The derivative instruments used by us were to mitigate risks arising from ordinary business operations. Our risk management department monitored risks to mitigate risk exposures, and reported unsettled positions, transaction balances, and related gains or losses to our chief financial officer on monthly basis. See Note 34 to our consolidated financial statements included in this annual report for details. Market Risk Our exposure to financial market risks relates primarily to changes in foreign currency exchange rates. Gains or losses arising from fluctuations in foreign currency exchange rates of a variety of derivative financial instruments were approximately offset by those of hedged items. Interest rate risk was not significant as the cost of capital was expected to be fixed. Interest Rate Risk. Our exposure to interest rate risks relates primarily to our borrowings with floating rates, which are normally incurred to support our corporate activities and capital expenditures. We utilized financing instruments with low interest rates and favorable terms to maintain low financing costs and adequate banking facilities, as well as to hedge interest rate risk. For assets and liabilities with floating interest rates, a 100-basis point increase or decrease was used when reporting interest rate risk internally to key management personnel. If interest rates had been 100 basis points (1%) higher or lower and all other variables held constant, our profit before income tax for the year ended 2025 would have decreased or increased approximately by NT$1,833.0 million (US$58.4 million). The tables below set forth information relating to our short-term and long-term bank loans, bills payable, and bonds payable as of December 31, 2025. Expected Maturity Date Expected Maturity Date 2026 2027 2028 2029 2030 Thereafter Total Fair Value (in millions, except percentages) Short-term: Variable rate (NT$) 14,708.0 - - - - - 14,708.0 14,708.0 Average interest rate 2.00% - - - - - 2.00% - Fixed rate (NT$) 3,800.0 - - - - - 3,800.0 3,800.0 Average interest rate 1.78% - - - - - 1.78% - Variable rate (US$) 402.0 - - - - - 402.0 402.0 Average interest rate 4.29% - - - - - 4.29% - Fixed rate (US$) 63.5 - - - - - 63.5 63.5 Average interest rate 4.14% - - - - - 4.14% - Variable rate (RMB) 2.6 - - - - - 2.6 2.6 Average interest rate 2.09% - - - - - 2.09% - Fixed rate (RMB) 6.7 - - - - - 6.7 6.7 Average interest rate 2.60% - - - - - 2.60% - Variable rate (EUR) 2.3 - - - - - 2.3 2.3 Average interest rate 3.27% - - - - - 3.27% - Fixed rate (EUR) 272.5 - - - - - 272.5 272.5 Average interest rate 2.49% - - - - - 2.49% - Long-term: Variable rate (NT$) 1,104.6 47,374.0 7,788.1 29,088.7 25,116.7 0.2 110,472.3 110,472.3 Average interest rate 0.85% 1.74% 1.57% 1.94% 1.99% 1.65% 1.83% - Fixed rate (NT$) 3,500.0 3,150.0 - 1,500.0 - - 8,150.0 8,150.0 Average interest rate 1.03% 1.28% - 1.78% - - 1.26% - Variable rate (US$) - 2,496.2 - - - - 2,496.2 2,496.2 Average interest rate - 4.02% - - - - 4.02% - Variable rate (RMB) 287.6 295.8 386.9 459.0 291.4 1,197.4 2,918.1 2,918.1 Average interest rate 1.81% 1.89% 1.93% 1.97% 1.97% 0.28% 1.25% - Fixed rate (RMB) - 2,043.5 - - - - 2,043.5 2,043.5 Average interest rate - 1.80% - - - - 1.80% - Fixed rate (EUR) 21.8 15.2 - - - - 37.0 37.0 Average interest rate 1.99% 2.08% - - - - 2.03% - 97 Table of Contents Foreign Currency Exchange Rate Risk. Our foreign currency exposure gives rise to market risk associated with exchange rate movements against the NT dollar, our functional currency. Currently, the majority of our revenues and a significant portion of our capital expenditures are denominated in U.S. dollars. In contrast, our operating costs and operating expenses are primarily incurred in NT dollars, U.S. dollars, RMB, Japanese yen, Korean won, and EUR. The majority of our borrowings are denominated in NT dollars, U.S. dollars, EUR, and RMB. Fluctuations in exchange rates, primarily among the U.S. dollar and Japanese yen against the NT dollar, RMB, and EUR, will affect our costs and operating margins and could result in exchange losses and increased costs in NT dollar and other local currency terms. We use 1% fluctuation when reporting foreign currency exchange rate risk internally to key management personnel and it represents management’s assessment of reasonably possible changes in foreign currency exchange rates. The sensitivity analysis included financial assets and liabilities and intercompany receivables and payables within the Group. The changes in profit before income tax due to a 1% change in U.S. dollar and Japanese yen against NT dollar, RMB, and EUR would be NT$149.0 million (US$4.7 million) for the year ended December 31, 2025. Hedging contracts and hedged items have been considered while measuring the changes in profit before income tax. The abovementioned sensitivity analysis mainly focused on the foreign currency monetary items at each balance sheet date. As the year-end exposure did not reflect the exposure for the year ended December 31, 2025, the abovementioned sensitivity analysis was unrepresentative. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign currency exchange rates, we entered into a variety of nonderivative financial instruments and derivative financial instruments to minimize the impact of foreign currency fluctuations on our results of operations. Despite these hedging and mitigating techniques, fluctuations in exchange rates have affected, and may continue to affect, our financial condition and results of operations. Our hedging strategy was to lift borrowings denominated in foreign currencies to avoid exchange rate exposure from its investments in equity instruments denominated in foreign currencies (recognized under the line item of financial assets at FVTPL) and net investment in foreign subsidiary, USIFR, which has EUR as its functional currency. Those transactions were designated as fair value hedges and a hedge of net investment in foreign operation, respectively. Hedge adjustments were made to totally offset the foreign exchange gains or losses from those equity instruments denominated in foreign currencies and foreign operations when they were evaluated based on the exchange rates on each balance sheet date. The hedge ineffectiveness in these hedging relationships arose from the material difference between the notional amounts of borrowings denominated in foreign currencies and the original investments in equity instruments denominated in foreign currencies and net investment in foreign operations. No other source of ineffectiveness is expected to emerge from these hedging relationships. 98 Table of Contents The table below sets forth our outstanding forward exchange contracts and swap contracts, for which the expected maturity dates are in 2026, in aggregate terms by type of contract as of December 31, 2025. Forward Exchange Contracts Swap Contracts Buy US$ against NT$ Notional Amount US$250.0 million US$4,303.0 million Weighted Average Strike Price US$/NT$30.846 US$/NT$30.501 Fair Value US$5.334 million US$84.552 million Buy US$ against RMB Notional Amount US$18.0 million - Weighted Average Strike Price US$/RMB7.078 - Fair Value Negative US$0.133 million - Buy US$ against MXN Notional Amount US$16.0 million - Weighted Average Strike Price US$/MXN18.074 - Fair Value Negative US$0.016 million - Buy US$ against MYR Notional Amount - US$17.0 million Weighted Average Strike Price - US$/MYR4.116 Fair Value - Negative US$0.245 million Buy US$ against JPY Notional Amount - US$4.3 million Weighted Average Strike Price - US$/JPY148.785 Fair Value - US$0.206 million Buy JPY against RMB Notional Amount JPY165.0 million - Weighted Average Strike Price JPY/RMB0.046 - Fair Value Negative US$0.027 million - Sell US$ against EUR Notional Amount US$2.3 million - Weighted Average Strike Price US$/EUR0.860 - Fair Value US$0.024 million - Sell US$ against NT$ Notional Amount US$246.3 million US$69.2 million Weighted Average Strike Price US$/NT$31.324 US$/NT$31.178 Fair Value Negative US$0.922 million Negative US$0.366 million 99 Table of Contents Forward Exchange Contracts Swap Contracts Sell US$ against RMB Notional Amount US$569.7 million - Weighted Average Strike Price US$/RMB7.038 - Fair Value US$1.417 million - Sell US$ against JPY Notional Amount US$83.7 million - Weighted Average Strike Price US$/JPY155.008 - Fair Value Negative US$0.629 million - Sell US$ against MYR Notional Amount US$0.5 million - Weighted Average Strike Price US$/MYR4.050 - Fair Value Negative US$0.002 million - Sell US$ against SGD Notional Amount US$17.7 million - Weighted Average Strike Price US$/SGD1.290 - Fair Value US$0.076 million - Sell US$ against KRW Notional Amount US$21.6 million US$52.0 million Weighted Average Strike Price US$/KRW1461.044 US$/KRW1465.613 Fair Value US$0.403 million US$1.155 million Other Market Risk. We are exposed to equity price risk through investments in financial assets at FVTPL and financial assets at FVTOCI. The value of these investments may fluctuate based on various factors including prevailing market conditions. Moreover, the fair value of investments in unquoted securities may be significantly different from their carrying value. If equity price was 1% higher or lower, profit before income tax for the year ended December 31, 2025 would have increased or decreased approximately by NT$50.0 million (US$1.6 million) and other comprehensive income before income tax would have increased or decreased approximately by NT$126.0 million (US$4.0 million) for the same year. Furthermore, fluctuations in gold prices may also affect the price at which we have been able to purchase gold wire. How this will impact the results of our operations depends on whether such costs can be transferred to our customers.