2020 Ir Report En.Pdf

I. SPOKESPERSON & DEPUTY SPOKESPERSON Spokesperson: Nick Wu Title: Chief Financial Officer Tel.: (886) 2 2894-3447 E-mail: [email protected] Deputy Spokesperson: Colvin Sung Title: Business Analysis Department - Director Tel.: (886) 2 2894-3447 E-mail: [email protected] II. HEADQUARTERS AND PLANTS Taipei Headquarters: (LiDe Building) No.15, Li-Te Rd., Beitou Dist., Taipei 112, Taiwan (LiGong Building) No.115, Li-Te Rd., Beitou Dist., Taipei 112, Taiwan Tel.: (886) 2 2894-3447 Address: 1F, No.15, Li-Te Rd., Beitou Dist., Taipei 112, Taiwan III.SECURITIES DEALING INSTITUTE Name : KGI Securities Corporation, Registrar and Transfer Services Address : 5F, 2, Sec. 1, Chung-Chin S. Rd., ZhongZheng Dist., Taipei City Tel. : (886) 2 2389-2999 Website : http://www.kgiworld.com.tw IV. AUDITORS Name : CPA: CHOU, CHIEN-HUNG & LIN, CHUN-YAO CPA Firm : PricewaterhouseCoopers, Taiwan Address : 27F., No.333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City 110 Tel. : (886) 2 2729-6666 E-mail : http://www.pwc.com V. EXCHANGEABLE BOND EXCHANGE MARKETPLACE Marketable security: GDR Luxemburg Stock Exchange: http://www.bourse.lu VI. COMPANY WEBSITE http://www.asus.com.tw －－ CONTENTS －－ Page I. Letter to shareholders ……………………………………………………………………… 1 II. Introduction of the Company ……………………………………………………………… 4 1. Date of Incorporation ………………..…...………………………..……………………….. 4 2. Company History …………...……………………………………………………………… 4 III. Corporate governance report ……………………………………………………………... 27 1. Organization of company ………………………………………………………………… 27 2. Directors, President, Vice President, Assistant V.P., and department heads……………….. 29 3. Corporate governance …………………………………………………………………….. 42 4. CPAs fees …………...…..………………………………………………………………….. 93 5. CPA’s information …………………………………………………………………………. 94 6. The chairman, president, and financial or accounting manager of the Company who had worked for the independent auditor or the related party in the most recent years ………… 94 7. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads, and Shareholders of 10% shareholding or more ……………………………………………………………………………………….. 94 8. The relation of the top ten shareholders as the definition of Finance Standard Article 6 …. 95 9. Investment from Directors, Supervisors, Managers, and directly or indirectly controlled businesses ………………………………………………………………………………… 97 IV. Stock subscription …………………………………………………………………………. 102 1. Capital and shares …………………………………………………………………………. 102 2. Corporate bonds ………………………………………………………………………….… 108 3. Preferred stock ……………………………………………………………………………. 108 4. Issuance of global depository receipts …………………………………………………….. 108 5. Employees stock option certificates ………………………………………………………... 110 6. Limit on Employee New Bonus Share ……………………………………………... 110 7. Merger and acquisitions or stock shares transferred with new stock shares issued……….. 110 8. Fund implementation plan ………………………………………………………………… 111 V. Overview of business operation………………………………..…………………………… 112 1. Principal activities ………………………………………………………………………… 112 2. Market analysis and the condition of sale and production ………………………………… 116 3. Status of employees ……………………………………………………………………….. 122 4. Expenditure on environmental protection ………………………………………………… 122 5. Employee / employer relation …………………………………………………………….. 123 6. Important agreements ……………………………………………………………………… 130 VI. Financial information ………………………………………………………………. 131 1. Five-year Condensed balance sheet and comprehensive income statement ………………. 131 2. Five-year Financial analysis ……………..………………………………………………… 135 3. Audit Committee’s Review Report of 2020. ………………………………………………. 140 4. Consolidated Financial statements with Independent Auditors’ Review Report ………….. 140 5. Parent Company Only Financial Statements With Independent Auditors’ Report ………… 140 6. Impact of financial difficulties of the Company and related party on the Company’s financial position ………………………………………………………………………….. 140 VII. Review of financial position, financial performance and risk management ……………. 141 1. Financial Analysis ………………………………………………………………………….. 141 2. Business Performance Analysis …………...…………………………………….…………. 143 3. Cash flows Analysis ……………………………………………………………………... 146 4. Impact of major capital expenditure on finance and business …………………………….. 147 5. Policies, reasons for gain or loss and action plan in regard to investment plans in current year and the next year…………………………………………………………………….. 147 6. Risk management …………………………………………………………………………. 147 7. Other important matters …………………………………………………………………… 157 VIII Special disclosures …………………………………………………………………………. 158 1. Related party ……………………………………………………………………………… 158 2. Subscription of marketable securities privately in the most recent years …………………. 158 3. The stock shares of the Company held or disposed by the subsidiaries in the most recent years ……………………………………………………………………………………… 158 4. Supplementary disclosures ……………………………………………………………….. 158 5. Occurrence of events defined in Securities Transaction Law Article 36.2.2 that has great impact on shareholder’s equity or security price in the most recent years and up to the date of the report printed …………………………………………………………………. 158 I. Letter to Shareholders Dear Shareholders: Thank you for your long-term support for ASUS. The year 2020 was thoroughly tumultuous. The COVID-19 pandemic threatened the lives and health of people worldwide and had a significant impact on the global economy, world trade, the job market, and industrial supply chains. However, society is capable of strengthening and evolving through adversity. It is encouraging to see that the collective global fight against the pandemic, including proactive economic policies and government measures, has duly curtailed and reversed the pandemic’s impact. At present, we are also seeing the rise of vaccines and an end on the horizon. To a certain degree, the pandemic has reshaped the way people live and work, and has accelerated the advancement of society towards digitalization. Remote work, distance learning, and online entertainment have become widespread, which has galvanized strong demand for computers and computer peripherals. In the future, we believe products and services that are user-centric and modeled after the digital economy will flourish, and the digitalization of individuals, businesses, and society will continue to deepen. Bolstered by our firm leading position in the motherboard, computer, and gaming industries, ASUS will further expand into the commercial market and smart applications field; accelerate digital transformation; develop a dynamic portfolio of AI, cloud computing, and AIoT solutions; and strive to become the world’s most admired innovative leading technology enterprise in the new digital era. Looking back on 2020, the pandemic, the market, and the supply chain caused many ups and downs. For the whole ASUS team, these challenges were far from easy. It was the spirited, unrelenting work of the management team and all colleagues and the mutual support of industry partners fighting by our side that have propelled ASUS to steadfastly continue our evolution and achieve outstanding operations results. We are incredibly proud that we are a unified team with a culture that trusts in radical truth and transparency and fosters collective wisdom. ASUS is becoming a self-learning organization that continues to evolve and innovate. Guided by our Golden Triangle Principle comprised of Design Thinking, Market Position, and NPS (Net Promoter Scores for user recommendability), the ASUS brand will push towards new milestones in 2021. At the same time, ASUS will establish a firm foothold in the new digital era of AIoT and — with a management culture rooted in trust, radical truth, and transparency — will achieve the crucial work of realizing the next generation of digital technology, digital integration, and digital transformation. The following is a summary of the business operations results for 2020 and the outlook for 2021. Honored as the World’s Best Laptop Brand and Ranked Among the World’s Most Admired Companies In the spirit of our brand promise — In Search of Incredible — our product innovation, user recommendability, social responsibility, and sustainable practices have all continued to evolve, and have received international recognition and multiple prestigious awards. In 2020, ASUS was recognized as one of Fortune’s World’s Most Admired Companies, was honored as one of Taiwan’s most valuable 1 international brands by Taiwan’s Ministry of Economic Affairs through Interbrand, and was ranked as among the Clarivate Top 100 Global Innovators™ 2021. These are clear signals that our innovation capabilities, brand value, and brand spirit are highly esteemed internationally. In terms of product and brand, ASUS won 26 Red Dot Design Awards, 15 Good Design Awards, and 27 Taiwan Excellence Awards in 2020, in addition to being recognized by the prestigious U.S.-based Laptop Mag as the world’s best laptop brand of 2020 — with full scores or the world’s highest scores in terms of product reviews, innovation, design, and value and selection. User-centric Design Thinking and Innovation in Products and Smart Applications With users at the forefront, ASUS is vigorously implementing a number of product innovations, including the ZenBook Pro Duo dual-screen laptop, which was praised as a “killer innovation” by Laptop Mag; the smart, innovative Z490 series motherboards; the Zephyrus G14 gaming laptop with trendy customizable lighting effects; the

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