REALTEK SEMICONDUCTOR CORP. 2020 Annual Report
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TSE Code: 2379 REALTEK SEMICONDUCTOR CORP. 2020 Annual Report The annual report is available at: I. Taiwan Stock Exchange Market Observation Post System: https://mops.twse.com.tw II. Realtek website for annual report: https://www.realtek.com Printed Date: April 28, 2021 Notice to Readers: This annual report has been prepared originally in Chinese. The English version is a direct translation of the Chinese version. I. Spokesperson: Name: Huang, Yee-Wei Title: Vice President Deputy Spokesperson: Name: Lin, Han-Chen Title: Special Assistant to President Tel: (03) 578-0211 Email: [email protected] II. Headquarters Address: No. 2, Innovation Road II, Hsinchu Science Park, Hsinchu 300, Taiwan Tel: (03) 578-0211 III. Transfer Agent: Company: CTBC BANK CO., LTD. Transfer Agency Department Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Taipei City 100, Taiwan. Website: www.ctbcbank.com Tel: (02) 6636-5566 IV. Auditor of the latest financial report: Auditors: Lin, Yu-Kuan & Tsang, Kwok-Wah Company: PricewaterhouseCoopers' Address: 5F., No. 2, Gongye E. 3rd Rd., Hsinchu Science Park, Hsinchu 300, Taiwan Website: www.pwc.com.tw Tel: (03) 578-0205 V. GDR listed stock exchange and the way to search for information: Name: Luxembourg Stock Exchange Please refer to the Luxembourg Stock Exchange official website for Realtek GDR Price. Website: www.bourse.lu VI. Company website: www.realtek.com -ii- ii Table of Contents Letter to Shareholders ..................................................................................................................................... 1 Company Introduction .................................................................................................................................... 4 I. Date of Establishment .................................................................................................................................. 4 II. Company Milestones .................................................................................................................................. 4 Corporate Governance Report ....................................................................................................................... 9 I. Organization ................................................................................................................................................. 9 II. Information of Directors and Officers ...................................................................................................... 11 III. Corporate Governance ............................................................................................................................. 22 IV. Information Regarding Audit Fees .......................................................................................................... 53 V. Replacement of Independent Auditors ..................................................................................................... 54 VI. If the Company’s Chairman, President, Managers in charge of finance or accounting operations held positions within the auditor’s firm or its affiliates during last year, the name, title, and period of holding positions should be disclosed: None ......................................................................................... 55 VII. Share transfer or share pledge of Directors, Officers and major shareholders holding more than 10% shares from last year to the date of the annual report printed. ............................................................... 56 VIII. The relationship between any of the Company’s top ten shareholders: ............................................... 57 IX. The consolidated shareholdings and percentage of investments held by the Company, Directors, Officers, and the companies controlled directly or indirectly by the Company. .................................... 58 Capital Raising ............................................................................................................................................... 59 I. Source of Capital ........................................................................................................................................ 59 II. Structure of Shareholders .......................................................................................................................... 59 III. Distribution of Shareholding ................................................................................................................... 60 IV. List of Major Shareholders ...................................................................................................................... 60 V. Market price, net worth, earning, and dividends per common share and related information over the last two years ................................................................................................................................................. 61 VI. Dividend Policy and Status of Execution ................................................................................................ 62 VII. Impact to business performance and EPS resulting from stock dividend distribution: None. ......... 62 VIII. Employees’ Compensation and Remuneration to Directors ................................................................. 62 IX. Status of Treasury Stocks: None ............................................................................................................. 64 X. Status of Corporate Bonds: None .............................................................................................................. 64 XI. Status of Preferred Stocks: None ............................................................................................................. 64 XII. Status of GDR ........................................................................................................................................ 65 XIII. Status of Employee Stock Warrants: None .......................................................................................... 65 XIV. Status of Employee Restricted Stocks: None ........................................................................................ 65 XV. Status of Mergers or Acquisitions, or as assignee of new shares issued by other companies: None ..... 65 XVI. Status of Implementation of Fund Utilization Plan: Not Applicable .................................................... 65 -iii- iii Operations Overview ..................................................................................................................................... 66 I. Business Overview ..................................................................................................................................... 66 II. Marketplace and Production Overview .................................................................................................... 83 III. Employees ............................................................................................................................................... 90 IV. Environmental Expenses ......................................................................................................................... 90 V. Labor Relations ......................................................................................................................................... 90 VI. Significant Agreements ........................................................................................................................... 93 Financial Status, Operating Results and Status of Risk Management ..................................................... 94 I. Financial Status .......................................................................................................................................... 94 II. Operational Results ................................................................................................................................... 95 Unit: NT$ thousands ...................................................................................................................................... 95 III. Cash Flow ................................................................................................................................................ 96 IV. Impact on Financial and Business associated with Major Capital Expenditures in recent years: None. 96 V. Investment Policies in recent years, the reasons for losses and plans to improve for next year: ............. 96 VI. Risk Items ................................................................................................................................................ 97 VII. Other Material Events: None. .............................................................................................................. 101 Special Items ................................................................................................................................................. 102 I. Information of Affiliated Companies ...................................................................................................... 102 II. Significant events with impact on shareholders’ rights or stock price regulated in Article 36-3-2 of the Securities and Exchange Act happened during last year to the date of the annual report printed: None .............................................................................................................................................................. 111 III. Acquisition or disposal of Realtek shares by subsidiaries during last year to