Weikeng Industrial : 2022 Annual General Meeting Minutes

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

111 年股東常會議事錄(2022 Annual General Meeting Minutes)

Notice to readers

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

• Date and Time of the Meeting：June 16, 2022 at 9:00 a.m. (Thursday)
• Location of the Meeting：Chin-Chin Garden Restaurant (No.32, Ln. 266, Sec. 2, Zhishan Rd., Shilin Dist., Taipei City 111, Taiwan )
• Report of the Number of Shares Represented by Shareholders Present at the Meeting)： At 9:00 a.m., the total number of ordinary shares in attendance by shareholders (including in person and by proxy) are 286,226,646 shares (including the number of shares attended through electronic means which are 41,228,840shares), accounted for 67.93% of the total 421,294,256 ordinary shares issued by the Company, and met the statutory meeting quorum in accordance with article 174 of the Company Act.
• Chairman：Hu, Chiu-Chiang
• Recorder: Chou, Kan-Lin
• Directors Present：
• 1. Independent Director： Tsai, Yu-Ping, Lin, Hung, and Yu, Hsueh-Ping
  2. Director：Hu, Chiu-Chiang, Chi, Ting-Fang, Chen, Kuan-Hu, and Chen, Cheng-Fong
• Other Attendees
• 1. Attorney at Law：Wang, Chien-Chih
  2. CPA： KPMG, Taiwan, Au, Yiu-Kwan

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

1. Chairman's Remarks：（Omitted）
   III.Reporting Matters
2. 1. 2021 Business Report & Report to Shareholders
      2021 Business Performance
      2021 was a year of economic recovery amid COVID-19 pandemic. The risk and uncertainty of variant outbreak had immensely impacted the way we live and work, our economy and government policy making. As we learn and adjust to a new-normal life with COVID-19, the applications of semiconductor had expanded due to pandemic-inducedstay-at-home economy as well as emerging technology related to the raising importance of a green economy. As a result, worldwide semiconductor revenue reached an all-time high. However, new wafer capacity was still not in place to accommodate the surge in demand in the past year, while the industry faced prolonged shipping time like all others, downstream suppliers struggled to secure orders and chips shortages became the new status quo. Weikeng Group continued to play the role of connecting technology and creating value in the semiconductor industry. We aim to maintain logistics efficiency to meet client's production schedule in difficult times. With the diligent efforts of all colleagues and the support of shareholders, the Group consolidated sales revenue and net profit before tax reached approximately NT$72.4 billion and NT$2.4 billion in 2021, respectively, representing a growth of approximately 24% and 163%, and the gross margin of 7.13% and operating income margin of 3.49% have increased by 1.88 percentage points and 1.82 percentage points respectively, hitting new highs in recent years.
      Commitment to Sustainable Development

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Weikeng is dedicated to strengthen corporate governance and sustainability development. The goal is to partner with our vendors and buyers in the semiconductor industry to build a green sustainable supply chain that reduces environmental impact and act in accordance with social compliance. Vendors of the Company are renowned IDM and fabless companies who follow the code of conducts set by RBA (Responsible Business Alliance) formerly the Electronic Industry Citizenship Coalition (EICC), covering five aspects: labor, health and safety, environment, ethics and management system, and as their distributor, we aim to connect our downstream partners to participate accordingly for a better and more sustainable future.

Weikeng implemented BRA practices per vendors' requests and established the "Code of Conduct for Supplier" in May, 2020, to promote sustainable supply chain proactively. Apart from those already participated in BRA, 50 Weikeng suppliers had signed the agreement to comply with BRA code of conduct as of the end of 2021. An intra department Green Product Management was structured to ensure the compliance with RoHS (Restriction of Hazardous Substances), REACH Substances of Very High Concern (SVHC), and RBA regulations throughout product life cycle. We will continue to connect our downstream clients and devote management resources to issues concerning labor, health and safety, environment, ethics and management system, to build a supply chain that addresses social and environmental issues, and ultimately to implement our sustainable supply chain management strategies.

Emission reduction and energy efficiency have been the main drivers that motivate innovative electronic and technology products for combating climate change. The Company will continue to evaluate risks and opportunities associated with climate change both at present and in the foreseeable future. Through collaborations among industry partners who are on the same path, we hope to do our best by devoting more resources in green product development, and leverage our demand creation ability to further extend green technology applications such as battery management system, electric vehicle charging pile, smart grid, wind power, solar power inverter. Since the upstream DIM and fabless vendors had already expanded R&D capacity for the compound/ group III semiconductors, the Company will continue to expand businesses in the automotive/electric vehicle and industrial energy related markets by develop technology supports for more stable, more efficient and low-power-consuming products as we seize the opportunities in green energy industry.

In 2021, the Company has established Protection of Human Rights Policy, Intellectual Property Management Plan and Risk Management Policies and Procedures as part of the progress of enhancing sustainable development framework. We continued to sponsor environmental awareness documentary, education scholarship, sports events and technology research institutes for the purpose of cultivating high- technology talents, in response to United Nation's Sustainability Development Goals. In March 2022, the Board of directors had approved the establishment of the Sustainable Development Committee, under which sustainable development team and risk management team were established to ensure the advocacy and implementation of the work related to sustainable development of the Company. The Company is committed to fulfilling corporate social responsibility following international standards and trends. We promise to not only make the effort to respond actively to stakeholders concerning environmental, social and corporate governance related issues, but also conduct risk assessment and take countermeasures to strengthen corporate governance and sustainability.

2022 Business Outlook

In 2022, the semiconductor industry is still facing geopolitical tension and exclusions, production capacity rush and intensive communication within the supply chain, while the major chip manufacturers are also investing massive resources to increase capacities. However, due to the high cost of building new fabs and

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the prolonged construction period, chips shortages and price adjustments may continue into the second half of 2022 and even into 2023. We may anticipate market uncertainties and challenges as we wait for supply-demand balance in the semiconductor supply chain while entering post-pandemic era. The Company will continue to grasp market insights, meet vendor and customer requirements, closely monitor lead-time of stocking and delivery speed, and to provide technical support to clients. In time of foreseeable growth and business expansion, it is hoped that the management team will lead all colleagues to strictly abide by the risk management policy, operation performance optimization and "Ethical Corporate Management Best Practice Principles", together we will continue to strive towards the goal of integrity, sustainability and stable operation, and thus create more value for all stakeholders.

Weikeng Group has successfully won the franchises of product lines, covering many semiconductor Integrated Device Manufacturers (IDMs) or IC design companies such as AMD, Amazing, Cypress, Infineon, Lattice, Microchip, Molex, NXP, Sinopower, Vishay, Western Digital, etc. However, the Company continues to find and develop new products and applications in the semiconductor market, look for new cooperation opportunities of franchises, and create new customer demand. At present, in the application fields of industrial electronics, automotive electronics, mobile communications, consumer electronics, computer peripherals, and AI/5G, Weikeng Group's regional companies are capable of providing customers with competitive parts, technical support services, and efficient management services of supply chain to achieve a triple win value through the Group's intermediary technology connection between upstream vendors and downstream customers.

1. The annual business report for 2021

1. Business plan implementation results

Financial Figures	Amount	YoY %
( in Thousands of NT$)
Net Sales Revenue	72,404,886	24
Gross Profit	5,162,842	68
Net Operating Income	2,525,619	159
Profit before Tax	2,451,320	163
Net Profit	1,721,140	146

1. Budget Execution in 2021

In 2021, the Group's implementation of operating budget, revenue and profitability performance have exceeded expectations.

(iii) Financial Income, Costs and Profitability Analysis

	Financial Ratios	%
	Debt Ratio	70.86
Finicial Structure	Long-term Capital to Property, Plant and	6,861.49
	Equipment Ratio
Solvency	Current Ratio	145.16
Quick Ratio	88.91
	Return on Assets	7.37
Profitability	Return on Equity	24.42
Net Profit Margin	2.38
	Basic EPS(in NT$)	4.54

(iv) Research Development Status

Under the planning and active pursuit of the "Marketing Development Division", the Company has

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successfully franchised the product lines of well-known domestic and foreign semiconductor companies as a distributor, and even successfully maintained or expanded the continuation of the franchises after the consolidation between the upstream vendors. In addition to continuing to establish a solid foothold in the application field of 3C electronic products, the "FAE Division" also actively cooperates with the vendors to provide technical support for the relevant IC products that customers need in emerging application fields, so as to increase the Company's business territory, help customers save R&D expenses and shorten the electronic products of time-to-market, and enhance service levels to strengthen the cooperative relationship with vendors and customers.

In the "Solution Division", we are moving into the field of R&D and design, specializing in the turnkey solution of products. Given the fast growing scope of semiconductor and its emerging application solutions, in addition to franchising the product lines of well-known domestic and foreign semiconductor companies as a distributor, the "Marketing Development Division" is leading the search for new distributorships, paying close attention to and assessing the applications and development of products rolled out by startups and new ventures, including the development of green economy-related applications, and timely investing the development resources of the "Solution Division", and then introducing the technical support and demand creation services of the "FAE Division".

At this stage, the Group's companies are developing product solutions for 5G (smartphones, Customer Premise Equipment (CPE), Open Radio Access Network (O-RAN) and Small Cell Station), artificial intelligence/AIoT, WiFi 6, automotive electronics (including electric vehicles, electric locomotives, charging piles/stations, etc.), consumer electronics, industrial control, Type C-Power Delivery(PD), and various power supply applications. We also devote our resources to the development of product solutions for servers/data centers, motor control, battery energy storage management systems, human-machine interface for in-vehicle infotainment systems and Center Information Display (CID), in order to provide customers with immediate product reference solutions. All of these solutions are now available to customers.

1. Annual Business Plan in 2022

1. Operating Principles
2. 1. Immediate response to change or adjustment of client's needs according to material/chip shortages and stocking schedule adjustments in time of disrupted supply chain.
   2. To strengthen core competence and create added-value through R&D and collaboration with industry partners according to high-tech application trends, client's near-term and future needs and pricing strategy of all product items.
   3. Continue to provide high competitive components, technical support and R&D projects that advocate to the rising importance of sustainability and the fast growing green economy. To achieve technology connections of the supply chain and our mission to build a greener and more sustainable supply chain with upstream vendors and downstream clients.
   4. To obtain Real-time insights of the diversified strategy and construction of customers' production bases and supply chains affected by trade brinkmanship and the epidemic.
   5. To remain cautious in time of prosperity of the market and post pandemic era. As the scale of business and operation expands, Weikeng Group must fully abide by the risk management policy, Ethical Corporate Management Best Practice Principles and optimize business performance and profitability, as well as to evaluate and take actions to seize market opportunities in a timely manner.
3. Production and Sales Policy
4. 1. Pricing Strategy: In the face of increasing customer demand, we will actively mediate the delivery date of franchise vendors'products for clients, adjust the product and price strategy in a timely manner, so to provide best interactive communication platform.
   2. New Business Development: closely monitor the development trend of "new technology" and "green

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economy" and expand business cooperation opportunities, and strengthen customer structure accordingly.

1. Resilience: Facing the multinational expansion of customers outside of the Asia-Pacific region, the Group must strengthen timely support, service momentum and flexibility to accommodate client's cross-border and cross-region reallocation.
2. Compliance: Emphasize on the importance of and act accordingly to the compliance with laws and regulations for the import and export of strategic high-tech commodities.
3. Risk and Profitability Assessment: As the scale of operations expands, both risk and profitability must be critically examined and assessed.

1. Expected sales volume and its basis in 2022

The Company classifies the franchising products into chipsets/special application standard ICs, mixed signals and discrete components according to product characteristics. In 2022, the external environment posts challenges as it double-struck by the US-China disputes of trading brinkmanship and the COVID-19 epidemic. We continue to navigate through supply chain disruption driven by the conflict and pressure from US fed interest rate uncertainty. However, based on the management team's consideration of relevant research institutions' estimates of the semiconductor industry's sales forecast, the upstream vendors' set targets and the Company's internal business plan, the operating target of sales forecast for the fiscal year 2022 is expected to have growth opportunities, despite the challenges and difficulties in external environment.

The Company's management team and all colleagues hereby give thanks to all shareholders for your support and encouragement. We also look forward to all of your continuing greatest support and advice to Weikeng. Wishing all shareholders a good health and all the best!

Weikeng Industrial Co., Ltd.

Chairman & President：HU, CHIU-CHIANG

1. 2021 Financial Results as reviewed by Audit Committee Explanation:
2. 1. The Company's 2021 annual financial report has been audited and attested by independent auditors, Lo, Jui-Lan and Au, Yiu-Kwan of KPMG Taiwan, together with the Business Report and Earnings Distribution Plan for 2021 have been submitted to the Audit Committee for verification and prepared a written review report as the following.

Weikeng Industrial Co., Ltd.

2021 Review Report of Audit Committee

The Board of Directors has prepared this Company's 2021 financial statements (including individual financial statements and consolidated financial statements), business report, and the earnings distribution plan; with respect to the financial statements have been audited by independent auditors, Lo, Jui-Lan and Au, Yiu-Kwan of KPMG Taiwan, who have submitted an audit report. The aforementioned statements, plan and report have been reviewed by the Audit Committee and no irregularities were found. We hereby report as above in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Kindly verify.

To: Weikeng Industrial Co., Ltd., 2022 Annual General Meeting

Convener of Audit Committee：Tsai, Yu-Ping Date: March 25, 2022

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