Interim report
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1 English Translation of a Report and Financial Statements Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Consolidated Financial Statements for the Years Ended December 31, 2025 and 2024 with Independent Auditors’ Report Notice to Readers The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.
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A member firm of Ernst & Young Global Limited 2 安永聯合會計師事務所 30078 新⽵市新⽵科學園區⼒⾏⼀路 1號 E-3 E-3, No. 1, Lixing 1st Rd., Hsinchu Science Park Hsinchu City, Taiwan, R.O.C. 電話 Tel: 886 3 688 5678 傳真 Fax: 886 3 688 6000 ey.com/zh_tw English Translation of a Report Originally Issued in Chinese Independent Auditors’ Report The Board of Directors and Shareholders Novatek Microelectronics Corp. Opinion We have audited the accompanying consolidated balance sheets of Novatek Microelectronics Corp. and its subsidiaries as of December 31, 2025 and 2024, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2025 and 2024, and notes to the consolidated financial statements, including the summary of material accounting policies (together referred as “the consolidated financial statements”). In our opinion, based on our audits and the reports of the other auditors (please refer to “Other Matter — Making Reference to the Audits of Other Auditors” section of our report) the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Novatek Microelectronics Corp. and its subsidiaries as of December 31, 2025 and 2024, and their consolidated financial performance and cash flows for the years ended December 31, 2025 and 2024, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) as endorsed and issued into effective by Financial Supervisory Commission of the Republic of China. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagement of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of Novatek Microelectronics Corp. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of the other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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A member firm of Ernst & Young Global Limited 3 Revenue recognition Novatek Microelectronics Corp. and its subsidiaries are mainly engaged in manufacturing and sales of integrated circuit products, and recognized net sales of NT$100,663,144 thousand for the year ended December 31, 2025. Since the trading terms of the sales orders varied with demand, the management’s judgement is exercised to determine when the performance obligations were satisfied. As a result, we determined the matter to be a key audit matter. Our audit procedures include (but are not limited to) assessing the appropriateness of the accounting policy for revenue recognition; evaluating and testing the effectiveness of internal controls within the sales cycle which are related to the timing of revenue recognition; performing test of details on selected samples and reviewing the significant terms of sales agreements and tracing to relevant documentation of transactions; performing cut-off procedures on selected samples for a period before and after the reporting date, tracing to relevant documentation to verify the appropriateness of the timing of revenue recognition, and reviewing significant sales reversals in subsequent period. We also considered the appropriateness of the disclosures of sales of goods. Please refer to Note 4, 5 and 6 in notes to consolidated financial statements. Valuation for inventories Novatek Microelectronics Corp. and its subsidiaries recognized net inventories of NT$8,640,715 thousand as of December 31, 2025, and the amount was significant to consolidated financial statements. Novatek Microelectronics Corp. and its subsidiaries operate in an industry where technologies are upgrading rapidly and thereby their inventories become obsolete speedily. Novatek Microelectronics Corp. and its subsidiaries’ policy of provision for inventory is based on those inventories aged over a certain period of time and identified as obsolete or damaged. The amount of inventories is material, the types of inventories vary and the estimation of net realizable value for individually obsolete or damaged inventories is subject to management’s judgment. As a result, we determined the matter to be a key audit matter. Our audit procedures include (but are not limited to) evaluating the appropriate accounting policies of slow-moving and obsolete inventories; selecting samples to evaluate and test the design and operating effectiveness of internal controls of the valuation of inventories by management; selecting samples to test the correctness of calculating inventory aging and recalculating the amount of inventory allowance; selecting samples to evaluate and test the net realizable value used by management; evaluating management’s inventory count plan and selecting important inventory locations to observe physical inventory count for confirming inventory quantity and status. We also assessed the adequacy of disclosures of inventories. Please refer to Notes 4, 5 and 6 in notes to consolidated financial statements.
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A member firm of Ernst & Young Global Limited 4 Other Matter — Making Reference to the Audits of Other Auditors We did not audit the consolidated financial statements of certain subsidiaries, which statements reflect total assets of NT$565,996 thousand, constituting 0.55% of consolidated total assets as of December 31, 2024, and total operating revenues of NT$46,898 thousand, constituting 0.05% of consolidated operating revenues for the year ended December 31, 2024. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of Novatek Microelectronics Corp. and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Novatek Microelectronics Corp. and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of Novatek Microelectronics Corp. and its subsidiaries. Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:
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A member firm of Ernst & Young Global Limited 5 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of Novatek Microelectronics Corp. and its subsidiaries. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of Novatek Microelectronics Corp. and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause Novatek Microelectronics Corp. and its subsidiaries to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Novatek Microelectronics Corp. and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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A member firm of Ernst & Young Global Limited 6 From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2025 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other As of and for the years ended December 31, 2025 and 2024, the separate financial statements of Novatek Microelectronics Corp. have been audited and we have expressed an unqualified opinion and an unqualified opinion including a paragraph of Other Matter, respectively. /s/ Huang, Ming-Ju /s/ Chiu, Wan-Ju Ernst & Young, Taiwan March 10, 2026 Notice to Readers The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.
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Notes Notes Current assets Current liabilities Cash and cash equivalents 4, 6(1) 42,418,895$ 43.57 48,770,810$ 47.63 Contract liabilities, current 4 , 6(16) 573,466$ 0.59 746,221$ 0.73 Trade receivables, net 4, 6(2), 6(17) 21,098,981 21.67 20,273,523 19.80 Trade payables 9,352,427 9.61 10,634,642 10.39 Other receivables 6(3) 434,033 0.44 441,656 0.43 Other payables 6,435,171 6.61 7,029,891 6.86 Inventories, net 4, 6(4) 8,640,715 8.87 8,701,076 8.50 Current income tax liabilities 4, 6(22) 878,837 0.90 1,407,164 1.37 Prepayments 670,031 0.69 576,051 0.56 Lease liabilities, current 4, 6(18) 74,993 0.08 42,002 0.04 Other financial assets, current 4, 6(11) 277,680 0.29 277,680 0.27 Other financial liabilities, current 6(14) 2,301,069 2.36 4,327,860 4.23 Total current assets 73,540,335 75.53 79,040,796 77.19 Other current liabilities 4, 6(12) 235,404 0.24 176,568 0.17 Total current liabilities 19,851,367 20.39 24,364,348 23.79 Non-current assets Non-current liabilities Financial assets measured at fair value through profit or loss, non-current 4, 6(5) 490,858 0.51 404,502 0.39 Deferred income tax liabilities 4, 6(22) 335,962 0.34 335,962 0.33 4, 6(6) 4,126,689 4.24 3,570,702 3.49 Lease liabilities, non-current 4, 6(18) 477,293 0.49 412,932 0.40 Property, plant and equipment 4, 6(7) 7,209,539 7.41 7,023,275 6.86 Net defined benefit liabilities, non-current 4, 6(13), 6(19) 96,315 0.10 116,393 0.12 Right-of-use assets 4, 6(18) 537,353 0.55 444,169 0.43 Guarantee deposits received 6(14) 8,865,825 9.11 9,247,596 9.03 Investment property 4, 6(8) 11,368 0.01 24,753 0.02 Total non-current liabilities 9,775,395 10.04 10,112,883 9.88 Intangible assets 4, 6(9), 6(10) 2,652,288 2.72 2,608,813 2.55 Deferred income tax assets 4, 6(22) 632,308 0.65 807,457 0.79 Total liabilities 29,626,762 30.43 34,477,231 33.67 Other financial assets, non-current 4, 6(11), 8 8,142,990 8.36 8,419,475 8.22 Other assets, non-current 22,281 0.02 56,661 0.06 Equity Total non-current assets 23,825,674 24.47 23,359,807 22.81 Share capital 6(15) Common stock 6,085,115 6.25 6,085,115 5.94 Capital surplus 6(15) 2,375,054 2.44 2,375,054 2.32 Retained earnings 6(15) Legal reserve 21,461,372 22.04 19,422,404 18.97 Undistributed earnings 35,836,193 36.81 38,567,166 37.66 Other equity 1,981,513 2.03 1,473,633 1.44 Total equity 67,739,247 69.57 67,923,372 66.33 Total assets 97,366,009$ 100.00 102,400,603$ 100.00 Total liabilities and equity 97,366,009$ 100.00 102,400,603$ 100.00 Chairman: T. S. Ho President: Steve Wang Chief Accounting Officer: H. Z. Chen English Translation of Financial Statements Originally Issued in Chinese NOVATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Consolidated Balance Sheets Liabilities and EquityDecember 31,2025 December 31,2025 As of December 31, 2025 and 2024 (Expressed in Thousands of New Taiwan Dollars) Assets December 31,2024December 31,2024 The accompanying notes are an integral part of the consolidated financial statements. Financial assets measured at fair value through other comprehensive income, non-current 7
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Operating revenues 4, 6(16) 100,663,144$ 100.00 102,787,751$ 100.00 Operating costs 6(4), 6(9), 6(13), 6(19), 7 (62,755,132) (62.34) (61,315,395) (59.65) Gross profit 37,908,012 37.66 41,472,356 40.35 Operating expenses 6(9), 6(13), 6(17), 6(18), 6(19), 7 Selling expenses (397,018) (0.39) (426,645) (0.42) Administrative expenses (2,549,296) (2.53) (2,432,246) (2.37) Research and development expenses (16,724,604) (16.62) (16,807,427) (16.35) Total operating expenses (19,670,918) (19.54) (19,666,318) (19.14) Operating income 18,237,094 18.12 21,806,038 21.21 Non-operating income and expenses 4, 6(20) Interest income 1,028,320 1.02 1,304,494 1.27 Other income 378,659 0.37 259,431 0.25 Other gains and losses (101,054) (0.10) 764,528 0.75 Financial costs (9,492) (0.01) (8,174) (0.01) Total non-operating income and expenses 1,296,433 1.28 2,320,279 2.26 Income before income tax 19,533,527 19.40 24,126,317 23.47 Income tax expense 4, 6(22) (3,185,834) (3.16) (3,784,296) (3.68) Net income 16,347,693 16.24 20,342,021 19.79 Other comprehensive income 6(21) Remeasurements of defined benefit plans 6(13) 15,075 0.02 47,658 0.04 497,192 0.49 (259,667) (0.25) To be reclassified to profit or loss in subsequent periods (7,846) (0.01) 49,993 0.05 2,082 - (1,028) - Other comprehensive income (net of income tax) 506,503 0.50 (163,044) (0.16) Total comprehensive income 16,854,196$ 16.74 20,178,977$ 19.63 Net income attributable to : Shareholders of the parent 16,347,693$ 20,342,021$ Non-controlling interests - - 16,347,693$ 20,342,021$ Total comprehensive income attributable to : Shareholders of the parent 16,854,196$ 20,178,977$ Non-controlling interests - - 16,854,196$ 20,178,977$ Earnings per share (in New Taiwan Dollars) 6(23) Basic earnings per share 26.87$ 33.43$ Diluted earnings per share 26.84$ 33.40$ Chairman: T. S. Ho President: Steve Wang Chief Accounting Officer: H. Z. Chen 2024 Exchange differences resulting from translating the financial statements of foreign operations English Translation of Financial Statements Originally Issued in Chinese For The Years Ended December 31, 2025 and 2024 Consolidated Statements of Comprehensive Income NOVATEK MICROELECTRONICS CORP. AND SUBSIDIARIES The accompanying notes are an integral part of the consolidated financial statements. (Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share) NotesDescription Not to be reclassified to profit or loss in subsequent periods Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income For the years ended December 31, 2025 Unrealized gains (losses) from debt instruments investments measured at fair value through other comprehensive income 8
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Balance as of January 1, 2024 6,085,115$ 2,375,054$ 17,090,451$ 39,981,807$ (122,640)$ 1,806,975$ 67,216,762$ 67,216,762$ Appropriation and distribution of 2023 earnings: Legal reserve - - 2,331,953 (2,331,953) - - - - Cash dividends - - - (19,472,367) - - (19,472,367) (19,472,367) Net income for the year ended December 31, 2024 - - - 20,342,021 - - 20,342,021 20,342,021 Other comprehensive income for the year ended December 31, 2024 - - - 47,658 49,993 (260,695) (163,044) (163,044) Total comprehensive income for the year ended December 31, 2024 - - - 20,389,679 49,993 (260,695) 20,178,977 20,178,977 Balance as of December 31, 2024 6,085,115$ 2,375,054$ 19,422,404$ 38,567,166$ (72,647)$ 1,546,280$ 67,923,372$ 67,923,372$ Balance as of January 1, 2025 6,085,115$ 2,375,054$ 19,422,404$ 38,567,166$ (72,647)$ 1,546,280$ 67,923,372$ 67,923,372$ Appropriation and distribution of 2024 earnings: Legal reserve - - 2,038,968 (2,038,968) - - - - Cash dividends - - - (17,038,321) - - (17,038,321) (17,038,321) Net income for the year ended December 31, 2025 - - - 16,347,693 - - 16,347,693 16,347,693 Other comprehensive income for the year ended December 31, 2025 - - - 15,075 (7,846) 499,274 506,503 506,503 Total comprehensive income for the year ended December 31, 2025 - - - 16,362,768 (7,846) 499,274 16,854,196 16,854,196 Proceeds from disposal of equity instruments measured at fair value through other comprehensive income - - - (16,452) - 16,452 - - Balance as of December 31, 2025 6,085,115$ 2,375,054$ 21,461,372$ 35,836,193$ (80,493)$ 2,062,006$ 67,739,247$ 67,739,247$ Chairman: T. S. Ho President: Steve Wang Chief Accounting Officer: H. Z. Chen Equity attributable to shareholders of the parent Common stock Capital surplus Retained earnings Legal reserve Undistributed earnings Other adjustments Exchange differences resulting from translating the financial statements of foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income The accompanying notes are an integral part of the consolidated financial statements. Description English Translation of Financial Statements Originally Issued in Chinese NOVATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Consolidated Statements of Changes in Equity (Expressed in Thousands of New Taiwan Dollars) For The Years Ended December 31, 2025 and 2024 Total Total equity 9
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Cash flows from operating activities: Cash flows from investing activities: Income before income tax 19,533,527$ 24,126,317$ Acquisition of financial assets measured at fair value through other comprehensive income (100,000)$ (214,059)$ Adjustments for: 2,687 - The profit or loss items: Proceeds from capital return of finiancial assets measured at fair value through other comprehensive income 40,600 133,000 Depreciation 1,142,837 1,126,745 Acquisition of financial assets measured at fair value through profit or loss (97,357) (142,298) Amortization 193,047 187,193 Acquisition of property, plant and equipment (1,103,558) (1,174,594) Net losses (gains) on financial assets and liabilities at fair value through profit or loss 11,001 (20,614) Disposal of property, plant and equipment - 46,673 Interest expense 9,492 8,174 Decrease in refundable deposits 276,485 792,556 Interest income (1,028,320) (1,304,494) Acquisition of intangible assets (236,524) (281,546) Dividend income (93,623) (92,434) Increase in prepayment for equipment (107,835) (101,107) Losses on disposal or retirement of property, plant and equipment 1,005 719 Dividend received 93,623 92,434 Unrealized (gains) losses from foreign currency exchange (782,219) 761,926 Net cash used in investing activities (1,231,879) (848,941) Others - (38) Changes in operating assets and liabilities： Trade receivables (825,458) (3,339,001) Cash flows from financing activities: Other receivables 62,332 11,426 Decrease in guarantee deposits received (1,626,343) (1,415,760) Inventories 60,361 (149,978) Cash payment for the principal portion of the lease liabilities (66,887) (60,023) Prepayments (93,980) (253,143) Cash dividends (17,038,321) (19,472,367) Other financial assets - (6,000) Interest paid (9,492) (8,174) Contract liabilities (172,755) 92,010 Net cash used in financing activities (18,741,043) (20,956,324) Trade payables (1,282,215) 1,066,322 Trade payables to related parties - (3,010,841) Other payables (594,720) (260,880) Other current liabilities 58,836 (84,563) Net defined benefit liabilities (5,003) (5,434) Cash generated from operating activities 16,194,145 18,853,412 Effect of exchange rate changes on cash and cash equivalents (7,737) 34,318 Interest received 973,485 1,354,032 Net decreasein cash and cash equivalents (6,351,915) (5,118,658) Income tax paid (3,538,886) (3,555,155) Cash and cash equivalents at the beginning of the year 48,770,810 53,889,468 Net cash generated from operating activities 13,628,744 16,652,289 Cash and cash equivalents at the end of the year 42,418,895$ 48,770,810$ Chairman: T. S. Ho President: Steve Wang Chief Accounting Officer: H. Z. Chen English Translation of Financial Statements Originally Issued in Chinese NOVATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows For The Years Ended December 31, 2025 and 2024 (Expressed in Thousands of New Taiwan Dollars) For the years ended December 31, For the years ended December 31, Description Description The accompanying notes are an integral part of the consolidated financial statements. 2025 2024 2025 2024 Proceeds from disposal of financial assets measured at fair value through other comprehensive income 10
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements For The Years Ended December 31, 2025 and 2024 (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 11 1. HISTORIES AND ORGANIZATION Novatek Microelectronics Corporation (”the Company”) was incorporated in Hsinchu Science Park on May 28, 1997. The Company is mainly engaged in researching, developing, manufacturing and sales of integrated circuit chips speech, communication, computer peripheral, LCD driver IC system, embedded MCU, DSP and system. The Company’s shares are traded in the Taiwan Stock Exchange. The Company’s registered office and the main business location is at 2F, No.13, Innovation Road 1, Hsinchu Science Park, Hsinchu 300, Taiwan R.O.C. 2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the years ended December 31, 2025 and 2024 were authorized for issue by the Board of Directors on March 10, 2026. 3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS (1) Changes in accounting policies resulting from applying certain standards and amendments for the first time The Group applied for certain International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2025. The adoption of these new standards and amendments had no material impact on the Group. (2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below: Standards or Interpretations Numbers The Projects of Standards or Interpretations Effective Dates IFRS 17 “Insurance Contracts” January 1, 2023 IFRS 7 and IFRS 9 “Classification and Measurement of Financial Instruments” (Amendment) January 1, 2026 IFRS “Annual Improvements to IFRS Accounting Standards” — V olume 11 January 1, 2026 IFRS 7 and IFRS 9 “Contracts Referencing Nature-dependent Electricity” (Amendment) January 1, 2026
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 12 The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2026. All standards and interpretations have no material impact on the Group. (3) Standards or interpretations issued, revised or amended, by IASB which have not been endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below. Standards or Interpretations Numbers The Projects of Standards or Interpretations Effective Dates IFRS 10 and IAS 28 “Consolidated Financial Statements” and “Investments in Associates and Joint Ventures” –Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures (Amendment) To be determined by IASB IFRS 18 “Presentation and Disclosure in Financial Statements” January 1, 2027 (Note) IFRS 19 “Disclosure Initiative – Subsidiaries without Public Accountability: Disclosures” January 1, 2027 IAS 21 and IAS 29 “Translation to a Hyperinflationary Presentation Currency” January 1, 2027 Note: On September 25, 2025, FSC announced in a press release that Taiwan will adopt IFRS 18 in 2028. The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date of issuance of the Group’s financial statements. The effective dates are to be determined by FSC. In addition, the Group is currently evaluating the potential impact of the newly announced or revised standards or interpretations of IFRS 18 “Presentation and Disclosure of Financial Statements”. All other standards and interpretations have no material impact on the Group. 4. SUMMARY OF MATERIAL ACCOUNTING POLICIES (1) Statement of compliance The Group’s consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”), the IFRSs, IASs, and interpretations as well as related guidance endorsed by the FSC with the effective dates.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 13 (2) Basis of preparation The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated. (3) Basis of consolidation Principle of consolidation Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has: A. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee), B. exposure, or rights, to variable returns from its involvement with the investee, and C. the ability to use its power over the investee to affect its returns. When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including: A. the contractual arrangement with the other vote holders of the investee B. rights arising from other contractual arrangements C. the Company’s voting rights and potential voting rights The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 14 Total comprehensive income of the subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. If the Company loses control over a subsidiary, it: A. derecognizes the assets (including goodwill) and liabilities of the subsidiary; B. derecognizes the carrying amount of any non-controlling interest; C. recognizes the fair value of the consideration received; D. recognizes the fair value of any investment retained; E. reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss, or transfer directly to retained earnings if required by other IFRSs; and F. recognizes the resulting difference in profit or loss. Consolidated entities Percentage of ownership (%) Investor Subsidiary Main businesses 2025.12.31 2024.12.31 The Company Novatek International (BVI) Ltd. Investment 100% 100% The Company Novatek Investment Corporation Limited Investment 100% 100% The Company Novatek Japan Kabushiki-Kaisha Marketing of integrated circuits and semiconductor services 100% 100% The Company NTK International Limited Sales of integrated circuits and semiconductor services 100% 100% The Company Cheertek International Inc. Investment 100% 100% The Company Novatek USA Inc. Marketing of integrated circuits and semiconductor services 100% 100% Novatek International (BVI) Ltd. Novatek (Shenzhen) Co., Ltd. Design, development, test and consulting of semiconductor application software 100% 100%
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 15 Percentage of ownership (%) Investor Subsidiary Main businesses 2025.12.31 2024.12.31 Novatek International (BVI) Ltd. Novatek International (SAMOA) Ltd. Investment 100% 100% Novatek International (BVI) Ltd. Novatek (Beijing) Co., Ltd. Sales, development, test and consulting of semiconductor application software 100% 100% Novatek International (SAMOA) Ltd. Novatek (Suzhou) Co., Ltd. Marketing of integrated circuits and semiconductor services 100% 100% Novatek International (SAMOA) Ltd. Novatek (Xian) Co., Ltd. Design, development, test and consulting of semiconductor application software 100% 100% Cheertek International Inc. Novatek (Shanghai) Co., Ltd. Design, development, test and consulting of semiconductor application software 100% 100% (4) Foreign currency transactions The Group’s consolidated financial statements are presented in NT$, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as of the dates of the initial transactions. All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 16 A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization. B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments. C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment. When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss. (5) Translation of financial statements in foreign currency The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average exchange rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposal. On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reattributed to the non-controlling interests in that foreign operation. On the partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss. Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 17 (6) Current and non-current distinction An asset is classified as current when: A. The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle. B. The Group holds the asset primarily for the purpose of trading. C. The Group expects to realize the asset within twelve months after the reporting period. D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: A. The Group expects to settle the liability in its normal operating cycle. B. The Group holds the liability primarily for the purpose of trading. C. The liability is due to be settled within twelve months after the reporting period. D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. All other liabilities are classified as non-current. (7) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within twelve months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (8) Financial instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial assets or financial liabilities.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 18 A. Financial instruments: Recognition and Measurement The Group accounts for regular way purchase or sales of financial assets on the trade date. The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below: (a) the Group’s business model for managing the financial assets and (b) the contractual cash flow characteristics of the financial asset. Financial assets measured at amortized cost A financial asset is measured at amortized cost if both of the following conditions are met and presented as trade receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date: (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and (b) 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. Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses. Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for: (a) purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. (b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 19 Financial assets measured at fair value through other comprehensive income A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (b) 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. Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described below: (a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified. (b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for: I. Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. II. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods. Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 20 on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment. Financial assets measured at fair value through profit or loss Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss. Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets. B. Impairment of financial assets The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position. The Group measures expected credit losses of a financial instrument in a way that reflects: (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; (b) the time value of money; and (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. The loss allowance is measured as follows: (a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met. (b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 21 (c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses. (d) For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit losses. At each reporting date, the Group is required to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk. C. Derecognition of financial assets A financial asset is derecognized when: (a) The rights to receive cash flows from the asset have expired. (b) The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred. (c) The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss. D. Financial liabilities and equity Classification between liabilities or equity The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 22 Financial liabilities Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if: (a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short- term profit-taking; or (c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument). If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either: (a) it eliminates or significantly reduces a measurement or recognition inconsistency; or (b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel. Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss. Financial liabilities at amortized cost Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 23 Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs. Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. E. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. (9) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: A. in the principal market for the asset or liability, or B. in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 24 A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. (10) Inventories Inventories are valued at lower of cost and net realizable value item by item. Costs incurred in bringing each inventory to its present location and condition are accounted for as follows: Raw materials — Actual purchase cost measured using weighted-average method. Finished goods and work in progress — Cost of direct materials and manufacturing overheads. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. (11) Property, plant and equipment Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 25 Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets: Buildings and facilities 3〜 51 years Machinery and equipment 4〜 6 years Moulding equipment 2 years Other equipment 2〜 6 years An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each fiscal year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates. (12) Investment property The Group’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, investment properties are measured using the cost model in accordance with the requirements of IAS 16 for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16. Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets: Buildings 21 years Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition. Assets are transferred to or from investment properties when there is a change in use. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 26 (13) Leases The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following: A. the right to obtain substantially all of the economic benefits from use of the identified asset; and B. the right to direct the use of the identified asset. For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information. Group as a lessee Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts. At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: A. fixed payments (including in-substance fixed payments), less any lease incentives receivable; B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; C. amounts expected to be payable by the lessee under residual value guarantees; D. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 27 E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made. At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises: A. the amount of the initial measurement of the lease liability; B. any lease payments made at or before the commencement date, less any lease incentives received; C. any initial direct costs incurred by the lessee; and D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model. If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of- use asset or the end of the lease term. The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified. Except for those leases that the Group accounted for as short-term leases or leases of low- value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements of comprehensive income. For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 28 (14) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss. Research and development costs Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Group can demonstrate: A. the technical feasibility of completing the intangible asset so that it will be available for use or sale; B. its intention to complete and its ability to use or sell the asset; C. how the asset will generate future economic benefits; D. the availability of resources to complete the asset; E. the ability to measure reliably the expenditure during development.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 29 Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. A summary of the policies information applied to the Group’s intangible assets is as follows: Expertise capitalized Computer software Useful lives Finite (3 to 10 years) Finite (3 to 10 years) Amortization method used Amortized on a straight- line basis over the period of the patent Amortized on a straight- line basis over the estimated useful life Internally generated or acquired Acquired Acquired (15) Impairment of non-financial assets The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash- generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 30 A cash generating unit, or groups of CGUs, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason. An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss. (16) Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. The liability to pay a levy is recognized progressively if the obligating event occurs over a period of time. (17) Sales returns and allowances The Group estimates sales returns and allowances based on past experience and other known factors in accordance with IFRS 15, which are recognized as deduction of operating revenue and provisions.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 31 (18) Revenue recognition The Group’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policy is explained as follows: Sale of goods The Group manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customers and the goods are delivered to the customers. (i.e. when the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from the goods). The main products of the Group are display driver IC and SoC and revenue is recognized based on the consideration stated in the contract. The credit period of the Group’s sale of goods is from 60 to 90 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly afte r transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group has transferred the goods to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Group measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses. Rendering of services Revenue from the rendering of services primarily comes from non-recurring engineering, which is recognized based on the stage of completion of the contracts. Most of the contractual considerations of the Group are collected evenly throughout the contract period. When the Group has performed the services to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities. The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component arises.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 32 (19) Post-employment benefits All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations. For the defined contribution plan, the Company and its domestic subsidiaries make a monthly contribution of no less than 6% of the monthly wages of the employees’ subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of: A. the date of the plan amendment or curtailment, and B. the date that the Group recognizes restructuring-related costs or termination benefits. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment. (20) Income taxes Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax. Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 33 The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by shareholders. Deferred tax Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except: A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss ; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. B. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except: A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 34 Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. According to the temporary exception in the “International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)”, information about deferred tax assets and liabilities related to Pillar Two income tax will neither be recognized nor be disclosed. 5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that would have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year are discussed below: (1) Impairment of non-financial assets An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are further explained in Note 6.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 35 (2) Valuation of inventories Inventories are stated at lower of cost or net realizable value, so the Group exercises the judgments and estimates to determine the net realizable value of the inventories at the end of the reporting period. Due to the rapid changes of technology, the Group estimates the net realizable value of the inventories for obsolescence and unmarketable items based on historical experience for the nature of the inventories and future value in use as well as market price at the reporting date. Please refer to Note 6. (3) Post-employment benefits The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves various assumptions. These include the determination of the discount rate and future salary adjustments. Please refer to Note 6 for more details. (4) Revenue recognition — sales returns and allowance The Group estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the sales returns and allowance, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details. (5) Fair value of financial instruments Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the market approach and asset approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details. (6) Income tax Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group entities’ domicile.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 36 Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for disclosure on unrecognized deferred tax assets of the Group as of December 31, 2025. 6. CONTENTS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents As of December 31, 2025 2024 Cash on hand $1,514 $1,515 Checking and saving accounts 1,739,103 2,263,127 Time deposits 40,425,908 46,133,428 Cash equivalents Puttable notes — commercial paper 252,370 372,740 $42,418,895 $48,770,810 (2) Trade receivables As of December 31, 2025 2024 Trade receivables $21,826,688 $21,001,230 Less: loss allowance (727,707) (727,707) $21,098,981 $20,273,523 Trade receivables were not pledged. Trade receivables are generally with collection term of 60 to 90 days. Please refer to Note 6(17) for more details on loss allowance of trade receivables for the years ended December 31, 2025 and 2024. Please refer to Note 12 for more details on credit risk management. (3) Other receivables As of December 31, 2025 2024 Tax refund receivable $340,433 $402,891 Interest receivable 93,600 38,765 $434,033 $441,656
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 37 (4) Inventories As of December 31, 2025 2024 Raw materials $1,054,640 $668,138 Supplies 181,954 215,291 Work in progress 4,620,786 4,652,636 Finished goods 2,783,335 3,165,011 $8,640,715 $8,701,076 Expenses and losses incurred from inventories for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 Cost of inventories sold $62,757,682 $61,258,554 Allowance for inventory valuation and obsolescence loss - 60,000 Revenue from sale of scraps (2,550) (3,159) $62,755,132 $61,315,395 Inventories were not pledged. (5) Financial assets measured at fair value through profit or loss, non-current As of December 31, 2025 2024 Financial assets measured at fair value through profit or loss: Capital $490,858 $404,502
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 38 (6) Financial assets measured at fair value through other comprehensive income, non-current As of December 31, 2025 2024 Debt instrument investments measured at fair value through other comprehensive income: Bonds $300,402 $198,320 Equity instrument investments measured at fair value through other comprehensive income: Unlisted companies’ stocks 3,826,287 3,372,382 $4,126,689 $3,570,702 The Group’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 Related to investments held at the end of the reporting period $93,623 $92,434 Related to investments derecognized during the period - - Dividends recognized during the period $93,623 $92,434 (7) Property, plant and equipment As of December 31, 2025 2024 Property, plant and equipment used by the Group $7,209,539 $7,023,275
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 39 A. Property, plant and equipment used by the Group Land Buildings and facilities Machinery and equipment Moulding equipment Other equipment Construction in progress Total Cost: As of January 1, 2025 $990,790 $5,341,696 $5,753,562 $178,641 $142,826 $128,398 $12,535,913 Additions - 29,285 685,757 74,413 23,590 290,513 1,103,558 Disposals - (69,154) (215,204) (52,782) (4,349) - (341,489) Exchange differences - 2,343 840 - (47) - 3,136 Other changes - 53,450 36,637 - 52,128 - 142,215 As of December 31, 2025 $990,790 $5,357,620 $6,261,592 $200,272 $214,148 $418,911 $13,443,333 As of January 1, 2024 $990,790 $5,307,084 $4,961,978 $195,021 $136,651 $1,092 $11,592,616 Additions - 7,007 952,318 76,831 11,132 127,306 1,174,594 Disposals - (2,475) (212,811) (93,211) (6,635) - (315,132) Exchange differences - 19,660 6,442 - 1,646 - 27,748 Other changes - 10,420 45,635 - 32 - 56,087 As of December 31, 2024 $990,790 $5,341,696 $5,753,562 $178,641 $142,826 $128,398 $12,535,913 Depreciation and impairment: As of January 1, 2025 $- $1,400,284 $3,905,281 $98,058 $109,015 $- $5,512,638 Depreciation - 182,072 783,187 70,687 22,553 - 1,058,499 Disposals - (69,154) (214,297) (52,782) (4,243) - (340,476) Exchange differences - 1,802 1,279 - 52 - 3,133 Other changes - - (746) - 746 - - As of December 31, 2025 $- $1,515,004 $4,474,704 $115,963 $128,123 $- $6,233,794 As of January 1, 2024 $- $1,222,249 $3,259,034 $138,292 $97,422 $- $4,716,997 Depreciation - 174,180 807,683 52,977 16,593 - 1,051,433 Disposals - (2,475) (165,666) (93,211) (6,386) - (267,738) Exchange differences - 6,330 4,248 - 1,368 - 11,946 Other changes - - (18) - 18 - - As of December 31, 2024 $- $1,400,284 $3,905,281 $98,058 $109,015 $- $5,512,638 Net carrying amount as of: December 31, 2025 $990,790 $3,842,616 $1,786,888 $84,309 $86,025 $418,911 $7,209,539 December 31, 2024 $990,790 $3,941,412 $1,848,281 $80,583 $33,811 $128,398 $7,023,275
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 40 B. Significant components of buildings with different useful lives are main building structure, electromechanical and air conditioning units, which are depreciated over 20 to 51 years and 3 to 21 years, respectively. C. The Group’s property, plant and equipment were not pledged. (8) Investment property The investment property held by the Group is for own-use. In April, 2022, the Group has entered into commercial property leases with terms of 5 years and leased to other companies for use. These leases include a clause to enable revision of the rental charge on an annual basis according to prevailing market conditions. Buildings Cost: As of January 1, 2025 $281,080 Transfers - As of December 31, 2025 $281,080 As of January 1, 2024 $281,080 Transfers - As of December 31, 2024 $281,080 Depreciation and impairment: As of January 1, 2025 $256,327 Depreciation 13,385 As of December 31, 2025 $269,712 As of January 1, 2024 $242,942 Depreciation 13,385 As of December 31, 2024 $256,327 Net carrying amount as of: December 31, 2025 $11,368 December 31, 2024 $24,753 Years Ended December 31 2025 2024 Rental income from investment properties $63,474 $59,555 Investment properties were not pledged.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 41 Investment properties held by the Group are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized with Level 3. The fair value of the investment properties held by the Group was NT$537,400 thousand and NT$523,700 thousand as of December 31, 2025 and 2024, respectively. The fair value has been determined based on valuations performed by an independent appraiser. The valuation method used is discount cash-flow analysis method, and the key inputs used and quantitative information are as follows: As of December 31, 2025 2024 Discount rates 4.72% 4.72% Growth rates 0.5% 0.4% (9) Intangible assets Computer software Goodwill Expertise capitalized Total Cost: As of January 1, 2025 $281,491 $2,080,084 $3,041,744 $5,403,319 Additions 77,496 - 159,028 236,524 Decreases (28,030) - (8,991) (37,021) Exchange differences 22 - 35 57 As of December 31, 2025 $330,979 $2,080,084 $3,191,816 $5,602,879 As of January 1, 2024 $346,621 $2,080,084 $2,845,987 $5,272,692 Additions 86,091 - 195,455 281,546 Decreases (156,647) - - (156,647) Exchange differences 176 - 302 478 Other changes 5,250 - - 5,250 As of December 31, 2024 $281,491 $2,080,084 $3,041,744 $5,403,319 Amortization and impairment: As of January 1, 2025 $192,027 $- $2,602,479 $2,794,506 Amortization 70,683 - 122,364 193,047 Decreases (28,030) - (8,991) (37,021) Exchange differences 24 - 35 59 As of December 31, 2025 $234,704 $- $2,715,887 $2,950,591 As of January 1, 2024 $300,421 $- $2,463,076 $2,763,497 Amortization 48,092 - 139,101 187,193 Decreases (156,647) - - (156,647) Exchange differences 161 - 302 463 As of December 31, 2024 $192,027 $- $2,602,479 $2,794,506
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 42 Computer software Goodwill Expertise capitalized Total Net carrying amount as of: December 31, 2025 $96,275 $2,080,084 $475,929 $2,652,288 December 31, 2024 $89,464 $2,080,084 $439,265 $2,608,813 Amortization expense of intangible assets under the statement of comprehensive income: Years Ended December 31, 2025 2024 Operating costs $2,473 $2,189 Research and development expenses $162,139 $157,767 Administrative expenses $28,435 $27,237 (10) Impairment testing of goodwill The Group is a single operating segment, also a CGU, based on which, the Group assesses whether the goodwill is impaired annually. The major revenue of the Group comes from flat panel display and integrated circuit design products, assessments are as follows: The recoverable amounts of the CGU have been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five-year period. The projected cash flows have been updated to reflect the change in demand for products and services. The pre-tax discount rate applied to cash flow projections is 16.52% in 2025 and 15.66% in 2024. Cash flows beyond the five-year period are extrapolated using the growth rate of 1.06% in 2025 and 1.10% in 2024. As of December 31, 2025 and 2024, the group did not identify any impairment for goodwill of NT$2,080,084 thousand. The calculation of value-in-use for CGU is most sensitive to the following assumptions: A. Gross margin B. Discount rates C. Growth rate of sales used to extrapolate cash flows beyond the budget period. Gross margins — gross margins are based on the actual results in the most recent years, and are adjusted with considering the expected future market trend.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 43 Discount rates — the discount rates were estimated based on the weighted average cost of capital (WACC) for the Group, taking into account the particular situations of the Group and its operating segments. The WACC includes both the cost of liabilities and cost of equities. The cost of equities is derived from the expected returns of the Group’s investors on capital, while the cost of liabilities is measured by the interest-bearing loans that the Group has obligation to settle. Growth rates of sales estimates — the growth rates of sales are based on historical experiences. For the reasons explained above, the long-term average growth rate used to extrapolate the budget has been adjusted based on the pace of product innovation and the overall economic environment. Sensitivity to changes in assumptions With regard to the assessment of value-in-use of the CGU, management believes that no reasonably possible change in any of the key assumptions above would cause the carrying value of the unit to materially exceed its recoverable amount. (11) Other financial assets As of December 31, 2025 2024 Refundable deposits for capacity reservation $8,382,236 $8,659,916 Others 38,434 37,239 $8,420,670 $8,697,155 Current $277,680 $277,680 Non-current 8,142,990 8,419,475 $8,420,670 $8,697,155 The Group entered into the capacity reservation agreements with suppliers to ensure stable foundry capacity. The deposits were paid to suppliers in compliance with the agreements and refunded to the Group when terms and conditions set forth in the agreements have been satisfied.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 44 (12) Other current liabilities As of December 31, 2025 2024 Sales returns and allowance $87,808 $74,580 Advance sales receipts 76,511 44,094 Others 71,085 57,894 $235,404 $176,568 (13) Post-employment benefits Defined contribution plan The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts. Subsidiaries located in the People’s Republic of China contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts. Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations. For the years ended December 31, 2025 and 2024, the pension expenses recognized under the defined contribution plan were NT$283,424 thousand and NT$261,533 thousand, respectively. Defined benefit plan The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March in the following year.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 45 The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandating, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$10,532 thousand to its defined benefit plan during the 12 months beginning after December 31, 2025. The average duration of the defined benefit plan obligation as of December 31, 2025 and 2024 were 9.57 years and 10.20 years, respectively. Pension costs recognized in profit or loss for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Current service costs $3,639 $3,173 Net interest on the net defined benefit liabilities (assets) 1,872 2,092 Other adjustments 4 (4) $5,515 $5,261 Changes in the defined benefit obligation and fair value of plan assets are as follows: As of December 31, 2025 December 31, 2024 January 1, 2024 Defined benefit obligation $385,413 $380,323 $409,791 Plan assets at fair value (289,931) (264,745) (241,105) Other adjustments 833 815 799 Net defined benefit liabilities, non-current recognized on the consolidated balance sheets $96,315 $116,393 $169,485
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 46 Reconciliation of liabilities (assets) under the defined benefit plan is as follows: Defined benefit obligation Fair value of plan assets Benefit liabilities (assets) As of January 1, 2024 $409,791 $(241,105) $168,686 Current service costs 3,173 - 3,173 Net interest expense (income) 5,081 (2,989) 2,092 418,045 (244,094) 173,951 Remeasurements of the net defined benefit liabilities (assets): Actuarial gains and losses arising from changes in demographic assumptions 70 - 70 Actuarial gains and losses arising from changes in financial assumptions (15,153) - (15,153) Experience adjustments (10,551) - (10,551) Remeasurements of the defined benefit assets - (22,024) (22,024) (25,634) (22,024) (47,658) Contributions by employer - (10,715) (10,715) Payments from the plan (12,088) 12,088 - As of December 31, 2024 380,323 (264,745) 115,578 Current service costs 3,639 - 3,639 Net interest expense (income) 6,161 (4,289) 1,872 390,123 (269,034) 121,089 Remeasurements of the net defined benefit liabilities (assets): Actuarial gains and losses arising from changes in demographic assumptions 1,641 - 1,641 Actuarial gains and losses arising from changes in financial assumptions 8,573 - 8,573 Experience adjustments (7,132) - (7,132) Remeasurements of the defined benefit assets - (18,157) (18,157) 3,082 (18,157) (15,075) Contributions by employer - (10,532) (10,532) Payments from the plan (7,792) 7,792 - As of December 31, 2025 $385,413 $(289,931) $95,482
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 47 The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation: As of December 31, 2025 2024 Discount rate 1.39% 1.62% Expected rate of salary increases 3.00% 3.00% The sensitivity analyses for significant assumption are shown below: Years Ended December 31, 2025 2024 Increase in defined benefit obligation Decrease in defined benefit obligation Increase in defined benefit obligation Decrease in defined benefit obligation Discount rate increases by 0.5% $- $(17,739) $- $(18,633) Discount rate decreases by 0.5% 19,159 - 20,145 - Future salary increases by 0.5% 18,753 - 19,765 - Future salary decreases by 0.5% - (17,554) - (18,479) The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period. (14) Other financial liabilities As of December 31, 2025 2024 Guarantee deposits for capacity reservation $11,156,472 $13,565,034 Others 10,422 10,422 $11,166,894 $13,575,456 Current $2,301,069 $4,327,860 Non-current 8,865,825 9,247,596 $11,166,894 $13,575,456
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 48 The customers entered into the capacity reservation agreements with the Group to reserve specific production capacity. The deposits were collected from the customers in compliance with the agreements and refunded to them when terms and conditions set forth in the agreements have been satisfied. (15) Equities A. Common stock As of both December 31, 2025 and 2024, the Company’s authorized capital was NT$7,500,000 thousand and the issued capital was NT$6,085,115 thousand, each at a par value of NT$10. The Company has issued 608,512 thousand common shares as of both December 31, 2025 and 2024. Each share has one voting right and a right to receive dividends. B. Capital surplus As of December 31, 2025 2024 Additional paid-in capital — conversion of convertible bonds $7,959 $7,959 Premium from merger 2,244,432 2,244,432 Employee stock option 122,663 122,663 $2,375,054 $2,375,054 According to the Company Act, the capital surplus shall not be used except for offsetting the deficit of the company. When a company incurs no loss, it may distribute the capital surplus derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them. C. Legal reserve According to the Company Act, the company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to offset the deficit of the company. When the company incurs no loss, it may distribute the portion of legal serve, which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 49 D. Special reserve When the Company distributing distributes earnings, in accordance with relevant laws or regulations, it shall set aside to special reserve, an amount equal to “other net deductions from shareholders” equity for the current fiscal year. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed from the special reserve. E. Retained earnings and dividend policies According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order: (a) Income tax obligation; (b) Offsetting accumulated deficits, if any; (c) Legal reserve at 10% of net income after tax; where such legal reserve amounts to the total authorized capital, this provision shall not apply; (d) Special reserve in compliance with the Company Law or Securities and Exchange Law; (e) The remaining balance after the mentioned above payment to be made, combining with the undistributed earnings of the proceeding years may be retained or distributed as shareholders’ dividends after the approval of the shareholders’ meeting. The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equili brium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting. Dividends distributed to shareholders, if any, could be paid in the form of cash or share dividends. At least 50% of the dividends must be paid in the form of cash. The 2024 and 2023 earnings distribution and dividends per share as approved by the shareholders’ meeting on May 28, 2025 and May 31, 2024, respectively, are as follows: Appropriation of earnings Dividends per share (NT$) Years Ended December 31, 2024 2023 2024 2023 Legal reserve $2,038,968 $2,331,953 Common stock — cash dividends 17,038,321 19,472,367 28.00 32.00
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 50 Please refer to Note 6(19) for further details on employees’ compensation and remuneration to directors. (16) Operating revenue A. Disaggregation of revenue Years Ended December 31, 2025 2024 Revenue from contracts with customers Sale of goods $99,996,657 $101,648,586 Others 666,487 1,139,165 $100,663,144 $102,787,751 Timing of revenue recognition: At a point in time $100,016,563 $101,658,475 Over time 646,581 1,129,276 $100,663,144 $102,787,751 B. Contract balances Contract liabilities, current December 31, 2025 December 31, 2024 January 1, 2024 Sale of goods $36,178 $77,981 $101,750 Others 537,288 668,240 552,461 $573,466 $746,221 $654,211 The significant changes in the Group’s balances of contract liabilities for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 Revenue recognized during the period that was included in the beginning balance $(518,106) $(426,990) Increase in receipts in advance during the period 345,351 519,000
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 51 C. Transaction price allocated to unsatisfied performance obligations There is no need to provide relevant information of the unsatisfied performance obligations as the contract terms with customers about the sales of goods are all shorter than one year. D. Assets recognized from costs to fulfil a contract: None. (17) Expected credit losses Years Ended December 31, 2025 2024 Operating expenses — Expected credit losses Trade receivables $- $- Please refer to Note 12 for more details on credit risk. The Group measures the credit loss allowance of its trade receivables at an amount equal to lifetime expected credit losses. The assessment of the Group’s credit loss allowance as of December 31, 2025 and 2024 are as follows: The Group consider the grouping of trade receivables by counterparties’ credit rating, by geographical region and by industry sector and its loss allowance is measured by using a provision matrix, where details are as follows: As of December 31, 2025 Days of trade receivables <=60 days 61-180 days 181- >=361 days Total Gross carrying amount $13,977,369 $7,829,291 $20,028 $21,826,688 Loss ratio 1%-5% 5%-30% 20%-100% Lifetime expected credit losses 294,648 413,031 20,028 727,707 $13,682,721 $7,416,260 $- $21,098,981
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 52 As of December 31, 2024 Days of trade receivables <=60 days 61-180 days 181- >=361 days Total Gross carrying amount $14,970,657 $6,009,681 $20,892 $21,001,230 Loss ratio 1%-5% 5%-30% 20%-100% Lifetime expected credit losses 307,517 399,298 20,892 727,707 $14,663,140 $5,610,383 $- $20,273,523 The movement in the provision for impairment of trade receivables as for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 As of January 1, 2025 $727,707 $727,707 Allowance (reversal) for the current period - - As of December 31, 2025 $727,707 $727,707 (18) Leases Group as a lessee The Group leases various properties, including real estate such as land, buildings and facilities, and other equipment. The lease terms range from 1 to 50 years. The Group’s leases effect on the financial position, financial performance and cash flows are as follows: A. Amounts recognized in the balance sheet (a) Right-of-use assets The carrying amount of right-of-use assets As of December 31, 2025 2024 Land $382,473 $380,769 Buildings and facilities 154,880 63,400 $537,353 $444,169
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 53 During the years ended December 31, 2025 and 2024, the Group’s additions to right-of- use assets amounted to NT$168,664 thousand and NT$134,721 thousand, respectively. (b) Lease liabilities As of December 31, 2025 2024 Current $74,993 $42,002 Non-current 477,293 412,932 $552,286 $454,934 Please refer to Note 6(20) for the interest on lease liabilities recognized during the years ended December 31, 2025 and 2024, and refer to Note 12(5) Liquidity Risk Management for the maturity analysis for lease liabilities as of December 31, 2025 and 2024. B. Amounts recognized in the statement of profit or loss Depreciation charge for right-of-use assets Years Ended December 31, 2025 2024 Land $14,228 $13,687 Buildings and facilities 56,725 48,240 $70,953 $61,927 C. Cash outflow relating to leasing activities During the years ended December 31, 2025 and 2024, the Group’s total cash outflows for leases amounted to NT$76,199 thousand and NT$68,030 thousand, respectively.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 54 D. Other information relating to leasing activities Extension option A portion of the Group’s property rental agreements contain extension option. In determining the lease terms, the non-cancellable period for which the Group has the right to use an underlying asset, include the period covered by an option to extend the lease if the Group is reasonably certain to exercise that option. The option is used to maximize operational flexibility in terms of managing contracts. The majority of extension options held are exclusively exercisable by the Group. After the commencement date, the Group reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term. (19) Summary statement of employee benefits, depreciation and amortization expenses by function during the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Operating costs Operating expenses Total Operating costs Operating expenses Total Employee benefits expense Salaries $498,378 $11,198,931 $11,697,309 $462,712 $11,233,200 $11,695,912 Labor and health insurance 27,851 684,514 712,365 25,823 638,575 664,398 Pension 19,387 269,552 288,939 18,199 248,596 266,795 Others 5,080 166,689 171,769 4,991 151,205 156,196 Total $550,696 $12,319,686 $12,870,382 $511,725 $12,271,576 $12,783,301 Depreciation $91,313 $1,051,524 $1,142,837 $228,966 $897,779 $1,126,745 Amortization $2,473 $190,574 $193,047 $2,189 $185,004 $187,193
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 55 According to the Articles of Incorporation, no lower than 1% of profit of the current year is distributable as employees’ compensation and no higher than 4‰ of profit of the current year is distributable as remuneration to directors. However, the Company’s accumulated losses shall first have been covered (if any). No less than 50% of the employees’ compensation amount mentioned in the preceding paragraph should be allocated to non-executive employees. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE. Based on profit of current year, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended December 31, 2025 to be NT$197,288 thousand and NT$13,500 thousand, respectively. The employees’ compensation and remuneration to directors recognized as salary expense. If the estimated amounts differ from the actual distribution resolved by the Board of Directors, the Company will recognize the change as an adjustment to income of next year. If the Board of Directors resolved to distribute employees’ compensation in the form of stocks, then the number of stocks distributed as employees’ compensation was calculated based on the closing price one day earlier than the date of resolution. A resolution was passed at a Board of Directors meeting held on March 10, 2026 to distribute NT$197,288 thousand and NT$13,500 thousand in cash as employees’ compensation and remuneration to directors, respectively. There was no material difference between the aforementioned approved amounts and the amounts recognized in the financial statements for the year ended December 31, 2025. No material differences existed between the estimated amount and the actual distribution NT$241,930 thousand and NT$13,500 thousand of the employee compensation and remuneration to directors for the year ended December 31, 2024. (20) Non-operating income and expenses A. Interest income Years Ended December 31, 2025 2024 Financial assets measured at amortized cost $1,025,470 $1,303,094 Financial assets measured at fair value through other comprehensive income 2,850 1,400 $1,028,320 $1,304,494
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 56 B. Other income Years Ended December 31, 2025 2024 Rental income $66,522 $62,565 Dividend income 93,623 92,434 Others 218,514 104,432 $378,659 $259,431 C. Other gains and losses Years Ended December 31, 2025 2024 Foreign exchange (losses) gains, net $(82,329) $750,141 (Losses) gains on financial asset measured at fair value through profit or loss (11,001) 20,614 Losses on disposal of property, plant and equipment (1,005) (719) Others (6,719) (5,508) $(101,054) $764,528 D. Finance costs Years Ended December 31, 2025 2024 Interest on lease liabilities $9,312 $8,007 Others 180 167 $9,492 $8,174
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 57 (21) Components of other comprehensive income For the year ended December 31, 2025 Arising during the period Reclassification adjustments during the period Other comprehensive income, before tax Income tax relating to components of other comprehensive income Other comprehensive income, net of tax Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $15,075 $- $15,075 $- $15,075 Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income 497,192 - 497,192 - 497,192 To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of foreign operations (7,846) - (7,846) - (7,846) Unrealized gains (losses) from debt instruments investments measured at fair value through other comprehensive income 2,082 - 2,082 - 2,082 $506,503 $- $506,503 $- $506,503
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 58 For the year ended December 31, 2024 Arising during the period Reclassification adjustments during the period Other comprehensive income, before tax Income tax relating to components of other comprehensive income Other comprehensive income, net of tax Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans $47,658 $- $47,658 $- $47,658 Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income (259,667) - (259,667) - (259,667) To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of foreign operations 49,993 - 49,993 - 49,993 Unrealized gains (losses) from debt instruments investments measured at fair value through other comprehensive income (1,028) - (1,028) - (1,028) $(163,044) $- $(163,044) $- $(163,044)
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 59 (22) Income tax The major components of income tax expense are as follows: Income tax expense recognized in profit or loss Years Ended December 31, 2025 2024 Current income tax expense: Current income tax payable $3,088,762 $4,108,100 Adjustments in respect of current income tax of prior periods (81,434) (380,611) Deferred tax expense: Deferred tax expense relating to origination and reversal of temporary differences 175,149 100,873 Others 3,357 (44,066) Total income tax expense $3,185,834 $3,784,296 A reconciliation of tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: Years Ended December 31, 2025 2024 Accounting profit before tax from continuing operations $19,533,527 $24,126,317 Tax at the domestic rates applicable 20% to profits in the country concerned $3,906,705 $4,825,264 Tax effect of revenues exempt from taxation (16,914) (19,941) Tax effect of expenses not deductible for tax purposes 107 196 Tax effect of deferred tax assets/ liabilities 176,859 202,241 Income tax credit (819,317) (990,766) 5% surtax on undistributed retained earnings 5,600 36,000 Adjustments in respect of current income tax of prior periods (81,434) (380,611) Others 14,228 111,913 Total income tax expense recognized in profit or loss $3,185,834 $3,784,296
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 60 Deferred tax assets (liabilities) relate to the following: For the year ended December 31, 2025 Beginning balance Recognized in profit or loss Recognized in other comprehensive income Charged directly to equity Acquired in business combinations Exchange differences Ending balance Temporary differences Unrealized foreign exchange (gains) losses $304,024 $(156,258) $- $- $- $- $147,766 Unrealized inventory loss provision 338,872 (17,490) - - - - 321,382 Unrealized loss allowance 103,539 (1,785) - - - - 101,754 Unrealized estimated expense 34,986 (2,262) - - - - 32,724 Goodwill (335,962) - - - - - (335,962) Unrealized sales returns and allowances 14,916 2,646 - - - - 17,562 Net defined benefit liabilities, non- current 8,922 - - - - - 8,922 Unused tax losses 2,198 - - - - - 2,198 Deferred tax (expense) income $(175,149) $- $- $- $- Net deferred tax assets $471,495 $296,346 Reflected in balance sheet as follows: Deferred tax assets $807,457 $632,308 Deferred tax liabilities $335,962 $335,962
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 61 For the year ended December 31, 2024 Beginning balance Recognized in profit or loss Recognized in other comprehensive income Charged directly to equity Acquired in business combinations Exchange differences Ending balance Temporary differences Unrealized foreign exchange (gains) losses $353,741 $(49,717) $- $- $- $- $304,024 Unrealized inventory loss provision 355,749 (16,877) - - - - 338,872 Unrealized loss allowance 110,100 (6,561) - - - - 103,539 Unrealized estimated expense 40,727 (5,741) - - - - 34,986 Goodwill (335,962) - - - - - (335,962) Unrealized sales returns and allowances 36,893 (21,977) - - - - 14,916 Net defined benefit liabilities, non- current 8,922 - - - - - 8,922 Unused tax losses 2,198 - - - - - 2,198 Deferred tax (expense) income $(100,873) $- $- $- $- Net deferred tax assets $572,368 $471,495 Reflected in balance sheet as follows: Deferred tax assets $908,330 $807,457 Deferred tax liabilities $335,962 $335,962 The following table contains information of the unused tax losses of the Group: Unused tax losses as of The Company Year Tax losses for the period December 31, 2025 December 31, 2024 Expiration year Novatek Investment Corporation Limited 2018 $51,243 $51,243 $51,243 2028
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 62 Unrecognized deferred tax assets As of December 31, 2025 and 2024, deferred tax assets that have not been recognized amounted to NT$10,363 thousand and NT$10,395 thousand, respectively. Unrecognized deferred tax liabilities relating to the investment in subsidiaries The Group did not recognize any deferred tax liability for taxes that would be payable on the unremitted earnings of the Group’s overseas subsidiaries, as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. As of December 31, 2025 and 2024, deferred tax liability not being recognized for subsidiaries, aggregated to NT$63,376 thousand and NT$59,668 thousand, respectively. The assessment of income tax returns As of December 31, 2025, the assessment and approval of the income tax returns of the Company and its subsidiaries are as follows: The Group The assessment of income tax returns The Company Assessed and approved up to 2023 Subsidiary — Novatek Investment Corporation Limited Assessed and approved up to 2023 Subsidiary — NTK International Limited Assessed and approved up to 2024 (23) Earnings per share Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. The capital structure of the Group is considered complex. Computations are as follows:
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 63 Years Ended December 31, 2025 2024 A. Basic earnings per share Profit attributable to ordinary equity holders of the parent company (in thousand NT$) $16,347,693 $20,342,021 Weighted average number of ordinary shares outstanding for basic earnings per share (in thousand share) 608,512 608,512 Basic earnings per share (NT$) $26.87 $33.43 B. Diluted earnings per share Profit attributable to ordinary equity holders of the parent company after dilution (in thousand NT$) $16,347,693 $20,342,021 Weighted average number of ordinary shares outstanding for basic earnings per share (in thousand share) 608,512 608,512 Effect of dilution: Employee bonus-stock (in thousand share) 593 556 Weighted average number of ordinary shares outstanding after dilution (in thousand share) 609,105 609,068 Diluted earnings per share (NT$) $26.84 $33.40 There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the issuance date of the financial statements. 7. RELATED PARTY TRANSACTIONS Information of the related parties that had transactions with the Group during the financial reporting period is as follows: Names of related parties Nature of relationship of the related parties United Microelectronics Corporation Director of the Company (Note) HeJian Technology (Suzhou) Co., Ltd. Other related party (Note) United Semiconductor (Xiamen) Co., Ltd. Other related party (Note) United Semiconductor Japan Co., Ltd. Other related party (Note) Note: After re-electing directors at the shareholders’ meeting held on May 31, 2024, United Microelectronics Corporation has ceased to be a related party of the Company.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 64 Significant transactions with related parties (1) Purchases Years Ended December 31, 2025 2024 United Microelectronics Corporation $- $5,040,851 Others - 1,414,993 $- $6,455,844 The payment terms from the related party suppliers were comparable with third party suppliers, and they are 45 days from the end of the month when the invoices are issued. (2) Technology Service Years Ended December 31, 2025 2024 United Microelectronics Corporation $- $110,791 Others - 66,048 $- $176,839 Key management personnel compensation Years Ended December 31, 2025 2024 Short-term employee benefits $457,144 $476,894 Post-employment benefits 1,932 1,864 $459,076 $478,758 8. ASSETS PLEDGE AS SECURITY The following table lists assets of the Group pledged as security: As of December 31, Assets pledged for security 2025 2024 Secured liabilities Other financial assets, non-current $20,600 $20,600 Guarantee for land
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 65 9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACTUAL COMMITMENTS (1) The Group paid certain royalty fee based on the product sales volume of certain units or amounts per contract to use the technology know-how of other companies. (2) Capital expenditures contracted but not yet incurred Years Ended December 31, 2025 2024 Property, plant and equipment $2,083,231 $2,362,496 10. LOSSES DUE TO MAJOR DISASTERS None. 11. SIGNIFICANT SUBSEQUENT EVENTS None. 12. OTHERS (1) Categories of financial instruments As of December 31, 2025 2024 Financial assets Financial assets measured at fair value through profit or loss $490,858 $404,502 Financial assets measured at fair value through other comprehensive income 4,126,689 3,570,702 Financial assets measured at amortized cost: Cash and cash equivalents (excluding cash on hand) 42,417,381 48,769,295 Trade receivables 21,533,014 20,715,179 Other financial assets (including current and non- current) 8,420,670 8,697,155 $76,988,612 $82,156,833
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 66 As of December 31, 2025 2024 Financial liabilities Financial liabilities measured at amortized cost: Trade and other payables $15,787,598 $17,664,533 Guarantee deposits received (including current and non-current) 11,166,894 13,575,456 Lease liabilities 552,286 454,934 $27,506,778 $31,694,923 (2) Financial risk management objectives The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Group identifies, measures and manages the aforementioned risks based on the Group’s policy and risk appetite. The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times. (3) Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity instruments). In practice, it is rarely the case that a single risk variable will change independently from other risk variables, there is usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables. Foreign currency risk The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 67 The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group. The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analysis is as follows: When NTD strengthens/weakens against USD by 5%, the profit for the years ended December 31, 2025 and 2024 would decrease/increase by NT$209,251 thousand and NT$366,037 thousand, respectively. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. All of the Group’s financial assets and financial liabilities that are exposed to cash flow risk due to interest rate fluctuation are under short-term contracts, thus the cash flow risk of interest rate fluctuation is considerably low. Equity price risk The fair value of the Group’s unlisted equity securities is susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s unlisted equity securities are classified under financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income. The Group manages the equity price risk through diversification of equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions. A change of 5% in the price of the unlisted companies’ equity instruments classified under equity instrument investments measured at fair value through profit or loss could cause the profit or loss in 2025 and 2024 to increase/decrease by NT$24,543 thousand and NT$20,225 thousand, respectively.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 68 A change of 5% in the price of the unlisted companies’ equity instruments classified under equity instrument investments measured at fair value through other comprehensive income could cause the profit or loss in 2025 and 2024 to increase/decrease by NT$191,314 thousand and NT$168,619 thousand, respectively. (4) Credit risk management Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for trade receivables) and from its financing activities, including bank deposits and other financial instruments. Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counterparties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counterparties’ credit risk will also be managed by taking credit enhancement procedures, such as requesting for prepayment. As of December 31, 2025 and 2024, trade receivables from top ten customers represented 70% and 64% of the total trade receivables of the Group, respectively. The credit concentration risk of other trade receivables is insignificant. Credit risk from bank deposits and other financial instruments is managed by the Group’s Finance Department in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks, financial institutions and companies with good credit rating. Consequently, there is no significant credit risk for these counterparties. The Group adopted IFRS 9 to assess the expected credit losses and the details of the assessment are described as follows: Level of credit risk Indicator Measurement method for expected credit losses Total carrying amount of trade receivables as of December 31, 2025 2024 Simplified approach (Note) (Note) Lifetime expected credit losses $21,826,688 $21,001,230 Note: By using simplified approach (loss allowance is measured at lifetime expected credit losses), including accounts receivables.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 69 (5) Liquidity risk management The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank loans. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. Non-derivative financial liabilities Less than 1 year 2 to 3 years 4 to 5 years > 5 years Total As of December 31, 2025 Trade and other payables $15,787,598 $- $- $- $15,787,598 Lease liabilities 83,992 111,932 62,399 434,129 692,452 Guarantee deposits received 2,301,069 8,237,225 628,600 - 11,166,894 As of December 31, 2024 Trade and other payables $17,664,533 $- $- $- $17,664,533 Lease liabilities 49,982 68,139 34,946 443,404 596,471 Guarantee deposits received 4,327,860 8,591,896 655,700 - 13,575,456 (6) Reconciliation of liabilities arising from financing activities Reconciliation of liabilities for the year ended December 31, 2025: Guarantee deposits received Lease liabilities Total liabilities from financing activities As of January 1, 2025 $13,575,456 $454,934 $14,030,390 Cash flows (1,626,343) (66,887) (1,693,230) Non-cash changes Addition for the current period - 168,664 168,664 Lease modification - (7,923) (7,923) Foreign exchange movement (782,219) 3,498 (778,721) As of December 31, 2025 $11,166,894 $552,286 $11,719,180
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 70 Reconciliation of liabilities for the year ended December 31, 2024: Guarantee deposits received Lease liabilities Total liabilities from financing activities As of January 1, 2024 $14,283,252 $373,144 $14,656,396 Cash flows (1,415,760) (60,023) (1,475,783) Non-cash changes Addition for the current period - 134,721 134,721 Lease modification - 4,898 4,898 Foreign exchange movement 707,964 2,194 710,158 As of December 31, 2024 $13,575,456 $454,934 $14,030,390 (7) Fair values of financial instruments A. The methods and assumptions applied in determining the fair value of financial instruments: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities: (a) The carrying amount of cash and cash equivalents, trade receivables, other financial assets, trade and other payables, other financial liabilities and guarantee deposits approximate their fair value due to their short maturities. (b) For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and funds etc.) at the reporting date. (c) Fair value of equity instruments without market quotations (including private company equity securities) are estimated using the market approach or asset approach valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information. (d) Fair value of debt instruments without market quotations is determined based on the discounted cash flow analysis. The assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument and interest rate yield curve for the contract period. B. Fair value of financial instruments measured at amortized cost The carrying amount of the Group’s financial assets and liabilities measured at amortized cost approximate their fair value.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 71 C. Fair value measurement hierarchy for financial instruments Please refer to Note 12(8) for fair value measurement hierarchy for financial instruments of the Group. (8) Fair value measurement hierarchy A. Fair value measurement hierarchy All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows: Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 — Unobservable inputs for the asset or liability For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period. B. Fair value measurement hierarchy of the Group’s assets and liabilities The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows: As of December 31, 2025: Level 1 Level 2 Level 3 Total Financial assets measured at fair value: Financial assets measured at fair value through profit or loss Capital $- $- $490,858 $490,858 Financial assets measured at fair value through other comprehensive income Debt instrument - 300,402 - 300,402 Equity instrument - - 3,826,287 3,826,287 $- $300,402 $4,317,145 $4,617,547
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 72 As of December 31, 2024: Level 1 Level 2 Level 3 Total Financial assets measured at fair value: Financial assets measured at fair value through profit or loss Capital $- $- $404,502 $404,502 Financial assets measured at fair value through other comprehensive income Debt instrument - 198,320 - 198,320 Equity instrument - - 3,372,382 3,372,382 $- $198,320 $3,776,884 $3,975,204 Transfers between Level l and Level 2 during the period. During the years ended December 31, 2025 and 2024, there were no transfers between Level 1 and Level 2 fair value measurements. The detail movement of recurring fair value measurements in Level 3: Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows: For the year ended December 31, 2025 Assets At fair value through profit or loss At fair value through other comprehensive income Capital Stocks As of January 1, 2025 $404,502 $3,372,382 Additions 97,357 - Disposals - (2,687) Return of capital during the period - (40,600) Total gains and losses recognized: Amount recognized in profit or loss (11,001) - Amount recognized in OCI - 497,192 As of December 31, 2025 $490,858 $3,826,287
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 73 For the year ended December 31, 2024 Assets At fair value through profit or loss At fair value through other comprehensive income Capital Stocks As of January 1, 2024 $241,590 $3,650,995 Additions 142,298 114,054 Return of capital during the period - (133,000) Total gains and losses recognized: Amount recognized in profit or loss 20,614 - Amount recognized in OCI - (259,667) As of December 31, 2024 $404,502 $3,372,382 Information on significant unobservable inputs to valuation Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 74 As of December 31, 2025: Valuation technique Significant unobservable inputs Quantitative information Relationship between inputs and fair value Sensitivity analysis of interrelationship between inputs and fair value Financial assets: Financial assets measured at fair value through profit or loss Capital Asset approach Discount for lack of marketability 10% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s profit or loss by NT$54,540 thousand Financial assets measured at fair value through other comprehensive income Stocks Asset approach Discount for lack of marketability and minority interest 0~30% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$375,984 thousand Stocks Market approach Discount for lack of marketability 0~30% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$48,077 thousand
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 75 As of December 31, 2024: Valuation technique Significant unobservable inputs Quantitative information Relationship between inputs and fair value Sensitivity analysis of interrelationship between inputs and fair value Financial assets: Financial assets measured at fair value through profit or loss Capital Asset approach Discount for lack of marketability 10% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s profit or loss by NT$44,945 thousand Financial assets measured at fair value through other comprehensive income Stocks Asset approach Discount for lack of marketability and minority interest 10~30% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$381,749 thousand Stocks Market approach Discount for lack of marketability 30% The higher the discount for lack of marketability, the lower the fair value estimated 10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$2,064 thousand
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 76 Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy The Group’s Finance Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The department analyses the movements in the values of assets and liabilities which are required to be remeasured or reassessed as per the Group’s accounting policies at each reporting date to ensure the measurement or assessment are reasonable. C. Fair value measurement hierarchy of the Company’s assets and liabilities not measured at fair value but for which the fair value is disclosed. Please refer to Note 6(8) for information of investment property. (9) Significant assets and liabilities denominated in foreign currencies Information regarding the significant assets and liabilities denominated in foreign currencies is listed below: As of December 31, 2025 Foreign currencies (In thousands) Foreign exchange rate NTD (In thousands) Financial assets Monetary items: USD $767,092 31.43 $24,110,374 RMB 138,577 4.496 623,040 Financial liabilities Monetary items: USD $633,939 31.43 $19,924,695 RMB 33,013 4.496 148,428
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 77 As of December 31, 2024 Foreign currencies (In thousands) Foreign exchange rate NTD (In thousands) Financial assets Monetary items: USD $929,325 32.785 $30,469,376 RMB 127,100 4.478 569,152 Financial liabilities Monetary items: USD $706,030 32.785 $23,147,193 RMB 31,591 4.478 141,464 The Group does not disclose all the information regarding exchange gains and losses of monetary financial assets and liabilities denominated in foreign currencies due to the varieties of functional currencies. During the years ended December 31, 2025 and 2024, the foreign exchange (losses) gains were NT $ (82,239) thousand and NT$750,141 thousand, respectively. (10) Capital management The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares. 13. ADDITIONAL DISCLOSURES (1) The following are additional disclosures for the Company and its affiliates as required by the R.O.C. Securities and Futures Bureau: A. Financing provided to others for the year ended December 31, 2025: None. B. Endorsement/Guarantee provided to others for the year ended December 31, 2025: None.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 78 C. Significant securities held as of December 31, 2025 (excluding subsidiaries): Name of the Company Held Marketable Securities Type and Name Relationship with the Company Financial Statement Account December 31, 2025 Shares/Units (In thousands) Carrying Value Percentage of Ownership (%) Fair Value Note Novatek Microelectronics Corp. Common Stock SHIEH YONG Investment Co., Ltd. - Financial assets measured at fair value through other comprehensive income, non-current 306,977 $2,996,377 15.15% $2,996,377 - Common Stock Unitech Capital Inc. - Financial assets measured at fair value through other comprehensive income, non-current 6,000 135,248 12.00% 135,248 - Common Stock TriKnight Capital Corporation - Financial assets measured at fair value through other comprehensive income, non-current 15,346 79,742 4.67% 79,742 - - Taiwan Cooperative Bank issue of Unsecured Senior Financial Debentures - Financial assets measured at fair value through other comprehensive income, non-current - 200,455 - 200,455 - - Senior Unsecured Financial Debenture of Mega International Commercial Bank Co., Ltd. - Financial assets measured at fair value through other comprehensive income, non-current - 99,947 - 99,947 - - TGV est Asia Partners II (Taiwan) L.P . - Financial assets measured at fair value through profit or loss, non- current - 166,288 - 166,288 -
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 79 Name of the Company Held Marketable Securities Type and Name Relationship with the Company Financial Statement Account December 31, 2025 Shares/Units (In thousands) Carrying Value Percentage of Ownership (%) Fair Value Note Novatek Investment Corporation Limited Common Stock Yobon Technologies, Inc. - Financial assets measured at fair value through other comprehensive income, non-current 26 $- 3.79% $- - Common Stock TriKnight Capital Corporation - Financial assets measured at fair value through other comprehensive income, non-current 7,673 39,871 2.33% 39,871 - Common Stock Perinnova Limited - Financial assets measured at fair value through other comprehensive income, non-current 1.9 5,861 19.00% 5,861 - Preferred Stock Gear Radio Limited - Financial assets measured at fair value through other comprehensive income, non-current 2,400 9,669 5.11% 9,669 - Preferred Stock xMEMS Labs, Inc. - Financial assets measured at fair value through other comprehensive income, non-current 2,006 64,922 1.45% 64,922 - Preferred Stock XConn Technologies Holdings, Ltd. - Financial assets measured at fair value through other comprehensive income, non-current 1,755 445,340 2.94% 445,340 - Common Stock Gallopwave Inc. - Financial assets measured at fair value through other comprehensive income, non-current 7,875 15,132 10.24% 15,132 -
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 80 Name of the Company Held Marketable Securities Type and Name Relationship with the Company Financial Statement Account December 31, 2025 Shares/Units (In thousands) Carrying Value Percentage of Ownership (%) Fair Value Note Novatek Investment Corporation Limited Preferred stock H3 Platform Inc. - Financial assets measured at fair value through other comprehensive income, non-current 18,750 $34,125 8.77% $34,125 - - CDIB-Innolux Limited Partnership - Financial assets measured at fair value through profit or loss, non- current - 50,060 - 50,060 - - TGV est Asia Partners II (Taiwan) L.P. - Financial assets measured at fair value through profit or loss, non- current - 154,411 - 154,411 - - Translink Capital Partners V , L.P. - Financial assets measured at fair value through profit or loss, non- current - 65,490 - 65,490 - - CDIB-Innolux II Limited Partnership - Financial assets measured at fair value through profit or loss, non- current - 54,609 - 54,609 -
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 81 E. Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the paid-in capital for the year ended December 31, 2025: Company Name Related Party Nature of Relationship Transaction Details Abnormal Transaction Notes/Accounts Payable or Receivable Purchase/ Sales Amount % to Total Payment Terms Unit Price Payment Terms Ending Balance % to Total Novatek Microelectronics Corp. NTK International Limited (NTK) Subsidiary Sales $(4,253,689) 4.23% Month-end 60 days - - $804,426 3.67% NTK International Limited (NTK) Novatek Microelectronics Corp. Subsidiary Purchase 4,253,689 100.00% Month-end 60 days - - (804,426) (100.00)% F. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of paid-in capital as of December 31, 2025: Company Name Related Party Nature of Relationship Ending Balance Turnover Rate Overdue Amounts Received in Subsequent Period Allowance for Bad DebtsAmount Action Taken Novatek Microelectronics Corp. NTK International Limited (NTK) Subsidiary $804,426 7.79 - - $804,426 -
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 82 G. Intercompany relationship and significant intercompany transactions for the year ended December 31, 2025: No. (Note 1) Company Name Counterparty Nature of Relationship (Note 2) Intercompany Transactions Financial Statement Item Amount Terms Percentage of Consolidated Net Revenue or Total Assets (Note 3) 0 Novatek Microelectronics Corp. Novatek Japan Kabushiki-Kaisha (NJKK) 1 Selling expenses $21,117 According to the contract (0.02)% 0 Novatek Microelectronics Corp. NTK International Limited (NTK) 1 Sales 4,253,689 Month-end 60 days 4.23% 0 Novatek Microelectronics Corp. NTK International Limited (NTK) 1 Trade receivables 804,426 Month-end 60 days 0.83% 0 Novatek Microelectronics Corp. Novatek (Suzhou) Co., Ltd. 1 Administrative expenses 229,962 According to the contract (0.23)% 0 Novatek Microelectronics Corp. Novatek USA Inc.. 1 Selling expenses 60,756 According to the contract (0.06)% 0 Novatek Microelectronics Corp. Novatek USA Inc. 1 Other payables 6,997 According to the contract 0.01% 0 Novatek Microelectronics Corp. Novatek (Beijing) Co., Ltd. 1 Administrative expenses 46,810 According to the contract (0.05)% 1 Novatek International (BVI) Ltd. Novatek (Xian) Co., Ltd. 3 Administrative expenses 369,592 According to the contract (0.37)% 1 Novatek International (BVI) Ltd. Novatek (Shenzhen) Co., Ltd. 3 Administrative expenses 347,792 According to the contract (0.35)% 2 Cheertek International Inc. Novatek (Shanghai) Co., Ltd. 3 Administrative expenses 240,072 According to the contract (0.24)%
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 83 Note 1: Number should be input in the remark column for intercompany transactions. See below for how to assign numbers to transactions. 1. 0 for parent company. 2. Subsidiaries are given a number in sequence starting with No. 1. Note 2: There are three types of transactions. Please mark the type of transaction by giving a number to it. 1. Parent to Subsidiary. 2. Subsidiary to Parent. 3. Subsidiaries to Subsidiaries. Note 3: Asset/liability items are calculated by using the ending balances of the item divided by ending balance of total consolidated assets; Profit/loss items are calculated by using the amount of the transaction divided by total consolidated revenue.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 84 (2) Information on investees Names, locations and related information of investees as of December 31, 2025 (excluding investment in Mainland China): Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Balances as of December 31, 2025 Net Income (losses) of the Investee Profits/losses of Investee NoteDecember 31, 2025 December 31, 2024 Shares (In thousands) Percentage of Ownership Carrying Value Novatek Microelectronics Corp. Novatek Investment Corporation Limited Taiwan Investment $860,000 $860,000 86,000 100.00% $1,029,686 $1,728 $1,728 - Cheertek International Inc. Samoa Investment 521,132 304,197 16,500 100.00% 62,654 (234,459) (234,459) - Novatek International (BVI) Ltd. British Virgin Islands Investment 1,137,650 1,149,355 36,000 100.00% 714,249 (677,137) (677,137) - NTK International Limited (NTK) Kowloon, Hong Kong Marketing of integrated circuits and semiconductor services 20,949 20,949 5,000 100.00% 284,113 22,694 22,694 - Novatek Japan Kabushiki-Kaisha (NJKK) Tokyo, Japan Marketing of integrated circuits and semiconductor services 5,430 5,430 0.4 100.00% 2,229 298 298 - Novatek USA Inc. California, USA Marketing of integrated circuits and semiconductor services 30,800 30,800 0.01 100.00% 36,911 3,134 3,134 - Novatek International (BVI) Ltd. Novatek International (SAMOA) Ltd. Samoa Investment 121,600 (USD4,000 Thousand) 121,600 (USD4,000 Thousand) 4,000 100.00% 203,799 27,633 - -
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 85 (3) Investment in Mainland China: A. Investment situation: Investee Company Main Businesses and Products Total Amount of Paid-in Capital (Note 7) Method of Investment Accumulated outflow of Investment from Taiwan as of January 1, 2025 (Note 7) Investment Flows Accumulated outflow of Investment from Taiwan as of December 31, 2025 (Note 7) Percentage of Ownership Net Income (Losses) of the Investee Company Share of Profits /Losses (Note 6) Carrying Amount as of December 31, 2025 Accumulated Inward Remittance of Earnings as of December 31, 2025Outflow Inflow Novatek (Suzhou) Co., Ltd. Marketing of integrated circuits and semiconductor services $34,300 Indirectly investment in Mainland China through companies registered in a third region (Note 1) $34,300 $- $- $34,300 100.00% $12,096 $12,096 $94,237 $-(USD1,000 thousand) (USD1,000 thousand) (USD1,000 thousand) Novatek (Shanghai) Co., Ltd. Multimedia VLSI software design, development, testing and related consulting services 32,485 Indirectly investment in Mainland China through companies registered in a third region (Note 2) 32,485 - - 32,485 100.00% 4,997 4,997 82,479 -(USD1,000 thousand) (USD1,000 thousand) (USD1,000 thousand) Novatek (Xian) Co., Ltd. Multimedia VLSI software design, development, testing and related consulting services 88,410 Indirectly investment in Mainland China through companies registered in a third region (Note 3) 88,410 - - 88,410 100.00% 15,538 15,538 109,555 -(USD3,000 thousand) (USD3,000 thousand) (USD3,000 thousand) Novatek (Shenzhen) Co., Ltd. Multimedia VLSI software design, development, testing and related consulting services 938,280 Indirectly investment in Mainland China through companies registered in a third region (Note 4) 938,280 - - 938,280 100.00% 11,494 11,494 463,602 -(USD30,000 thousand) (USD30,000 thousand) (USD30,000 thousand) Novatek (Beijing) Co., Ltd. Multimedia VLSI software sales, development, testing and related consulting services 28,000 Indirectly investment in Mainland China through companies registered in a third region (Note 5) 28,000 - - 28,000 100.00% 1,895 1,895 33,107 -(USD1,000 thousand) (USD1,000 thousand) (USD1,000 thousand)
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 86 Accumulated Investment in Mainland China as of December 31, 2025 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment $1,121,475 (Note 7) $1,121,475 (Note 7) $40,643,548(USD36,000 thousand) (USD36,000 thousand) Note 1: The Company indirectly invested in Novatek (Suzhou) Co., Ltd., via investment in Novatek International (SAMOA) Ltd., an equit y investee, via investment in Novatek International (BVI) Ltd., an equity investee. The Department of Investment Review, MOEA has approved the investment. Note 2: The Company indirectly invested in Novatek (Shanghai) Co., Ltd. via investment in Cheertek International Inc., an equity inve stee. The Department of Investment Review, MOEA has approved the investment. Note 3: The Company indirectly invested in Novatek (Xian) Co., Ltd. via investment in Novatek International (SAMOA) Ltd., an equity investee, via investment in Novatek International (BVI) Ltd., an equity investee. The Department of Investment Review, MOEA has approved the investment. Note 4: The Company indirectly invested in Novatek (Shenzhen) Co., Ltd. via investment in Novatek International (BVI) Ltd., an equity investee. The Department of Investment Review, MOEA has approved the investment. Note 5: The Company indirectly invested in Novatek (Beijing) Co., Ltd. via investment in Novatek International (BVI) Ltd., an equity investee. The Department of Investment Review, MOEA has approved the investment. Note 6: The share of profits/losses from equity investments under the equity method in 2025were recognized based on its financial statements audited by Taiwan parent company’s independent auditor. Note 7: This was calculated by using the exchange rate on remittance day.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 87 B. Significant direct or indirect transactions with the investees in Mainland China: (a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None. (b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None. (c) The amount of property transactions and the amount of the resultant gains or losses: None. (d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None. (e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None. (f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Please refer to Note 13(1) F.
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English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese NOV ATEK MICROELECTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated) 88 14. SEGMENT INFORMATION (1) General information The major revenue of the Group comes from flat panel display and integrated circuit design products. The chief operating decision maker reviews the overall operating results to make decisions about resources to be allocated to and evaluates the overall performance. Therefore, the Group is aggregated into a single segment. (2) Geographical information A. Revenues from external customers: Years Ended December 31, 2025 2024 Taiwan $26,847,339 $23,285,434 Asia 73,314,344 78,304,394 Others 768,997 1,372,783 Less: Sales return and allowance (267,536) (174,860) $100,663,144 $102,787,751 B. Non-current assets: As of December 31, 2025 2024 Taiwan $9,902,219 $9,643,038 Others 530,610 514,633 $10,432,829 $10,157,671 (3) Major customers Major customers representing at least 10% of gross sales: Years Ended December 31, 2025 2024 Customer A $20,852,650 $17,775,896