plant and corresponding land holdings for NT$1,666.6 million (US$54.4 million) based upon the agreed-upon joint construction apportionment.
In May 2023, the boards of directors of ASE and ASE Test Taiwan resolved to dispose of their shareholdings in our subsidiary, Luchu Development Corporation. These shareholdings, consisting of 145,178 thousand ordinary shares and 40,981 thousand ordinary shares, respectively, were transferred to our equity method investee, Hung Ching. The disposal was completed in December 2023.
INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
Item 8. Financial Information
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
Consolidated financial statements are set forth under “Item 18. Financial Statements.”
Export Sales
We categorize our revenues geographically based on the country in which the customer is headquartered. Revenues from our export sales were NT$475,399.1 million, NT$587,217.5 million and NT$511,422.0 million (US$16,702.2 million) in 2021, 2022, and 2023, respectively, which contributed 83.4%, 87.5% and 87.9% of our total sales for those years, respectively. See “Item 4. Information on the Company—Business Overview—Sales and Marketing” for information on our export sales.
Legal Proceedings
K7 Plant Wastewater Discharge
On December 20, 2013, the Kaohsiung Environmental Protection Bureau (“KEPB”) imposed an administrative fine of NT$102.0 million (the “Original Fine”) upon us for violation of the Water Pollution Control Act. After we sought administrative remedies against the Original Fine, the Original Fine was revoked by final judgment of Supreme Administrative Court on June 8, 2017, and KEPB was ordered to refund the Original Fine to us. On December 27, 2019, KEPB refunded NT$55.1 million to us. On February 10, 2020, KEPB reimposed an administrative fine of NT$47.0 million (the “New Fine”) upon us and offset the New Fine by the remaining amount which shall be refunded to us, therefore no additional payment is required for the New Fine. After we filed an administrative appeal against the New Fine, the Administrative Appeal Review Committee of Kaohsiung City Government revoked the New Fine on December 15, 2020 and remanded to KEPB for another legitimate administrative action.
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Waste Disposal Discharge
Five employees and a waste disposal supplier of a subsidiary in the P.R.C. were accused by the Procuratorate of committing the crime of environmental pollution in 2018. During the trial, the Procuratorate claimed that the subsidiary should also be charged with a corporate crime which caused the subsidiary to receive a change and addition indictment in October 2019. In June 2020, during the first trial, the court of first instance ruled that the subsidiary shall be imposed a fine of RMB400 thousand and return the benefit (RMB344 thousand) generated from such violation. Both the fine and the return of benefit from violation were recognized by the subsidiary under the line item of “other gains and losses.” Because some of the co-defendants have filed an appeal against the judgment and, pursuant to local applicable law, the entire case will be deemed appealed. This case was denied by the court of second instance, which affirmed the judgment of the first instance on April 7, 2021. The case was concluded.
Any penalties, fines, damages, or settlements made in connection with these criminal, civil, and/or administrative investigations and/or lawsuits may divert management’s attention and resources, which may cause a material adverse effect on our results of operations, financial condition, and business. We are also unable to quantify the harm to our reputation should any adverse findings be made against us. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Any environmental claims or failure to comply with any present or future environmental laws and regulations, as well as any fire or other industrial accident, may require us to spend additional funds and may materially and adversely affect our financial condition and results of operations,” and “Item 4. Information on the Company—Business Overview—Environmental Matters.”
Dividends and Dividend Policy
On March 28, 2024, our board of directors adopted resolutions to pay cash dividends of NT$5.20 per share based on 4,392,105,237 shares, which equals the number of issued shares shown in the shareholders’ roster as of March 19, 2024. This proposal is subject to actual cash available and may be adjusted in line with fluctuations in our number of issued shares due to factors such as the exercise of share options, capital increases, or the cancellation and repurchase of treasury stock.
The following table sets forth the stock dividends paid during each of the years indicated and related information.
| Cash Dividends per Common Share |
Stock Dividends per Common Share |
Total Common Shares Issued as Stock Dividends |
Outstanding Common Shares on Record Date(1) |
Percentage of Outstanding Common Shares Represented by Stock Dividends |
||||||||||||||||
| NT$ | NT$ | |||||||||||||||||||
| 2019 |
2.50 | — | — | 4,324,861,082 | — | |||||||||||||||
| 2020 |
2.00 | — | — | 4,338,439,132 | — | |||||||||||||||
| 2021 |
4.20 | — | — | 4,378,537,032 | — | |||||||||||||||
| 2022 |
7.00 | — | — | 4,357,425,832 | — | |||||||||||||||
| 2023 |
8.80 | — | — | 4,372,963,937 | — | |||||||||||||||
| (1) | Aggregate number of Common Shares outstanding on the record date applicable to the dividend payment. Includes Common Shares issued in the previous year under our employee bonus plan. |
In order to meet the needs of our present and future capital expenditures, we anticipate paying both stock and cash dividends in the future. The form, frequency, and amount of future cash or stock dividends on our Common Shares will depend upon our net income, cash flow, financial condition, shareholders’ requirement for cash inflow, and other factors. According to our Articles of Incorporation, we have a general policy that cash dividend distribution shall not be less than 30% of the total dividend amount and the residual dividends shall be distributed in form of stocks in accordance with the distribution plan proposed by the board of directors and resolved by the general shareholders’ meeting.
In general, we are not permitted to distribute dividends or make other distributions to shareholders in any given year in which we did not have either earnings or retained earnings. Before distribution of dividends, we shall offset the losses incurred in prior years and set aside 10% of remaining net earnings as a legal reserve until the accumulated legal reserve equals our paid-in capital, and then allocate or reverse a special surplus reserve in accordance with laws or regulations set forth by the authorities concerned. The remainder plus the undistributed earnings shall be distributed in accordance with the proposal submitted by the board of directors and adopted by the general meeting of shareholders. However, when earnings are distributed as cash dividends, this may be approved by the majority of the directors at a board meeting in which over two-thirds of the directors are present, and then reported to the shareholders’ meeting.
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According to our Articles of Incorporation, the remuneration of our independent directors is set at NT$3.0 million per person per year. For those that do not serve a full year, the remuneration will be calculated in proportion to the number of days of the term that were actually served. The additional remuneration of the Company’s independent directors who are also the members of the Company’s compensation committee is set at NT$360.0 thousand per person annually. For those that do not serve a full year, the additional remuneration will be calculated in proportion to the number of days of the term that were actually served. In addition, if we are profitable, we set aside 0.01% (inclusive) to 1.00% (inclusive) and 0.75% (inclusive) or less as compensation to employees and remuneration to directors, respectively, of net profit before income tax, employees’ compensation and remuneration to directors. While we have accumulated losses, the profit shall be set aside to compensate losses before distribution. See “Item 10. Additional information—Articles of Incorporation—Dividends and Distributions.”
Holders of ADSs will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of our Common Shares. Cash dividends will be paid to the depositary in NT dollars and, except as otherwise provided in the deposit agreement, will be converted by the depositary into U.S. dollars and paid to holders of ADSs according to the terms of the deposit agreement. Stock dividends will be distributed to the depositary and, except as otherwise provided in the deposit agreement, will be distributed by the depositary, in the form of additional ADSs, to holders of ADSs according to the terms of the deposit agreement.
Holders of outstanding Common Shares on a dividend record date will be entitled to the full dividend declared without regard to any prior or subsequent transfer of Common Shares. Holders of outstanding ADSs are entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as the holders of outstanding Common Shares.
For information relating to R.O.C. withholding taxes payable on dividends, see “Item 10. Additional Information—Taxation—R.O.C. Taxation—Dividends.”
SIGNIFICANT CHANGES
Other than as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of the annual financial statements.
Item 9. The Offer and Listing
OFFER AND LISTING DETAILS
Prior to the establishment of our current holding company, the common shares of ASE had been listed on the TWSE under the symbol “2311” from July 1989 until April 2018. ASE’s ADSs were listed on the NYSE under the symbol “ASX” from September 2000 until April 2018.
ASE Technology Holding Co., Ltd., our current holding company, was established by the combination of ASE and SPIL. Our Common Shares have been listed on the TWSE under the symbol “3711” since April 30, 2018. The TWSE is an auction market where the securities traded are priced according to supply and demand through announced bid and ask prices. As of January 31, 2024, there was an aggregate of 4,388,322,087 of our Common Shares outstanding.
The performance of the TWSE has in recent years been characterized by extreme price volatility. There are currently limits on the range of daily price movements on the TWSE. In the case of equity securities traded on the TWSE, such as our Common Shares, fluctuations in the price of a particular security may not exceed a 10.0% change either above or below the previous day’s closing price of such security.
Our ADSs have been listed on the NYSE under the symbol “ASX” since April 30, 2018. The outstanding ADSs are identified by the CUSIP number 00215W100. As of January 31, 2024, a total of 157,163,870 ADSs were outstanding.
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PLAN OF DISTRIBUTION
Not applicable.
MARKETS
The principal trading market for our Common Shares is the TWSE and the principal trading market for ADSs representing our Common Shares is the NYSE.
SELLING SHAREHOLDERS
Not applicable.
DILUTION
Not applicable.
EXPENSES OF THE ISSUE
Not applicable.
Item 10. Additional Information
SHARE CAPITAL
Not applicable.
ARTICLES OF INCORPORATION
General
We are a company limited by shares organized under the laws of the R.O.C. Our organizational document is our Articles of Incorporation. We have no by-laws.
Our Articles of Incorporation provide, in Article 2, that we may engage in the General Investment Business, which includes investments in various businesses including agriculture, forestry, fishery, animal husbandry, industry, mining and merchandising business, investments in service companies, securities companies, bank insurance companies, trading companies, cultural companies, construction of residential buildings, commercial building, recreation businesses, and tourist hotels-related business.
We were incorporated on April 30, 2018 as a company limited by shares under the R.O.C. Company Law. Our authorized share capital was NT$55,000,000,000, divided into 5,500,000,000 Common Shares with a par value of NT$10 per Share. We do not have any equity in the form of preference shares or otherwise outstanding as of the date of this annual report.
Subject to limited exceptions, with the approval of our board of directors and the FSC, we may grant share options to our employees; share options worth NT$4,000,000,000 are reserved for employee subscription. We may issue new shares to employees with restricted rights after the resolutions of the shareholders’ meeting. See “Item 6. Directors, Senior Management and Employees—Compensation.”
Directors
Our Articles of Incorporation provide that we are to have nine directors (three independent directors and six non-independent directors) who will be elected by the general shareholders’ meeting from candidates with legal capacity. Each director shall hold office for a term of three years and may continue to serve in the office if re-elected. The election of the directors of the Company shall be conducted pursuant to the R.O.C. Company Act and relevant regulations. The election of independent directors and non-independent directors should be held concurrently, with the exception that the number of independent directors and non-independent directors elected shall be calculated separately; those who receive votes representing more voting rights will be elected as independent directors or non-independent directors.
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Our audit committee replaced the function of supervisors in accordance with the R.O.C. Securities and Exchange Act to exercise the powers and duties of supervisors. The audit committee shall be comprised solely of independent directors.
A candidate nomination system is used in the election of directors. Shareholders who hold 1% or more of our issued shares and the board of directors may nominate a list of candidates for directors. Re-elections are allowed. The board of directors have certain powers and duties, including (1) preparing business plans; (2) preparing surplus distribution or loss make-up proposals; (3) preparing proposals to increase or decrease capital; (4) reviewing material internal rules and contracts; (5) hiring and discharging the general manager; (6) establishing and dissolving branch offices; (7) reviewing budgets and audited financial statements; and (8) other duties and powers granted by or in accordance with the R.O.C. Company Act or shareholders’ resolutions.
The board of directors is constituted of directors, and the chairman and vice chairman are elected by more than half of the directors at a board meeting at which two-thirds or more of the directors are present. If the chairman is absent or unable to discharge his or her duties for any reason, his or her acting proxy shall be elected in accordance with the R.O.C. Company Act. Board meetings may be held in the R.O.C. or at any location that is convenient for the directors to attend and appropriate for the meeting to be convened, or by video conference. A director may appoint another director to attend a board meeting and vote by proxy, but only one proxy may be accepted.
Dividends and Distributions
In general, we are not permitted to distribute dividends or make other distributions to shareholders in any given year in which we did not have either earnings or retained earnings. Before distribution of dividends, we shall offset the losses incurred in prior years and set aside 10% of remaining net earnings as a legal reserve until the accumulated legal reserve equals our paid-in capital, and then allocate or reverse a special surplus reserve in accordance with laws or regulations set forth by the authorities concerned. The remainder plus the undistributed earnings shall be distributed in accordance with the proposal submitted by the board of directors and adopted by the general meeting of shareholders. However, if earnings are to be distributed as cash dividends, they shall be reported to the shareholders’ meeting with the approval of the majority of the directors at a board meeting, at which over two-thirds of the directors are present.
According to our Articles of Incorporation, the remuneration of our independent directors is set at NT$3.0 million per person per year. For those that do not serve a full year, the remuneration will be calculated in proportion to the number of days of the term that were actually served. The additional remuneration of our independent directors who are also the members of our compensation committee is set at NT$360.0 thousand per person per year. For those that do not serve a full year, the additional remuneration will be calculated in proportion to the number of days of the term that were actually served.
If we are profitable, we set aside 0.01% (inclusive) to 1.00% (inclusive) and 0.75% (inclusive) or less as compensation to employees and remuneration to directors, respectively, of net profit before income tax, employees’ compensation and remuneration to directors. While we have accumulated losses, the profit shall be set aside to compensate losses before distribution.
At the annual general meeting of shareholders, our board of directors submits to the shareholders for their approval any proposal for the distribution of dividends or the making of any other distribution to shareholders from our net income for the preceding fiscal year. All Common Shares outstanding and fully paid as of the relevant record date are entitled to share equally in any dividend or other distribution so approved. Dividends may be distributed in cash, in the form of Common Shares or a combination of the two, as determined by the shareholders at the meeting. According to our Articles of Incorporation, we have a general policy that cash dividend distribution shall not be less than 30% of the total dividend amount and the residual dividends shall be distributed in form of stocks in accordance with the distribution plan proposed by the board of directors and resolved by the general shareholders’ meeting. See “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Dividends and Dividend Policy.”
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The compensation being distributed to employees in the form of stock or cash shall be approved by more than half of the directors at a board meeting at which two-thirds or more of the directors are present and report to the general shareholders’ meeting. In addition to permitting dividends to be paid out of earnings or retained earnings, the R.O.C. Company Act permits us to make distributions to our shareholders in cash or in the form of Common Shares from capital surplus and the legal reserve. While legal reserve is distributed by issuing new shares or by cash, only the portion of legal reserve which exceeds 25% of our paid-in capital can be distributed. We distribute profit to employees in the form of shares by a resolution of a meeting of the board of directors, and may resolve, at the same meeting of the board of directors, to distribute the shares by way of new shares to be issued by us or existing shares to be repurchased by us.
For information on the dividends paid in recent years, see “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Dividends and Dividend Policy.” For information as to R.O.C. taxes on dividends and distributions, see “—Taxation—R.O.C. Taxation—Dividends.”
Preemptive Rights
Under the R.O.C. Company Law, when an R.O.C. company issues new shares for cash, existing shareholders who are listed on the shareholders’ register as of the record date have preemptive rights to subscribe for the new issue in proportion to their existing shareholdings, while a company’s employees, whether or not they are shareholders of the company, have rights to subscribe for 10% to 15% of the new issue. Any new shares that remain unsubscribed at the expiration of the subscription period may be freely offered, subject to compliance with applicable R.O.C. law.
In addition, in accordance with the R.O.C. Securities and Exchange Act, a public company that intends to offer new shares for cash must offer to the public at least 10% of the shares to be sold, except under certain circumstances or when exempted by the FSC. This percentage can be increased by a resolution passed at a shareholders’ meeting, which would diminish the number of new shares subject to the preemptive rights of existing shareholders.
These preemptive rights provisions do not apply to offerings of new shares through a private placement approved at a shareholders’ meeting.
Meetings of Shareholders
General shareholders’ meetings include both annual general meetings and extraordinary general meetings. We are required to hold an annual general meeting of our shareholders within six months following the end of each fiscal year. These meetings are generally held in Kaohsiung, Taiwan. Any shareholder who holds 1% or more of our issued and outstanding shares may submit one proposal for discussion at our annual general meeting. Extraordinary general shareholders’ meetings may be convened by resolution of the board of directors or by the board of directors upon the written request of any shareholder or shareholders who have held 3% or more of the outstanding Common Shares for a period of one year or longer or shareholders who have held more than 50% of the outstanding Common Shares for three months or longer. Shareholders’ meetings may also be convened by the audit committee. Notice in writing of meetings of shareholders, stating the place, time, and purpose, must be dispatched to each shareholder at least 30 days, in the case of annual general meetings, and 15 days, in the case of extraordinary meetings, before the date set for each meeting. A majority of the holders of all issued and outstanding Common Shares present at a shareholders’ meeting constitutes a quorum for meetings of shareholders.
Voting Rights
Under the R.O.C. Company Law, except under limited circumstances, shareholders have one vote for each Common Share held. Under the R.O.C. Company Law, our directors are elected at a shareholders’ meeting through cumulative voting.
In general, a resolution can be adopted by the holders of at least a majority of our Common Shares represented at a shareholders’ meeting at which the holders of a majority of all issued and outstanding Common Shares are present. Under R.O.C. Company Law, the approval by at least a majority of our Common Shares represented at a shareholders’ meeting in which a quorum of at least two-thirds of all issued and outstanding Common Shares are represented is required for major corporate actions, including:
| • | amendment to the Articles of Incorporation, including increase of authorized share capital and any changes of the rights of different classes of shares; |
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| • | execution, amendment, or termination of any contract through which the company leases its entire business to others, or the company appoints others to operate its business, or the company operates its business with others on a continuous basis; |
| • | transfer of its entire business or assets or a substantial part of its business or assets; |
| • | acquisition of the entire business or assets of any other company, which would have a significant impact on the company’s operations; |
| • | distribution of any stock dividend; |
| • | dissolution, merger, or spin-off of the company; |
| • | issuance of restricted stocks to employees; and |
| • | removal of the directors. |
However, in the case of a listed company such as us, the resolution may be adopted by the holders of at least two-thirds of our issued and outstanding Common Shares represented at a shareholders’ meeting at which the holders of at least a majority of all issued and outstanding Common Shares are present.
A shareholder may be represented at an annual general or extraordinary meeting by proxy if a valid proxy form is delivered to us five days before the commencement of the annual general or extraordinary general shareholders’ meeting. Shareholders may exercise their voting rights by way of a written ballot or by way of electronic transmission if the voting decision is delivered to us two days before the commencement of the annual general or extraordinary general shareholders’ meeting.
Holders of ADSs do not have the right to exercise voting rights with respect to the underlying Common Shares, except as described in the deposit agreement.
Other Rights of Shareholders
Under the R.O.C. Company Law, dissenting shareholders are entitled to appraisal rights in certain major corporate actions such as a proposed amalgamation by the company. If agreement with the company cannot be reached, dissenting shareholders may seek a court order for the company to redeem all of their shares. Shareholders may exercise their appraisal rights by serving written notice on the company prior to or at the related shareholders’ meeting and/or by raising and registering an objection at the shareholders’ meeting. In addition to appraisal rights, shareholders have the right to sue for the annulment of any resolution adopted at a shareholders’ meeting where the procedures were legally defective within 30 days after the date of the shareholders’ meeting. One or more shareholders who have held 1% or more of the issued and outstanding shares of a company for a period of six months or longer may require the audit committee to bring a derivative action on behalf of the company against a director as a result of the director’s unlawful actions or failure to act.
Rights of Holders of Deposited Securities
Except as described below, holders of ADSs generally have no right under the deposit agreement to instruct the depositary to exercise the voting rights for our Common Shares represented by the ADSs. Instead, by accepting ADSs or any beneficial interest in ADSs, holders of ADSs are deemed to have authorized and directed the depositary to appoint our chairman or his designee to represent them at our shareholders’ meetings and to vote our Common Shares deposited with the custodian according to the terms of the deposit agreement.
The depositary will mail to holders of ADSs any notice of a shareholders’ meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the securities represented by ADSs.
If we fail to timely provide the depositary with an English-language translation of our notice of meeting or other materials related to any meeting of owners of Common Shares, the depositary will endeavor to cause all the deposited securities represented by ADSs to be present at the applicable meeting, insofar as practicable and permitted under applicable law, but will not cause those securities to be voted.
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If the depositary timely receives voting instructions from owners of at least 51.0% of the outstanding ADSs to vote in the same direction regarding one or more resolutions to be proposed at the meeting, including election of directors, the depositary will notify our chairman or his designee to attend the meeting and vote all the securities represented by the holders’ ADSs in accordance with the direction received from owners of at least 51.0% of the outstanding ADSs.
If we have timely provided the depositary with the materials described in the deposit agreement and the depositary has not timely received instructions from holders of at least 51.0% of the outstanding ADSs to vote in the same direction regarding any resolution to be considered at the meeting, then holders of ADSs will be deemed to have authorized and directed the depositary bank to give a discretionary proxy to our chairman or his designee to attend and vote at the meeting our Common Shares represented by the ADSs in any manner our chairman or his designee may wish, which may not be in the interests of holders.
The ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure ADS holders that they will receive voting materials in time to enable them to return voting instructions to the depositary in a timely manner.
While shareholders who own 1% or more of our outstanding shares are entitled to submit one proposal to be considered at our annual general meetings, only holders representing at least 51% of our ADSs outstanding at the relevant record date are entitled to submit one proposal to be considered at our annual general meetings. Hence, only one proposal may be submitted on behalf of all ADS holders.
Register of Shareholders and Record Dates
Our share registrar, President Securities Corp., maintains our register of shareholders at its offices in Taipei, Taiwan. Under the R.O.C. Company Law and our Articles of Incorporation, we may, by giving advance public notice, set a record date and close the register of shareholders for a specified period in order for us to determine the shareholders or pledgees that are entitled to rights pertaining to our Common Shares. The specified period required is as follows:
| • | annual general meeting—60 days; |
| • | extraordinary general shareholders’ meeting—30 days; and |
| • | relevant record date for distribution of dividends, bonuses, or other interests—5 days. |
Annual Financial Statements
At least 10 days before the annual general meeting, our annual financial statements, which are prepared in conformity with Taiwan-IFRS, must be available at our principal executive office in Kaohsiung, Taiwan for inspection by the shareholders. According to the regulations of the FSC, we are required to publish our annual and quarterly financial statements on a consolidated basis. In addition, the R.O.C. Securities and Exchange Act requests a public company, such as us, to publicly announce its audited annual financial report within three months after the close of each fiscal year.
Transfer of Common Shares
The transfer of Common Shares in registered form is effected by endorsement and delivery of the related share certificates but, in order to assert shareholders’ rights against us, the transferee must have his or her name and address registered on our register of shareholders. Shareholders are required to file their respective specimen seals, also known as chops, with us. Chops are official stamps widely used in Taiwan by individuals and other entities to authenticate the execution of official and commercial documents. The settlement of trading in our Common Shares is normally carried out on the book-entry system maintained by the Taiwan Depository & Clearing Corporation.
Acquisition of Common Shares by ASEH
Under the R.O.C. Securities and Exchange Act, we may purchase our own Common Shares for treasury stock under limited circumstances, including:
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| • | to transfer shares to our employees; |
| • | to deliver shares upon the conversion or exercise of bonds with warrants, preferred shares with warrants, convertible bonds, convertible preferred shares, or warrants issued by us; and |
| • | to maintain our credit and our shareholders’ equity, provided that the shares so purchased shall be canceled. |
We may purchase our Common Shares on the TWSE or by means of a public tender offer. These transactions require the approval of a majority of our board of directors at a meeting in which at least two-thirds of the directors are in attendance. The total amount of Common Shares purchased for treasury stock may not exceed 10.0% of the total issued shares. In addition, the total cost of the purchased shares shall not exceed the aggregate amount of our retained earnings, any premium from share issuances, and the realized portion of our capital reserve.
We may not pledge or hypothecate any of our shares purchased by us. In addition, we may not exercise any shareholders’ right attaching to such shares. In the event that we purchase our shares on the TWSE, our affiliates, directors, managers, and shareholders, together with their respective spouses, minor children, and/or nominees who hold 10.0% or more of our total issued shares (as well as such respective spouses, minor children and/or nominees) are prohibited from selling any of our shares during the period in which we are purchasing our shares.
Pursuant to the R.O.C. Company Law, an entity in which our company directly or indirectly owns more than 50.0% of the voting shares or paid-in capital, which is referred to as a controlled entity, may not purchase our shares. Also, if our company and a controlled entity jointly own, directly or indirectly, more than 50.0% of the voting shares or paid-in capital of another entity, which is referred to as a third entity, the third entity may not purchase shares in either our company or a controlled entity.
Liquidation Rights
In the event of our liquidation, the assets remaining after payment of all debts, liquidation expenses, and taxes will be distributed pro rata to the shareholders in accordance with the relevant provisions of the R.O.C. Company Law.
Transfer Restrictions
Substantial Shareholders
The R.O.C. Securities and Exchange Act currently requires:
| • | each director, manager, or substantial shareholder (that is, a shareholder who holds more than 10.0% of the shares of a company), together with their respective spouses, minor children, or nominees, to report any change in that person’s shareholding (as well as such respective spouses, minor children, or nominees), on a monthly basis, to the issuer of the shares; and |
| • | each director, manager, or substantial shareholder, together with their respective spouses, minor children, or nominees, after acquiring the status of director, manager, or substantial shareholder for a period of six months, to report his or her intent to transfer any shares (as well as such respective spouses, minor children, or nominees) on the TWSE or on the Taipei Exchange to the FSC at least three days before the intended transfer, unless the number of shares to be transferred does not exceed 10,000 shares. |
In addition, the number of shares that can be sold or transferred on the TWSE or on the Taipei Exchange by any person subject to the restrictions described above on any given day may not exceed the greater of:
| • | 0.2% of the outstanding shares of the company in the case of a company with no more than 30 million outstanding shares; or |
| • | 0.2% of 30 million shares plus 0.1% of the outstanding shares exceeding 30 million shares in the case of a company with more than 30 million outstanding shares; and |
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| • | 5.0% of the average trading volume (number of shares) on the TWSE for the 10 consecutive trading days preceding the reporting day on which the director, manager or substantial shareholder reports the intended share transfer to the FSC. |
These restrictions do not apply to sales or transfers of our ADSs.
MATERIAL CONTRACT
Disposal of Advanced Shanghai, ASEKS, ASEN, and ASEWH
The disposal agreement for Advanced Shanghai, ASEKS, ASEN, and ASEWH, or collectively, the China Sites, was entered into on December 1, 2021 between ASEH and certain of its subsidiaries, as sellers, and Beijing Wise Road Asset Management Co., Ltd., or Wise Road Capital, as purchaser. Pursuant to the disposal agreement, Wise Road Capital acquired the entire equity interest in GAPT Holding Limited, Global Advanced Packaging Test (HongKong) Limited and the China Sites, or collectively, the Disposed Companies, from ASEH and certain of its subsidiaries. The transaction was completed on December 16, 2021.
The total consideration for the sale of the Disposed Companies was US$1.33 billion, comprising of (i) US$1.08 billion in cash, plus the cash held by the Disposed Companies, less the debt held by the Group Companies, at closing with further adjustment post-completion; and (ii) follow-on cash consideration of US$380 million, payable following the expiry of a six-month period from the date of completion or a longer period as agreed by the parties.
Under the disposal agreement, ASEH and certain of its subsidiaries gave Wise Road Capital certain warranties and indemnities in relation to the shares, equity interests, and assets that were the subject of the disposal. In addition, ASEH and certain of its subsidiaries provided an indemnity in relation to the potential liabilities of the Disposed Companies arising out of litigation, tax, third-party software license, and social security and housing fund matters. Pursuant to the disposal agreement, Wise Road Capital shall procure that the Disposed Companies shall, as soon as practicable, but in any event by June 30, 2022, remove from each of their company or trading name, domain name, logo, or trade or service mark (whether registered or unregistered) references to us.
The disposal of the China Sites would realign the Group’s resources to focus on the major operations in the P.R.C., such as SPIL, and to generate more cash resources for organic expansion and strategic investments to address other opportunities in the P.R.C.
FOREIGN INVESTMENT IN THE R.O.C.
Historically, foreign investment in the R.O.C. securities market has been restricted. Since 1983, the R.O.C. government has from time to time enacted legislation and adopted regulations to permit foreign investment in the R.O.C. securities market.
On September 30, 2003, the Executive Yuan approved an amendment to the Regulations Governing Investment in Securities by Overseas Chinese and Foreign National (the “Regulations”), which took effect on October 2, 2003. Pursuant to the Regulations, the FSC abolished the mechanism of the “qualified foreign institutional investors” and “general foreign investors” as stipulated in the Regulations before the amendment.
Under the Regulations, foreign investors (other than P.R.C. persons) are classified as either “onshore foreign investors” or “offshore foreign investors” according to their respective geographical location. Both onshore and offshore foreign investors are allowed to invest in R.O.C. securities after they register with the TWSE or the Taiwan Futures Exchange. The Regulations further classify foreign investors into foreign institutional investors and foreign individual investors. “Foreign institutional investors” refer to those investors incorporated and registered in accordance with foreign laws outside of the R.O.C. (i.e., offshore foreign institutional investors) or their branches set up and recognized within the R.O.C. (i.e., onshore foreign institutional investors). Offshore overseas Chinese and foreign individual investors may be subject to a maximum investment ceiling that will be separately determined by the FSC, after consultation with the Central Bank of the Republic of China (Taiwan). Currently, there is no maximum investment ceiling for offshore overseas Chinese and foreign individual investors. Foreign institutional investors are not subject to any ceiling for investment in the R.O.C. securities market.
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Except for certain specified industries, such as telecommunications, investments in R.O.C. listed companies by foreign investors are not subject to individual or aggregate foreign ownership limits. Custodians for foreign investors are required to submit to the Central Bank of the Republic of China (Taiwan) and the TWSE a monthly report of trading activities and status of assets under custody and other matters. Capital remitted to the R.O.C. under these guidelines may be remitted out of the R.O.C. at any time after the date the capital is remitted to the R.O.C. Capital gains and income on investments may be remitted out of the R.O.C. at any time.
Foreign investors (other than P.R.C. persons) who wish to make (i) direct investments in the shares of R.O.C. private companies or (ii) investment in 10.0% or more of the equity interest of a R.O.C. company listed on the TWSE or the Taipei Exchange in any single transaction are required to submit a foreign investment approval application to the DIR or other applicable government authority. The DIR or such other government authority reviews each foreign investment approval application and approves or disapproves each application after consultation with other governmental agencies (such as the Central Bank of the Republic of China (Taiwan) and the FSC).
Under current R.O.C. law, any non-R.O.C. person possessing a foreign investment approval may remit capital for the approved investment and is entitled to repatriate annual net profits, interest, and cash dividends attributable to the approved investment. Dividends attributable to such investment may be repatriated upon submitting certain required documents to the remitting bank, and investment capital and capital gains attributable to such investment may be repatriated after approvals of the DIR or other government authorities have been obtained.
In addition to the general restriction against direct investment by foreign investors in securities of R.O.C. companies, foreign investors (except in certain limited cases) are currently prohibited from investing in certain industries in the R.O.C. pursuant to a “negative list,” as amended by the Executive Yuan. The prohibition on foreign investment in the prohibited industries specified in the negative list is absolute in the absence of a specific exemption from the application of the negative list. Pursuant to the negative list, certain other industries are restricted so that foreign investors (except in limited cases) may invest in these industries only up to a specified level and with the special approval of the relevant competent authority that is responsible for enforcing the relevant legislation that the negative list is intended to implement.
The FSC announced the P.R.C. Regulations on April 30, 2009. According to the P.R.C. Regulations, a P.R.C. QDII is allowed to invest in R.O.C. securities (including less than 10.0% (or less in certain industries) of shareholding of a R.O.C. company listed on the TWSE or the Taipei Exchange), provided that the total investment amount of any QDII does not exceed US$500 million. The custodians of QDIIs must apply with the TWSE for the remittance amount for each QDII, which cannot exceed US$100 million, and QDII can only invest in R.O.C. securities at an amount approved by the TWSE. In addition, QDIIs are currently prohibited from investing in certain industries, and their investment in any company of certain other industries is restricted to a certain percentage pursuant to a list promulgated by the FSC and amended from time to time. P.R.C. investors other than QDII are prohibited from making investments in a R.O.C. company listed on the TWSE or the Taipei Exchange if the investment is less than 10.0% of the equity interest of such R.O.C. company.
In addition to investments permitted under the P.R.C. Regulations, P.R.C. investors who wish to make (i) a direct investment in the shares of R.O.C. private companies or (ii) investments, individually or in the aggregate, in 10.0% or more of the equity interest of a R.O.C. company listed on the TWSE or the Taipei Exchange, are required to submit an investment approval application to the DIR or other government authority. The DIR or such other government authority reviews each investment approval application and approves or disapproves each application after consultation with other governmental agencies.
In addition to the general restriction against a direct investment by P.R.C. investors in securities of R.O.C. companies, P.R.C. investors may only invest in certain industries on the “positive list” promulgated by the Executive Yuan. Furthermore, a P.R.C. investor who wishes to be elected as a R.O.C. company’s director or supervisor shall submit an investment approval application to the DIR or other government authority for approval.
EXCHANGE CONTROLS
R.O.C. Exchange Controls
The R.O.C. Foreign Exchange Control Act and regulations provide that all foreign exchange transactions must be executed by banks designated by the FSC and by the Central Bank of the Republic of China (Taiwan) to engage in such transactions. Current regulations favor trade-related or service-related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters, and all foreign currency needed for the importation of merchandise and services may be purchased freely from designated foreign exchange banks.
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Apart from trade-related or service-related foreign exchange transactions, R.O.C. companies and individual residents of the R.O.C. reaching the age of 18 years old may, without foreign exchange approval, remit foreign currency of up to US$50 million (or its equivalent) and US$5 million (or its equivalent) to and from the R.O.C. (or such other amount as determined by the Central Bank of the Republic of China (Taiwan) from time to time at its discretion in consideration of the economic and financial conditions of the R.O.C. or the needs to maintain the order of the foreign exchange market in the R.O.C.), respectively, in each calendar year. The above limits apply to remittances involving either a conversion of NT dollars into a foreign currency or a conversion of foreign currency into NT dollars. In addition, a requirement is also imposed on all enterprises incorporated or registered in the R.O.C. to register their medium- and long-term foreign debts with the Central Bank of the Republic of China (Taiwan).
In addition, foreign persons may, subject to specified requirements, but without foreign exchange approval of the Central Bank of the Republic of China (Taiwan), remit to and from the R.O.C. foreign currencies of up to US$100,000 (or its equivalent) per remittance if the required documentation is provided to the R.O.C. authorities. The above limit applies to remittances involving either a conversion of NT dollars into a foreign currency or a conversion of foreign currency into NT dollars. The above limit does not, however, apply to the conversion of NT dollars into other currencies, including U.S. dollars, from the proceeds of a sale of any underlying shares withdrawn from a depositary receipt facility.
TAXATION
R.O.C. Taxation
The following discussion describes the material R.O.C. tax consequences of the ownership and disposition of our Common Shares or ADSs by and to a nonresident individual or nonresident entity holder that owns our Common Shares or ADSs (referred to here as a “non-R.O.C. holder”). As used in this context, a “nonresident individual” is a non-R.O.C. national who owns our Common Shares or ADSs and is not physically present in the R.O.C. for 183 days or more during any calendar year, and a “nonresident entity” is a corporation or a noncorporate body that owns our Common Shares or ADSs, is organized under the laws of a jurisdiction other than the R.O.C. and has no fixed place of business or business agent in the R.O.C.
Dividends
Dividends (whether in cash or Common Shares) declared by us out of retained earnings and distributed to a non-R.O.C. holder are subject to R.O.C. withholding tax at 21% (unless a preferable tax rate is provided under a tax treaty between the R.O.C. and the jurisdiction where the non-R.O.C. holder is a resident) on the amount of the distribution (in the case of cash dividends) or on the par value of the distributed Common Shares (in the case of stock dividends).
Distributions of Common Shares or cash out of capital reserves will not be subject to withholding tax, except under limited circumstances.
Capital Gains
Starting from January 1, 2016, capital gains realized upon the sale or other disposition of common shares are exempt from R.O.C. income tax.
Sales of ADSs are not regarded as sales of R.O.C. securities, and thus any gains derived from transfers of ADSs by non-R.O.C. holders are not currently subject to R.O.C. income tax.
Securities Transaction Tax
Securities transaction tax will be imposed on the seller at the rate of 0.3% of the transaction price upon a sale of common shares. Transfers of ADSs are not subject to R.O.C. securities transaction tax. During the one-year period from April 28, 2017 to April 27, 2018, the tax rate for day trading of shares meeting certain criteria was reduced to 0.15%. The Legislative Yuan approved on April 13, 2018 is an extension of the aforesaid reduction in the tax rate. Under the amended Securities Transaction Tax Act, which became effective on April 27, 2018, the aforesaid reduction in the tax rate applies until December 31, 2024.
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Subscription Rights
Distributions of statutory subscription rights for our Common Shares in compliance with the R.O.C. Company Law are currently not subject to R.O.C. tax. Sales of statutory subscription rights evidenced by securities are subject to securities transaction tax, currently at the rate of 0.3% of the gross amount received. Holders are exempt from income tax on capital gains from the sale of statutory subscription rights evidenced by securities. Proceeds derived from sales of statutory subscription rights, which are not evidenced by securities, are not subject to securities transaction tax but are subject to income tax at a fixed rate of 20% of the income if the seller is a non-R.O.C. holder. Subject to compliance with R.O.C. law, we, in our sole discretion, may determine whether statutory subscription rights are evidenced by securities.
Estate and Gift Tax
R.O.C. estate tax is payable on any property within the R.O.C. left by a deceased nonresident individual, and R.O.C. gift tax is payable on any property within the R.O.C. donated by a nonresident individual. Estate tax and gift tax are currently imposed at the progressive rates of 10%, 15% and 20%. Under the R.O.C. Estate and Gift Tax Act, common shares issued by R.O.C. companies are deemed property located in the R.O.C. without regard to the location of the owner. It is unclear whether a holder of ADSs will be considered to own common shares for this purpose.
Tax Treaty
At present, the R.O.C. has income tax treaties with Indonesia, Singapore, New Zealand, Australia, the United Kingdom, South Africa, Gambia, eSwatini (Swaziland), Malaysia, North Macedonia, the Netherlands, Senegal, Sweden, Belgium, Denmark, Israel, Vietnam, Paraguay, Hungary, France, India, Slovakia, Switzerland, Germany, Thailand, Kiribati, Luxembourg, Austria, Italy, Japan, Canada, Poland, Czech Republic, Saudi Arabia, and Korea. These tax treaties may limit the rate of R.O.C. withholding tax on dividends paid with respect to common shares issued by R.O.C. companies. A non-R.O.C. holder of ADSs may or may not be considered as the beneficial owner of common shares for the purposes of such treaties. Accordingly, holders of ADSs who wish to apply a reduced withholding tax rate that is provided under a tax treaty should consult their own tax advisers concerning such application. The U.S. does not have an income tax treaty with the R.O.C.
U.S. Federal Income Taxation
The following discussion describes material U.S. federal income tax consequences of the ownership and disposition of our Common Shares or ADSs to the U.S. Holders described below that hold such Common Shares or ADSs as capital assets for U.S. federal income tax purposes. As used herein, a “U.S. Holder” is a person that, for U.S. federal income tax purposes, is a beneficial owner of our Common Shares or ADSs and:
| • | a citizen or individual resident of the U.S.; |
| • | a corporation, or other entity taxable as a corporation, created or organized under the laws of the U.S. or of any political subdivision of the U.S.; or |
| • | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
This discussion does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) known as the Medicare contribution tax, and tax consequences that may be relevant to U.S. Holders subject to special rules, including:
| • | insurance companies; |
| • | tax-exempt entities, “individual retirement accounts” or “Roth IRAs”; |
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| • | dealers or traders in securities that use a mark-to-market method of accounting for U.S. federal income tax purposes; |
| • | certain financial institutions; |
| • | partnerships or other entities classified as partnerships for U.S. federal income tax purposes and partners therein; |
| • | persons holding Common Shares or ADSs in connection with a trade or business conducted outside of the U.S.; |
| • | persons that hold or will hold Common Shares or ADSs as part of a straddle, hedge, conversion transaction, integrated transaction, or similar transactions; |
| • | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
| • | persons that own or are deemed to own 10% or more of the voting power or value of our stock; or |
| • | persons that acquired our Common Shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation. |
If an entity that is classified as a partnership for U.S. federal income tax purposes holds our Common Shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding our Common Shares or ADSs and their partners should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of our Common Shares or ADSs.
This discussion is based on the Code, final, temporary, and proposed Treasury regulations, administrative pronouncements, and judicial decisions, all as of the date hereof. These laws and regulations are subject to change, possibly with retroactive effect.
In general, for U.S. federal income tax purposes, a U.S. Holder that owns ADSs should be treated as the owner of the Common Shares represented by the ADSs. Accordingly, no gain or loss should be recognized if a U.S. Holder exchanges ADSs for the Common Shares represented by those ADSs.
U.S. Holders should consult their tax advisers with regard to the application of the U.S. federal income tax laws to their Common Shares or ADSs, as well as any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
Dividends
Distributions paid on our Common Shares or ADSs, other than certain pro rata distributions of our Common Shares to all holders of our Common Shares and ADSs, will generally constitute dividend income to the extent paid out of our current or accumulated earnings and profits, as determined in accordance with U.S. federal income tax principles. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. The amount a U.S. Holder will be required to include in income with respect to any dividend paid in NT dollars will be equal to the U.S. dollar value of the NT dollars paid, calculated by reference to the exchange rate in effect on the date the payment is received by the depositary (in the case of ADSs) or by a U.S. Holder (in the case of Common Shares), regardless of whether the payment is in fact converted into U.S. dollars on the date of receipt. If a U.S. Holder does not convert the NT dollars so received into U.S. dollars on the date of receipt, any gain or loss recognized on a subsequent sale or other disposition of the NT dollars generally will be U.S.-source ordinary income or loss. The amount of any taxable distribution of property other than cash will be the fair market value of such property on the date of distribution. Dividends will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code.
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Subject to applicable limitations, certain dividends paid by “qualified foreign corporations” to certain non-corporate U.S. Holders are taxable at the preferential rates applicable to long-term capital gain. A non-U.S. corporation is treated as a qualified foreign corporation with respect to dividends it pays on shares (or depositary shares representing such shares) that are readily tradable on a securities market in the U.S., such as the NYSE, where our ADSs are traded. Noncorporate U.S. Holders should consult their tax advisers to determine whether these preferential rates may apply to dividends they receive and whether they are subject to any special rules that limit their ability to be taxed at these preferential rates.
Dividend income will be foreign-source and will include the amount of any R.O.C. taxes withheld thereon. Subject to applicable limitations and restrictions, which can vary depending upon the U.S. Holder’s circumstances (such as a requirement to satisfy certain minimum holding periods), R.O.C. taxes withheld from dividend distributions may be eligible for credit against the U.S. Holder’s U.S. federal income tax liability However, under certain Treasury regulations, in order for non-U.S. income taxes to be creditable the relevant non-U.S. income tax rules must be consistent with certain U.S. federal income tax principles, and we have not determined whether the R.O.C. income tax system meets these requirements. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. In lieu of claiming a credit, U.S. Holders may, at their election, deduct otherwise creditable R.O.C. taxes in computing their taxable income, subject to generally applicable limitations. An election to deduct non-U.S. taxes instead of claiming foreign tax credits applies to all creditable non-U.S. taxes paid or accrued in the taxable year. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisers regarding the creditability or deductibility of any R.O.C. tax generally (including under the Treasury regulations mentioned above) and in their particular circumstances.
Certain pro rata distributions of Common Shares by us to all our shareholders (including ADS holders) will not be subject to U.S. federal income tax. Accordingly, these distributions will not give rise to U.S. federal income tax against which the R.O.C. tax imposed on these distributions may be credited. U.S. Holders should consult their tax advisers as to whether any R.O.C. tax imposed on such distributions may be creditable in general, and if so, the extent to which such R.O.C. tax may be creditable against their U.S. federal income tax on foreign-source income from other sources.
Capital Gains
A U.S. Holder generally will recognize U.S.-source capital gain or loss for U.S. federal income tax purposes on the sale or taxable exchange of our Common Shares or ADSs, which will be long-term capital gain or loss if our Common Shares or ADSs have been held by the U.S. Holder for more than one year. The amount of gain or loss will be equal to the difference between the U.S. Holder’s tax basis in our Common Shares or ADSs disposed of and the amount realized on disposition, in each case as determined in U.S. dollars. A U.S. Holder’s tax basis in our Common Shares or ADSs acquired for cash will generally equal the U.S. Holder’s cost of such Common Shares or ADSs. U.S. Holders should consult their tax advisers about the treatment of capital gains, which may be taxed at lower rates than ordinary income for noncorporate taxpayers, and capital losses, the deductibility of which may be limited.
The R.O.C. securities transaction tax imposed upon a sale of Common Shares (as discussed above under “R.O.C. Taxation—Securities Transaction Tax”) will not be treated as creditable foreign tax for U.S. federal income tax purposes. However, such tax may reduce the amount realized by a U.S. Holder upon a disposition of our Common Shares.
Passive Foreign Investment Company Rules
We believe that we were not a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes for our 2023 taxable year. However, since PFIC status depends upon the composition of a company’s income and assets and the market value of its assets (including its equity investments), there can be no assurance that we will not be a PFIC for any taxable year.
If we are a PFIC for any taxable year during which a U.S. Holder owns a Common Share or an ADS, certain adverse consequences could apply to that U.S. Holder, such as an increased U.S. federal income tax liability on gains from depositions of our Common Shares or ADSs, or on certain excess distributions. In addition, if we are a PFIC for any taxable year during which a U.S. Holder owns a Common Share or an ADS, such U.S. Holder will generally be required to file Internal Revenue Service Form 8621 with its annual U.S. federal income tax returns, subject to certain exceptions. Furthermore, if we are a PFIC for any taxable year in which we pay a dividend or the preceding taxable year, any preferential tax that may have otherwise applied in the case of noncorporate U.S. Holders will not be available. U.S. Holders should consult their tax advisers regarding the potential application of the PFIC rules to their ownership or disposition of our Common Shares or ADSs.
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Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the U.S. or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient (and establishes that fact if required to do so) or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.
The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
DIVIDENDS AND PAYING AGENTS
Not applicable.
STATEMENT BY EXPERTS
Not applicable.
DOCUMENTS ON DISPLAY
We file annual reports on Form 20-F and furnish periodic reports on Form 6-K with the SEC. You can read and copy these reports and other information at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing to the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The reports and other information we file electronically with the SEC are also available to the public from the SEC’s website at https://www.sec.gov. Information about ASEH is also available to the public on our website at https://www.aseglobal.com.
SUBSIDIARY INFORMATION
Not applicable.
ANNUAL REPORT TO SECURITY HOLDERS
We intend to submit any annual report provided to security holders in electronic format as an exhibit to a current report on Form 6-K.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
The derivative instruments used by us were to mitigate risks arising from ordinary business operations. Our risk management department monitored risks to mitigate risk exposures, and reported unsettled positions, transaction balances, and related gains or losses to our chief financial officer on monthly basis. See Note 34 to our consolidated financial statements included in this annual report for details.
Market Risk
Our exposure to financial market risks relates primarily to changes in foreign currency exchange rates. Gains or losses arising from fluctuations in foreign currency exchange rates of a variety of derivative financial instruments were approximately offset by those of hedged items. Interest rate risk was not significant as the cost of capital was expected to be fixed.
Interest Rate Risk. Our exposure to interest rate risks relates primarily to our borrowings with floating rates, which are normally incurred to support our corporate activities and capital expenditures. We utilized financing instruments with low interest rates and favorable terms to maintain low financing costs and adequate banking facilities, as well as to hedge interest rate risk.
For assets and liabilities with floating interest rates, a 100-basis point increase or decrease was used when reporting interest rate risk internally to key management personnel. If interest rates had been 100 basis points (1%) higher or lower and all other variables held constant, our profit before income tax for the year ended 2023 would have decreased or increased approximately by NT$660.0 million (US$21.6 million).
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The tables below set forth information relating to our short-term and long-term bank loans as well as bonds payable as of December 31, 2023.
Expected Maturity Date
| Expected Maturity Date | ||||||||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
| Short-term borrowings: |
||||||||||||||||||||||||||||||||
| Variable rate (NT$) |
11,513.4 | — | — | — | — | — | 11,513.4 | 11,513.4 | ||||||||||||||||||||||||
| Average interest rate |
1.67 | % | — | — | — | — | — | 1.67 | % | — | ||||||||||||||||||||||
| Fixed rate (NT$) |
5,400.0 | — | — | — | — | — | 5,400.0 | 5,400.0 | ||||||||||||||||||||||||
| Average interest rate |
1.68 | % | — | — | — | — | — | 1.68 | % | — | ||||||||||||||||||||||
| Variable rate (US$) |
504.2 | — | — | — | — | — | 504.2 | 504.2 | ||||||||||||||||||||||||
| Average interest rate |
4.52 | % | — | — | — | — | — | 4.52 | % | — | ||||||||||||||||||||||
| Fixed rate (US$) |
81.1 | — | — | — | — | — | 81.1 | 81.1 | ||||||||||||||||||||||||
| Average interest rate |
5.96 | % | — | — | — | — | — | 5.96 | % | — | ||||||||||||||||||||||
| Variable rate (RMB) |
309.1 | — | — | — | — | — | 309.1 | 309.1 | ||||||||||||||||||||||||
| Average interest rate |
2.91 | % | — | — | — | — | — | 2.91 | % | — | ||||||||||||||||||||||
| Fixed rate (RMB) |
10.0 | — | — | — | — | — | 10.0 | 10.0 | ||||||||||||||||||||||||
| Average interest rate |
3.04 | % | — | — | — | — | — | 3.04 | % | — | ||||||||||||||||||||||
| Variable rate (EUR) |
10.4 | — | — | — | — | — | 10.4 | 10.4 | ||||||||||||||||||||||||
| Average interest rate |
3.50 | % | — | — | — | — | — | 3.50 | % | — | ||||||||||||||||||||||
| Fixed rate (EUR) |
386.5 | — | — | — | — | — | 386.5 | 386.5 | ||||||||||||||||||||||||
| Average interest rate |
4.54 | % | — | — | — | — | — | 4.54 | % | — | ||||||||||||||||||||||
| Variable rate (VND) |
10,000.0 | — | — | — | — | — | 10,000.0 | 10,000.0 | ||||||||||||||||||||||||
| Average interest rate |
3.03 | % | — | — | — | — | — | 3.03 | % | — | ||||||||||||||||||||||
| Fixed rate (VND) |
20,700.0 | — | — | — | — | — | 20,700.0 | 20,700.0 | ||||||||||||||||||||||||
| Average interest rate |
3.03 | % | — | — | — | — | — | 3.03 | % | — | ||||||||||||||||||||||
| Variable rate (HKD) |
832.6 | — | — | — | — | — | 832.6 | 832.6 | ||||||||||||||||||||||||
| Average interest rate |
5.54 | % | — | — | — | — | — | 5.54 | % | — | ||||||||||||||||||||||
| Long-term borrowings and bonds payable: |
||||||||||||||||||||||||||||||||
| Variable rate (NT$) |
1,608.8 | 37,066.6 | 1,100.4 | 850.4 | 850.4 | 496.1 | 41,972.7 | 41,972.7 | ||||||||||||||||||||||||
| Average interest rate |
1.53 | % | 1.28 | % | 1.72 | % | 1.68 | % | 1.99 | % | 0.62 | % | 1.32 | % | — | |||||||||||||||||
| Fixed rate (NT$) |
13,902.4 | 15,000.0 | 3,500.0 | 2,000.0 | — | — | 34,402.4 | 34,402.4 | ||||||||||||||||||||||||
| Average interest rate |
1.43 | % | 0.88 | % | 1.03 | % | 0.95 | % | — | — | 1.12 | % | — | |||||||||||||||||||
| Variable rate (US$) |
— | 534.3 | 489.3 | — | — | — | 1,023.6 | 1,023.6 | ||||||||||||||||||||||||
| Average interest rate |
— | 3.80 | % | 3.74 | % | — | — | — | 3.77 | % | — | |||||||||||||||||||||
| Fixed rate (EUR) |
2.0 | 2.0 | 2.0 | 2.0 | — | — | 8.0 | 8.0 | ||||||||||||||||||||||||
| Average interest rate |
3.90 | % | 3.90 | % | 3.90 | % | 3.90 | % | — | — | 3.90 | % | — | |||||||||||||||||||
| Variable rate (RMB) |
559.7 | 483.7 | 87.5 | 83.9 | 87.9 | 1,463.7 | 2,766.4 | 2,766.4 | ||||||||||||||||||||||||
| Average interest rate |
2.79 | % | 3.17 | % | 3.53 | % | 3.63 | % | 3.65 | % | 0.97 | % | 1.97 | % | — | |||||||||||||||||
| Fixed rate (RMB) |
2,466.1 | — | — | — | — | — | 2,466.1 | 2,466.1 | ||||||||||||||||||||||||
| Average interest rate |
0.20 | % | — | — | — | — | — | 0.20 | % | — | ||||||||||||||||||||||
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Foreign Currency Exchange Rate Risk. Our foreign currency exposure gives rise to market risk associated with exchange rate movements against the NT dollar, our functional currency. Currently, the majority of our revenues are denominated in U.S. dollars, with a portion denominated in NT dollars and Japanese yen. Our costs of revenues and operating expenses are incurred in several currencies, primarily in NT dollars, U.S. dollars, RMB, Japanese yen, Korean won, and Euro, as well as, to a lesser extent, Singapore dollars and Malaysian ringgit and Polish zloty. In addition, a substantial portion of our capital expenditures, primarily for the purchase of equipment, has been, and is expected to continue to be, denominated primarily in U.S. dollars with the remainder in Japanese yen. The majority of our borrowings are denominated in NT dollars, U.S. dollars, EUR, VND, and RMB. Fluctuations in exchange rates, primarily among the U.S. dollar and Japanese yen against the NT dollar, RMB, and EUR, will affect our costs and operating margins and could result in exchange losses and increased costs in NT dollar and other local currency terms.
We use 1% fluctuation when reporting foreign currency exchange rate risk internally to key management personnel and it represents management’s assessment of reasonably possible changes in foreign currency exchange rates. The sensitivity analysis included financial assets and liabilities and intercompany receivables and payables within the Group. The changes in profit before income tax due to a 1% change in U.S. dollar and Japanese yen against NT dollar, RMB, and EUR would be NT$148.0 million (US$4.8 million) for the year ended December 31, 2023. Hedging contracts and hedged items have been considered while measuring the changes in profit before income tax. The abovementioned sensitivity analysis mainly focused on the foreign currency monetary items at each balance sheet date. As the year-end exposure did not reflect the exposure for the year ended December 31, 2023, the abovementioned sensitivity analysis was unrepresentative.
To protect against reductions in value and the volatility of future cash flows caused by changes in foreign currency exchange rates, we entered into a variety of nonderivative financial instruments and derivative financial instruments to minimize the impact of foreign currency fluctuations on our results of operations. Despite these hedging and mitigating techniques, fluctuations in exchange rates have affected, and may continue to affect, our financial condition and results of operations.
Our hedging strategy was to lift borrowings denominated in foreign currencies to avoid exchange rate exposure from its investments in equity instruments denominated in foreign currencies (recognized under the line item of financial assets at FVTPL) and net investment in foreign subsidiary, USIFR, which has EUR as its functional currency. Those transactions were designated as fair value hedges and a hedge of net investment in foreign operation, respectively. Hedge adjustments were made to totally offset the foreign exchange gains or losses from those equity instruments denominated in foreign currencies and foreign operations when they were evaluated based on the exchange rates on each balance sheet date. The hedge ineffectiveness in these hedging relationships arose from the material difference between the notional amounts of borrowings denominated in foreign currencies and the original investments in equity instruments denominated in foreign currencies and net investment in foreign operations. No other source of ineffectiveness is expected to emerge from these hedging relationships.
The table below sets forth our outstanding forward exchange contracts and swap contracts, for which the expected maturity dates are in 2024, in aggregate terms by type of contract as of December 31, 2023.
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| Forward Exchange Contracts |
Swap Contracts | |||
| Buy US$ against NT$ |
||||
| Notional Amount |
US$150.0 million | US$2,988.5 million | ||
| Weighted Average Strike Price |
US$/NT$30.985 | US$/NT$30.012 | ||
| Fair Value |
Negative US$3.627 million | US$4.605 million | ||
| Buy US$ against RMB |
||||
| Notional Amount |
US$18.5 million | US$122.0 million | ||
| Weighted Average Strike Price |
US$/RMB7.124 | US$/RMB7.129 | ||
| Fair Value |
Negative US$0.160 million | Negative US$1.052 million | ||
| Buy US$ against HKD |
||||
| Notional Amount |
— | US$1.5 million | ||
| Weighted Average Strike Price |
— | US$/HKD7.795 | ||
| Fair Value |
— | US$0.001 million | ||
| Buy US$ against JPY |
||||
| Notional Amount |
— | US$2.7 million | ||
| Weighted Average Strike Price |
— | US$/JPY140.340 | ||
| Fair Value |
— | Negative US$0.016 million | ||
| Buy CZK against EUR |
||||
| Notional Amount |
CZK60.0 million | — | ||
| Weighted Average Strike Price |
CZK/EUR0.041 | — | ||
| Fair Value |
Negative US$0.025 million | — | ||
| Buy JPY against RMB |
||||
| Notional Amount |
JPY165.0 million | — | ||
| Weighted Average Strike Price |
JPY/RMB0.050 | — | ||
| Fair Value |
US$0.001 million | — | ||
| Buy NTD against RMB |
||||
| Notional Amount |
NTD11.5 million | — | ||
| Weighted Average Strike Price |
NTD/RMB0.229 | — | ||
| Fair Value |
US$0.003 million | — | ||
| Sell US$ against PLN |
||||
| Notional Amount |
US$6.0 million | — | ||
| Weighted Average Strike Price |
US$/PLN4.355 | — | ||
| Fair Value |
US$0.681 million | — | ||
| Sell US$ against NT$ |
||||
| Notional Amount |
US$67.2 million | US$353.3 million | ||
| Weighted Average Strike Price |
US$/NT$30.593 | US$/NT$31.037 | ||
| Fair Value |
US$0.977 million | US$4.940 million | ||
| Sell US$ against RMB |
||||
| Notional Amount |
US$297.3 million | — | ||
| Weighted Average Strike Price |
US$/RMB7.127 | — | ||
| Fair Value |
US$2.374 million | — | ||
| Sell US$ against JPY |
||||
| Notional Amount |
US$33.3 million | — | ||
| Weighted Average Strike Price |
US$/JPY143.181 | — | ||
| Fair Value |
US$0.512 million | — | ||
| Sell US$ against MYR |
||||
| Notional Amount |
US$16.0 million | — | ||
| Weighted Average Strike Price |
US$/MYR4.659 | — | ||
| Fair Value |
US$0.250 million | — | ||
| Sell US$ against SGD |
||||
| Notional Amount |
US$12.5 million | — | ||
| Weighted Average Strike Price |
US$/SGD1.342 | — | ||
| Fair Value |
US$0.219 million | — | ||
| Sell US$ against KRW |
||||
| Notional Amount |
US$95.7 million | US$31.0 million | ||
| Weighted Average Strike Price |
US$/KRW1,291.634 | US$/KRW1,303.881 | ||
| Fair Value |
US$0.200 million | US$0.353 million |
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Other Market Risk. We are exposed to equity price risk through investments in financial assets at FVTPL and financial assets at FVTOCI. The value of these investments may fluctuate based on various factors including prevailing market conditions. Moreover, the fair value of investments in unlisted securities may be significantly different from their carrying value. As of December 31, 2023, our investments in quoted ordinary shares, open-end mutual funds, unquoted preferred shares, private-placement funds, and convertible notes, classified as financial assets at FVTPL were NT$5,012.9 million (US$163.7 million). As of December 31, 2023, our investments in equity instruments at FVTOCI were NT$620.8 million (US$20.3 million). If equity price was 1% higher or lower, profit before income tax for the year ended December 31, 2023 would have increased or decreased approximately by NT$46.5 million (US$1.5 million) and other comprehensive income before income tax would have increased or decreased approximately by NT$6.0 million (US$0.2 million) for the same year. Furthermore, fluctuations in gold prices may also affect the price at which we have been able to purchase gold wire. How this will impact the results of our operations depends on whether such costs can be transferred to our customers.
Item 12. Description of Securities Other Than Equity Securities
DEBT SECURITIES
Not applicable.
WARRANTS AND RIGHTS
Not applicable.
OTHER SECURITIES
Not applicable.
AMERICAN DEPOSITARY SHARES
Depositary Fees and Charges
As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:
| Service |
Fees | |
| Issuance of ADSs (e.g., an issuance upon a deposit of shares, upon a change in ADS(s)-to-Common Share(s) ratio, or for any other reason), excluding issuances as a result of distributions of Common Shares | Up to U.S. $5.00 per 100 ADSs issued | |
| Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited Common Shares, upon a change in the ADS(s)-to-Common Share(s) ratio, or for any other reason) | Up to U.S. $5.00 per 100 ADSs cancelled | |
| Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) | Up to U.S. $5.00 per 100 ADSs held | |
| Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs | Up to U.S. $5.00 per 100 ADSs held | |
| Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off) | Up to U.S. $5.00 per 100 ADSs held | |
| ADS Services | Up to U.S. $5.00 per 100 ADSs held on the applicable record date(s) established by the Depositary |
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As an ADS holder you will also be responsible to pay certain charges such as:
| • | taxes (including applicable interest and penalties) and other governmental charges; |
| • | the registration fees as may from time to time be in effect for the registration of Common Shares on the share register and applicable to transfers of Common Shares to or from the name of the custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively; |
| • | certain cable, telex, and facsimile transmission and delivery expenses; |
| • | the expenses and charges incurred by the Depositary in the conversion of foreign currency; |
| • | the fees and expenses incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Common Shares, ADSs and ADRs; and |
| • | the fees and expenses incurred by the Depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited property. |
ADS fees and charges payable upon (i) the issuance of ADSs and (ii) cancellation of ADSs will be payable by the person to whom the ADSs are so issued (in the case of ADS issuances) and by the person whose ADSs are being cancelled (in the case of ADS cancellations). In the case of ADSs issued by the Depositary into DTC or held via DTC, the ADS issuance and cancellation fees and charges will be payable by the DTC participant(s) receiving the ADSs or whose ADSs are being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC and may be charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.
In the event of refusal to pay the Depositary fees, the Depositary may, under the terms of the Deposit Agreement, refuse the requested service until payment is received or may set off the amount of the Depositary fees from any distribution to be made to the ADS holder. Certain of the depositary fees and charges (such as the ADS services fee) may become payable shortly after the Closing Date. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the Depositary. You will receive prior notice of such changes. The Depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the Depositary agree from time to time.
Depositary Payments
In 2023, we received direct reimbursement of US$2,715,961.57 (net of U.S. withholding tax) from Citibank, N.A., the depositary bank for our ADR programs.
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not applicable.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
Disclosure Controls and Procedures
As of December 31, 2023, our management, with the participation of our principal executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding management’s control objectives. Based on this evaluation, our principal executive officer and chief financial officer concluded that our disclosure controls and procedures are effective for recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, for information required to be disclosed in the reports we file or submit under the Exchange Act, and for accumulating and communicating such information to our management, including our principal executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on this assessment, management concluded that, as of December 31, 2023, our internal control over financial reporting is effective based on those criteria.
Our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 excluded the internal control over financial reporting of HCC, because HCC was acquired on October 27, 2023, which was close to the year end. According to HCC’s financial statements, its contributions constitute 0.5% and 0.7% of net and total assets, respectively, 0.2% of operating revenues, and 0.1% of profit of the consolidated financial statement amounts for the Group as of and for the year ended December 31, 2023.
Our independent registered public accounting firm, Deloitte & Touche, assessed the effectiveness of our internal control over financial reporting. Deloitte & Touche has issued an attestation report, which is included below.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
ASE Technology Holding Co., Ltd.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of ASE Technology Holding Co., Ltd. (a Republic of China corporation) and its subsidiaries (collectively, the “Group”) as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023 of the Group and our report dated March 28, 2024, expressed an unqualified opinion on those consolidated financial statements.
As described in Management’s Annual Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Hirschmann Car Communication Holding S.a.r.l. and its subsidiaries (collectively, “Hirschmann”), which was acquired on October 27, 2023, and whose financial statements constituted 0.5% and 0.7% of net and total assets, respectively, 0.2% of operating revenues, and 0.1% of profit of the consolidated financial statement amounts as of and for the year ended December 31, 2023. Accordingly, our audit did not include the internal control over financial reporting at Hirschmann.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche
Taipei, Taiwan
Republic of China
March 28, 2024
Changes in Internal Control over Financial Reporting
Other than as explained below, there has been no change in our internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting during 2023.
On October 27, 2023, we acquired control of HCC. As a result of the timing, breadth and complexity of the transaction, we increased the level of resources devoted to the application of our internal processes and controls to the financial closing process. In 2024, we expect the following will occur with respect to these acquired businesses: (1) HCC will continue the transition to our accounting and reporting policies and processes, (2) HCC will assess the design and operating effectiveness of their internal control system based on criteria established in Internal Control- Integrated Framework (2013) issued by the COSO, and (3) HCC’s control systems and processes will be integrated into our framework of internal controls over financial reporting. These actions may precipitate changes in our processes or controls.
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Our board of directors determined that Shen-Fu Yu, Mei-Yueh Ho, and Wen-Chyi Ong are audit committee financial experts as defined under the applicable rules of the SEC issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002 and are independent for the purposes of Rule 10A-3 of the Exchange Act.
Item 16B. Code of Ethics
We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which satisfies the requirements of Item 16B of Form 20-F and applies to all employees, officers, supervisors, and directors of our Company and subsidiaries, including our principal executive officer, chief financial officer, and principal accounting officer. The Code of Ethics contains the policies with respect to anti-corruption, fair competition, anti-money laundering, whistleblowing, and regulatory compliance. The robust and effective policies and procedures have been built in the Code of Ethics to enable us to persistently maintain high ethical standards of business conduct. We have continued to implement the Code of Ethics through promoting awareness and educational activities among our employees, officers, supervisors, and directors of our Company and subsidiaries in daily operation. For further details on the Code of Ethics, please refer to our website at https://ir.aseglobal.com/html/ir_doc.php
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Year Ended December 31, |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ |
||||||||||
(in thousands) |
||||||||||||
Audit fees (1) |
216,948.7 | 187,606.9 | 6,126.9 | |||||||||
Audit-related fees (2) |
2,420.5 | 3,274.1 | 106.9 | |||||||||
Tax fees (3) |
26,532.5 | 33,432.5 | 1,091.9 | |||||||||
All other fees (4) |
12,807.0 | 17,009.3 | 555.5 | |||||||||
Total |
258,708.7 | 241,322.8 | 7,881.2 | |||||||||
| (1) | Audit fees are defined as the standard audit and review work that needs to be performed each year in order to issue an opinion on our consolidated financial statements and to issue reports on the local statutory financial statements. It also includes services that can only be provided by our auditor such as statutory audits required by the Tax Bureau of the R.O.C. and the Customs Bureau of the R.O.C., consents, and comfort letters and any other audit services required for SEC or other regulatory filings. |
| (2) | Audit-related fees consist of assurance and related services by Deloitte & Touche and its affiliated firms that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under Audit Fees. The service for the fees disclosed under this category relate to cash capital increase and bonds offering. |
| (3) | Tax fees consist of professional services rendered by Deloitte & Touche and its affiliated firms for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. |
| (4) | Other fees primarily consist of a risk management advisory fee and a business operation and process advisory fee, among others. |
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Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share Repurchase
On November 5, 2021, we announced a share repurchase program, or the “First Share Repurchase Program,” which is approved by our board of directors to repurchase our Common Shares during the period from November 8, 2021 to January 7, 2022. The repurchase price under the First Share Repurchase Program was between NT$90.0 to NT$150.0 per Common Share. The maximum number of Common Shares allowed to be repurchased pursuant to the First Share Repurchase Program was 55.0 million Common Shares.
The First Share Repurchase Program was concluded on December 30, 2021, with a total number of 55.0 million Common Shares being repurchased at an average price of NT$104.3 per Common Share. February 25, 2022 was the record date for capital reduction and we completed the cancellation of those repurchased Common Shares.
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Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
As a company listed on the NYSE, we are subject to certain corporate governance rules of the NYSE. The application of the NYSE’s corporate governance rules is limited for foreign private issuers, recognizing that they must comply with domestic requirements. As a foreign private issuer, we must comply with the following NYSE corporate governance rules: 1) satisfy the audit committee requirements of the SEC; 2) the principal executive officer must promptly notify the NYSE in writing upon becoming aware of any material non-compliance with applicable NYSE corporate governance rules; 3) submit annual and interim affirmations to the NYSE regarding compliance with applicable NYSE corporate governance requirements; and 4) provide a brief description of any significant differences between our corporate governance practices and those required of U.S. companies under the NYSE listing standards. The table below sets forth the significant differences between our corporate governance practices and those required of U.S. companies under the NYSE listing standards.
| New York Stock Exchange Corporate Applicable to U.S. Companies |
Description of Significant Differences Between Our Governance Practices and the NYSE Corporate Governance Rules Applicable to U.S. Companies | |
| Director independence | ||
| Listed companies must have a majority of independent directors, as defined under the NYSE listing standards. | Three members of our board of directors are independent as defined in Rule 10A-3 under the Exchange Act. We do not assess the independence of our directors under the independence requirements of the NYSE listing standards. Pursuant to relevant laws and regulations of the R.O.C., we have three independent directors on our board of directors that were elected through the candidate nomination system at our annual general shareholders’ meeting on August 12, 2021. | |
| To empower non-management directors to serve as a more effective check on management, the non-management directors of each company must meet at regularly scheduled executive sessions without management. | All of our directors attend the meetings of the board of directors. Our non-management directors do not meet at regularly scheduled executive sessions without management. The R.O.C. Company Law does not require companies incorporated in the R.O.C. to have their non-management directors meet at regularly scheduled executive sessions without management. | |
| Nominating/Corporate governance committee | ||
| Listed companies must have a nominating/corporate governance committee composed entirely of independent directors and governed by a written charter that provides for certain responsibilities of the committee set out in the NYSE listing standards. | We do not have a nominating/corporate governance committee. The R.O.C. Company Law does not require companies incorporated in the R.O.C. to have a nominating/corporate governance committee. Currently, our board of directors performs the duties of a corporate governance committee and regularly reviews our corporate governance principles and practices. In addition, our chief administration officer was appointed as the corporate governance officer by the board of directors to facilitate the operation of the board of directors.
The R.O.C. Company Law requires that directors be elected by shareholders. Under R.O.C. laws and regulations, companies that have independent directors are required to adopt a candidate nomination system for the election of independent directors. Our three independent directors were elected through the candidate nomination system provided in our Articles of Incorporation. However, starting from 2021, the directors (including independent directors) of the company listed on the TWSE or the Taipei Exchange shall be nominated by adopting the candidate nomination system. | |
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| New York Stock Exchange Corporate Governance Rules Applicable to U.S. Companies |
Description of Significant Differences Between Our Governance Practices and the NYSE Corporate Governance Rules Applicable to U.S. Companies | |
| Compensation committee | ||
| Listed companies must have a compensation committee composed entirely of independent directors and governed by a written charter that provides for certain responsibilities of the committee set out in the NYSE listing standards. | We have a compensation committee as required by the regulations promulgated by the FSC. The charter of such committee contains similar responsibilities as those provided under NYSE listing standards. | |
| In addition to any requirement of Rule 10A-3(b)(1), all compensation committee members must satisfy the independence requirements for independent directors set out in the NYSE listing standards. | We do not assess the independence of our compensation committee member under the independence requirements of the NYSE listing standards but adopt the independence standard as promulgated under the R.O.C. Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the TWSE or the Taipei Exchange. | |
| Audit committee | ||
| Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. | We have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act and the requirements under the R.O.C. Securities and Exchange Act. | |
| The audit committee must have a minimum of three members. In addition to any requirement of Rule 10A-3(b)(1), all audit committee members must satisfy the independence requirements for independent directors set out in the NYSE listing standards. | We currently have three members on our audit committee. Our audit committee members satisfy the independence requirements of Rule 10A-3 under the Exchange Act. We do not assess the independence of our audit committee member under the independence requirements of the NYSE listing standards. | |
| The audit committee must have a written charter that provides for the duties and responsibilities set out in Rule 10A-3 and addresses certain other matters required by the NYSE listing standards. | Our audit committee charter provides for the audit committee to assist our board of directors in its oversight of (i) the integrity of our financial statements, (ii) the qualifications, independence, and performance of our independent auditor and (iii) our compliance with legal and regulatory requirements and provides for the duties and responsibilities set out in Rule 10A-3. Our audit committee charter does not address all the matters required by the NYSE listing standards beyond the requirements of Rule 10A-3. | |
| Because the appointment and retention of our independent auditor are the responsibility of our entire board of directors under R.O.C. laws and regulations, our audit committee charter provides that the audit committee shall make recommendations to the board of directors with respect to these matters. | ||
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| New York Stock Exchange Corporate Governance Rules Applicable to U.S. Companies |
Description of Significant Differences Between Our Governance Practices and the NYSE Corporate Governance Rules Applicable to U.S. Companies | |
| Each listed company must have an internal audit function. | We have an internal audit function. Under the R.O.C. Regulations for the Establishment of Internal Control Systems by Public Companies, a public company is required to set out its internal control systems in writing, including internal audit implementation rules, which must be approved by the board of directors. Our entire board of directors and the principal executive officer are responsible for the establishment of the internal audit functions, compliance with the internal audit implementation rules, and oversight of our internal control systems, including the appointment and retention of our independent auditor. | |
| Equity compensation plans | ||
| Shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans, and amendments in the context of mergers and acquisitions, and certain specific types of plans. | The board of directors has authority under R.O.C. laws and regulations to approve (i) the distribution of employee compensation and (ii) employee stock option plans by a majority vote of the board of directors at a meeting where at least two-thirds of all directors are present and to grant options to employees pursuant to such plans, provided that shareholders’ approval is required if the exercise price of an option would be less than the closing price of the Common Shares on the TWSE on the grant date of the option, subject to the approval of the Securities and Futures Bureau of the FSC, and to approve treasury stock programs and the transfer of shares to employees under such programs by a majority vote of the board of directors in a meeting where at least two-thirds of all directors are present. | |
| Corporate governance guidelines | ||
| Listed companies must adopt and disclose corporate governance guidelines. | We have adopted the corporate governance best practice principles in accordance with the Corporate Governance Best Practice Principles for TWSE and Taipei Exchange Listed Companies promulgated by the TWSE and the Taipei Exchange, and we provide an explanation of the differences between our practice and the principles, if any, in our R.O.C. annual report. We have posted our corporate governance best practice principles on our website. Also, we have a dedicated section on our website to disclose the relevant information and inform investors how to access such principles. | |
| Code of ethics for directors, officers, and employees | ||
| Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers, and employees, and promptly disclose any waivers of the code for directors or executive officers. | We have adopted a code of ethics that satisfies the requirements of Item 16B of Form 20-F and applies to all employees, officers, supervisors and directors of our company and our subsidiaries and will disclose any waivers of the code as required by Item 16B of Form 20-F. We have posted our code of ethics on our website. | |
| Description of significant differences | ||
| Listed foreign private issuers must disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. | This table contains the significant differences between our corporate governance practices and those required of U.S. companies under the NYSE listing standards. | |
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| New York Stock Exchange Corporate Governance Rules Applicable to U.S. Companies |
Description of Significant Differences Between Our Governance Practices and the NYSE Corporate Governance Rules Applicable to U.S. Companies | |
| Principal Executive Officer certification | ||
| Each listed company principal executive officer must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards, qualifying the certification to the extent necessary. | As a foreign private issuer, we are not required to comply with this rule; however, our principal executive officer provides certifications under Sections 302 and 906 of the Sarbanes-Oxley Act. | |
| Each listed company principal executive officer must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any applicable provisions of Section 303A. | We intend to comply with this requirement. | |
| Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation each time a change occurs to the board or any of the committees subject to Section 303A. The annual and interim Written Affirmations must be in the form specified by the NYSE. | We have complied with this requirement to date and intend to continue to comply going forward. | |
| Website | ||
| Listed companies must have and maintain a publicly accessible website. | We have and maintain a publicly accessible website. | |
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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Item 16J. Insider Trading Policies
Not applicable.
Item 16K. Cybersecurity
Cybersecurity risk management is an integral part of our overall risk management program. Our board of directors has overall oversight responsibility for our risk management, and delegates cybersecurity risk management oversight to the information security management committee established by the CSC. The information security management committee is responsible for overall information security across all subsidiaries. Our vice chairman, who has participated in yearly professional courses relating to information security, has been appointed the chair of the committee, which is dedicated to enhancing information security, preventing and mitigating information security threats and risks by developing strategic plans for information security, establishing benchmarks for information security maturity assessments, promoting information security risk management in our subsidiaries, and coordinating internal and external technologies, resources and information. Our chief administrative officer and chief corporate governance officer, who previously taught technology law at the college-level, has been appointed as the chief information security officer of the committee, and assumes responsibility for establishing the information security management framework that covers conducting regular reviews with all subsidiaries and implementing incident response plans. The information security management committee provides a status report to the board of directors in the last quarter of each fiscal year. Our cybersecurity team maintains numerous active industry-recognized cyber certifications, including Certified Information Security Manager (CISM), Certified Information Systems Security Professional (CISSP), and ISO 27001 Lead Auditor.
In addition, our Corporate CSR division, established under the CSC, is responsible for promoting and executing information security-related work across ASE, SPIL and USI Group entities, and each subsidiary appoints its information security team as members of the committee, tasked with implementing information security operations as resolved by the information security management committee. We hold quarterly information security management committee meetings to report and discuss the progress of our information security work and invite external experts to share insights on information security trends and topics of concern.
We set a threshold for material information security incidents by following relevant regulations promulgated by the FSC. On an annual basis, our cybersecurity team engages a third-party company to conduct regular cybersecurity audit and assessments, such as external audit, vulnerability scanning, and penetration testing to ensure that our network and information comply with safety standards. In addition to managing operational risks from the perspective of corporate governance, we prioritize elevating employees’ cybersecurity awareness and enhancing organizational capabilities. All employees are mandated to complete Proprietary Information Protection (“PIP”) cybersecurity educational training, including training covering topics such as policy adherence, management frameworks, and control measures. Additionally, periodic social engineering email drills have been conducted to enhance employees’ awareness of email-based social engineering attacks. We have gradually introduced management mechanisms to foster active participation in cybersecurity initiatives, such as cybersecurity meetings, educational trainings, incident management, confidential file labeling, antivirus/software security, and other cybersecurity-related projects in a systematic manner. Regular monitoring and audits serve as an extension of our management scope, with compliance integrated into our employees’ key performance indicators to mitigate risks such as penalties, legal liabilities, and disruptions to business operations.
In 2020, initiated by the information security management committee of the CSC, information security committees of our subsidiaries worked together to integrate and strengthen the information security protection of each subsidiary. The committees also set up an information security risk alert system, through which we could conduct on-site operational inspections to minimize information security risks by hiring third-party experts. In addition, our major subsidiaries have obtained ISO 27001 certification (for information security management system) and ISO 22301 certification to strengthen crisis management and disaster response. In addition, our Kaohsiung facility has been facing accelerating digital transition and is the first semiconductor assembly and testing facility in the world to receive the ISO 21434 international automotive network security standard certification and has passed the mobile communication security certification standard and obtained the GSMA certification. We also have established management procedures for the reporting and handling of information security incidents which allow employees to report any security incidents to ensure prompt handling that will be followed by efficient responses in order to mitigate information security risks. In addition, we conduct an annual disaster recovery drill to mitigate the risk of service disruptions caused by impacts from major crisis events to our information systems. All employees participate in our annual proprietary information protection training courses, which include training on information security policy, management framework, and control measures.
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Furthermore, we employ third-party service experts to conduct an annual audit and review of our information security performance. In the event of a sudden external cyberattack, our on-site safety teams would immediately hold a meeting to share information and discuss responses and countermeasures; external experts would be invited to join the meeting to conduct reviews and analyses if necessary.
In addition to focusing on information security technologies and capabilities of the semiconductor industry and high-tech manufacturing, in 2021, we joined the SEMI to jointly develop and launch the SEMI E187- Specification for Cybersecurity of Fab Equipment.
In terms of trade secrets management, we continuously train our employees to enhance the protection of trade secrets and mitigate the risk of infringement. Third-party service providers are required to strictly abide by our cybersecurity requirements, and are required to sign additional confidentiality or privacy agreements when necessary. Our management team provides regular reports to the board of directors on the progress of the management plan and its implementation, and sets forth improvement measures based on the board of directors’ recommendations at least once a year. We believe that our processes provide us with a comprehensive assessment of potential cyber threats, including those risks arising from threats associated with third-party service providers.
In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident. While we actively take measures to manage information technology security risks, there can be no assurance that these measures will be sufficient to mitigate all potential risks to our system, networks, and data. For more information about these risks, see “Risk Factors – Cyber-attacks could harm our business, financial condition, and results of operations.”
PART III
Item 17. Financial Statements
The Company has elected to provide financial statements and related information pursuant to Item 18.
Item 18. Financial Statements
See the consolidated financial statements starting on page F-1 of this annual report.
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Item 19. Exhibits
| 1. |
2.
| (a) |
| (b) |
4.
| (a) | ^Asset Purchase Agreement dated July 3, 1999 among ASE (Chung Li) Inc., ASE Inc., Motorola Electronics Taiwan, Ltd. and Motorola, Inc. (incorporated by reference to Exhibit 10.2 to ASE Test’s registration statement on Form F-3 (File No. 333-10892) filed on September 27, 1999 (the “ASE Test 1999 Form-3”)). |
| (b) |
| (c) | ^Stock Purchase Agreement dated July 3, 1999 among ASE Investment (Labuan) Inc., ASE Inc., Motorola Asia Ltd. and Motorola, Inc. relating to the purchase and sale of 100.0% of the common stock of Motorola Korea Ltd. (incorporated by reference to Exhibit 10.3 to the ASE Test 1999 Form F-3). |
| (d) |
| (e) |
| (f) |
| (g) |
| (h) |
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| (i) |
| (j) |
| (k) |
| (l) |
| (m) |
| (n) |
| (o) |
| (p) |
| (q) |
| (r) |
| (s) |
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| (t) |
| (u) |
| (v) |
| (w) |
| 8. |
12.
| (a) | *Certification of Jason C.S. Chang, required by Rule 13a-14(a) of the Exchange Act. |
| (b) | *Certification of Joseph Tung, required by Rule 13a-14(a) of the Exchange Act. |
13.
| (a) |
| (b) |
15.
| (a) |
| (b) |
| 97. |
| 101.INS* | Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File. (Embedded within the Inline XBRL document) |
| † | Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the Securities and Exchange Commission, certain portions of this exhibit have been redacted because they are both not material and the type that the Company treats as private or confidential |
| ^ | Filed in paper. |
| * | Filed herewith. |
| ** | Schedules and annexes have been omitted. |
The Company agrees to furnish to the SEC upon request a copy of any instrument which defines the rights of holders of long-term debt of the Company and its consolidated subsidiaries.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing an annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| ASE TECHNOLOGY HOLDING CO., LTD. | ||
| By: | /s/ Joseph Tung | |
| Name: | Joseph Tung | |
| Title: | Chief Financial Officer | |
Date: April 3, 2024
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ASE Technology Holding Co., Ltd. and Subsidiaries Consolidated Financial Statements as of December 31, 2022 and 2023 and for the Years Ended December 31, 2021, 2022 and 2023 and Reports of Independent Registered Public Accounting Firms |
• |
We tested the design and operating effectiveness of controls over management’s evaluation of goodwill allocated to the packaging and testing segments for impairment, including those over the determination of the value in use of the packaging and testing segments, such as controls related to management’s selection of the discount rates and assessment on the reasonableness of forecasts of future revenues. |
• |
We evaluated management’s ability to accurately forecast future revenues of the packaging and testing segments by comparing their actual results to management’s historical forecasts. |
• |
We performed sensitivity analyses to evaluate the risk of impairment if key assumptions are changed. |
• |
With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by performing certain procedures, including: |
– |
Testing the source information underlying the determination of the discount rates and the mathematical accuracy of the calculation. |
– |
Developing a range of independent estimates and comparing those to the discount rates selected by management |
December 31, 2022 |
December 31, 2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
ASSETS |
||||||||||||
CURRENT ASSETS |
||||||||||||
Cash and cash equivalents (Note 6) |
$ |
$ |
$ |
|||||||||
Financial assets at fair value through profit or loss - current (Note 7) |
||||||||||||
Contract assets - current (Note 41) |
||||||||||||
Trade receivables, net (Note 10) |
||||||||||||
Other receivables (Note 10) |
||||||||||||
Current tax assets |
||||||||||||
Inventories (Note 11) |
||||||||||||
Inventories related to real estate business (Notes 12 and 36) |
||||||||||||
Other financial assets - current (Notes 13 and 36) |
||||||||||||
Other current assets |
||||||||||||
Total current assets |
||||||||||||
NON-CURRENT ASSETS |
||||||||||||
Financial assets at fair value through profit or loss - non-current (Note 7) |
||||||||||||
Financial assets at fair value through other comprehensive income - non-current (Note 8) |
||||||||||||
Investments accounted for using the equity method (Note 14) |
||||||||||||
Property, plant and equipment (Notes 15, 25, 36 and 37) |
||||||||||||
Right-of-use |
||||||||||||
Investment properties (Notes 17, 25 and 36) |
||||||||||||
Goodwill (Note 18) |
||||||||||||
Other intangible assets (Notes 19 and 25) |
||||||||||||
Deferred tax assets |
||||||||||||
Other financial assets - non-current (Notes 13 and 36) |
||||||||||||
Other non-current assets |
||||||||||||
Total non-current assets |
||||||||||||
TOTAL |
$ |
$ |
$ |
|||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| LIABILITIES AND EQUITY |
||||||||||||
| CURRENT LIABILITIES |
||||||||||||
| Short-term borrowings (Notes 20 and 36) |
$ |
$ |
$ |
|||||||||
| Short-term bills payable (Note 20) |
— |
|||||||||||
| Financial liabilities at fair value through profit or loss - current (Note 7) |
||||||||||||
| Financial liabilities for hedging - current (Notes 20 and 34) |
||||||||||||
| Trade payables |
||||||||||||
| Other payables (Note 22) |
||||||||||||
| Current tax liabilities |
||||||||||||
| Lease liabilities - current (Note 16) |
||||||||||||
| Current portion of bonds payable (Note 21) |
||||||||||||
| Current portion of long-term borrowings (Notes 20 and 36) |
||||||||||||
| Other current liabilities |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total current liabilities |
||||||||||||
| |
|
|
|
|
|
|||||||
| NON-CURRENT LIABILITIES |
||||||||||||
| Bonds payable (Note 21) |
||||||||||||
| Long-term borrowings (Notes 20 and 36) |
||||||||||||
| Deferred tax liabilities |
||||||||||||
| Lease liabilities - non-current (Note 16) |
||||||||||||
| Net defined benefit liabilities (Note 23) |
||||||||||||
| Other non-current liabilities |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total non-current liabilities |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total liabilities |
||||||||||||
| |
|
|
|
|
|
|||||||
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 24) |
||||||||||||
| Share capital |
||||||||||||
| Ordinary shares |
||||||||||||
| Shares subscribed in advance |
||||||||||||
| Share capital awaiting retirement |
— |
( |
) |
( |
) | |||||||
| |
|
|
|
|
|
|||||||
| Total share capital |
||||||||||||
| |
|
|
|
|
|
|||||||
| Capital surplus |
||||||||||||
| |
|
|
|
|
|
|||||||
| Retained earnings |
||||||||||||
| Legal reserve |
||||||||||||
| Special reserve |
||||||||||||
| Unappropriated earnings |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total retained earnings |
||||||||||||
| |
|
|
|
|
|
|||||||
| Other equity |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Treasury shares |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Equity attributable to owners of the Company |
||||||||||||
| NON-CONTROLLING INTERESTS (Note 24) |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total equity |
||||||||||||
| |
|
|
|
|
|
|||||||
| TOTAL |
$ |
$ |
$ |
|||||||||
| |
|
|
|
|
|
|||||||
| The accompanying notes are an integral part of the consolidated financial statements. |
(Concluded) |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
OPERATING REVENUES (Note 41) |
$ |
$ |
$ |
$ |
||||||||||||
OPERATING COSTS (Notes 11 and 25) |
||||||||||||||||
GROSS PROFIT |
||||||||||||||||
OPERATING EXPENSES (Note 25) |
||||||||||||||||
Selling and marketing expenses |
||||||||||||||||
General and administrative expenses |
||||||||||||||||
Research and development expenses |
||||||||||||||||
Total operating expenses |
||||||||||||||||
OTHER OPERATING INCOME AND EXPENSES, NET (Note 25) |
||||||||||||||||
PROFIT FROM OPERATIONS |
||||||||||||||||
NON-OPERATING INCOME AND EXPENSES |
||||||||||||||||
Other income (Note 25) |
||||||||||||||||
Other gains and losses (Note 25) |
||||||||||||||||
Finance costs (Note 25) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Share of the profit or loss of associates and joint ventures |
||||||||||||||||
Total non-operating income and expenses |
||||||||||||||||
PROFIT BEFORE INCOME TAX |
||||||||||||||||
INCOME TAX EXPENSE (Note 26) |
||||||||||||||||
PROFIT FOR THE YEAR |
||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) |
||||||||||||||||
Items that will not be reclassified subsequently to profit or loss: |
||||||||||||||||
Remeasurement of defined benefit obligation |
( |
) |
( |
) | ||||||||||||
Unrealized gain (loss) on equity instruments at fair value through other comprehensive income |
( |
) |
||||||||||||||
Share of other comprehensive income (loss) of associates and joint ventures |
( |
) |
||||||||||||||
Income tax relating to items that will not be reclassified subsequently to profit or loss |
( |
) |
( |
) |
( |
) | ||||||||||
( |
) |
|||||||||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Items that may be reclassified subsequently to profit or loss: |
||||||||||||||||
| Exchange differences on translating foreign operations |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | ||||||
| Unrealized gain (loss) on debt investments at fair value through other comprehensive income |
( |
) |
( |
) |
( |
) | ||||||||||
| Gain (loss) on hedging instruments |
( |
) |
( |
) | ||||||||||||
| Share of other comprehensive income (loss) of associates and joint ventures |
( |
) |
( |
) |
( |
) | ||||||||||
| Income tax related to items that may be reclassified subsequently to profit or loss |
— |
— |
( |
) |
( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
( |
) |
( |
) |
( |
) | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Other comprehensive income for the year, net of income tax |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| NET PROFIT ATTRIBUTABLE TO: |
||||||||||||||||
| Owners of the Company |
$ |
$ |
$ |
$ |
||||||||||||
| Non-controlling interests |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: |
||||||||||||||||
| Owners of the Company |
$ |
$ |
$ |
$ |
||||||||||||
| Non-controlling interests |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EARNINGS PER SHARE (Note 27) |
||||||||||||||||
| Basic |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EARNINGS PER AMERICAN DEPOSITARY SHARE (“ADS”) (Note 27) |
||||||||||||||||
| Basic |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| The accompanying notes are an integral part of the consolidated financial statements. |
(Concluded) |
(Amounts in Thousands) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Attributable to Owners of the Company |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange |
(Loss) on Financial |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differences on |
Assets at Fair Value |
Equity Directly Associated with Disposal Groups Held for Sale |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Capital |
Retained Earnings |
Translating |
Through Other |
Gain (Loss) |
Unearned |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Capital |
Legal |
Special |
Unappropriated |
Foreign |
Comprehensive |
on Hedging |
Employee |
Treasury |
Non-controlling |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In Thousands) |
Amounts |
Surplus |
Reserve |
Reserve |
Earnings |
Total |
Operations |
Income |
Instruments |
Compensation |
Total |
Shares |
Total |
Interests |
Total Equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2021 (RETROSPECTIVELY ADJUSTED) |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Appropriation of 2020 earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Special reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends distributed by the Company |
— | — | — | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| — | — | — | ( |
) | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
Change from investments in associates accounted for using the equity method |
— | — | ( |
) | — | — | — | ( |
) | — | — | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other changes in the capital surplus |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net profit for the year ended December 31, 2021 |
— | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax |
— | — | — | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) for the year ended December 31, 2021 |
— | — | — | — | — | ( |
) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Buy-back of ordinary shares |
— | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends received by subsidiaries from the Company |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in percentage of ownership interest in subsidiaries (Note 31) |
— | — | ( |
) | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
Issue of ordinary shares under employee share options (Note 28) |
— | — | — | — | — | — | — | ( |
) | — | ( |
) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends distributed by subsidiaries |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
Additional non-controlling interest arising on issue of employee share options by subsidiaries (Note 28) |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issue of convertible bonds by subsidiary (Note 21) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal of investments in equity instruments at fair value through other comprehensive income |
— | — | — | — | — | — | ( |
) | — | — | — | ( |
) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2021 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2022 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Appropriation of 2021 earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Special reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends distributed by the Company |
— | — | — | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| — | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Donations from shareholders |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change from investments in associates accounted for using the equity method |
— | — | — | — | — | ( |
) | — | — | — | ( |
) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other changes in the capital surplus |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net profit for the year ended December 31, 2022 |
— | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) for the year ended December 31, 2022, net of income tax |
— | — | — | — | — | ( |
) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) for the year ended December 31, 2022 |
— | — | — | — | — | ( |
) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Amounts in Thousands) | ||||||||||||||||||||||||||||||||
Equity Attributable to Owners of the Company |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain |
Equity Directly Associated with Disposal Groups Held for Sale |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange |
(Loss) on Financial |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differences on |
Assets at Fair Value |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Capital |
Retained Earnings |
Translating |
Through Other |
Gain (Loss) |
Unearned |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Capital |
Legal |
Special |
Unappropriated |
Foreign |
Comprehensive |
on Hedging |
Employee |
Treasury |
Non-controlling |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In Thousands) |
Amounts |
Surplus |
Reserve |
Reserve |
Earnings |
Total |
Operations |
Income |
Instruments |
Compensation |
Total |
Shares |
Total |
Interests |
Total Equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
| Buy-back of ordinary shares |
— | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | ||||||||||||||||||||||||||||||||
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| Cancelation of treasury shares |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
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| Cash dividends received by subsidiaries from the Company |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Changes in percentage of ownership interest in subsidiaries (Note 31) |
— | — | ( |
) | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Issue of ordinary shares under employee share options (Note 28) |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Cash dividends distributed by subsidiaries |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Additional non-controlling interest arising on issue of employee share options by subsidiaries (Note 28) |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Issue of convertible bonds by subsidiary (Note 21) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Disposal of investments in equity instruments at fair value through other comprehensive income |
— | — | — | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2022 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| BALANCE AT JANUARY 1, 2023 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
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| Appropriation of 2022 earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Legal reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Special reserve |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends distributed by the Company |
— | — | — | — | — | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
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| — | — | — | ( |
) | ( |
) | ( |
) | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
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| Reversal of special reserve appropriated at the first-time adoption of IFRS Accounting Standards |
— | — | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| Change from investments in associates accounted for using the equity method |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||||
| Other changes in the capital surplus |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net profit for the year ended December 31, 2023 |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) for the year ended December 31, 2023, net of income tax |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Total comprehensive income (loss) for the year ended December 31, 2023 |
— | — | — | — | — | ( |
) | ( |
) | — | ( |
) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Cash dividends received by subsidiaries from the Company |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Disposal of subsidiary (Note 30) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Differences between consideration and carrying amount arising from acquisition of subsidiaries |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Issue of ordinary shares under employee share options (Note 28) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Cash dividends distributed by subsidiaries |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Additional non-controlling interest arising on issue of employee share options by subsidiaries (Note 28) |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Issue of convertible bonds by subsidiary (Note 21) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| Disposal of investments in equity instruments at fair value through other comprehensive income |
— | — | — | — | — | — | ( |
) | — | — | — | ( |
) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2023 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| US DOLLARS (Note 4) BALANCE AT DECEMBER 31, 2023 |
$ | $ | $ | $ | $ | $ | $ | ( |
) | $ | $ | $ | — | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| |
|
|
|
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|
|||||||||||||||||||||||||||||||||||
| The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
Profit before income tax |
$ | $ | $ | $ | ||||||||||||
Adjustments for: |
||||||||||||||||
Depreciation expense |
||||||||||||||||
Amortization expense |
||||||||||||||||
Net loss (gain) on fair value change of financial assets and liabilities at fair value through profit or loss |
( |
) | ( |
) | ( |
) | ||||||||||
Finance costs |
||||||||||||||||
Interest income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Dividend income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Share-based payment compensations |
||||||||||||||||
Share of profit of associates and joint ventures |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Gain on disposal of property, plant and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loss (gain) on disposal of investments accounted for using the equity method |
( |
) | ( |
) | ( |
) | ||||||||||
Impairment loss recognized on financial assets |
||||||||||||||||
Impairment loss recognized on non-financial assets |
||||||||||||||||
Gain on disposal of subsidiaries |
( |
) | — | ( |
) | ( |
) | |||||||||
Gain from bargain purchase - acquisition of subsidiary |
( |
) | — | — | — | |||||||||||
Net loss (gain) on foreign currency exchange |
( |
) | ||||||||||||||
Others |
( |
) | ||||||||||||||
Changes in operating assets and liabilities |
||||||||||||||||
Financial assets mandatorily at fair value through profit or loss |
||||||||||||||||
Contract assets |
( |
) | ( |
) | ||||||||||||
Trade receivables |
( |
) | ||||||||||||||
Other receivables |
( |
) | ( |
) | ||||||||||||
Inventories |
( |
) | ( |
) | ||||||||||||
Other current assets |
( |
) | ( |
) | ( |
) | ||||||||||
Other financial assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other operating activities assets |
( |
) | ||||||||||||||
Financial liabilities held for trading |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Trade payables |
( |
) | ( |
) | ( |
) | ||||||||||
Other payables |
( |
) | ( |
) | ||||||||||||
Other current liabilities |
( |
) | ( |
) | ||||||||||||
Other operating activities liabilities |
( |
) | ( |
) | ||||||||||||
Cash generated from operations |
||||||||||||||||
Interest received |
||||||||||||||||
Dividend received |
||||||||||||||||
Interest paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net cash generated from operating activities |
|
|
||||||||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||
| Purchase of financial assets at fair value through other comprehensive income |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Proceeds from sale of financial assets at fair value through other comprehensive income |
— | — | — | |||||||||||||
| Return of capital from financial assets at fair value through other comprehensive income |
||||||||||||||||
| Proceeds from sale of financial assets at amortized cost |
— | — | — | |||||||||||||
| Acquisition of associates and joint ventures |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Proceeds from disposal of investments accounted for using the equity method |
— | — | ||||||||||||||
| Net proceeds outflow on acquisition of subsidiaries (Note 29) |
( |
) | — | ( |
) | ( |
) | |||||||||
| Net proceeds from disposal of subsidiaries (Note 30) |
— | |||||||||||||||
| Payments for property, plant and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Proceeds from disposal of property, plant and equipment |
||||||||||||||||
| Payments for intangible assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Proceeds from disposal of intangible assets |
||||||||||||||||
| Payments for right-of-use |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Payments for investment properties |
— | ( |
) | ( |
) | ( |
) | |||||||||
| Increase in other financial assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Decrease in other financial assets |
||||||||||||||||
| Increase in other non-current assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Decrease in other non-current assets |
||||||||||||||||
| Income tax paid |
( |
) | ( |
) | — | — | ||||||||||
| Proceeds from disposal of right -of-use |
— | — | — | |||||||||||||
| Other investing activities items |
— | |||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||
| Proceeds from short-term borrowings |
||||||||||||||||
| Proceeds from short-term bills payable |
— | — | ||||||||||||||
| Proceeds from bonds offering |
||||||||||||||||
| Repayment of bonds payable |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Proceeds from long-term borrowings |
||||||||||||||||
| Repayment of long-term borrowings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Repayment of the principle portion of lease liabilities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Dividends paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Proceeds from exercise of employee share options |
||||||||||||||||
| Payments for buy-back of ordinary shares |
( |
) | ( |
) | — | — | ||||||||||
| Decrease in non-controlling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other financing activities items |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCY |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
( |
) | ||||||||||||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR |
||||||||||||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR |
$ | |
$ | |
$ | $ | ||||||||||
| The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |
1. |
GENERAL INFORMATION |
2. |
APPROVAL OF FINANCIAL STATEMENTS |
3. |
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (“IASB”) (collectively, “IFRS Accounting Standards”) |
| a. | Amendments to IFRS Accounting Standards that are mandatorily effective for the current year |
| 1) | Amendments to IAS 1 “Disclosure of Accounting Policies” |
| • | Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed; |
| • | The Group may consider the accounting policy information material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and |
| • | Not all accounting policy information relating to material transactions, other events or conditions is itself material. |
| a) | The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements; |
| b) | The Group chose the accounting policy from options permitted by the standards; |
| c) | The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies; |
| d) | The accounting policy relates to an area for which the Group is required to make significant judgments or assumptions in applying an accounting policy, and the Group discloses those judgments or assumptions; or |
| e) | The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions. |
| 2) | Amendments to IAS 8 “Definition of Accounting Estimates” |
| 3) | Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” |
| 4) | Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules” |
| b. | New, revised or amended IFRS Accounting Standards in issue but not yet effective |
New, Revised or Amended Standards and Interpretations |
Effective Date Announced by IASB (Note 1) | |
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” |
To be determined by IASB | |
Amendments to IFRS 16“Leases Liability in a Sale and Leaseback” |
January 1, 2024 (Note 2) | |
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” |
January 1, 2024 | |
Amendments to IAS 1 “Non-current Liabilities with Covenants” |
January 1, 2024 | |
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” |
January 1, 2024 (Note 3) | |
Amendments to IAS 21 “Lack of Exchangeability” |
January 1, 2025 (Note 4) |
| Note 1: | Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates. |
| Note 2: | A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16. |
| Note 3: | The amendments provide some transition relief regarding disclosure requirements. |
| Note 4: | A Group shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the Group recognizes any effect as an adjustment to the opening balance of retained earnings. When the Group uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity. |
| c. | Material changes in accounting policy resulted from new, revised and amended standards and interpretations in issue but not yet effective |
4. |
SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION |
| a. | Statement of compliance |
| b. | Basis of preparation |
| 1) | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| 2) | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or a liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and |
| 3) | Level 3 inputs are unobservable inputs for an asset or a liability. |
| c. | Classification of current and non-current assets and liabilities |
| d. | Basis of consolidation |
| 1) | Principles for preparing consolidated financial statements |
| 2) | The detail information of the subsidiaries was as follows: |
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
The Company |
ASE |
|||||||||||||
USI Inc. (“USIINC”) |
||||||||||||||
SPIL |
||||||||||||||
ASE Social Enterprise Co., Ltd. |
||||||||||||||
ASE Global Integrated Solutions Co., Ltd. |
||||||||||||||
ASE |
A.S.E. Holding Limited |
|||||||||||||
J & R Holding Limited (“J&R Holding”) |
||||||||||||||
Innosource Limited |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
Omniquest Industrial Limited |
||||||||||||||
ASE Marketing & Service Japan Co., Ltd. |
||||||||||||||
ASE Test, Inc. (“ASET”) |
||||||||||||||
Luchu Development Corporation (“LUCHU”) |
||||||||||||||
Advanced Microelectronic Products Inc. (“AMPI”) |
||||||||||||||
ASE Singapore Pte. Ltd. |
||||||||||||||
ASE Electronics (M) Sdn. Bhd. |
||||||||||||||
ASET |
Alto Enterprises Limited |
|||||||||||||
Super Zone Holdings Limited |
||||||||||||||
LUCHU |
||||||||||||||
TLJ Intertech Inc. |
||||||||||||||
AMPI |
||||||||||||||
A.S.E. Holding Limited |
ASE Investment (Labuan) Inc. |
|||||||||||||
ASE Test Limited (“ASE Test”) |
||||||||||||||
ASE Technology Partners, Limited |
||||||||||||||
Integrated Solutions Enterprise Europe (“ITGEU”) |
||||||||||||||
J&R Holding |
ASE Test |
|||||||||||||
Omniquest Industrial Limited |
||||||||||||||
J&R Industrial Inc. |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
ASE Japan Co., Ltd. |
||||||||||||||
ASE (U.S.) Inc. |
||||||||||||||
Global Advanced Packaging Technology Limited |
||||||||||||||
Innosource Limited |
Omniquest Industrial Limited |
|||||||||||||
ASE (Shanghai) Inc. (“ASEMTL”) |
||||||||||||||
ASE Enterprise Management (Shanghai) Inc. (“ASEEMSH”) |
||||||||||||||
Omniquest Industrial Limited |
ASE Corporation |
|||||||||||||
Alto Enterprises Limited |
ASE Investment (Kun Shan) Limited |
|||||||||||||
Super Zone Holdings Limited |
Advanced Semiconductor Engineering (China) Ltd. |
|||||||||||||
ASE Investment (Labuan) Inc. |
ASE (Korea) Inc. |
|||||||||||||
ASE Technology Partners, Limited |
ASE Technology Acquisition Corporation |
|||||||||||||
ASE Test |
ASE Test Holdings, Ltd. |
|||||||||||||
ASE Holdings (Singapore) Pte Ltd |
||||||||||||||
ASE Investment (Labuan) Inc. |
||||||||||||||
ASE Test Holdings, Ltd. |
ISE Labs, Inc. |
|||||||||||||
ISE Labs, Inc. |
ISE Services, Inc. |
|||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
Global Advanced Packaging Technology Limited |
ASE Assembly & Test (Shanghai) Limited (“ASESH”) |
|||||||||||||
ASESH |
Wuxi Tongzhi Microelectronics Co., Ltd. |
|||||||||||||
ISE Labs, China, Ltd. |
||||||||||||||
Shanghai Ding Hui Real Estate Development Co., Ltd. (“DH”) |
||||||||||||||
DH |
Shanghai Ding Qi Property Management Co., Ltd. |
|||||||||||||
Shanghai Ding Wei Real Estate Development Co., Ltd. |
||||||||||||||
Shanghai Ding Yu Real Estate Development Co., Ltd. |
||||||||||||||
Kun Shan Ding Hong Real Estate Development Co., Ltd. |
||||||||||||||
Shanghai Ding Xu Property Management Co., Ltd. |
||||||||||||||
Shanghai Ding Yao Estate Development Co., Ltd. |
||||||||||||||
Shanghai Ding Fan Business Management Co., Ltd. |
||||||||||||||
ASE Corporation |
ASE Mauritius Inc. |
|||||||||||||
ASE Labuan Inc. |
||||||||||||||
ASE Mauritius Inc. |
ASEMTL |
|||||||||||||
ASEEMSH |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
ASE Labuan Inc. |
ASE Electronics Inc. |
|||||||||||||
ASEMTL |
Advanced Semiconductor Engineering (HK) Limited |
|||||||||||||
DH |
||||||||||||||
Universal Scientific Industrial (Shanghai) Co., Ltd. (“USISH”) |
||||||||||||||
ASEEMSH |
DH |
|||||||||||||
USIINC |
Huntington Holdings International Co., Ltd. |
|||||||||||||
Huntington Holdings International Co., Ltd. |
Unitech Holdings International Co., Ltd. |
|||||||||||||
Real Tech Holdings Limited |
||||||||||||||
Universal ABIT Holding Co., Ltd. |
||||||||||||||
Real Tech Holdings Limited |
USI Enterprise Limited (“USIE”) |
|||||||||||||
USIE |
USISH |
|||||||||||||
USISH |
Universal Global Technology Co., Limited |
|||||||||||||
Universal Global Technology (Kunshan) Co., Ltd. (“UGKS”) |
||||||||||||||
Universal Global Technology (Shanghai) Co., Ltd. |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
Universal Global Electronics (Shanghai) Co., Ltd. |
||||||||||||||
USI Electronics (Shenzhen) Co., Ltd. (“USISZ”) |
||||||||||||||
Universal Global Technology (Huizhou) Co., Ltd. |
||||||||||||||
FINANCIERE AFG (”FAFG”) |
||||||||||||||
Universal Global Technology Co., Limited |
Universal Global Industrial Co., Limited |
|||||||||||||
Universal Global Scientific Industrial Co., Ltd. (“UGTW”) |
||||||||||||||
USI America Inc. |
||||||||||||||
Universal Scientific Industrial De Mexico S.A. De C.V. |
||||||||||||||
USI Japan Co., Ltd. |
||||||||||||||
USISZ |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
Universal Global Electronics Co., Ltd. (“UGHK”) |
||||||||||||||
Universal Scientific Industrial (France) |
||||||||||||||
UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED |
||||||||||||||
Universal Ample Technology Co., Limited |
||||||||||||||
Universal Global Industrial Co., Limited |
Universal Scientific Industrial De Mexico S.A. De C.V. |
(Note 1 | ) | (Note 1 | ) | |||||||||
UGTW |
Universal Scientific Industrial Co., Ltd. |
|||||||||||||
UGHK |
Universal Scientific Industrial Poland Sp. z o.o. |
|||||||||||||
Universal Global Electronics (Shanghai) Co., Ltd. |
USI Science and Technology (Shenzhen) Co., Ltd. |
|||||||||||||
Universal Ample Technology Co., Limited |
setus 80. GmbH |
|||||||||||||
setus 80. GmbH |
Hirschmann Car Communication Holding S.a.r.l. (“Hirschmann”) |
|||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
Hirschmann |
Hirschmann Car Communication GmbH |
|||||||||||||
Hirschmann Car Communication Kft. |
||||||||||||||
Hirschmann Car Communication, Inc. |
||||||||||||||
Hirschmann Car Communication GmbH |
Hirschmann Car Communication S.A.S. |
|||||||||||||
Hirschmann Car Communication (Shanghai) Co., Ltd. |
||||||||||||||
Universal Scientific Industrial (France) |
FAFG |
|||||||||||||
FAFG |
MANUFACTURING POWER TUNISIA |
|||||||||||||
ASTEELFLASH MEXICO S.A. de C.V. |
||||||||||||||
ASTEELFLASH (BEDFORD) LIMITED |
||||||||||||||
ASTEELFLASH FRANCE |
||||||||||||||
ASTEELFLASH TUNISIE S.A. |
||||||||||||||
ASTEELFLASH HONG KONG LIMITED |
||||||||||||||
ASTEELFLASH GERMANY GmbH |
||||||||||||||
ASTEELFLASH US HOLDING CORP. |
||||||||||||||
AFERH TUNISIE |
||||||||||||||
Establishment |
Percentage of Ownership (%) |
|||||||||||||
and Operating |
December 31 |
|||||||||||||
Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
|||||||||
ASTEEL ELECTRONICS MANUFACTURING SERVICES |
||||||||||||||
ASTEELFLASH PLZEN S.R.O. |
||||||||||||||
ASTEELFLASH (BEDFORD) LIMITED |
ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | |||||||||
ASTEELFLASH TECHNOLOGIE |
ASTEELFLASH FRANCE |
(Note 1 | ) | (Note 1 | ) | |||||||||
ASTEELFLASH FRANCE |
ASTEEL ELECTRONICS MANUFACTURING SERVICES |
|||||||||||||
ASTEELFLASH TECHNOLOGIE |
||||||||||||||
ASTEELFLASH BRETAGNE |
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ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | ||||||||||
AFERH TUNISIE |
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ASTEELFLASH HONG KONG LIMITED |
Asteelflash Suzhou Co., Ltd. |
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Asteelflash Suzhou Co., Ltd. |
ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | |||||||||
ASTEELFLASH GERMANY GmbH |
ASTEELFLASH HERSFELD GmbH |
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ASTEELFLASH EBERBACH GmbH |
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Establishment |
Percentage of Ownership (%) |
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and Operating |
December 31 |
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Name of Investor |
Name of Investee |
Main Businesses |
Location |
2022 |
2023 |
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ASTEELFLASH BONN GmbH |
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ASTEELFLASH SCHWANDORF GmbH |
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ASTEELFLASH DESIGN SOLUTIONS HAMBOURG GmbH |
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EN ELECTRONIC NETWORK SRL |
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ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | ||||||||||
ASTEELFLASH MEXICO S.A. de C.V. |
ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | |||||||||
ASTEELFLASH US HOLDING CORP. |
ASTEELFLASH USA CORP. |
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ASTEELFLASH USA CORP. |
ASTEELFLASH TUNISIE S.A. |
(Note 1 | ) | (Note 1 | ) | |||||||||
SPIL |
SPIL (B.V.I.) Holding Limited |
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Siliconware Precision Malaysia Sdn. Bhd. |
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SPIL (B.V.I.) Holding Limited |
Siliconware USA, Inc. |
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SPIL (Cayman) Holding Limited |
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SPIL (Cayman) Holding Limited |
Siliconware Technology (Suzhou) Limited |
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| Note 1: | The number of shares held was |
| e. | Business combinations |
| f. | Foreign currencies |
| g. | Inventories and inventories related to real estate business |
| h. | Investments in associates and joint ventures |
| i. | Property, plant and equipment |
| j. | Investment properties |
| k. | Goodwill |
| l. | Other intangible assets |
| 1) | Separate acquisition |
| 2) | Acquired through business combinations |
| 3) | Derecognition |
| m. | Impairment of property, plant and equipment, right-of-use |
| n. | Financial instruments |
| 1) | Financial assets |
| a) | Measurement categories |
| i. | Financial asset at FVTPL |
| ii. | Financial assets 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. |
| 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 the financial asset; and |
| ii) | Financial assets that are not credit-impaired on purchase or origination but 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 in subsequent reporting periods. |
| i) | Significant financial difficulty of the issuer or the borrower; |
| ii) | Breach of contract, such as a default; |
| iii) | It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or |
| iv) | The disappearance of an active market for that financial asset because of financial difficulties. |
| iii. | Investments in debt instruments at FVTOCI |
| i) | the debt instrument is held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of the financial assets; and |
| ii) | the contractual terms of the debt instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
| iv. | Investments in equity instruments at FVTOCI |
| b) | Impairment of financial assets and contract assets |
| c) | Derecognition of financial assets |
| 2) | Equity instruments |
| 3) | Financial liabilities |
| a) | Subsequent measurement |
| b) | Derecognition of financial liabilities |
| 4) | Derivative financial instruments |
| 5) | Convertible bonds issued by the subsidiaries |
| o. | Hedge accounting |
| 1) | Fair value hedges |
| 2) | Hedges of net investments in foreign operations |
| p. | Revenue recognition |
| q. | Leases |
| 1) | The Group as lessor |
| 2) | The Group as lessee |
| r. | Borrowing costs |
| s. | Government grants |
| t. | Employee benefits |
| 1) | Short-term employee benefits |
| 2) | Retirement benefits |
| u. | Share-based payment arrangements |
| v. | Taxation |
| 1) | Current tax |
| 2) | Deferred tax |
| 3) | Current and deferred tax for the year |
| w. | U.S. Dollar Amounts |
5. |
MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
6. |
CASH AND CASH EQUIVALENTS |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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Cash on hand |
$ | $ | $ | |||||||||
Checking accounts and demand deposits |
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Cash equivalents (time deposits with original maturity of less than three months) |
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| $ | $ | $ | ||||||||||
| 7. | FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Financial assets mandatorily classified as at FVTPL |
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| Derivative instruments (non-designated hedges) |
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| Swap contracts |
$ | $ | $ | |||||||||
| Forward exchange contracts |
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| Non-derivative financial assets |
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| Quoted ordinary shares |
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| Private-placement funds |
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| Unquoted preferred shares |
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| Open-end mutual funds |
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| Contingent considerations |
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| Hybrid financial assets |
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| Convertible notes |
— | |||||||||||
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| Current |
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| Non-current |
$ | $ | $ | |||||||||
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| Financial liabilities held for trading - current |
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| Derivative instruments (non-designated hedges) |
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| Swap contracts |
$ | $ | $ | |||||||||
| Forward exchange contracts |
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$ | $ | $ | |||||||||
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| a. | At each balance sheet date, outstanding swap contracts not accounted for hedge accounting were as follows: |
Currency |
Maturity Period |
Notional Amount (In Thousands) | ||
| December 31, 2022 |
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| Sell RMB/Buy US$ |
RMB | |||
| Sell NT$/Buy US$ |
- |
NT$ | ||
| Sell US$/Buy KRW |
US$ | |||
| Sell US$/Buy NT$ |
US$ | |||
| December 31, 2023 |
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| Sell RMB/Buy US$ |
RMB | |||
| Sell HKD/Buy US$ |
HKD | |||
| Sell JPY/Buy US$ |
JPY | |||
| Sell NT$/Buy US$ |
- | NT$ | ||
| Sell US$/Buy KRW |
US$ | |||
| Sell US$/Buy NT$ |
US$ | |||
| b. | At each balance sheet date, outstanding forward exchange contracts not accounted for hedge accounting were as follows: |
Currency |
Maturity Period |
Notional Amount (In Thousands) | ||
| December 31, 2022 |
||||
| Sell RMB/Buy JPY |
RMB | |||
| Sell RMB/Buy NT$ |
- |
RMB | ||
| Sell RMB/Buy US$ |
- |
RMB | ||
| Sell EUR/Buy JPY |
EUR | |||
| Sell NT$/Buy US$ |
- |
NT$ | ||
| Sell US$/Buy RMB |
- |
US$ | ||
| Sell US$/Buy EUR |
- |
US$ | ||
| Sell US$/Buy JPY |
US$ | |||
| Sell US$/Buy KRW |
US$ | |||
| Sell US$/Buy MYR |
- |
US$ | ||
| Sell US$/Buy NT$ |
- |
US$ | ||
| Sell US$/Buy PLN |
- |
US$ | ||
| Sell US$/Buy SGD |
- |
US$ | ||
| December 31, 2023 |
||||
| Sell RMB/Buy JPY |
|
RMB | ||
| Sell RMB/Buy NT$ |
- |
RMB | ||
| Sell RMB/Buy US$ |
|
RMB | ||
| Sell EUR/Buy CZK |
- |
EUR | ||
| Sell NT$/Buy US$ |
- |
NT$ | ||
| Sell US$/Buy RMB |
- |
US$ | ||
| Sell US$/Buy JPY |
|
US$ | ||
| Sell US$/Buy KRW |
US$ | |||
| Sell US$/Buy MYR |
US$ | |||
| Sell US$/Buy NT$ |
- | US$ | ||
| Sell US$/Buy PLN |
- | US$ | ||
| Sell US$/Buy SGD |
- | US$ | ||
8. |
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI) |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Investments in equity instruments at FVTOCI |
$ | $ | $ | |||||||||
| Investments in debt instruments at FVTOCI |
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| $ | |
$ | |
$ | |
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| a. | Investments in equity instruments at FVTOCI |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Unquoted ordinary shares |
$ | $ | $ | |||||||||
| Unquoted preferred shares |
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| Quoted ordinary shares |
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| Limited partnership |
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| $ | |
$ | |
$ | |
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| b. | Investments in debt instruments at FVTOCI |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Unsecured subordinate corporate bonds |
$ | |
$ | |
$ | |
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9. |
CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS |
10. |
TRADE RECEIVABLES, NET |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| At amortized cost |
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| Gross carrying amount |
$ | $ | $ | |||||||||
| Less: Allowance for impairment loss |
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| At FVTOCI |
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| $ | $ | |
$ | |
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| a. | Trade receivables |
| 1) | At amortized cost |
Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Individually Impaired |
Total |
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NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
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| Expected credit loss rate |
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| Gross carrying amount |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loss allowance (Lifetime ECLs) |
( |
) | ( |
) | ( |
) | ( |
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) | ||||||||||||
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| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
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Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Individually Impaired |
Total |
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NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
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Expected credit loss rate |
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Gross carrying amount |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Loss allowance (Lifetime ECLs) |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Individually Impaired |
Total |
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US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
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Expected credit loss rate |
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Gross carrying amount |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Loss allowance (Lifetime ECLs) |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
December 31 |
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2021 |
2022 |
2023 |
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NT$ |
NT$ |
NT$ |
US$ (Note 4) |
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Balance at January 1 |
$ | $ | $ | $ | ||||||||||||
Remeasurement of loss allowance |
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Acquisition through business combinations |
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Amounts written off |
( |
) | ( |
) | ( |
) | ||||||||||
Disposal of subsidiaries |
( |
) | ||||||||||||||
Effects of foreign currency exchange differences |
( |
) | ||||||||||||||
Balance at December 31 |
$ | |
$ | |
$ | |
$ | |
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| 2) | At FVTOCI |
Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Total |
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NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
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Expected credit loss rate |
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Gross carrying amount |
$ |
$ |
$ |
$ |
$ |
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Loss allowance (Lifetime ECLs) |
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$ |
$ |
$ |
$ |
$ |
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December 31, 2023 |
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Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Total |
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NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
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Expected credit loss rate |
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Gross carrying amount |
$ |
$ |
$ |
$ |
$ |
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Loss allowance (Lifetime ECLs) |
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$ |
$ |
$ |
$ |
$ |
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Not Past Due |
Overdue 1 to 30 days |
Overdue 31 to 90 Days |
Overdue Over 91 Days |
Total |
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US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
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Expected credit loss rate |
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Gross carrying amount |
$ |
$ |
$ |
$ |
$ |
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Loss allowance (Lifetime ECLs) |
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$ |
$ |
$ |
$ |
$ |
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| 3) | At FVTPL |
| b. | Transfers of financial assets |
Counterparty |
Receivables Factoring Proceed |
Reclassified to Other Receivables |
Advances Received- Unused |
Advances Received- Used |
Annual Interest Rates on Advances Received (%) |
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December 31, 2022 |
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BNP Paribas |
EUR | |
EUR | |
EUR | |
EUR | |
|
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December 31, 2023 |
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BNP Paribas |
EUR | EUR | EUR | EUR | ||||||||||||||||||
11. |
INVENTORIES |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Finished goods |
$ | $ | $ | |||||||||
| Work in process |
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| Raw materials |
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| Supplies |
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| Raw materials and supplies in transit |
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| $ | |
$ | |
$ | |
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12. |
INVENTORIES RELATED TO REAL ESTATE BUSINESS |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Land and buildings held for sale |
$ | $ | $ | |||||||||
| Construction in progress |
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| Land held for construction |
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| $ | |
$ | |
$ | |
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13. |
OTHER FINANCIAL ASSETS |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Guarantee deposits |
$ | $ | $ | |||||||||
| Pledged time deposits (Note 36) |
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| Time deposits with original maturity over three months |
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| Others (Note 36) |
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| Current |
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| Non-current |
$ | |
$ | |
$ | |||||||
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14. |
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Investments in associates |
$ | $ | $ | |||||||||
| Investments in joint ventures |
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| $ | $ | $ | ||||||||||
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| a. | Investments in associates |
| 1) | Investments in associates accounted for using the equity method that was not individually material consisted of the following: |
Operating |
Carrying Amount as of December 31 |
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Name of Associate |
Main Business |
Location |
2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Yann Yuan Investment Co., Ltd. (“Yann Yuan”) |
|
$ | $ | $ | ||||||||||||
| ChipMOS Technologies Inc. (“ChipMOS”) |
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| MACHVISION,INC. (“MACHVISION”) |
non-contact optical inspection equipment |
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| Hung Ching Development & Construction Co. (“HC”) |
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| M-Universe Investments Pte. Ltd. (“MU”) |
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| Chipletz, Inc. (“CHIPLETZ”) |
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| Hung Ching Kwan Co. (“HCK”) |
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| Questyle Audio Engineering Co., Ltd. (“QUESTYLE”) |
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Operating |
Carrying Amount as of December 31 |
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Name of Associate |
Main Business |
Location |
2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| Deca Technologies Inc. (“DECA”) |
|
$ | $ | $ | ||||||||||||
| Goodcare Holdings Inc. (“GOODCARE”) |
|
— | ||||||||||||||
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| Less: Deferred gain on transfer of land |
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| $ | $ | $ | ||||||||||||||
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| 2) | At each balance sheet date, the total percentages of ownership held by the Group were as follows: |
December 31 | ||||||||||
2022 |
2023 | |||||||||
| Yann Yuan |
% | % | ||||||||
| ChipMOS |
% | % | ||||||||
| MACHVISION |
% | |||||||||
| HC |
% | % | ||||||||
| MU |
% | % | ||||||||
| CHIPLETZ |
% | % | ||||||||
| HCK |
% | % | ||||||||
| QUESTYLE |
% | % | ||||||||
| DECA |
% | % | ||||||||
| GOODCARE |
% | |||||||||
| 3) | At the end of 2022, the Group evaluated the recoverable amount of its investment in CHIPLETZ by using the value in use. The recoverable amount was lower than the carrying amount and, therefore, the Group recognized an impairment loss of NT$ in cash for additional newly issued preferred shares of CHIPLETZ at a percentage different from its existing ownership percentage, which led to a decrease in the Group’s percentage of ownership in CHIPLETZ to still has significant influence over CHIPLETZ since it involves in making significant decisions by participating in CHIPLETZ’s board meeting. |
| 4) | In November 2022, the Group’s subsidiary, USISH, invested RMB |
| 5) | In March 2023, the Group’s subsidiary, ASE Social Enterprise Co., Ltd, acquired |
| 6) | In June 2023, the Group’s subsidiary, ASE, subscribed for |
| 7) | In the second quarter of 2023, the exercise of employee share options issued by DECA led the Group’s percentage of ownership in DECA decreased to |
| 8) | Fair values (Level 1) of investments in associates with available published price quotation are summarized as follows: |
December 31 |
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2022 |
2023 |
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NT$ |
NT$ |
US$ (Note 4) |
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| ChipMOS |
$ | $ | $ | |||||||||
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| HC |
$ | |
$ | |
$ | |
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| 9) | Aggregate information of associates that are not individually material |
For the Year Ended December 31 |
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2021 |
2022 |
2023 |
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NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| The Group’s share of: |
||||||||||||||||
| Net income |
$ | $ | |
$ | $ | |||||||||||
| Other comprehensive income (loss) |
|
( |
) | |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income (loss) |
$ | |
$ | ( |
) | $ | $ | |
||||||||
| |
|
|
|
|
|
|
|
|||||||||
| b. | Investments in joint ventures |
| 1) | Investments in joint ventures that was not individually material and accounted for using the equity method consisted of the following: |
| Operating Location |
Carrying Amount as of December 31 |
|||||||||||||||||
Name of Joint Venture |
Main Business |
2022 |
2023 |
|||||||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||||||||
| MUtek Electronics Co., Ltd. (“MUtek”) |
|
$ | $ | $ | ||||||||||||||
| SUMA-USI Electronics Co., Ltd. (“SUMA-USI”) |
|
|||||||||||||||||
| |
|
|
|
|
|
|||||||||||||
| $ | $ | $ | ||||||||||||||||
| |
|
|
|
|
|
|||||||||||||
| 2) | At each balance sheet date, the percentages of ownership held by the Group’s subsidiaries were as follows: |
December 31 | ||||||||||
2022 |
2023 | |||||||||
| MUtek |
||||||||||
| SUMA-USI |
— | |||||||||
| 3) | Aggregate information of joint ventures that were not individually material |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| The Group’s share of: |
||||||||||||||||
| Total net income (loss) and comprehensive income (loss) |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
15. |
PROPERTY, PLANT AND EQUIPMENT |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Land and land improvements |
$ | $ | $ | |||||||||
| Buildings and improvements |
||||||||||||
| Machinery and equipment |
||||||||||||
| Other equipment |
||||||||||||
| Construction in progress and machinery under installation |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | |
|||||||||
| |
|
|
|
|
|
|||||||
Land |
Buildings and Improvements |
Machinery and Equipment |
Other Equipment |
Construction in Progress and Machinery under Installation |
Total |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Cost |
||||||||||||||||||||||||
| Balance at January 1, 2021 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions |
||||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||
| Reclassification |
( |
) | ( |
) | ||||||||||||||||||||
| Acquisitions through business combinations (Note 29) |
— | |||||||||||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | $ | $ | |
$ | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Accumulated depreciation and impairment |
||||||||||||||||||||||||
| Balance at January 1, 2021 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| Depreciation expense |
— | — | ||||||||||||||||||||||
| Impairment losses recognized |
— | — | ||||||||||||||||||||||
| Disposals |
— | ( |
) | ( |
) | ( |
) | — | ( |
) | ||||||||||||||
| Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | — | ( |
) | ||||||||||||||
| Reclassification |
— | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||
| Acquisitions through business combinations (Note 29) |
— | — | ||||||||||||||||||||||
| Effect of foreign currency exchange differences |
— | ( |
) | ( |
) | ( |
) | — | ( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2021 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Land |
Buildings and Improvements |
Machinery and Equipment |
Other Equipment |
Construction in Progress and Machinery under Installation |
Total |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Cost |
||||||||||||||||||||||||
| Balance at January 1, 2022 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions |
||||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Reclassification |
( |
) | ( |
) | ||||||||||||||||||||
| Effect of foreign currency exchange differences |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2022 |
$ | $ | $ | $ | $ | |
$ | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Accumulated depreciation and impairment |
||||||||||||||||||||||||
| Balance at January 1, 2022 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| Depreciation expense |
— | — | ||||||||||||||||||||||
| Impairment losses recognized |
— | — | ||||||||||||||||||||||
| Disposals |
— | ( |
) | ( |
) | ( |
) | — | ( |
) | ||||||||||||||
| Reclassification |
— | ( |
) | — | ||||||||||||||||||||
| Effect of foreign currency exchange differences |
— | — | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2022 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the year ended December 31, 2023 |
| |||||||||||||||||||||||
Land and Land Improvements |
Buildings and Improvements |
Machinery and Equipment |
Other Equipment |
Construction in Progress and Machinery under Installation |
Total |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Cost |
||||||||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | $ | $ | $ | |
$ | |||||||||||||||||
| Additions |
||||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Reclassification |
( |
) | ||||||||||||||||||||||
| Acquisitions through business combinations (Note 29) |
||||||||||||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Accumulated depreciation and impairment |
||||||||||||||||||||||||
| Balance at January 1, 2023 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| Depreciation expense |
— | |||||||||||||||||||||||
| Impairment losses recognized |
— | — | ||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Reclassification |
( |
) | — | |||||||||||||||||||||
| Acquisitions through business combinations (Note 29) |
— | — | ||||||||||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | — | $ | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Land and Land Improvements |
Buildings and Improvements |
Machinery and Equipment |
Other Equipment |
Construction in Progress and Machinery under Installation |
Total |
|||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| Cost |
||||||||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions |
||||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Reclassification |
( |
) | ||||||||||||||||||||||
| Acquisitions through business combinations (Note 29) |
||||||||||||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Accumulated depreciation and impairment |
||||||||||||||||||||||||
| Balance at January 1, 2023 |
$ | — | $ | $ | $ | $ | — | $ | ||||||||||||||||
| Depreciation expense |
— | |||||||||||||||||||||||
| Impairment losses recognized |
— | — | ||||||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Reclassification |
( |
) | — | |||||||||||||||||||||
| Acquisitions through business combinations (Note 29) |
— | — | ||||||||||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | — | $ | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Land improvements |
||||
| Buildings and improvements |
||||
| Main plant buildings |
||||
| Cleanrooms |
||||
| Others |
||||
| Machinery and equipment |
||||
| Other equipment |
|
16. |
LEASE ARRANGEMENTS |
| a. | Right-of-use |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Carrying amounts |
||||||||||||
| Land |
$ | $ | $ | |||||||||
| Buildings and improvements |
||||||||||||
| Machinery and equipment |
||||||||||||
| Other equipment |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | |
|||||||
| |
|
|
|
|
|
|||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Additions to right-of-use |
$ | $ | $ | $ | ||||||||||||
| Depreciation charge for right-of-use |
||||||||||||||||
| Land |
$ | $ | $ | $ | ||||||||||||
| Buildings and improvements |
||||||||||||||||
| Machinery and equipment |
||||||||||||||||
| Other equipment |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| b. | Lease liabilities |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Carrying amounts |
||||||||||||
| Current |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
| Non-current |
$ | |
$ | |
$ | |
||||||
| |
|
|
|
|
|
|||||||
December 31 |
||||||||
2022 |
2023 |
|||||||
| Land (%) |
||||||||
| Buildings and improvements (%) |
||||||||
| c. | Material lease-in activities and terms |
| d. | Subleases |
| e. | Other lease information |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Expenses relating to short-term leases |
$ | $ | $ | |||||||||
Expenses relating to low-value assets leases |
$ | $ | $ | |||||||||
Expenses relating to variable lease payments not included in the measurement of lease liabilities |
$ | $ | $ | |||||||||
Total cash outflow for leases |
$ | |
$ | |
$ | |
||||||
17. |
INVESTMENT PROPERTIES |
Land |
Buildings and Improvements |
Right-of-use Assets |
Total |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
Cost |
||||||||||||||||
Balance at January 1, 2021 |
$ | $ | $ | $ | ||||||||||||
Disposals |
— | ( |
) | — | ( |
) | ||||||||||
Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | |||||||||
Reclassification (Note 12) |
( |
) | ||||||||||||||
Effects of foreign currency exchange differences |
— | ( |
) | |||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ||||||||||||
Accumulated depreciation |
||||||||||||||||
Balance at January 1, 2021 |
$ | — | $ | $ | $ | |||||||||||
Depreciation expenses |
— | |||||||||||||||
Disposals |
— | ( |
) | — | ( |
) | ||||||||||
Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | |||||||||
Reclassification |
— | |||||||||||||||
Effects of foreign currency exchange differences |
— | ( |
) | ( |
) | |||||||||||
Balance at December 31, 2021 |
$ | — | $ | $ | $ | |||||||||||
Carrying amount at December 31, 2021 |
$ | $ | $ | $ | ||||||||||||
Land |
Buildings and Improvements |
Right-of-use Assets |
Total |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
Cost |
||||||||||||||||
Balance at January 1, 2022 |
$ | $ | $ | $ | ||||||||||||
Additions |
— | — | ||||||||||||||
Disposals |
— | ( |
) | — | ( |
) | ||||||||||
Reclassification |
( |
) | ||||||||||||||
Effects of foreign currency exchange differences |
||||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | $ | ||||||||||||
Accumulated depreciation |
||||||||||||||||
Balance at January 1, 2022 |
$ | — | $ | $ | $ | |||||||||||
Depreciation expenses |
— | |||||||||||||||
Disposals |
— | ( |
) | — | ( |
) | ||||||||||
Reclassification |
— | ( |
) | ( |
) | ( |
) | |||||||||
Effects of foreign currency exchange differences |
— | |||||||||||||||
Balance at December 31, 2022 |
$ | — | $ | $ | $ | |||||||||||
Carrying amount at December 31, 2022 |
$ | $ | $ | |
$ | |||||||||||
Land |
Buildings and Improvements |
Right-of-use Assets |
Total |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
Cost |
||||||||||||||||
Balance at January 1, 2023 |
$ | $ | $ | $ | ||||||||||||
Additions |
— | — | ||||||||||||||
Reclassification |
— | ( |
) | ( |
) | ( |
) | |||||||||
Effects of foreign currency exchange differences |
— | ( |
) | ( |
) | ( |
) | |||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | ||||||||||||
Accumulated depreciation |
||||||||||||||||
Balance at January 1, 2023 |
$ | — | $ | $ | $ | |||||||||||
Depreciation expenses |
— | |||||||||||||||
Reclassification |
— | ( |
) | ( |
) | ( |
) | |||||||||
Effects of foreign currency exchange differences |
— | ( |
) | ( |
) | ( |
) | |||||||||
Balance at December 31, 2023 |
$ | — | $ | $ | $ | |||||||||||
Carrying amount at December 31, 2023 |
$ | $ | $ | $ | ||||||||||||
Land |
Buildings and Improvements |
Right-of-use Assets |
Total |
|||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||
Cost |
||||||||||||||||
Balance at January 1, 2023 |
$ | $ | $ | $ | ||||||||||||
Additions |
— | — | ||||||||||||||
Reclassification |
— | ( |
) | ( |
) | ( |
) | |||||||||
Effects of foreign currency exchange differences |
— | ( |
) | ( |
) | ( |
) | |||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | ||||||||||||
Accumulated depreciation |
||||||||||||||||
Balance at January 1, 2023 |
$ | — | $ | $ | $ | |||||||||||
Depreciation expenses |
— | |||||||||||||||
Reclassification |
— | ( |
) | ( |
) | ( |
) | |||||||||
Effects of foreign currency exchange differences |
— | ( |
) | ( |
) | ( |
) | |||||||||
Balance at December 31, 2023 |
$ | — | $ | $ | $ | |||||||||||
Carrying amount at December 31, 2023 |
$ | $ | $ | $ | ||||||||||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Year 1 |
$ | $ | $ | |||||||||
Year 2 |
||||||||||||
Year 3 |
||||||||||||
Year 4 |
||||||||||||
Year 5 |
||||||||||||
Year 6 onwards |
||||||||||||
| $ | |
$ | |
$ | |
|||||||
Main buildings |
||||
Right-of-use |
||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Fair value |
$ | |
$ | |
$ | |
||||||
18. |
GOODWILL |
Cost |
Accumulated impairment |
Carrying amount |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
Balance at January 1, 2021 |
$ | $ | $ | |||||||||
Disposal of subsidiaries (Note 30) |
( |
) | — | ( |
) | |||||||
Effect of foreign currency exchange differences |
( |
) | — | ( |
) | |||||||
Balance at December 31, 2021 |
$ | $ | $ | |||||||||
Cost |
Accumulated impairment |
Carrying amount |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
Balance at January 1, 2022 |
$ | $ | $ | |||||||||
Effect of foreign currency exchange differences |
— | |||||||||||
Balance at December 31, 2022 |
$ | $ | $ | |||||||||
Cost |
Accumulated impairment |
Carrying amount |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
Balance at January 1, 2023 |
$ | $ | $ | |||||||||
Acquisitions through business combinations (Note 29) |
— | |||||||||||
Effect of foreign currency exchange differences |
— | |||||||||||
Balance at December 31, 2023 |
$ | $ | $ | |||||||||
Cost |
Accumulated Impairment |
Carrying Amount |
||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||
Balance at January 1, 2023 |
$ | $ | $ | |||||||||
Acquisitions through business combinations (Note 29) |
— | |||||||||||
Effect of foreign currency exchange differences |
— | |||||||||||
Balance at December 31, 2023 |
$ | $ | $ | |||||||||
| a. | Allocating goodwill to cash-generating units |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
Cash-generating units |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||
Packaging segment |
$ | $ | $ | |||||||||
Testing segment |
||||||||||||
EMS segment |
||||||||||||
Others |
||||||||||||
| $ | |
$ | |
$ | |
|||||||
| b. | Impairment assessment |
19. |
OTHER INTANGIBLE ASSETS |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Customer relationships |
$ | $ | $ | |||||||||
Computer software |
||||||||||||
Patents and acquired specific technology |
||||||||||||
Others |
||||||||||||
| $ | |
$ | |
$ | |
|||||||
Customer Relationships |
Computer Software |
Patents and Acquired Specific Technology |
Others |
Total |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2021 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Additions |
— | |||||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | — | ( |
) | ( |
) | |||||||||||
Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
Acquisition through business combinations (Note 29) |
— | — | — | |||||||||||||||||
Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | $ | |||||||||||||||
Accumulated amortization |
||||||||||||||||||||
Balance at January 1, 2021 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Amortization expense |
||||||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | — | ( |
) | ( |
) | |||||||||||
Disposal of subsidiaries (Note 30) |
— | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
Acquisition through business combinations (Note 29) |
— | — | — | |||||||||||||||||
Effect of foreign currency exchange differences |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | $ | |||||||||||||||
Customer Relationships |
Computer Software |
Patents and Acquired Specific Technology |
Others |
Total |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2022 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Additions |
— | |||||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
Effect of foreign currency exchange differences |
||||||||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | $ | $ | |||||||||||||||
Accumulated amortization and impairment |
||||||||||||||||||||
Balance at January 1, 2022 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Amortization expense |
||||||||||||||||||||
Impairment losses recognized |
— | |||||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
Effect of foreign currency exchange differences |
||||||||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | $ | $ | |||||||||||||||
Customer Relationships |
Computer Software |
Patents and Acquired Specific Technology |
Others |
Total |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2023 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Additions |
— | ( |
) | |||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
Effect of foreign currency exchange differences |
( |
) | ||||||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
Accumulated amortization and impairment |
||||||||||||||||||||
Balance at January 1, 2023 |
$ | $ | |
$ | |
$ | |
$ | |
|||||||||||
Amortization expense |
||||||||||||||||||||
Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
Effect of foreign currency exchange differences |
( |
) | ||||||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
Customer Relationships |
Computer Software |
Patents and Acquired Specific Technology |
Others |
Total |
||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||||||||
| Cost |
||||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
| Additions |
— | ( |
) | |||||||||||||||||
| Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Accumulated amortization and impairment |
||||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
| Amortization expense |
||||||||||||||||||||
| Disposals or derecognition |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Effect of foreign currency exchange differences |
( |
) | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31, 2023 |
$ | $ | $ | $ | $ | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Customer relationships |
||||
| Computer software |
||||
| Patents and acquired specific technology |
||||
| Others |
20. |
BORROWINGS |
a. |
Short-term borrowings |
1) |
Bank loans |
| Mainly represented unsecured revolving loans, letters of credit and bank overdrafts. |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Secured bank loans, annual interest rates were |
$ | $ | $ | |||||||||
| Unsecured bank loans, annual interest rates were |
||||||||||||
| |
|
|
|
|
|
|||||||
| Less: financial liabilities for hedging - current (Note 34) |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | |
|||||||
| |
|
|
|
|
|
|||||||
| 2) | Short-term bills payable – only as of December 31, 2023 |
NT$ |
US$ (Note 4) |
|||||||
| Commercial papers |
$ | $ | ||||||
| Less: Unamortized discounts |
||||||||
| |
|
|
|
|||||
| $ | $ | |||||||
| |
|
|
|
|||||
| |
|
|
|
|
|
|
|
|
| Annual interest rate (%) |
||||||||
| b. | Long-term borrowings |
| 1) | Bank loans |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Revolving bank loans |
||||||||||||
| Others - repayable through January 2024 to July 2029, annual interest rates were |
$ | $ | $ | |||||||||
| Mortgage loans (Note 36) |
||||||||||||
| Repayable through January 2024 to November 2039, annual interest rates were |
||||||||||||
| |
|
|
|
|
|
|||||||
| Less: current portion |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | |
|||||||
| |
|
|
|
|
|
|||||||
| 2) | Long-term bills payable – only as of December 31, 2022 |
| Ta Ching Bills Finance Corporation, redeemed in |
$ | |||
| Cathay United Bank, redeemed in |
||||
| |
|
|||
| Less: unamortized discounts |
||||
| |
|
|||
| $ | ||||
| |
|
|||
21. |
BONDS PAYABLE |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Unsecured domestic bonds |
||||||||||||
| Redeemed in January 2023 and interest due annually with annual interest rate at |
$ | $ | $ | |||||||||
| Repayable at maturity in January 2024 and interest due annually with annual interest rate at |
||||||||||||
| Repayable at maturity in April 2024 and interest due annually with annual interest rate at |
||||||||||||
| Repayable at maturity in April 2026 and interest due annually with annual interest rate at |
||||||||||||
| Repayable at maturity in April 2025 and interest due annually with annual interest rate at |
||||||||||||
| Redeemed in August 2023 and interest due annually with annual interest rate at |
||||||||||||
| Repayable at maturity in August 2025 and interest due annually with annual interest rate at |
||||||||||||
| Repayable at maturity in August 2027 and interest due annually with annual interest rate at |
||||||||||||
| Unsecured overseas bonds |
||||||||||||
| US$ |
||||||||||||
| Unsecured overseas convertible bonds |
||||||||||||
| RMB |
||||||||||||
| |
|
|
|
|
|
|||||||
| |
|
|
||||||||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Less: discounts on bonds payable |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
| |
||||||||||||
| Less: current portion of bonds payable |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | ||||||||
| |
|
|
|
|
|
|||||||
22. |
OTHER PAYABLES |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Accrued salary and bonus |
$ | $ | $ | |||||||||
| Payables for property, plant and equipment |
||||||||||||
| Accrued employees’ compensation and remuneration to directors and supervisors |
||||||||||||
| Accrued employee insurance |
||||||||||||
| Accrued utilities |
||||||||||||
| Others |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | |
|||||||
| |
|
|
|
|
|
|||||||
23. |
RETIREMENT BENEFIT PLANS |
| a. | Defined contribution plans |
| 1) | The pension plan under the R.O.C. Labor Pension Act (“LPA”) for the Group’s R.O.C. resident employees is a government-managed defined contribution plan. Based on the LPA, the Company and its subsidiaries in R.O.C. makes monthly contributions to employees’ individual pension accounts at |
| 2) | The subsidiaries of the Group located in countries other than R.O.C. also make contributions at various ranges according to relevant local regulations. |
| b. | Defined benefit plans |
| 1) | The Company and its subsidiaries in R.O.C. joined the defined benefit pension plan under the R.O.C. Labor Standards Law operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the last six months before retirement. The Company and its subsidiaries in R.O.C. make contributions based on a certain percentage of their domestic employees’ monthly salaries to a pension fund administered by the pension fund monitoring committee. Before the end of each year, the Company and its subsidiaries in R.O.C. assess the balance in the pension fund. If the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company and its subsidiaries in R.O.C. are required to fund the difference in one appropriation that should be made by the end of March in the next year. 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 and its subsidiaries in Taiwan have no right to influence the investment policy and strategy. |
| 2) | Pension plans for certain subsidiaries of the Group stipulate that employees with service years exceeding agreed years are entitled to receive a lump-sum payment based on their length of service and the agreed salaries at the time of termination of employment. |
| 3) | ASE, SPIL, ASE Test, Inc. and ASEE have pension plans for executive managers. Pension costs under the plans were NT$ |
| 4) | |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Present value of the defined benefit obligation |
$ | |
$ | |
$ | |
||||||
| Fair value of the plan assets |
( |
) | ( |
) | ( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Present value of unfunded defined benefit obligation |
||||||||||||
| Recorded under other payables |
( |
) | ( |
) | ( |
) | ||||||
| Recorded under other non-current assets |
||||||||||||
| |
|
|
|
|
|
|||||||
| Net defined benefit liabilities |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
Present Value of the Defined Benefit Obligation |
Fair Value of the Plan Assets |
Net Defined Benefit Liabilities (Assets) |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
| Balance at January 1, 2021 |
$ |
$ |
( |
) |
$ |
|||||||
| |
|
|
|
|
|
|||||||
| Service cost |
||||||||||||
| Current service cost |
||||||||||||
| Past service cost and gain on settlements |
( |
) |
( |
) | ||||||||
| Net interest expense (income) |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Recognized in profit or loss |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Remeasurement |
||||||||||||
| Return on plan assets (excluding amounts included in net interest) |
( |
) |
( |
) | ||||||||
| Actuarial (gain) loss |
||||||||||||
| Changes in financial assumptions |
( |
) |
( |
) | ||||||||
| Experience adjustments |
||||||||||||
| Changes in demographic assumptions |
||||||||||||
| |
|
|
|
|
|
|||||||
| Recognized in other comprehensive income |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
Present Value of the Defined Benefit Obligation |
Fair Value of the Plan Assets |
Net Defined Benefit Liabilities (Assets) |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
| Contributions from the employer |
$ |
$ |
( |
) |
$ |
( |
) | |||||
| Benefits paid from |
||||||||||||
| the pension fund |
( |
) |
||||||||||
| the Group |
( |
) |
( |
) | ||||||||
| Business combinations |
||||||||||||
| Exchange differences on foreign plans |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2021 |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Service cost |
||||||||||||
| Current service cost |
||||||||||||
| Past service cost and gain on settlements |
( |
) |
( |
) | ||||||||
| Net interest expense (income) |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Recognized in profit or loss |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Remeasurement |
||||||||||||
| Return on plan assets (excluding amounts included in net interest) |
( |
) |
( |
) | ||||||||
| Actuarial (gain) loss |
||||||||||||
| Changes in financial assumptions |
( |
) |
( |
) | ||||||||
| Experience adjustments |
||||||||||||
| Changes in demographic assumptions |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Recognized in other comprehensive income |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Contributions from the employer |
( |
) |
( |
) | ||||||||
| Benefits paid from |
||||||||||||
| the pension fund |
( |
) |
||||||||||
| the Group |
( |
) |
( |
) | ||||||||
| Assets extinguished on settlement |
( |
) |
( |
) | ||||||||
| Exchange differences on foreign plans |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2022 |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Service cost |
||||||||||||
| Current service cost |
||||||||||||
| Past service cost and loss on settlements |
||||||||||||
| Net interest expense (income) |
( |
) |
||||||||||
| Other termination benefit cost |
||||||||||||
| |
|
|
|
|
|
|||||||
| Recognized in profit or loss |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Remeasurement |
||||||||||||
| Return on plan assets (excluding amounts included in net interest) |
( |
) |
( |
) | ||||||||
| Actuarial (gain) loss |
||||||||||||
| Changes in financial assumptions |
||||||||||||
Present Value of the Defined Benefit Obligation |
Fair Value of the Plan Assets |
Net Defined Benefit Liabilities (Assets) |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
| Experience adjustments |
$ |
( |
) |
$ |
$ |
( |
) | |||||
| Changes in demographic assumptions |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Recognized in other comprehensive income |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Contributions from the employer |
( |
) |
( |
) | ||||||||
| Benefits paid from |
||||||||||||
| the pension fund |
( |
) |
||||||||||
| the Group |
( |
) |
( |
) | ||||||||
| Liabilities extinguished on settlement |
( |
) |
( |
) | ||||||||
| Liabilities assumed in a business combination |
— |
|||||||||||
| Exchange differences on foreign plans |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2023 |
$ |
$ |
( |
) |
$ |
|||||||
| |
|
|
|
|
|
|||||||
Present Value of the Defined Benefit Obligation |
Fair Value of the Plan Assets |
Net Defined Benefit Liabilities (Assets) |
||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||
| Balance at January 1, 2023 |
$ |
$ |
( |
) |
$ |
|||||||
| |
|
|
|
|
|
|||||||
| Service cost |
||||||||||||
| Current service cost |
||||||||||||
| Past service cost and loss on settlements |
— |
|||||||||||
| Net interest expense (income) |
( |
) |
||||||||||
| Other benefit cost |
||||||||||||
| |
|
|
|
|
|
|||||||
| Recognized in profit or loss |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Remeasurement |
||||||||||||
| Return on plan assets (excluding amounts included in net interest) |
( |
) |
( |
) | ||||||||
| Actuarial (gain) loss |
||||||||||||
| Changes in financial assumptions |
||||||||||||
| Experience adjustments |
( |
) |
( |
) | ||||||||
| Changes in demographic assumptions |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Recognized in other comprehensive income |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Contributions from the employer |
( |
) |
( |
) | ||||||||
| Benefits paid from |
||||||||||||
| the pension fund |
( |
) |
||||||||||
| the Group |
( |
) |
( |
) | ||||||||
Present Value of the Defined Benefit Obligation |
Fair Value of the Plan Assets |
Net Defined Benefit Liabilities (Assets) |
||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||
| Liabilities extinguished on settlement |
$ |
( |
) |
$ |
$ |
( |
) | |||||
| Liabilities assumed in a business combination |
— |
|||||||||||
| Exchange differences on foreign plans |
( |
) |
||||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2023 |
$ |
$ |
( |
) |
$ |
|||||||
| |
|
|
|
|
|
|||||||
| 5) | |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Cash |
$ | |
$ | |
$ | |||||||
| Equity instruments |
||||||||||||
| Debt instruments |
||||||||||||
| Others |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total |
$ | $ | $ | |
||||||||
| |
|
|
|
|
|
|||||||
| 6) | Through the defined benefit plans under the Labor Standards Law of the R.O.C., the Group in R.O.C. are exposed to the following risks: |
| a) | Investment risk |
| b) | Interest risk |
| c) | Salary risk |
| 7) | The management of ASE (Korea) Inc. is responsible for the administration of the fund and determination of the investment strategies according to related local regulations. ASE (Korea) Inc. is responsible for the shortfall between the fund and the defined benefit obligation. The plan assets are investment in the certificates of deposits. |
| 8) | |
December 31 |
||||||||
2022 |
2023 |
|||||||
| Discount rates (%) |
||||||||
| Expected rates of salary increase (%) |
||||||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Discount rate |
||||||||||||
| 0.5% higher |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| |
|
|
|
|
|
|||||||
| 0.5% lower |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
| Expected rates of salary increase |
||||||||||||
| 0.5% higher |
$ | |
$ | |
$ | |
||||||
| |
|
|
|
|
|
|||||||
| 0.5% lower |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| |
|
|
|
|
|
|||||||
| 9) | |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| No later than 1 year |
$ | $ | $ | |||||||||
| Later than 1 year but not later than 5 years |
||||||||||||
| Later than 5 years |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | |
$ | |
$ | |
|||||||
| |
|
|
|
|
|
|||||||
24. |
EQUITY |
| a. | Share capital |
December 31 |
||||||||
2022 |
2023 |
|||||||
| Numbers of shares authorized (in thousands) |
||||||||
| |
|
|
|
|||||
| Numbers of shares reserved (in thousands) |
||||||||
| Employee share options |
||||||||
| |
|
|
|
|||||
| Number of shares issued and fully paid (in thousands) |
||||||||
| |
|
|
|
|||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Share capital authorized |
$ | |
$ | |
$ | |
||||||
| |
|
|
|
|
|
|||||||
| Share capital reserved |
||||||||||||
| Employee share options |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
| b. | Capital surplus |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| May be used to offset a deficit, cash dividends, |
||||||||||||
| Issuance of ordinary shares |
$ | $ | $ | |||||||||
| Merger by share exchange |
||||||||||||
| Difference between consideration and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition |
||||||||||||
| Exercised employee share options |
||||||||||||
| Treasury share transactions |
||||||||||||
| Donations from shareholders |
||||||||||||
| Expired share options |
||||||||||||
| |
|
|
|
|
|
|||||||
| |
||||||||||||
| |
|
|
|
|
|
|||||||
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| May be used to offset a deficit only |
||||||||||||
| Changes in percentage of ownership interest in subsidiaries (2) |
$ | $ | $ | |||||||||
| Share of changes in capital surplus of associates accounted for using the equity method |
||||||||||||
| Dividends that the claim period has elapsed and unclaimed by shareholders |
||||||||||||
| Exercised disgorgement |
||||||||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
| May not be used for any purpose |
||||||||||||
| Employee share options |
||||||||||||
| Employee restricted stock awards |
( |
) | ( |
) | ||||||||
| Others (3) |
||||||||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | |
|||||||||
| |
|
|
|
|
|
|||||||
| 1) | Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year). |
| 2) | Such capital surplus arises from the effects of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method. |
| 3) | Such capital surplus represents the excess of the carrying amount of related accounts over the par value due to employee share options exercised and the Company has not completed registration formalities. |
| c. | Retained earnings and dividend policy |
| 1) | Replenishment of deficits; |
| 2) | 10.0% as legal reserve; |
| 3) | Special reserve appropriated or reversed in accordance with laws or regulations set forth by the authorities concerned; |
| 4) | If annual net income remains, a proposal for the distribution of such amount together with a part or all of the accumulated undistributed profits from previous years shall be prepared by the board of directors and submit to the shareholders’ meeting for resolution. However, the distributable dividends may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and, in addition, a report of such distribution shall be submitted to the shareholders’ meeting. |
Appropriation of Earnings |
Dividends Per Share |
|||||||||||||||
For Year 2021 |
For Year 2022 |
For Year 2021 |
For Year 2022 |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
(in dollars) |
(in dollars) |
|||||||||||||||
| Legal reserve |
$ | $ | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Special reserve (reversed) |
$ |
$ |
( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash dividends |
$ |
$ |
$ | $ | ||||||||||||
| |
|
|
|
|||||||||||||
| d. | Others equity items |
| 1) | Exchange differences on translating foreign operations |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Balance at January 1 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| Recognized for the year |
||||||||||||||||
| Exchange differences arising on translating foreign operations |
( |
) |
( |
) |
( |
) | ||||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Share from associates and joint ventures accounted for using the equity method |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
Reclassification |
||||||||||||||||
Disposal of foreign operations |
( |
) |
||||||||||||||
Balance at December 31 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| 2) | Unrealized gain (loss) on financial assets at FVTOCI |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Balance at January 1 |
$ |
$ |
$ |
$ |
||||||||||||
Unrealized gain (loss) recognized for the year |
||||||||||||||||
Debt instruments |
( |
) |
( |
) |
( |
) | ||||||||||
Equity instruments |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Share from associates and joint ventures accounted for using the equity method |
( |
) |
||||||||||||||
Other comprehensive income for the year |
( |
) |
||||||||||||||
Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal |
||||||||||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Cumulative unrealized gain transferred to retained earnings due to disposal of equity instruments in relation to associates and joint venture accounted for using the equity method |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Balance at December 31 |
$ | |
$ | |
$ | |
$ | |
||||||||
| 3) | Gain (loss) on hedging instruments – hedges of net investments of foreign operations |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Balance at January 1 |
$ | ( |
) | $ | $ | $ | ||||||||||
Recognized for the year |
||||||||||||||||
Foreign currency risk – loans denominated in foreign currency |
( |
) | ( |
) | ||||||||||||
Balance at December 31 |
$ | |
$ | |
$ | |
$ | |
||||||||
| 4) | Unearned employee compensation |
For the Year Ended December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Balance at January 1 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Share-based payment expenses |
|
|||||||||||
Valuation adjustments |
|
|
||||||||||
Balance at December 31 |
$ | ( |
) | $ | $ | |||||||
| e. | Treasury shares |
Purpose of Repurchase |
||||||||||||
Shares Repurchased for Cancellation |
Shares Held by Subsidiaries |
Total |
||||||||||
| (in thousand shares) |
(in thousand shares) |
(in thousand shares) |
||||||||||
| Balance at January 31, 2022 |
|
|||||||||||
| Increase during the year |
||||||||||||
| Decrease during the year |
( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2022 |
||||||||||||
| |
|
|
|
|
|
|||||||
| Balance at December 31, 2023 |
|
|
||||||||||
| |
|
|
|
|
|
|||||||
Shares Held by Subsidiaries |
Carrying Amount |
Carrying Amount |
Fair Value |
Fair Value |
||||||||||||||||
| (in thousand shares) |
NT$ |
US$ (Note 4) |
NT$ |
US$ (Note 4) |
||||||||||||||||
| December 31, 2022 |
||||||||||||||||||||
| ASE |
|
$ | $ | |||||||||||||||||
| ASE Test, Inc. |
||||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||
| $ | $ | |||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||
| December 31, 2023 |
||||||||||||||||||||
| ASE |
$ | $ | $ | $ | ||||||||||||||||
| ASE Test, Inc. |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| f. | Non-controlling interests |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Balance at January 1 |
$ | $ | $ | $ | ||||||||||||
| Share of profit for the year |
||||||||||||||||
| Other comprehensive income (loss) for the year |
||||||||||||||||
| Exchange difference on translating foreign operations |
( |
) | ( |
) | ( |
) | ||||||||||
| Unrealized gain (loss) on equity instruments at FVTOCI |
( |
) | ||||||||||||||
| Gain (loss) from hedging |
( |
) | ( |
) | ||||||||||||
| Remeasurement on defined benefit plans |
( |
) | ( |
) | ||||||||||||
| Share in other comprehensive income (loss) from associates accounted for using the equity method |
( |
) | ( |
) | ( |
) | ||||||||||
| Subsidiaries’ buy back of their own outstanding ordinary shares (Note 31) |
( |
) | ( |
) | ||||||||||||
| Disposal of subsidiary |
( |
) | ( |
) | ||||||||||||
| Non-controlling interest arising from capital increase of subsidiaries |
||||||||||||||||
| Cash dividends distributed to non-controlling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Non-controlling interest relating to outstanding vested employee share options granted by subsidiaries |
||||||||||||||||
| Equity component of convertible bonds issued by subsidiaries |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Balance at December 31 |
$ | |
$ | |
$ | |
$ | |
||||||||
| |
|
|
|
|
|
|
|
|||||||||
25. |
PROFIT BEFORE INCOME TAX |
| a. | Other operating income and expenses, net |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Rental income |
$ | $ | $ | $ | ||||||||||||
| Gain on disposal of property, plant and equipment |
||||||||||||||||
| Royalty income |
||||||||||||||||
| Impairment loss on non-financial assets (Notes 15 and 19) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Others |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| b. | Other income |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Interest income |
||||||||||||||||
| Bank deposits |
$ | $ | $ | $ | ||||||||||||
| Contracts with customers |
||||||||||||||||
| Government subsidies |
||||||||||||||||
| Dividends income |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| c. | Other gains and losses |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Net gain on financial assets mandatorily at FVTPL |
$ | $ | $ | $ | ||||||||||||
| Net loss arising on financial instruments held for trading |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gain on disposal of subsidiaries (Note 30) |
||||||||||||||||
| Foreign exchange gains (losses), net |
( |
) | ||||||||||||||
| Gain recognized in bargain purchase transaction (Note 29) |
— | — | — | |||||||||||||
| Impairment loss on investments accounted for using the equity method (Note 14) |
— | ( |
) | |||||||||||||
| Gain (loss) on disposal of investments accounted for using the equity method |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| d. | Finance costs |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Interest on lease liabilities |
$ | $ | $ | $ | ||||||||||||
| Interest on borrowings and bonds payable |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total interest expense for financial liabilities measured at amortized cost |
||||||||||||||||
| Less: Amounts included in the cost of qualifying assets |
||||||||||||||||
| Inventories related to real estate business |
( |
) | ||||||||||||||
| Property, plant and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Other finance costs |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
For the Year Ended December 31 |
||||||||||||
2021 |
2022 |
2023 |
||||||||||
| Annual interest capitalization rates |
||||||||||||
| Inventories related to real estate business (%) |
— | — | ||||||||||
| Property, plant and equipment (%) |
||||||||||||
| e. | Depreciation and amortization |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Property, plant and equipment |
$ | $ | $ | $ | ||||||||||||
| Right-of-use |
||||||||||||||||
| Investment properties |
||||||||||||||||
| Other intangible assets |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Summary of depreciation by function |
||||||||||||||||
| Operating costs |
$ | $ | $ | $ | ||||||||||||
| Operating expenses |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | $ | $ | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Summary of amortization by function |
||||||||||||||||
| Operating costs |
$ | $ | $ | $ | ||||||||||||
| Operating expenses |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| f. | Operating expenses directly related to investment properties |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Direct operating expenses of investment properties that generated rental income |
$ | |
$ | |
$ | |
$ | |
||||||||
| g. | Employee benefits expense |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Post-employment benefits |
||||||||||||||||
Defined contribution plans |
$ | $ | $ | $ | ||||||||||||
Defined benefit plans |
||||||||||||||||
Equity-settled share-based payments |
||||||||||||||||
Other employee benefits |
||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Summary of employee benefits expense by function |
||||||||||||||||
Operating costs |
$ | $ | $ | $ | ||||||||||||
Operating expenses |
||||||||||||||||
| $ | |
$ | $ | |
$ | |
||||||||||
| h. | Employees’ compensation and the remuneration to directors |
For the Year Ended December 31 |
||||||||||||||||
2022 |
2023 |
|||||||||||||||
Accrual Rate (%) |
Accrual Amount |
Accrual Rate (%) |
Accrual Amount |
|||||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||||||
Employees’ compensation |
$ | $ | $ | |||||||||||||
Remuneration to directors |
||||||||||||||||
For Year 2021 |
For Year 2022 |
|||||||||||||||
Employees’ compensation |
Remuneration to directors |
Employees’ compensation |
Remuneration to directors |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
Resolved by the board of directors |
$ | $ | $ | $ | ||||||||||||
Recognized in the consolidated financial statements |
$ | $ | $ | $ | ||||||||||||
26. |
INCOME TAX |
| a. | Income tax recognized in profit or loss |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Current income tax |
||||||||||||||||
In respect of the current year |
$ | $ | $ | $ | ||||||||||||
Income tax on unappropriated earnings |
( |
) | ( |
) | ||||||||||||
Changes in estimate for prior years |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Deferred income tax |
||||||||||||||||
In respect of the current year |
( |
) | ( |
) | ( |
) | ||||||||||
Changes in tax rates |
( |
) | ||||||||||||||
Changes in estimate for prior years |
||||||||||||||||
Effect of foreign currency exchange differences |
( |
) | ||||||||||||||
| ( |
) | ( |
) | ( |
) | |||||||||||
Income tax expense recognized in profit or loss |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Profit before income tax |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Income tax expense calculated at the statutory rates |
$ | $ | $ | $ | ||||||||||||
| Nontaxable expense (income) in determining taxable income |
( |
) | ||||||||||||||
| Tax-exempt income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Additional income tax on unappropriated earnings |
( |
) | ( |
) | ||||||||||||
| Income tax credits |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| The origination and reversal of temporary differences |
||||||||||||||||
| Income tax adjustments on prior years |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Unrecognized deferred tax liability for temporary differences associated with investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Unrecognized loss carryforwards |
||||||||||||||||
| Withholding tax |
||||||||||||||||
| House and land transactions income tax |
||||||||||||||||
| Land value increment tax |
||||||||||||||||
| Capital gains tax |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Income tax expense recognized in profit or loss |
$ | |
$ | |
$ | |
$ | |
||||||||
| |
|
|
|
|
|
|
|
|||||||||
| b. | Income tax recognized directly in equity |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Deferred income tax |
||||||||||||||||
| Related to employee share options |
$ |
( |
) |
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| c. | Income tax recognized in other comprehensive income |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Deferred income tax |
||||||||||||||||
| Related to remeasurement of defined benefit plans |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| Unrealized gain (loss) on equity instruments at fair value through other comprehensive income |
( |
) |
( |
) |
( |
) | ||||||||||
| Unrealized loss on debt instruments at fair value through other comprehensive income |
( |
) |
( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Income tax recognized in other comprehensive income |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
| d. | Current tax assets and liabilities |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Current tax assets |
||||||||||||
| Tax refund receivable |
$ | $ | $ | |||||||||
| Prepaid income tax |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| Current tax liabilities |
||||||||||||
| Income tax payable |
$ | |
$ | |
$ | |
||||||
| |
|
|
|
|
|
|||||||
| e. | Deferred tax assets and liabilities |
Balance at January 1 |
Recognized in Profit or Loss |
Recognized in Other Comprehensive Income |
Recognized in Equity |
Exchange Differences |
Disposal of Subsidiaries |
Balance at December 31 |
||||||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||||||||
| Deferred tax assets |
||||||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
( |
) |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||
| Defined benefit obligation |
( |
) |
( |
) |
— |
( |
) |
— |
||||||||||||||||||||
| FVTPL financial instruments |
— |
— |
( |
) |
— |
|||||||||||||||||||||||
| Others |
— |
( |
) |
( |
) |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
( |
) |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||
| Loss carry-forward |
— |
— |
( |
) |
( |
) |
||||||||||||||||||||||
| Investment credits |
( |
) |
— |
— |
( |
) |
— |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Deferred tax liabilities |
||||||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||||
| FVTPL financial instruments |
— |
— |
( |
) |
— |
|||||||||||||||||||||||
| Others |
( |
) |
||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at January 1 |
Recognized in Profit or Loss |
Recognized in Other Comprehensive Income |
Exchange Differences |
Balance at December 31 |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Deferred tax assets |
||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
$ |
— |
$ |
$ |
||||||||||||||
| Defined benefit obligation |
( |
) |
( |
) |
||||||||||||||||
| FVTPL financial instruments |
— |
|||||||||||||||||||
| Others |
— |
|||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
( |
) |
|||||||||||||||||||
| Loss carry-forward |
( |
) |
— |
|||||||||||||||||
| Investment credits |
— |
|||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
$ |
$ |
$ |
( |
) |
$ |
$ |
||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Deferred tax liabilities |
||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
$ |
— |
$ |
$ |
||||||||||||||
| FVTPL financial instruments |
— |
|||||||||||||||||||
| Others |
( |
) |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
$ |
$ |
$ |
( |
) |
$ |
$ |
||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at January 1 |
Acquisitions through Business Combinations |
Recognized in Profit or Loss |
Recognized in Other Comprehensive Income |
Exchange Differences |
Balance at December 31 |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Deferred tax assets |
||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
— |
$ |
$ |
— |
$ |
$ |
||||||||||||||||
| Defined benefit obligation |
— |
( |
) |
( |
) |
|||||||||||||||||||
| FVTPL financial instruments |
— |
— |
||||||||||||||||||||||
| Others |
— |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
( |
) |
|||||||||||||||||||||||
| Loss carry-forward |
— |
— |
||||||||||||||||||||||
| Investment credits |
— |
( |
) |
— |
( |
) |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax liabilities |
||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
— |
$ |
( |
) |
$ |
— |
$ |
( |
) |
$ |
||||||||||||
| Defined benefit obligation |
— |
— |
( |
) |
||||||||||||||||||||
| FVTPL financial instruments |
— |
( |
) |
— |
||||||||||||||||||||
| Others |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1 |
Acquisitions through Business Combinations |
Recognized in Profit or Loss |
Recognized in Other Comprehensive Income |
Exchange Differences |
Balance at December 31 |
|||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| Deferred tax assets |
||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
— |
$ |
$ |
— |
$ |
$ |
||||||||||||||||
| Defined benefit obligation |
— |
( |
) |
( |
) |
|||||||||||||||||||
| FVTPL financial instruments |
— |
— |
||||||||||||||||||||||
| Others |
— |
|||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
( |
) |
|||||||||||||||||||||||
| Loss carry-forward |
— |
— |
||||||||||||||||||||||
| Investment credits |
— |
( |
) |
— |
( |
) |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
|||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax liabilities |
||||||||||||||||||||||||
| Temporary differences |
||||||||||||||||||||||||
| Property, plant and equipment |
$ |
$ |
— |
$ |
( |
) |
$ |
— |
$ |
( |
) |
$ |
||||||||||||
| Defined benefit obligation |
— |
— |
( |
) |
||||||||||||||||||||
| FVTPL financial instruments |
— |
( |
) |
— |
||||||||||||||||||||
| Others |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| f. | Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Loss carry-forward |
$ |
$ |
$ |
|||||||||
| Investment credits |
||||||||||||
| Deductible temporary differences |
||||||||||||
| |
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|||||||
| g. | Information about unused loss carry-forward, investment credits, tax-exemption and other tax relief |
Expiry Year |
NT$ |
US$ |
||||||
(Note 4) |
||||||||
| 2024 |
$ |
$ |
||||||
| 2025 |
||||||||
| 2026 |
||||||||
| 2027 |
||||||||
| 2028 and thereafter |
||||||||
| |
|
|
|
|||||
$ |
$ |
|||||||
| |
|
|
|
|||||
Tax Credit Source |
Remaining Creditable Amount |
Expiry Year | ||||||||
NT$ |
US$ |
|||||||||
(Note 4) |
||||||||||
| Purchase of machinery and equipment |
$ | $ | ||||||||
| Others |
||||||||||
| |
|
|
|
|||||||
| $ | $ | |||||||||
| |
|
|
|
|||||||
| h. | Unrecognized deferred tax liabilities associated with investments |
| i. | Income tax assessments |
27. |
EARNINGS PER SHARE |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Profit for the year attributable to owners of the Company |
$ | $ | $ | $ | ||||||||||||
Effect of potentially dilutive ordinary shares: |
||||||||||||||||
Potential ordinary shares of the subsidiary |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Earnings used in the computation of diluted earnings per share |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Year Ended December 31 |
||||||||||||
2021 |
2022 |
2023 |
||||||||||
Weighted average number of ordinary shares in the computation of basic earnings per share |
||||||||||||
Effect of potentially dilutive ordinary shares |
||||||||||||
Employee share options |
||||||||||||
Employees’ compensation |
||||||||||||
Employee restricted stock awards |
||||||||||||
Weighted average number of ordinary shares in the computation of diluted earnings per share |
||||||||||||
28. |
SHARE-BASED PAYMENT ARRANGEMENTS |
| a. | Employee share option plans of the Company |
For the Year Ended December 31 |
||||||||||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||||||||||
Weighted |
Weighted |
Weighted |
||||||||||||||||||||||
Average |
Average |
Average |
||||||||||||||||||||||
Number of |
Exercise |
Number of |
Exercise |
Number of |
Exercise |
|||||||||||||||||||
Options |
Price |
Options |
Price |
Options |
Price |
|||||||||||||||||||
(In |
Per Share |
(In |
Per Share |
(In |
Per Share |
|||||||||||||||||||
Thousands) |
(NT$) |
Thousands) |
(NT$) |
Thousands) |
(NT$) |
|||||||||||||||||||
Balance at January 1 |
$ | $ | $ | |||||||||||||||||||||
Options granted |
||||||||||||||||||||||||
Options forfeited |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Options exercised |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at December 31 |
||||||||||||||||||||||||
Options exercisable, end of year |
||||||||||||||||||||||||
Fair value of options granted (NT$) |
||||||||||||||||||||||||
Range of Exercise Price Per Share (NT$) |
Weighted Average Remaining Contractual Life (Years) |
|||||||
December 31, 2022 |
||||||||
ASE 5 th share options |
$ | |||||||
The Company 1 st share options |
||||||||
December 31, 2023 |
||||||||
ASE 5 th share options |
||||||||
The Company 1 st share options |
||||||||
The Company 2 nd share options |
||||||||
| b. | Employee restricted stock awards plan of the Company |
For the Year Ended December 31 |
||||||||||||
2021 |
2022 |
2023 |
||||||||||
(in thousand shares) |
(in thousand shares) |
(in thousand shares) |
||||||||||
Balance at January 1 |
||||||||||||
Stocks granted |
||||||||||||
Stocks unrestricted |
( |
) | ( |
) | ||||||||
Stocks retired |
— | — | ( |
) | ||||||||
Stocks awaiting retired |
— | — | ( |
) | ||||||||
Balance at December 31 |
||||||||||||
| c. | Employee share option plans of subsidiaries |
For the Year Ended December 31 |
||||||||||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||||||||||
Number of |
Weighted Average Exercise |
Number of |
Weighted Average Exercise |
Number of |
Weighted Average Exercise |
|||||||||||||||||||
Options |
Price |
Options |
Price |
Options |
Price |
|||||||||||||||||||
(In |
Per Share |
(In |
Per Share |
(In |
Per Share |
|||||||||||||||||||
Thousands) |
(RMB) |
Thousands) |
(RMB) |
Thousands) |
(RMB) |
|||||||||||||||||||
Balance at January 1 |
$ | $ | $ | |||||||||||||||||||||
Options granted |
||||||||||||||||||||||||
Options expired |
( |
) | ( |
) | ||||||||||||||||||||
Options forfeited |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Options exercised |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at December 31 |
||||||||||||||||||||||||
Options exercisable, end of year |
||||||||||||||||||||||||
Fair value of options granted (RMB) |
||||||||||||||||||||||||
Range of Exercise Price Per Share (RMB) |
Remaining Contractual Life (Years) |
|||||||
December 31, 2022 |
||||||||
2015 share options |
$ | |||||||
2019 share options |
||||||||
2020 share options |
||||||||
December 31, 2023 |
||||||||
2015 share options |
$ |
|||||||
2019 share options |
||||||||
2020 share options |
||||||||
2023 share options |
||||||||
For the Year Ended December 31 |
||||||||||||||||
2022 |
2023 |
|||||||||||||||
Number of |
Exercise |
Number of |
Exercise |
|||||||||||||
Options |
Price |
Options |
Price |
|||||||||||||
(In |
Per Share |
(In |
Per Share |
|||||||||||||
Thousands) |
(NT$) |
Thousands) |
(NT$) |
|||||||||||||
Balance at January 1 |
$ | $ | ||||||||||||||
Options granted |
||||||||||||||||
Balance at December 31 |
||||||||||||||||
Options exercisable, end of year |
||||||||||||||||
Fair value of options granted (NT$) |
||||||||||||||||
Range of Exercise Price Per Share |
Remaining Contractual Life (Years) |
|||||||
December 31, 2022 |
||||||||
2022 share options |
$ | |||||||
December 31, 2023 |
||||||||
2022 share options |
||||||||
| d. | Employee restricted stock plans of subsidiaries |
For the Year Ended December 31 |
||||||||||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||||||||||
Number of |
Weighted Average Exercise |
Number of |
Weighted Average Exercise |
Number of |
Weighted Average Exercise |
|||||||||||||||||||
Options |
Price |
Options |
Price |
Options |
Price |
|||||||||||||||||||
(In |
Per Share |
(In |
Per Share |
(In |
Per Share |
|||||||||||||||||||
Thousands) |
(RMB) |
Thousands) |
(RMB) |
Thousands) |
(RMB) |
|||||||||||||||||||
Balance at January 1 |
$ | $ | $ | |||||||||||||||||||||
Options granted |
||||||||||||||||||||||||
Options expired |
( |
) | ||||||||||||||||||||||
Options exercised |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Options forfeited |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at December 31 |
||||||||||||||||||||||||
Options exercisable, end of year |
||||||||||||||||||||||||
Fair value of options granted (RMB) |
||||||||||||||||||||||||
Range of Exercise Price Per Share (RMB) |
Remaining Contractual Life (Years) |
|||||||
December 31, 2022 |
||||||||
2019 restricted stocks |
$ | |||||||
2021 restricted stocks |
— | |||||||
December 31, 2023 |
||||||||
2023 restricted shares |
||||||||
| e. | Fair value information |
AMPI 2022 share options plan |
AMPI 2022 share options plan after capital reduction |
The Company 2023 share options plan | ||||
| Share price at the grant date |
NT$ |
NT$ |
NT$ | |||
| Exercise price |
NT$ |
NT$ |
NT$ | |||
| Expected volatility (%) |
||||||
| Expected lives (years) |
||||||
| Expected dividend yield |
— | — | — | |||
| Risk free interest rate (%) |
||||||
USISH 2023 share options plan | ||
| Share price at the grant date |
RMB | |
| Exercise price |
RMB | |
| Expected volatility (%) |
||
| Expected lives (years) |
||
| Expected dividend yield |
— | |
| Risk free interest rate (%) |
||
USISH 2021 restricted stock plan |
USISH 2023 restricted stock plan | |||
| Share price at the grant date |
RMB |
RMB | ||
| Exercise price |
(Note) | RMB | ||
| Expected volatility (%) |
||||
| Lock-up periods (years) |
||||
| Expected dividend yield |
— | — | ||
| Risk free interest rate (%) |
||||
Note: |
The restricted stocks plan is to transfer ordinary shares for free upon satisfaction of certain performance conditions prior to the expiration. |
29. |
BUSINESS COMBINATIONS |
a. |
Subsidiaries acquired |
Principal Activity |
Date of Acquisition |
Proportion of Voting Equity Interests Acquired (%) |
Consideration Transferred |
|||||||||||||
NT$ |
US$ (Note 4) |
|||||||||||||||
| ITGEU |
|
$ | ||||||||||||||
| |
|
|||||||||||||||
| SER |
|
$ | ||||||||||||||
| |
|
|||||||||||||||
| Hirschmann |
$ | $ | ||||||||||||||
| |
|
|
|
|||||||||||||
b. |
Consideration transferred |
ITGEU |
SER |
Hirschmann |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Cash |
$ | $ | |
$ | $ | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| c. | Assets acquired and liabilities assumed at the date of acquisition |
ITGEU |
SER |
Hirschmann |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Assets |
||||||||||||||||
| Cash and cash equivalents |
$ | $ | $ | |||||||||||||
| Trade and other receivables |
|
|
||||||||||||||
| Inventories |
— | |
||||||||||||||
| Property, plant and equipment |
||||||||||||||||
ITGEU |
SER |
Hirschmann |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Intangible assets |
— | — | ||||||||||||||
Right-of-use assets |
— | — | ||||||||||||||
Others |
||||||||||||||||
Liabilities |
||||||||||||||||
Trade and other payables |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Lease liabilities |
— | — | ( |
) | ( |
) | ||||||||||
Net defined benefit liabilities |
— | — | ( |
) | ( |
) | ||||||||||
Others |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Fair value of identifiable net assets acquired |
$ | |
$ | $ | $ | |||||||||||
| d. | Goodwill recognized on acquisitions or gain recognized in bargain purchase transaction |
ITGEU |
SER |
Hirschmann |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Consideration transferred |
$ | $ | $ | $ | ||||||||||||
Less: Fair value of identifiable net assets acquired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Goodwill recognized on acquisition (gain recognized in bargain purchase transaction) |
$ | ( |
) | $ | — | $ | $ | |||||||||
| e. | Net cash outflow (inflow) on acquisition of subsidiaries |
ITGEU |
SER |
Hirschmann |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Consideration transferred |
$ | $ | $ | $ | ||||||||||||
Less: Cash and cash equivalent acquired |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net cash outflow (inflow) on acquisition of subsidiaries |
$ | ( |
) | $ | $ | $ | ||||||||||
| f. | Impact of acquisitions on the results of the Group |
ITGEU (for the period from October 21, 2021 through December 31, 2021) |
SER (for the period from November 2, 2021 through December 31, 2021) |
Hirschmann (for the period from October 27, 2023 through December 31, 2023) |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Operating revenue |
$ | $ | $ | $ | ||||||||||||
Net profit (loss) |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||
30. |
DISPOSAL OF SUBSIDIARIES |
a. |
Analysis of assets and liabilities on the date control was lost |
2021 |
2023 |
|||||||||||
GAPT Holding and ASEKS |
LUCHU |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Current Assets |
||||||||||||
Cash and cash equivalent |
$ |
$ |
$ |
|||||||||
Trade and other receivables |
— |
— |
||||||||||
Inventories |
— |
— |
||||||||||
Inventories related to real estate business |
— |
|||||||||||
Other current assets |
||||||||||||
Non-Current Assets |
||||||||||||
Financial assets at fair value through other comprehensive income – non-current |
— |
|||||||||||
Property, plant and equipment |
— |
— |
||||||||||
Right-of-use |
— |
— |
||||||||||
Investment property |
— |
— |
||||||||||
Goodwill |
— |
— |
||||||||||
Deferred tax assets |
— |
— |
||||||||||
Other non-current assets |
— |
— |
||||||||||
Current Liabilities |
||||||||||||
Short-term borrowings |
( |
) |
— |
— |
||||||||
Trade and other payables |
( |
) |
( |
) |
( |
) | ||||||
Current portion of long-term borrowings |
— |
— |
||||||||||
Other current liabilities |
( |
) |
— |
— |
||||||||
Non-Current Liabilities |
— |
— |
||||||||||
Deferred tax liabilities |
( |
) |
— |
— |
||||||||
Lease liabilities – non-current |
( |
) |
— |
— |
||||||||
Other non-current liabilities |
( |
) |
— |
— |
||||||||
Net assets disposed of |
$ |
$ |
$ |
|||||||||
| b. | Gain on disposal of subsidiaries |
2021 |
2023 |
|||||||||||
GAPT Holding and ASEKS |
LUCHU |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Total consideration (paid in cash) |
$ | $ | $ | |||||||||
| Net assets disposed of |
( |
) | ( |
) | ( |
) | ||||||
| Non-controlling interest |
||||||||||||
| Reclassification of accumulated exchange difference from equity to profit or loss due to the loss of control |
||||||||||||
| |
|
|
|
|
|
|||||||
| Gain on disposals |
$ | $ | $ | |||||||||
| |
|
|
|
|
|
|||||||
| c. | Net cash inflow on disposals of subsidiaries |
2021 |
2023 |
|||||||||||
GAPT Holding and ASEKS |
LUCHU |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Consideration received in cash and cash equivalents |
$ |
$ |
$ |
|||||||||
| Less: Cash and cash equivalent balances disposed of |
( |
) |
( |
) |
( |
) | ||||||
| Other receivables (the outstanding receivables of consideration, net of relevant expenditure) |
( |
) |
— |
|||||||||
| |
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|||||||
31. |
EQUITY TRANSACTION WITH NON-CONTROLLING INTERESTS |
| a. | USISH |
| b. | USIE |
32. |
CASH FLOW INFORMATION |
| a. | Non-cash investing activities |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Payments for property, plant and equipment |
||||||||||||||||
| Purchase of property, plant and equipment |
$ |
$ |
$ |
$ |
||||||||||||
| Increase (decrease) in other non-current assets |
( |
) |
( |
) |
( |
) | ||||||||||
| Decrease (increase) in other payables |
( |
) |
( |
) |
||||||||||||
| Capitalized borrowing costs |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Proceeds from disposal of property, plant and equipment |
||||||||||||||||
| Consideration from disposal of property, plant and equipment |
$ |
$ |
$ |
$ |
||||||||||||
| Decrease in other receivables |
||||||||||||||||
| Decrease in other current assets |
— |
— |
||||||||||||||
| Decrease (increase) in other non-current assets |
( |
) |
— |
— |
||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| b. | Changes in liabilities arising from financing activities |
Short-term Borrowings (including financial liabilities for hedging) |
Bonds Payable |
Long-term Borrowings (including financial liabilities for hedging) |
Lease Liabilities |
Total |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Balance at January 1, 2021 |
$ | $ | $ | $ | $ | |||||||||||||||
| Net financing cash flows |
( |
) | ( |
) | ||||||||||||||||
| Interest under operating activities |
— | — | — | |||||||||||||||||
| Rent expense under operating activities |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Equity components of convertible bonds and embedded derivative liability |
— | ( |
) | — | — | ( |
) | |||||||||||||
| Non-cash changes |
||||||||||||||||||||
| Additions to lease liabilities |
— | — | — | |||||||||||||||||
| Amortization of issuance cost |
— | — | ||||||||||||||||||
| Convertible bonds issued by subsidiaries and converted to ordinary shares |
— | ( |
) | — | — | ( |
) | |||||||||||||
| Lease modifications |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Acquisition of subsidiaries (Note 29) |
— | — | ||||||||||||||||||
| Disposal of subsidiaries (Note 30) |
( |
) | — | ( |
) | ( |
) | |||||||||||||
| Reclassification |
— | — | — | |||||||||||||||||
| Effects of foreign currency exchange |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | $ | $ | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Short-term Borrowings (including financial liabilities for hedging) |
Bonds Payable |
Long-term Borrowings (including financial liabilities for hedging) |
Lease Liabilities |
Total |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Balance at January 1, 2022 |
$ | $ | $ | $ | $ | |||||||||||||||
| Net financing cash flows |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Interest under operating activities |
— | — | — | |||||||||||||||||
| Rent expense under operating activities |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Equity components of convertible bonds and embedded derivative liability |
— | ( |
) | — | — | ( |
) | |||||||||||||
| Non-cash changes |
||||||||||||||||||||
| Additions to lease liabilities |
— | — | — | |||||||||||||||||
| Amortization of issuance cost |
— | — | ||||||||||||||||||
| Convertible bonds issued by subsidiaries and converted to ordinary shares |
— | ( |
) | — | — | ( |
) | |||||||||||||
| Lease modifications |
— | — | — | ( |
) | ( |
) | |||||||||||||
| Adjustments for government subsidy |
— | — | ( |
) | — | ( |
) | |||||||||||||
| Long-term borrowings transferred to short-term borrowings |
— | ( |
) | — | — | |||||||||||||||
| Effects of foreign currency exchange |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31, 2022 |
$ | $ | $ | $ | $ | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Short-term Borrowings (including financial liabilities for hedging) |
Short-term Bills Payable |
Bonds Payable |
Long-term Borrowings |
Lease Liabilities |
Total |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||||||
Balance at January 1, 2023 |
$ | $ | — | $ | $ | $ | $ | |||||||||||||||||
Net financing cash flows |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Interest under operating activities |
— | — | — | — | ||||||||||||||||||||
Equity components of convertible bonds and embedded derivative liability |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||
Non-cash changes |
||||||||||||||||||||||||
Additions to lease liabilities |
— | — | — | — | ||||||||||||||||||||
Convertible bonds issued by subsidiaries and converted to ordinary shares |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||
Amortization of issuance cost |
— | — | — | |||||||||||||||||||||
Lease modifications |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Adjustments for government subsidy |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Acquisition through business combinations (Note 29) |
— | — | — |
— | ||||||||||||||||||||
Reclassification |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Effects of foreign currency exchange |
— | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Short-term Borrowings (including financial liabilities for hedging) |
Short-term Bills Payable |
Bonds Payable |
Long-term Borrowings |
Lease Liabilities |
Total |
|||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
Balance at January 1, 2023 |
$ | |
$ | — | $ | |
$ | |
$ | |
$ | |
||||||||||||
Net financing cash flows |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Interest under operating activities |
— | — | — | — | ||||||||||||||||||||
Equity components of convertible bonds and embedded derivative liability |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||
Non-cash changes |
||||||||||||||||||||||||
Additions to lease liabilities |
— | — | — | — | ||||||||||||||||||||
Convertible bonds issued by subsidiaries and converted to ordinary shares |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||
Amortization of issuance cost |
— | — | ||||||||||||||||||||||
Lease modifications |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Adjustments for government subsidy |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Acquisition through business combinations (Note 29) |
— | — | — | — | ||||||||||||||||||||
Reclassification |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Effects of foreign currency exchange |
— | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||
Balance at December 31, 2023 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| c. | Total taxes paid |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
Operating activities |
$ |
$ |
$ |
$ |
||||||||||||
Investing activities |
||||||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
33. |
CAPITAL MANAGEMENT |
34. |
FINANCIAL INSTRUMENTS |
| a. | Fair value of financial instruments that are not measured at fair value |
| 1) | Fair value of financial instruments not measured at fair value but for which fair value is disclosed |
Carrying Amount |
Fair Value |
|||||||||||||||
NT$ |
US$ (Note 4) |
NT$ |
US$ (Note 4) |
|||||||||||||
| December 31, 2022 |
$ | $ | ||||||||||||||
| December 31, 2023 |
$ | $ | ||||||||||||||
| 2) | Fair value hierarchy |
| b. | Fair value of financial instruments that are measured at fair value on a recurring basis |
| 1) | Fair value hierarchy |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
| December 31, 2022 |
||||||||||||||||
| Financial assets at FVTPL |
||||||||||||||||
| Derivative financial assets |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| Non-derivative financial assets |
||||||||||||||||
| Quoted ordinary shares |
— | — | ||||||||||||||
| Private-placement funds |
— | — | ||||||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Contingent considerations |
— | — | ||||||||||||||
| Open-end mutual funds |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | $ | $ | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial assets at FVTOCI |
||||||||||||||||
| Investments in equity instruments |
||||||||||||||||
| Unquoted ordinary shares |
$ | — | $ | — | $ | $ | ||||||||||
| Quoted ordinary shares |
— | — | ||||||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Limited partnership |
— | — | ||||||||||||||
| Investments in debt instruments |
||||||||||||||||
| Unsecured subordinate corporate bonds |
— | — | ||||||||||||||
| Trade receivables, net |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | — | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial liabilities at FVTPL |
||||||||||||||||
| Derivative financial liabilities |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | — | $ | $ | — | $ | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||
| December 31, 2023 |
||||||||||||||||
| Financial assets at FVTPL |
|
|
| |||||||||||||
| Derivative financial assets |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| Non-derivative financial assets |
||||||||||||||||
| Quoted ordinary shares |
— | — | ||||||||||||||
| Private-placement funds |
— | — | ||||||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Open-end mutual funds |
— | — | ||||||||||||||
| Hybrid financial assets Convertible notes |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial assets at FVTOCI |
||||||||||||||||
| Investments in equity instruments |
||||||||||||||||
| Unquoted ordinary shares |
$ | — | $ | — | $ | $ | ||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Investments in debt instruments |
||||||||||||||||
| Unsecured subordinate corporate bonds |
— | — | ||||||||||||||
| Trade receivables, net |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | — | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial liabilities at FVTPL |
||||||||||||||||
| Derivative financial liabilities |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | — | $ | $ | — | $ | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||
| December 31, 2023 |
||||||||||||||||
| Financial assets at FVTPL |
||||||||||||||||
| Derivative financial assets |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| Non-derivative financial assets |
||||||||||||||||
| Quoted ordinary shares |
— | — | ||||||||||||||
| Private-placement funds |
— | — | ||||||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Open-end mutual funds |
— | — | ||||||||||||||
| Hybrid financial assets Convertible notes |
— |
— |
||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial assets at FVTOCI |
||||||||||||||||
| Investments in equity instruments |
||||||||||||||||
| Unquoted ordinary shares |
$ | — | $ | — | $ | $ | ||||||||||
| Unquoted preferred shares |
— | — | ||||||||||||||
| Investments in debt instruments |
||||||||||||||||
| Unsecured subordinate corporate bonds |
— | — | ||||||||||||||
| Trade receivables, net |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | — | $ | — | $ | $ | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Financial liabilities at FVTPL |
||||||||||||||||
| Derivative financial liabilities |
||||||||||||||||
| Swap contracts |
$ | — | $ | $ | — | $ | ||||||||||
| Forward exchange contracts |
— | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | — | $ | $ | — | $ | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| 2) | Reconciliation of Level 3 fair value measurements of financial assets |
Financial Assets at FVTPL |
Financial Assets at FVTOCI |
|||||||||||||||||||
| Financial Assets |
Equity Instruments |
Debt Instruments |
Equity Instruments |
Debt Instruments |
Total |
|||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Balance at January 1 |
$ | $ | — | $ | $ | $ | ||||||||||||||
| Recognized in profit or loss |
— | — | — | |||||||||||||||||
| Recognized in other comprehensive income |
||||||||||||||||||||
| Included in unrealized gains on financial assets at FVTOCI |
— | — | ||||||||||||||||||
| Effects of foreign currency exchange |
( |
) | — | ( |
) | — | ( |
) | ||||||||||||
| Net increase in trade receivables |
— | — | ||||||||||||||||||
| Trade receivables factoring |
— | ( |
) | — | ( |
) | ( |
) | ||||||||||||
| Purchases |
— | — | ||||||||||||||||||
| Disposals |
( |
) | — | ( |
) | — | ( |
) | ||||||||||||
| Reclassify |
— | — | ( |
) | — | ( |
) | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31 |
$ | $ | — | $ | $ | $ | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Financial Assets at FVTPL |
Financial Assets at FVTOCI |
|||||||||||||||||||
| Financial Assets |
Equity Instruments |
Debt Instruments |
Equity Instruments |
Debt Instruments |
Total |
|||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Balance at January 1 |
$ | $ | — | $ | $ | $ | ||||||||||||||
| Recognized in profit or loss |
— | — | ||||||||||||||||||
| Recognized in other comprehensive income |
||||||||||||||||||||
| Included in unrealized losses on financial assets at FVTOCI |
— | — | ( |
) | ( |
) | ( |
) | ||||||||||||
| Effects of foreign currency exchange |
— | — | ||||||||||||||||||
| Net increase (decrease) in trade receivables |
— | — | ( |
) | ||||||||||||||||
| Trade receivables factoring |
— | ( |
) | — | ( |
) | ( |
) | ||||||||||||
| Purchases |
— | |||||||||||||||||||
| Disposals |
( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at December 31 |
$ | $ | — | $ | $ | $ | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial Assets at FVTPL |
Financial Assets at FVTOCI |
|||||||||||||||||||||||
| Financial Assets |
Equity Instruments |
Debt Instruments |
Hybrid Instruments |
Equity Instruments |
Debt Instruments |
Total |
||||||||||||||||||
| NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Balance at January 1 |
$ |
|
|
$ |
— |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
| ||||||
| Recognized in profit or loss |
|
( |
) |
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
( |
) | ||||||
| Recognized in other comprehensive income |
||||||||||||||||||||||||
| Included in unrealized losses on financial assets at FVTOCI |
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
( |
) |
|
|
| ||||||
| Effects of foreign currency exchange |
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
| ||||||
| Net increase in trade receivables |
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
| ||||||
| Trade receivables factoring |
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
— |
|
|
( |
) | ||||||
| Purchases |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
| ||||||
| Disposal of subsidiaries (Note 30) |
|
— |
|
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) | ||||||
| Disposals |
|
( |
) |
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) | ||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31 |
$ |
|
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
| ||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Financial Assets at FVTPL |
Financial Assets at FVTOCI |
|||||||||||||||||||||||
| Financial Assets |
Equity Instruments |
Debt Instruments |
Hybrid Instruments |
Equity Instruments |
Debt Instruments |
Total |
||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| Balance at January 1 |
$ |
|
|
$ |
— |
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
| ||||||
| Recognized in profit or loss |
|
( |
) |
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
( |
) | ||||||
| Recognized in other comprehensive income |
||||||||||||||||||||||||
| Included in unrealized losses on financial assets at FVTOCI |
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
( |
) |
|
|
| ||||||
| Effects of foreign currency exchange |
|
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
| ||||||
| Net increase in trade receivables |
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
| ||||||
| Trade receivables factoring |
|
— |
|
|
( |
) |
|
— |
|
|
— |
|
|
— |
|
|
( |
) | ||||||
| Purchases |
|
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
| ||||||
| Disposal of subsidiaries (Note 30) |
|
— |
|
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) | ||||||
| Disposals |
|
( |
) |
|
— |
|
|
— |
|
|
( |
) |
|
— |
|
|
( |
) | ||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at December 31 |
$ |
|
|
$ |
— |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
| ||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 3) |
Valuation techniques and assumptions applied for the purpose of measuring fair value |
| a) |
Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement |
| Financial Instruments |
Valuation Techniques and Inputs | |
| Derivatives - swap contracts and forward exchange contracts |
Discounted cash flows - Future cash flows are estimated based on observable forward exchange rates at balance sheet dates and contract forward exchange rates, discounted at rates that reflected the credit risk of various counterparties. | |
| b) |
Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement |
| c. | Categories of financial instruments |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Financial assets |
||||||||||||
| FVTPL |
||||||||||||
| Mandatorily at FVTPL |
$ |
$ |
$ |
|||||||||
| Measured at amortized cost (Note 1) |
||||||||||||
| FVTOCI |
||||||||||||
| Equity instruments |
||||||||||||
| Debt instruments |
||||||||||||
| Trade receivables, net |
||||||||||||
| Financial liabilities |
||||||||||||
| FVTPL |
||||||||||||
| Held for trading |
||||||||||||
| Financial liabilities for hedging |
||||||||||||
| Measured at amortized cost (Note 2) |
||||||||||||
| Note 1: | The balances included financial assets measured at amortized cost which comprised cash and cash equivalents, trade and other receivables and other financial assets. |
| Note 2: | The balances included financial liabilities measured at amortized cost which comprised short-term borrowings, trade and other payables, bonds payable, long-term borrowings and deposits received (under the line items of other current liabilities and other non-current liabilities). |
| d. | Financial risk management objectives and policies |
| 1) | Market risk |
| a) | Foreign currency exchange rate risk |
Line item in |
Carrying Amount |
|||||||||
Hedging Instrument/Hedged Items |
Balance sheet |
Asset |
Liability |
|||||||
NT$ |
NT$ |
|||||||||
| Fair value hedge |
||||||||||
| Borrowings denominated in foreign currencies/ Financial assets at FVTPL |
Financial liabilities for hedging - current | $ | — | $ | ||||||
| Hedge of net investment in foreign operation |
Financial liabilities for hedging - current | — | |
|
| |||||
Change in Value Used for Calculating Hedge Ineffectiveness |
Accumulated Gains or Losses in Other Equity |
Carrying Amount of Hedged Item in Fair Value Hedge |
Accumulated Amount of Fair Value Hedge Adjustments on Hedged Item |
|||||||||||||||||||||
| Hedging Instrument/ Hedged Item |
Hedging Instrument |
Hedged Item |
Continuing Hedges |
Hedge Accounting No Longer Applied |
Asset |
Asset |
||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Fair value hedge |
||||||||||||||||||||||||
| Borrowings denominated in foreign currencies/ Financial assets at FVTPL |
$ | ( |
) | $ | $ | — | $ | — | $ | $ | ||||||||||||||
| Hedge of net investment in foreign operation |
( |
) | — | — | — | |||||||||||||||||||
Line item in |
Carrying Amount |
|||||||||||||||||
| Hedging Instrument/Hedged Items |
Balance sheet |
Asset |
Liability |
|||||||||||||||
NT$ |
US$ (Note 4) |
NT$ |
US$ (Note 4) |
|||||||||||||||
| Fair value hedge |
||||||||||||||||||
| Borrowings denominated in foreign currencies/ Financial assets at FVTPL |
Financial liabilities for hedging - current | $ | — | $ | — | $ | $ | |||||||||||
| Hedge of net investment in foreign operation |
Financial liabilities for hedging - current | — | — | |||||||||||||||
Change in Value Used for Calculating Hedge Ineffectiveness |
Accumulated Gains or Losses in Other Equity |
Carrying Amount of Hedged Item in Fair Value Hedge |
Accumulated Amount of Fair Value Hedge Adjustments on Hedged Item |
|||||||||||||||||||||
| Hedging Instrument/ Hedged Item |
Hedging Instrument |
Hedged Item |
Continuing Hedges |
Hedge Accounting No Longer Applied |
Asset |
Asset |
||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Fair value hedge |
||||||||||||||||||||||||
| Borrowings denominated in foreign currencies/ Financial assets at FVTPL |
$ | $ | ( |
) | $ | — | $ | — | $ | $ | ||||||||||||||
| Hedge of net investment in foreign operation |
( |
) | — | — | — | |||||||||||||||||||
Change in Value Used for Calculating Hedge Ineffectiveness |
Accumulated Gains or Losses in Other Equity |
Carrying Amount of Hedged Item in Fair Value Hedge |
Accumulated Amount of Fair Value Hedge Adjustments on Hedged Item |
|||||||||||||||||||||
| Hedging Instrument/ Hedged Item |
Hedging Instrument |
Hedged Item |
Continuing Hedges |
Hedge Accounting No Longer Applied |
Asset |
Asset |
||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| Fair value hedge |
||||||||||||||||||||||||
| Borrowings denominated in foreign currencies/ Financial assets at FVTPL |
$ | $ | ( |
) | $ | — | $ | — | $ | $ | ||||||||||||||
| Hedge of net investment in foreign operation |
( |
) | — | — | — | |||||||||||||||||||
| b) | Interest rate risk |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Fair value interest rate risk |
||||||||||||
| Financial assets |
$ | $ | $ | |||||||||
| Financial liabilities |
||||||||||||
| Cash flow interest rate risk |
||||||||||||
| Financial assets |
||||||||||||
| Financial liabilities |
|
|||||||||||
| c) | Other price risk |
| 2) | Credit risk |
| 3) | Liquidity risk |
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
1 to 5 Years |
More than 5 Years |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Non-derivative financial liabilities |
||||||||||||||||||||
| Non-interest bearing |
$ | $ | $ | $ | $ | |||||||||||||||
| Obligation under leases |
||||||||||||||||||||
| Floating interest rate liabilities |
||||||||||||||||||||
| Fixed interest rate liabilities |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | |
$ | |
$ | |
$ | |
$ | |
|||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Less than 1 Year |
1 to 5 Years |
5 to 10 Years |
10 to 15 Years |
15 to 20 Years |
More than 20 Years |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Obligation under leases |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
1 to 5 Years |
More than 5 Years |
||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
||||||||||||||||
| Non-derivative financial liabilities |
||||||||||||||||||||
| Non-interest bearing |
$ | $ | $ | $ | $ | |||||||||||||||
| Obligation under leases |
||||||||||||||||||||
| Floating interest rate liabilities |
||||||||||||||||||||
| Fixed interest rate liabilities |
— | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
1 to 5 Years |
More than 5 Years |
||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||||||||
| Non-derivative financial liabilities |
||||||||||||||||||||
| Non-interest bearing |
$ | $ | $ | $ | $ | |||||||||||||||
| Obligation under leases |
||||||||||||||||||||
| Floating interest rate liabilities |
||||||||||||||||||||
| Fixed interest rate liabilities |
— | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Less than 1 Year |
1 to 5 Years |
5 to 10 Years |
10 to 15 Years |
15 to 20 Years |
More than 20 Years |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| Obligation under leases |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Less than 1 Year |
1 to 5 Years |
5 to 10 Years |
10 to 15 Years |
15 to 20 Years |
More than 20 Years |
|||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| Obligation under leases |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
| December 31, 2022 |
||||||||||||
| Net settled |
||||||||||||
| Forward exchange contracts |
$ |
( |
) |
$ |
$ |
— |
||||||
| |
|
|
|
|
|
|||||||
| Gross settled |
||||||||||||
| Forward exchange contracts |
||||||||||||
| Inflows |
$ |
$ |
$ |
|||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
| Swap contracts |
||||||||||||
| Inflows |
||||||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|||||||
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
||||||||||
NT$ |
NT$ |
NT$ |
||||||||||
| December 31, 2023 |
||||||||||||
| Net settled |
||||||||||||
| Forward exchange contracts |
$ |
( |
) |
$ |
$ |
— |
||||||
| |
|
|
|
|
|
|||||||
| Gross settled |
||||||||||||
| Forward exchange contracts |
||||||||||||
| Inflows |
$ |
$ |
$ |
|||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
| Swap contracts |
||||||||||||
| Inflows |
||||||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|||||||
On Demand or Less than 1 Month |
1 to 3 Months |
3 Months to 1 Year |
||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
||||||||||
| December 31, 2023 |
||||||||||||
| Net settled |
||||||||||||
| Forward exchange contracts |
$ |
( |
) |
$ |
$ |
— |
||||||
| |
|
|
|
|
|
|||||||
| Gross settled |
||||||||||||
| Forward exchange contracts |
||||||||||||
| Inflows |
$ |
$ |
$ |
|||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
| Swap contracts |
||||||||||||
| Inflows |
||||||||||||
| Outflows |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| |
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
| |
|
|
|
|
|
|||||||
35. |
RELATED PARTY TRANSACTIONS |
a. |
Related parties |
| Related Parties |
Relationship with the Group | |
| ASE Environmental Protection and Sustainability Foundation |
Substantial related party | |
| ASE Cultural and Educational Foundation |
Substantial related party | |
| b. | Contribution of related party |
For the Year Ended December 31 |
||||||||||||||||
| Relationship and Name |
2021 |
2022 |
2023 |
|||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Substantial related party |
||||||||||||||||
| ASE Environmental Protection and Sustainability Foundation |
$ | |
$ | |
$ | $ | ||||||||||
| ASE Cultural and Educational Foundation |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | |
$ | |
|||||||||
| |
|
|
|
|
|
|
|
|||||||||
| c. | ASE entered into a joint construction and allocation of housing units agreement with HC in August 2021. The agreement stipulated that ASE and HC should provide a part of land located in Kaohsiung and funds, respectively, for the joint construction of plant and consulted with professional appraisal firms to evaluate the allocation ratio of the value under joint construction. After the completion of the plant construction, ASE and its affiliates would have the priority to purchase the property which obtained by HC based on the agreed proportion of joint construction. In August 2023, the board of directors resolved to purchase |
| d. | ASE and ASEE entered into a joint construction and allocation of housing units agreement with HC, respectively, in August 2021. The agreement stipulated that ASE and ASEE provided land and leasehold land and HC provided fund for joint construction of plant and consulted with professional appraisal firm to evaluate the allocation ratio of the value under joint construction. After the completion of the plant construction, ASE, ASEE and its affiliates had the priority to purchase the property, which obtained by HC based on the agreed proportion of joint construction. Since the joint construction agreement between ASEE and HC had not yet started, therefore, the joint construction agreement was terminated by mutual consent of both parties, and the board of directors of ASEE decided to terminate the joint construction agreement in May 2022. |
| e. | In the third quarter of 2021, ASE purchased real estate properties from HC with an amount of NT$ |
| f. | ASE entered into a joint construction and allocation of housing units agreement with HC in April 2022. The agreement stipulated that ASE and HC provided a part of land located in Chung-Li and funds, respectively, for joint construction of plant and consulted with professional appraisal firm to evaluate the allocation ratio of the value under joint construction. After the completion of the plant construction, ASE would have the priority to purchase the property which obtained by HC based on the agreed proportion of joint construction. |
| g. | Compensation to key management personnel |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Short-term employee benefits |
$ | $ | $ |
$ | ||||||||||||
| Post-employment benefits |
||||||||||||||||
| Share-based payments |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | |
$ | |
$ | $ | |
||||||||||
| |
|
|
|
|
|
|
|
|||||||||
36. |
ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
Inventories related to real estate business |
$ | $ | $ | |||||||||
Property, plant and equipment |
||||||||||||
Investment properties |
||||||||||||
Other financial assets (including current and non-current) |
||||||||||||
| $ | |
$ | |
$ | |
|||||||
37. |
SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS |
| a. | As of December 31, 2022 and 2023, unused letters of credit of the Group were approximately NT$ |
| b. | As of December 31, 2022 and 2023, letters of bank guarantee provided to customs for the import and export of goods with bank facilities granted to the Group were approximately NT$ |
| c. | As of December 31, 2022 and 2023, the Group’s outstanding commitments to purchase property, plant and equipment were approximately NT$ |
| d. | The Group entered into long-term purchase agreements of materials and supplies with multiple suppliers. The relative minimum purchase quantity is specified in the agreements. |
| e. | The Group entered into long-term agreements with multiple customers. The relative minimum order quantity from customers and minimum purchase quantity of materials from suppliers are specified in the agreements. |
| f. | In December 2013, in consideration of corporate social responsibility for environmental protection, the board of directors of ASE, approved the contributions of at least NT$ |
38. |
SIGNIFICANT EVENTS AFTER REPORTING PERIOD |
a. |
In February 2024, the board of directors of ASE resolved to revoke the public offering of its ordinary shares and to acquire subsidiaries of Infineon Group, which are located in the Philippines and Korea, by ASE and ASE (Korea) Inc., respectively. |
b. |
In March 2024, the board of directors resolved to issue an employee restricted stock awards plan and grant up to |
3 9 . |
OTHERS |
| a. | There were five employees and a waste disposal supplier of a subsidiary in China accused by China People’s Procuratorate (the “Procuratorate”) for committing the crime of environmental pollution in 2018. During the trial, the Procuratorate claimed that the subsidiary should also be charged with corporate crime which caused the subsidiary received a change and addition indictment in October 2019. In June 2020, in the first trial, the court of first instance ruled that the subsidiary shall be imposed a fine of RMB co-defendants have filed an appeal against the judgment and, pursuant to local applicable law, the whole case were deemed appealed. On April 7, 2021, the court of the second instance has issued a ruling to deny the appeal and to affirm the judgment of the first instance, and the case has been concluded. |
| b. | On December 20, 2013, the Kaohsiung Environmental Protection Bureau (the “KEPB”) imposed an administrative fine of NT$ re-imposed an administrative fine of NT$ |
| c. | In March 2023, the board of directors of Global Advanced Packaging Technology Limited resolved to acquire around $ |
40. |
SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES |
Foreign Currencies (In Thousand) |
Exchange Rate |
Carrying Amount (In Thousand) |
||||||||||
December 31, 2022 |
||||||||||||
Monetary financial assets |
||||||||||||
US$ |
$ | $ | ||||||||||
US$ |
||||||||||||
US$ |
||||||||||||
JPY |
||||||||||||
JPY |
||||||||||||
| Foreign Currencies (In Thousand) |
Exchange Rate |
Carrying Amount (In Thousand) |
||||||||||
| Monetary financial liabilities |
||||||||||||
| US$ |
$ |
$ |
||||||||||
| US$ |
||||||||||||
| US$ |
||||||||||||
| JPY |
||||||||||||
| JPY |
||||||||||||
| December 31, 2023 |
||||||||||||
| Monetary financial assets |
||||||||||||
| US$ |
||||||||||||
| US$ |
||||||||||||
| US$ |
||||||||||||
| JPY |
||||||||||||
| JPY |
||||||||||||
| Monetary financial liabilities |
||||||||||||
| US$ |
||||||||||||
| US$ |
||||||||||||
| US$ |
||||||||||||
| JPY |
||||||||||||
| JPY |
||||||||||||
For the Year Ended December 31 |
||||||||||||||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||||||||||||||
| Functional Currencies |
Exchange Rate |
Net Foreign Exchange Gain (Loss) |
Exchange Rate |
Net Foreign Exchange Gain (Loss) |
Exchange Rate |
Net Foreign Exchange Gain (Loss) |
||||||||||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||||||||||||||
| US$ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||
| NT$ | ( |
) | ||||||||||||||||||||||||||
| RMB | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||||||||||
| $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||||||||||
41. |
OPERATING SEGMENTS INFORMATION |
| a. | Segment revenues and operation results |
Adjustments |
||||||||||||||||||||||||
Packaging |
Testing |
EMS |
Others |
and Eliminations |
Total |
|||||||||||||||||||
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
NT$ |
|||||||||||||||||||
| For the year ended December 31, 2021 |
||||||||||||||||||||||||
| Revenue from external customers |
$ | $ | $ | $ | $ | — | $ | |||||||||||||||||
| Inter-group revenues (Note 1) |
( |
) | — | |||||||||||||||||||||
| Segment revenues |
— | |||||||||||||||||||||||
| Interest income |
— | |||||||||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Share of the profit or loss of associates and joint ventures |
— | — | ||||||||||||||||||||||
| Impairment loss |
( |
) | ( |
) | — | — | — | ( |
) | |||||||||||||||
| Segment profit before income tax |
— | |||||||||||||||||||||||
| Expenditures for segment assets |
— | |||||||||||||||||||||||
| December 31, 2021 |
||||||||||||||||||||||||
| Investments accounted for using the equity method |
— | — | ||||||||||||||||||||||
| Contract assets |
— | — | — | |||||||||||||||||||||
| For the year ended December 31, 2022 |
||||||||||||||||||||||||
| Revenue from external customers |
— | |||||||||||||||||||||||
| Inter-group revenues (Note 1) |
( |
) | — | |||||||||||||||||||||
| Segment revenues |
— | |||||||||||||||||||||||
| Interest income |
— | |||||||||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Share of the profit or loss of associates and joint ventures |
— | — | ||||||||||||||||||||||
| Impairment loss |
( |
) | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||
| Segment profit before income tax |
— | |||||||||||||||||||||||
| Expenditures for segment assets |
— | |||||||||||||||||||||||
| December 31, 2022 |
||||||||||||||||||||||||
| Investments accounted for using the equity method |
— | — | ||||||||||||||||||||||
| Contract assets |
— | — | — | |||||||||||||||||||||
| For the year ended December 31, 2023 |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue from external customers |
— | |||||||||||||||||||||||
| Inter-group revenues (Note 1) |
( |
) | — | |||||||||||||||||||||
| Segment revenues |
— | |||||||||||||||||||||||
| Interest income |
— | |||||||||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Share of the profit or loss of associates and joint ventures |
( |
) | — | |||||||||||||||||||||
| Impairment loss |
( |
) | ( |
) | — | — | — | ( |
) | |||||||||||||||
| Segment profit before income tax |
( |
) | — | |||||||||||||||||||||
| Expenditures for segment assets |
— | |||||||||||||||||||||||
| December 31, 2023 |
||||||||||||||||||||||||
| Investments accounted for using the equity method |
— | |||||||||||||||||||||||
| Contract assets |
— | — | — | |||||||||||||||||||||
Adjustments |
||||||||||||||||||||||||
Packaging |
Testing |
EMS |
Others |
and Eliminations |
Total |
|||||||||||||||||||
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
US$ (Note 4) |
|||||||||||||||||||
| For the year ended December 31, 2023 |
||||||||||||||||||||||||
| Revenue from external customers |
$ | $ | $ | $ | $ | — | $ | |||||||||||||||||
| Inter-group revenues (Note 1) |
( |
) | — | |||||||||||||||||||||
| Segment revenues |
— | |||||||||||||||||||||||
| Interest income |
— | |||||||||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | — | ( |
) | |||||||||||||
| Share of the profit or loss of associates and joint ventures |
( |
) | — | |||||||||||||||||||||
| Impairment loss |
( |
) | ( |
) | — | — | — | ( |
) | |||||||||||||||
| Segment profit before income tax |
( |
) | — | |||||||||||||||||||||
| Expenditures for segment assets |
— | |||||||||||||||||||||||
| December 31, 2023 |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investments accounted for using the equity method |
— | |||||||||||||||||||||||
| Contract assets |
— | — | — | |||||||||||||||||||||
| Note 1: | Inter-group revenues were eliminated upon consolidation. |
| Note 2: | The disaggregated product and service type from the Group’s contract with customer is the same as those disclosed in above reportable segment. |
| b. | Revenue from major products and services |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| Packaging service |
$ |
$ |
$ |
$ |
||||||||||||
| Testing service |
||||||||||||||||
| EMS |
||||||||||||||||
| Others |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| c. | Geographical information |
| 1) | Net revenues from external customers |
For the Year Ended December 31 |
||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||
NT$ |
NT$ |
NT$ |
US$ (Note 4) |
|||||||||||||
| United States |
$ |
$ |
$ |
$ |
||||||||||||
| Taiwan |
||||||||||||||||
| Asia |
||||||||||||||||
| Europe |
||||||||||||||||
| Others |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| 2) | Non-current assets |
December 31 |
||||||||||||
2022 |
2023 |
|||||||||||
NT$ |
NT$ |
US$ (Note 4) |
||||||||||
| Taiwan |
$ | $ | $ | |||||||||
| China |
||||||||||||
| Others |
||||||||||||
| |
|
|
|
|
|
|||||||
| $ | $ | $ | ||||||||||
| |
|
|
|
|
|
|||||||
| d. | Major customers |