Mitigation and Adaptation Strategies

Physical risk

Acute risk

Increased severity of extreme

 weather events

1. Make pre-arrangements for dredging work before the typhoon season; require property management personnel of the building to propose a typhoon control plan when the land typhoon alert is issued, prepare for typhoon control (i.e., piling sandbags, fixing trees, and checking whether doors and windows are closed), and carry out patrol inspections; make immediate processing if there is any abnormal status to minimize impacts of the disaster.
2. For power suspension, power outage, windstorm disaster, and flood, immediately form an emergency response team to keep abreast of the latest development and the issue relevant matter of notice at all times, attach attention to whether there is any personnel injury, and check whether the buildings and equipment/facilities are damaged.
3. If the shipping schedule to customers may be delayed as the delivery of materials by suppliers is affected, the Company will immediately negotiate with customers to handle the shipping schedule and ensure the short-term effects. Carry out the second source evaluation and introduction plan for materials that are materially affected and continue to update the material evaluation surveys of suppliers who are under effects until the shortage of materials is eliminated.

1. Extreme weather may result inthe inability to use equipment due to the invasion of flood and the suspension in raw material supply, resulting in delays in product shipment and losses of customers and affecting the Company's orders, reputation, and image.
2. Maintenance or repair costs will increase if buildings are damaged due to extreme weather.
3. Necessary measures adopted to compensate for the risk of supply chain suspension (i.e., the increase in the second source materials and the change in transportation method) will increase operating costs.

Transformation risk

Policy and Legal Risks

Enhance GHG Emission Pricing

1. Improve Energy Efficiency and Reduce Emissions:  Replace outdated air conditioning units to enhance energy efficiency, consolidate testing workstations to optimize production procedures, and expand the use of renewable energy to reduce emissions.
2. Promote Green Supply Chain: The Company aims to reduce supply chain carbon dioxide emissions by guiding suppliers to adopt green designs, implement clean production processes, and utilize energy-saving and carbon reduction approaches.
3. Future Strategies for Managing Carbon Emission Costs:
   1. Develop Low-Carbon Technologies: The Company plans to reduce emissions and minimize costs associated with carbon market transactions by developing new energy-saving equipment, adopting environmentally friendly materials, and continuously optimizing production procedures.
   2. Participate in Carbon Market Transactions: The Company will offset carbon dioxide emissions by purchasing carbon rights, avoiding excessive fees, and exploring cost- effective carbon credit opportunities through participation in carbon market transactions or the disposal of carbon rights using the Company's carbon credits.

1. Purchasing carbon allowances or paying carbon taxes will increase operating costs and reduce market competitiveness.
2. Adopting measures to reduce energy consumption, such as changing energy sources or improving equipment efficiency, may increase capital expenditures.
3. With the government's promotion of a low-carbon economy, the Company faces new market and business opportunities, such as developing low-carbon technologies and products, enhancing innovation capacity, and strengthening competitiveness, which canultimately improve operating income.

Transformation risk

Policy and Legal Risks

 Demands and monitoring of current products and services

1. The R&D Center shall call upon personnel of different departments to form a task force for collecting documents related to compliance requirements and regular meetings for sharing discussions and achievements.
2.  In the future, it is estimated that the R&D Center will regularly hold meetings each quarter to examine the energy consumption status of existing products and environmental protection-related requirements so as to ensure whether designs can be adjusted or carbon dioxide reduction optimization can be performed during production.

1. Operating costs increased due to the extension in the production schedule as it is required to invest labor in investigating and studying the compliance of relevant standards or requirements.
2. Designs and production changes carried out to comply with regulatory requirements (i.e., selecting power IC with better efficiency and optimizing production and procedure jigs by plants) will cause an increase in operating costs.

Transformation risk

Market risk

Changing customer behavior

1. To satisfy customers' requirements for products, corresponding labor and equipment are required to be invested in the initial phase of product development, and relevant certifications are also required, which will increase the operating cost.
2. If the Company is unable to provide products in line with customers' requirements, appropriately respond to carbon taxes and transactions in the carbon market, or achieve the emission reduction targets stated by the government, operating income may decrease due to the possibility of causing customers or consumers to have negative impressions on the Company's brand image.

1. Take the initiative to develop low-carbon and energy-saving images and automotive product samples, seek relevant customers with low-carbon or energy-saving requirements, and discuss the subsequent cooperating product schedule.
2. Use parts and materials complying with low-carbon and energy-saving requirements to achieve the requirements of different low-carbon or energy-saving labels.
3. Appoint dedicated personnel in the R&D department. In the future, the Company estimates to complete the carbon footprint research of new products by 2024 and commence applying for low-carbon and energy-saving certification in 2024 and 2025 (i.e., ISO14067 product carbon footprint certification).

R&D

1. Regarding product development, the Company examines design and verification procedures, selects environmentally friendly materials and recyclable materials and parts of low power consumption for designs in general, and reduces the number of parts selected for use.
2. Establish product development procedures and standards, record development history, and subsequently examine procedure simplification.

Business

1. The Company estimates to focus on existing customers from 2023 to 2025, including smart image applications, smart analysis, 3600 image processing, automotive products, and automotive modules as target products, and add low carbon, energy-saving, and function-improving technologies to expand its market share.

2. In the future, the Company estimates to carry out the investigation planning for climate change-related requirements in the market and sort the priority of products preferred by consumers.

3. In the future, the Company will focus on customers for development Except for standard functions, the R&D for image applications will include low-carbon, energy-saving, and environmentally friendly concepts to improve the philosophy of green products.

R&D

Business

1. In the future, the Company estimates to carry out the investigation planning for climate change-related requirements in the market and sort the priority of products preferred by consumers.
2. In the future, the Company will focus on customers for development. Except for standard functions, the R&D for image applications will include low-carbon, energy-saving, and environmentally friendly concepts to improve the philosophy of green products.

1. If the Company is able to produce environmentally friendly products and find target customers, it will be beneficial for improving its operating income.
2. Operating costs increased due to the increase in human resources and equipment by the Company to develop low carbon energy-saving products.

Inventory management

1. Adjust and improve the full-load rate of import and export trucks.
2. Reduce inventory turnover days: Supply suppliers on time according to the plan and improve the processing time limit of obsolete supplies.
3. WMS: Allow real-time inventory visibility, improve warehouse operating efficiency, and reduce the waste of inventory allocation and labor costs.
   

Production/manufacturing

1. The Company estimates to commence optimizing improvements and implement operation tool/proof to improve the production efficiency of products.
2. The Company estimates to develop a testing platform for its procedures, integrate testing items and increase the variable portfolio of testing items, increase the automated/semi-automated testing ratio, and reduce the working hours of personnel operation.

1. Improve the full-load rate of import and export trucks to reduce transportation, warehouse rental, and insurance fees.
2. Reduce inventory turnover days, increase the consumption efficiency of working capital, reduce the space used by suppliers, and minimize the Company’s operating costs.
3. Invest in labor and equipment for procedure improvement, improve procedure stability, increase operating costs, and reduce the fees for changes in design.
4. Shorten waiting/turnover working hours for product testing to reduce operating costs.
5. Invest labor in developing a testing platform for the integrated testing item, resulting in an increase of operating costs. Reduce manufacturing working stations, reduce the space occupied by production, and reduce the spatial rental costs of areas that are required.