Weikeng Industrial : 2023 Annual General Meeting Minutes

威健實業股份有限公司(Weikeng Industrial Co., Ltd.)

112 年股東常會議事錄(2023 Annual General Meeting Minutes)

Notice to readers

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

• Date and Time of the Meeting：June 14, 2023 at 9:00 a.m. (Wednesday)
• Location of the Meeting：Chin-Chin Garden Restaurant (No.32, Ln. 266, Sec. 2, Zhishan Rd., Shilin Dist., Taipei City 111, Taiwan )
• Report of the Number of Shares Represented by Shareholders Present at the Meeting)： At 9:00 a.m., the total number of ordinary shares in attendance by shareholders (including in person and by proxy) are 297,440,615 shares (including the number of shares attended through electronic means which are 29,584,221 shares), accounted for 70.22% of the total 423,543,164 ordinary shares issued by the Company, and met the statutory meeting quorum in accordance with article 174 of the Company Act.
• Chairman：Hu, Chiu-Chiang
• Recorder: Chou, Kan-Lin
• Directors Present：
• 1. Independent Director： Tsai, Yu-Ping, Lin, Hung, and Yu, Hsueh-Ping
  2. Director：Hu, Chiu-Chiang, Chi, Ting-Fang, and Chen, Kuan-Hu
• Other Attendees
• 1. Attorney at Law：Wang, Chien-Chih
  2. CPA： KPMG, Taiwan, Au, Yiu-Kwan

1. The statutory meeting quorum is met. Chairman Hu, Chiu-Chiang announces the commencement of the meeting.

1. Chairman's Remarks：（Omitted）

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1. Reporting Matters
2. 1. 2022 Business Report & Report to Shareholders

2022 Business Performance

In 2022, the global political and economic situation changed dramatically, including the Russia- Ukraine War, price inflation of major economies, etc., which led to a sharp increase in interest rates by the US Federal Reserve Bank and tightening of monetary policies in European countries. In particular, because the global economic was in recession in the second half of the year, and many countries faced a risk of stagflation, in combination with the decline in demand for terminal electronic products in the post-pandemic era, semiconductor supply chains entered an inventory adjustment period due to the previous over-ordering of downstream manufacturers. However, the application scope of semiconductors has not decreased but is still increasing, so basic demand can be maintained and is supported by emerging application demands. The Group continued to make efforts to serve upstream and downstream manufacturers in the industry chain. Because the Group not only faced continuous pressure from supply chain destocking, but also faced pressure from inflation and financial cost rising after the dividend era of the previous stay-at-home economy and once chip shortage had passed, the Group's consolidated sales revenue and net profit before tax reached approximately NTD 70.2 billion and NTD 2.3 billion in 2022, respectively, representing a decrease of 2.93% and 4.94% year-on-year, respectively, and the gross margin of 7.81% and the operating income margin of 3.88% increased by 0.68% and 0.39% year-on-year, respectively.

Commitment to Sustainable Development

With the 45th anniversary of our establishment, facing the uncertainty of climate change, economic turbulence in 2022, and geopolitical and other factors, Weikeng Group will continue to actively study and improve its sustainable operation, hoping to maintain its business performance and take into account the needs of all stakeholders in this uncertain market. As a member of the semiconductor industry chain, Weikeng hopes to continue to contribute to the Group's resources, work with upstream and downstream partners to jointly build a green and sustainable supply chain for semiconductors, and strive to reduce environmental impacts and comply with social laws and regulations.

In 2022, through the risk management team under the Sustainable Development Committee, the Company began to promote the TCFD project plan. The Company referred to the structure disclosed in the TCFD to strengthen the governance structure of opportunities and risks associated with climate change, hoping to take a deep look at and grasp the opportunities and risks brought to the business by climate change. At the same time, with the trend of global net zero emissions, Weikeng introduced the ISO-14064 Greenhouse Gas Accounting and Verification Standards, and established an internal greenhouse gas accounting and verification team, and will successively establish a complete greenhouse gas accounting and verification management procedure and optimize the organization's internal processes and systems to facilitate the planning of sustainability-related investment and disclosure standards in the mid-long term.

In addition to strengthening the risk management and governance structure of climate change, the Company considers climate change as an important strategy to maintain its economic performance. Because energy conservation and carbon reduction have become the main demand for electronic and electrical products, the Company will continue to pay attention to the potential risks and opportunities of climate change for an enterprise at present and in the future, actively cooperate with the upstream vendors, and understand the demand of downstream manufacturers at the application end, continue

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to invest more resources in demand creation for relevant application solutions, such as power management, electric vehicle charging piles, smart grid, wind power generation, solar power generation inverters, etc., all of which are green business opportunities. In recent years, upstream vendors have more actively expanded research and development resources invested in compound/group III semiconductor products. The Company will also continue to invest resources into the automotive/electric vehicle and industrial energy-related markets to develop product solutions with low energy consumption and high power. It is expected that the Company will make its own efforts to develop energy-saving and carbon reduction products to support the development of the green energy industry.

In the past year, more Weikeng colleagues devoted themselves to work related to sustainability and actively participated in public welfare activities, which not only enhanced the centripetal force of the organization and team, but also connected the ESG strength within the organization, so that colleagues can make their own efforts to give back to the community. In addition to the participation of colleagues, the Company continues to sponsor environmental protection issues, education, sports resources, research institutions, etc., to cultivate scientific and technological talents in response to the United Nations Sustainable Development Goals (SDGs).In January 2023, the Board of Directors adopted a revision to the Company's "Directors and Employees (including Executive Officers) Emolument Policy", and established reasonable guidance on the connection between the individual salary and compensation arrangements of directors and employees (including executive officers) and the Company's operation and financial performance, investment in and contribution to sustainable development, and risk management, etc., so as to carry out business with ethical corporate management, corporate governance, and promotion for sustainable development.

The Company is committed to fulfilling its corporate social responsibility and following international trends. In addition to actively addressing the concerns of our stakeholders regarding environmental, social, and corporate governance issues, we furthermore carry out practical risk assessment and undertake countermeasures in order to strengthen the goals of corporate governance and sustainable operations.

2023 Business Outlook

In 2023, the world will still face the risk of stagflation. It is predicted that the overall semiconductor industry will decline slightly, and the problem of destocking in the industry chain will continue. In addition, geopolitical factors and aggravated inflation will adversely affect the demand for terminal electronic products, and the rising of interest rates will lead to an increase in financing costs, etc. However, 2023 will also be the starting year of the "Post-COVID Pandemic Era". Governments of all countries have launched various policies to stimulate consumption, and hope to stir up a rebooting of the economy, so Weikeng will still adhere to stable operation and risk management strengthening as the primary issue in 2023.In the aspect of business development, as geopolitics also promote regionalized division of the supply chain, the Company will review and adjust its strategies of business development, continuously grasp the needs of and provide technical support to vendors and customers, and expects the management team to lead all colleagues to strictly abide by the risk management system, optimize operation and capital efficiency, and adhere to the goals of integrity, sustainable operation, and stable operation under a stable operation mode, to create higher value for all stakeholders.

At present, Weikeng has been franchised many brands of semiconductor components, including many brands of semiconductor integrated device manufacturers (IDMs) or IC design companies, such

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as AMD, Amazon, Cypress, Infineon, Lattice, Microchip, Molex, NXP, Sinopower, Vishay, Western Digital, etc. In 2022, the Group obtained new franchises for a total of 9 vendors. In 2023, we will continue to develop and find new products and new application solutions in the semiconductor market, continue to seek new cooperation opportunities for franchises, and in the face of legal restrictions on the supply of products from European and American systems to China, continue to strengthen the product portfolio, expand the product portfolio involved in the supply chain, improve the core competitiveness of the Group, create new customer needs, and expect to assist customers in responding to geopolitical adjustments. At present, in the application fields of industrial electronics, automotive electronics, mobile communications, consumer electronics, computer peripheral equipment, AI/5G, etc., all regional companies affiliated with the Group have the ability to provide customers with competitive spare parts, technical support services, and efficient supply chain management services, so as to achieve a technology connection between the upstream vendors and downstream customers through the Group as an intermediator, and create value with a three-win situation.

1. Annual Business Report for 2022

(1) Implementation Results of the Business Plan

Item	Amount (in thousands of NT$)	Increase (decrease)%
Sales Revenue	70,281,179	(2.93)
Operating margin	5,489,993	6.34
Operating profit	2,728,183	8.02
Net profit before tax	2,330,154	(4.94)
Net profit after tax	1,699,134	(1.28)

(2) Budget Execution in 2022

In 2022, for the Group's implementation of its operating budget, although the scale of sales revenue was affected by adverse external factors, the achievement rate of sales revenue was still approximately 84%, and the achievement rate of net profit after tax rate was still 95%.

(3) Analysis of Financial Income, Costs, and Profitability

	Item	%
Financial structure	Debt Ratio	72.38
Long-term Capital to Property, Plant and Equipment	9,407.12
	Ratio
Solvency	Current Ratio	154.32
Quick Ratio	76.81
	Return on Assets	6.77
Profitability	Return on Shareholders' Equity	19.75
Net Profit Margin	2.42
	Basic EPS (in NT$)	4.03

(4) Research and Development Status

Under the planning and active efforts of the "Marketing Development Division", the Company has successfully represented the product lines of domestic and foreign well- known semiconductor manufacturers, and even successfully maintained or expanded the franchises granted by the upstream vendors after consolidation. In addition to continuing to establish a firm foothold in 3C electronic applications, the "FAE Division" also actively technically supports IC products from original manufacturers and customers in emerging applications to increase the Company's business territory, provide customers with technical support for product applications, help customers save R&D expenses, shorten time-to-

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market, and enhance service levels to strengthen the cooperative relationship with original manufacturers and customers.

In the "Solution Division", we are moving into the field of R&D and design, specializing in overall product reference solutions. The semiconductor industry is widely used and its application scheme is continuously updated. In addition to acting as a franchisee for the product lines of domestic and well-known foreign semiconductor manufacturers, the Company will direct the "Marketing Development Division" to take the lead in finding new product lines to be franchised, pay close attention to and evaluate the application and development of a start-up company's products, including the applications and development related to the green economy, timely input the development resources of the "Marketing Development Division", and then introduce the technical support and services created from demand of the "FAE Division".

At this stage, the Group's companies are developing the product solutions for 5G (smartphones, Customer Premise Equipment (CPE), Open Radio Access Network (O- RAN), small cell station, etc.), artificial intelligence/Internet of Things (AIoT), WiFi 6, automotive electronics (including electric vehicles, electric locomotives, charging piles, etc.), consumer electronics (PC, TV, Smartphone) , industrial control, Type C-Power Delivery (PD), and various types of power supply applications. At the same time, we also devote various resources to the development of relevant application product solutions for servers/data centers, motor control, battery energy storage management systems, in-vehicle infotainment systems, car radar, tire pressure monitoring systems (TPMS), and human- machine interfaces for Center Information Displays (CID), in order to provide customers with immediate product reference solutions. All of these solutions are now available to customers in succession.

2. Annual Business Plan in 2023

1. Operating Principles
2. • To prudently face the situation of destocking in the industry chain, actively manage and evaluate the speed of purchasing and sales, carefully prevent the loss of inventory depreciation, strengthen the efficiency of working capital, and enhance control measures for the prevention of dead inventory and improvement measures

for the disposal of dead inventory.

• To timely grasp the dynamic adjustment of suppliers and customers due to trade policies or geopolitical factors, such as the "China+1" layout of semiconductor application electronics manufacturers. In order to relocate a production base, move, or adjust the production lines according to its plan, the Company must also be able to build transnational and trans-regional capacity and flexibility of strategy establishment, and expand its product portfolio on the premise of compliance with the provisions of the United States' (various countries) import and export laws and regulations.

• In the face of a changing market and uncertainty, to continue to pay attention to the price and demand changes of each item, master the development trends of application-end technology products, invest appropriate R&D resources, and cooperate with industry partners to continue to create added value and competitiveness.

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