OPERATING RESULTS The following discussion of our business, financial condition, and results of operations should be read in conjunction with our consolidated financial statements, which are included elsewhere in this annual report. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of any number of factors, such as those set forth under “Item 3. Key Information—Risk Factors” and elsewhere in this annual report. See “Special Note Regarding Forward-Looking Statements.” Please refer to our Form 20-F filed with the Securities and Exchange Commission on March 27, 2025 (File No. 001-16125) for our discussion of financial information and operating results for 2024. 57 Table of Contents Overview We offer a broad range of semiconductor packaging and testing services, and we offer EMS through USI Group. In addition to offering each service separately, we also offer turnkey services, which include integrated packaging, testing, and direct shipment of semiconductors to end users designated by our customers and solution-based proactive original design manufacturing. In addition, we have been generating revenues from our real estate business and the manufacturing of integrated circuits. Discussed below are several factors that have had a significant influence on our financial results in recent years. Pricing and Revenue Mix We price our services taking into account the actual costs involved in providing these services, with consideration of prevailing market prices. The majority of our prices and revenues is denominated in U.S. dollars. Any significant fluctuation in exchange rates, especially between NT dollars and U.S. dollars, will affect our costs and, in turn, our revenues. In the case of semiconductor packaging, the cost of the silicon die, typically the most costly component of the packaged semiconductor, is usually not reflected in our costs (or revenues) since it is generally supplied by our customers on a consignment basis. The semiconductor industry is characterized by a general trend toward declining prices for products and services of a given technology over time. In addition, during periods of intense competition and adverse conditions in the semiconductor industry, the rate of this decline may be more rapid than in other years. The average selling prices of our packaging and testing services have experienced sharp declines during such periods as a result of intense price competition from other market participants that attempt to maintain high-capacity utilization levels in the face of reduced demand. Declines in average selling prices have been partially offset by changes in our revenue mix, and typically the selling price is largely dependent on the complexity of the services. Revenues derived from more advanced package types, such as flip chip BGA, higher-density packages with finer lead-to-lead spacing, or pitch, and testing of more complex, high-performance semiconductors have particularly increased as a percentage of total revenues. We intend to continue our focus on package types such as bumping, flip chip BGA and SiP, developing and offering new technologies in packaging and testing services, and expanding our capacity to achieve economies of scale, as well as improving production efficiencies for older technologies, in order to mitigate the effects of declining average selling prices on our profitability. Our profitability for a specific package type does not depend linearly on its average selling price. Some of our more traditional package types, which typically have low average selling prices, may well command steadier and sometimes higher margins than more advanced package types with higher average selling prices. High Fixed Costs Our operations, in particular our testing operations, are characterized by relatively high fixed costs. We expect to continue to incur substantial depreciation and other expenses, especially from our acquisitions of packaging and testing equipment and facilities. Our profitability depends in part not only on absolute pricing levels for our products/services, but also on utilization rates on equipment, commonly referred to as “capacity utilization rates.” Increases or decreases in our capacity utilization rates could have a significant effect on gross margins since the unit cost of our products and/or services generally decreases as fixed costs are allocated over a larger number of units. The capacity utilization rates of the machinery and equipment installed at our production facilities typically depend on factors such as the volume and variety of products, the efficiency of our operations in terms of the loading and adjustment of machinery and equipment for different products, the complexity of the different products to be packaged or tested, the amount of time set aside for the maintenance and repair of the machinery and equipment, and the experience and schedule of work shifts of operators. 58 Table of Contents In 2024 and 2025, our depreciation, amortization, and rental expenses included in operating costs as a percentage of operating revenues was 9.1% and 9.6%, respectively. The increase in depreciation, amortization, and rental expenses as a percentage of operating revenues in 2025 compared to 2024 was primarily a result of increased capital expenditures. In general, these costs do not decline when customer demand or our capacity utilization rates drop. A relatively modest increase or decrease in revenue can have a significant effect on our operating margins and on depreciation, amortization, and rental expenses as a percentage of revenue. We begin depreciating our equipment when the machinery is placed into service. There may sometimes be a time lag between when our equipment is available for use and when it achieves high levels of utilization. In particular, the capacity utilization rates for our testing equipment are more severely affected during an industry downturn as a result of a decrease in outsourcing demand from IDMs, which typically maintain larger in-house testing capacity than in-house packaging capacity. In addition to purchasing testers, we also lease a portion of our testers, which we believe allows us to better manage our capacity utilization rates and cash flows. Since leased testers can be replaced with more advanced testers upon the expiration of the lease, we believe that these leases have enabled us to improve our capacity utilization rates by allowing us to better align our capacity with changes in equipment technology and the needs of our customers. For more information about our testers, see “Item 4. Information on the Company—Business Overview—Equipment—Testing.” Raw Material Costs Substantially all of our raw material costs are accounted for by packaging, the production of interconnect materials, and EMS. Our EMS in particular requires more significant quantities of raw materials than our packaging and production of interconnect materials. In 2025, raw material costs accounted for 78.7% of our operating revenues from EMS, and our revenues generated from EMS contributed to 39.9% of our operating revenues. In 2024 and 2025, raw material cost as a percentage of our operating revenues was 51.5% and 48.4%, respectively. We have developed copper wire to gradually replace gold wire in the packaging processes in order to benefit from the lower material cost of copper. However, gold wire is still and will continue to be one of the principal raw materials for our packaging processes. It may be difficult for us to adjust our average selling prices to account for fluctuations in the price of gold. Thus, we expect our raw material costs to continue to be affected by fluctuations in the price of gold. Recent Accounting Pronouncements Please refer to Note 3 to our consolidated financial statements included in this annual report. Critical Accounting Estimates Impairment of goodwill. We only monitor goodwill for financial reporting purposes, not for internal management purposes. Therefore, goodwill is allocated to the cash-generating units for evaluation of impairment: packaging segment, testing segment, EMS segment and other segment. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The calculation of the value in use requires management to estimate the future cash flows expected to be generated from the cash-generating units and use a suitable discount rate in order to calculate the present value. Where changes in facts and circumstances result in downward revision of future cash flows or upward revision of discount rates, a material impairment loss may arise. An impairment charge is incurred to the extent the carrying amount exceeds the recoverable amount. These estimates change from year-to-year based on operating results, semiconductor industry market conditions, as well as other factors and could materially affect the determination of the value in use of each cash-generating unit. In evaluation of goodwill for impairment annually, we perform evaluation of goodwill for impairment by reviewing the recoverable amounts based on value in use which incorporates cash flow projections estimated by management covering a five-year period. The cash flows beyond that five-year period are extrapolated using a steady per annum growth rate. In assessing value in use, the estimated future cash flows are discounted to their present value using annual pre-tax discount rates which were 11.96%-13.81% in 2025. The key assumption used in calculating each segment’s value in use also included the growth rates for operating revenues, which were based on the forecast for us and the industry as well as our historical performance. 59 Table of Contents We considered a sensitivity analysis of revenues growth achievement and expected return on capital expenditures to support the assumptions and to test the reasonableness of value in use of cash-generating unit, and also considered the terminal growth rate and the weighted average cost of capital. The results of the sensitivity analyses in the assumptions did not cause the carrying amount of goodwill to exceed the recoverable amount. For the years ended December 31, 2023 and 2024, no impairment loss was recognized. Based on the assessment, as the actual operating results of other cash-generating units did not meet expectations and the recoverable amounts had fallen below their carrying amounts, a goodwill impairment loss of NT$132.8 million (US$4.2 million) was recognized in the first half of 2025. As of December 31, 2025, we had goodwill of NT$52,541.9 million (US$1,674.9 million). Our conclusion could, however, change in the future if actual results differ from our estimates and judgments are made under different assumptions and conditions. See notes 4, 5 and 18 to our consolidated financial statements included in this annual report for further information. Results of Operations The following table sets forth, for the periods indicated, selected financial data from our consolidated statements of comprehensive income. $ $ $ $ $ $ $ Year Ended December 31, 2023 2024 2025 NT$ Percentage NT$ Percentage NT$ US$ Percentage (in millions, except percentages) Operating revenues 581,914.5 100.0% 595,409.6 100.0% 645,387.7 20,573.4 100.0% Operating costs (490,157.4) (84.2)% (498,477.8) (83.7)% (531,194.8) (16,933.2) (82.3)% Gross profit 91,757.1 15.8% 96,931.8 16.3% 114,192.9 3,640.2 17.7% Operating expenses (51,429.4) (8.8)% (57,765.4) (9.7)% (63,437.4) (2,022.2) (9.8)% Other operating income and expenses, net 1,321.8 0.1% 1,172.6 0.2% 665.3 21.2 0.1% Profit from operations 41,649.5 7.1% 40,339.0 6.8% 51,420.8 1,639.2 8.0% Non-operating income and expenses, net 962.3 0.2% 1,394.4 0.2% (117.7) (3.8) 0.0% Profit before income tax 42,611.8 7.3% 41,733.4 7.0% 51,303.1 1,635.4 8.0% Income tax expense (5,304.0) (0.9)% (7,916.5) (1.3)% (10,106.7) (322.2) (1.6)% Profit for the year 37,307.8 6.4% 33,816.9 5.7% 41,196.4 1,313.2 6.4% Attributable to Owners of the Company 35,457.9 6.1% 32,378.9 5.4% 40,015.7 1,275.6 6.2% Non-controlling interests 1,849.9 0.3% 1,438.0 0.3% 1,180.7 37.6 0.2% 37,307.8 6.4% 33,816.9 5.7% 41,196.4 1,313.2 6.4% Other comprehensive income (loss) for the year, net of income tax 449.4 0.1% 13,638.3 2.3% (3,617.2) (115.3) (0.6)% Total comprehensive income for the year 37,757.2 6.5% 47,455.2 8.0% 37,579.2 1,197.9 5.8% Attributable to Owners of the Company 36,020.6 6.2% 45,203.1 7.6% 36,688.2 1,169.5 5.7% Non-controlling interests 1,736.6 0.3% 2,252.1 0.4% 891.0 28.4 0.1% 37,757.2 6.5% 47,455.2 8.0% 37,579.2 1,197.9 5.8% 60 Table of Contents The following table sets forth, for the periods indicated, earnings per Common Share and ADS. Year Ended December 31, 2023 2024 2025 Earnings per Common Share (NT$)(1): Basic 8.25 7.50 9.22 Diluted 8.04 7.20 8.75 Earnings per equivalent ADS (NT$)(1): Basic 16.51 14.99 18.44 Diluted 16.08 14.40 17.49 Number of Common Shares (in million shares)(2): Basic 4,295.9 4,319.0 4,341.2 Diluted 4,347.7 4,392.0 4,429.6 Number of equivalent ADSs (in million shares)(3) Basic 2,147.9 2,159.5 2,170.6 Diluted 2,173.8 2,196.0 2,214.8 (1) The denominators for diluted earnings per Common Share and diluted earnings per equivalent ADS are calculated to account for the potential diluted factors, such as employees’ compensation, the exercise of options, and the issuance of employee restricted stock awards. (2) Represents the weighted average number of shares after retroactive adjustments to give effect to stock dividends. Common shares held by consolidated subsidiaries are classified as “treasury stock,” and are deducted from the number of Common Shares outstanding. (3) For the computation of earnings per ADS, the denominators were the half of the aforementioned weighted average outstanding shares (one ADS represents two ordinary shares). The following table sets forth, for the periods indicated, segment results. Gross margin is calculated by dividing gross profit by their respective operating revenues. $ $ $ $ $ $ $ Year Ended December 31, 2023 2024 2025 NT$ Percentage NT$ Percentage NT$ US$ Percentage (in millions, except percentages) Operating revenues: Packaging 256,805.9 44.1% 261,731.4 44.0% 308,342.6 9,829.2 47.8% Testing 49,879.9 8.6% 54,561.5 9.2% 71,900.2 2,292.0 11.1% EMS 268,218.0 46.1% 271,293.3 45.6% 257,192.7 8,198.7 39.9% Gross profit: Packaging 52,571.0 20.5% 56,345.8 21.5% 68,294.0 2,177.0 22.1% Testing 15,303.2 30.7% 16,195.0 29.7% 22,315.6 711.4 31.0% EMS 23,203.1 8.7% 24,259.0 8.9% 23,556.7 750.9 9.2% The following table sets forth, for the periods indicated, a breakdown of our total operating costs and operating expenses, expressed as a percentage of operating revenues. Year Ended December 31, 2023 2024 2025 Operating costs Raw materials 53.3% 51.5% 48.4% Labor 10.4% 10.8% 11.3% Depreciation, amortization and rental expense 9.0% 9.1% 9.6% Others 11.5% 12.3% 13.0% Total operating costs 84.2% 83.7% 82.3% Operating expenses Selling and marketing 1.1% 1.3% 1.1% General and administrative 3.3% 3.6% 3.6% Research and development 4.4% 4.8% 5.1% Total operating expenses 8.8% 9.7% 9.8% 61 Table of Contents Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Operating Revenues. Operating revenues increased by 8.4% to NT$645,387.7 million (US$20,573.4 million) in 2025 from NT$595,409.6 million in 2024, primarily due to higher sales in our packaging and testing business. Revenues from our export sales, based on the country in which the customer is headquartered, were NT$506,134.7 million and NT$529,419.5 million (US$16,876.6 million) in 2024 and 2025, respectively, which contributed 85.0% and 82.0% of our total sales for those years. Packaging revenues increased by 17.8% to NT$308,342.6 million (US$9,829.2 million) in 2025 from NT$261,731.4 million in 2024. Testing revenues increased by 31.8% to NT$71,900.2 million (US$2,292.0 million) in 2025 from NT$54,561.5 million in 2024. The increase in packaging and testing revenues was primarily driven by growing demand in our leading-edge advanced packing services and testing business. Revenues from our EMS business decreased by 5.2% to NT$257,192.7 million (US$8,198.7 million) in 2025 from NT$271,293.3 million in 2024, primarily due to the slow recovery of general communication and automotive products. Gross Profit. Gross profit increased by 17.8% to NT$114,192.9 million (US$3,640.2 million) in 2025 from NT$96,931.8 million in 2024. Our gross profit as a percentage of operating revenues, or gross margin, was 17.7% in 2025 compared to 16.3% in 2024, which was primarily as a result of higher packaging and testing revenue mix and higher factory utilization of our packaging and testing equipment, offset in part by the appreciating NT dollars and higher utility costs. Our operating costs consist primarily of raw material costs and labor costs as well as depreciation, amortization, and rental expenses, as well as factory supplies. Raw material costs in 2025 were NT$312,260.7 million (US$9,954.1 million) compared to NT$306,359.2 million in 2024, primarily due to the changes in our product mix. As a percentage of operating revenues, raw material costs decreased to 48.4% in 2025 from 51.5% in 2024. Labor costs in 2025 were NT$73,128.2 million (US$2,331.2 million) compared to NT$64,267.7 million in 2024, primarily due to higher employee headcount, especially in our packaging business. As a percentage of operating revenues, labor cost increased to 11.3% in 2025 from 10.8% in 2024. Depreciation, amortization, and rental expenses in 2025 were NT$62,030.1 million (US$1,977.4 million) compared to NT$54,253.9 million in 2024. As a percentage of operating revenues, depreciation, amortization, and rental expenses increased to 9.6% in 2025 from 9.1% in 2024, primarily attributed to continuing investment in production capacity for advanced technologies. Our gross margin for packaging and testing business increased to 23.8% in 2025 from 22.9% in 2024, which was primarily attributable to higher factory efficiency, offset in part by the appreciating NT dollars. Our gross margin for EMS business increased to 9.2% in 2025 from 8.9% in 2024. Profit from Operations. Profit from operations increased by 27.5% to NT$51,420.8 million (US$1,639.2 million) in 2025 compared to NT$40,339.0 million in 2024. Our profit from operations as a percentage of operating revenues increased to 8.0% in 2025 from 6.8% in 2024, primarily due to the increased gross profit, partially offset by higher labor related expenses. General and administrative expenses increased by 8.0% to NT$23,181.0 million (US$739.0 million) in 2025 from NT$21,467.2 million in 2024. General and administrative expenses as a percentage of our operating revenues was 3.6% in both 2025 and 2024. Research and development expenses increased by 13.9% to NT$32,851.5 million (US$1,047.2 million) in 2025 compared to NT$28,830.3 million in 2024. Research and development expenses as a percentage of our operating revenues was 5.1% in 2025 compared to 4.8% in 2024. Selling and marketing expenses decreased by 0.8% to NT$7,404.9 million (US$236.1 million) in 2025 from NT$7,467.8 million in 2024. Selling and marketing expenses as a percentage of operating revenues was 1.1% in 2025 compared to 1.3% in 2024. The increases in the operating expenses were primarily due to our research and development activities to meet the rising demand for leading-edge advanced packaging services and higher labor related costs, including salary, employee bonus and profit sharing expenses in relation to business performance, as well as costs related to share-based payment arrangements. We had a net other operating income of NT$665.3 million (US$21.2 million) in 2025 compared to NT$1,172.6 million in 2024. The decrease was primarily due to lower rental and royalty income and higher impairment loss, partially offset by higher gain on disposal of property, plant and equipment. Non-Operating Income and Expenses. We had a net non-operating expense of NT$117.7 million (US$3.8 million) in 2025 compared to a net non-operating income of NT$1,394.4 million in 2024. The changes in net non-operating income and expenses were primarily due to a decrease in gain on our foreign exchange hedging activities and an increase in finance costs. 62 Table of Contents Net Profit. Net profit, excluding non-controlling interests, increased by 23.6% to NT$40,015.7 million (US$1,275.6 million) in 2025 compared to NT$32,378.9 million in 2024. Our diluted earnings per ADS increased to NT$17.49 (US$0.56) in 2025 compared to NT$14.40 in 2024. Our income tax expenses increased by 27.7% to NT$10,106.7 million (US$322.2 million) in 2025 compared to NT$7,916.5 million in 2024. This increase was primarily attributed to higher taxable income, withholding tax, as well as an increases in additional income tax imposed on unappropriated earnings in the R.O.C. and Pillar Two income tax. In relation to the SPIL Acquisition, we identified the difference between investment cost and our share of net fair value of SPIL’s identifiable assets and liabilities, or PPA effects of SPIL Acquisition, which caused the increase in the total of NT$4,193.7 million and NT$2,955.5 million (US$94.2 million), of which an increase of NT$3,191.8 million and NT$1,955.5 million (US$62.3 million) to depreciation and amortization in operating costs, NT$1,000.0 million and NT$1,000.0 million (US$31.9 million) to amortization in operating expenses, and NT$1.9 million and nil to other operating income and expenses, net in 2024 and 2025, respectively. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For a detailed description of the comparison of our operating results for the year ended December 31, 2024 to the year ended December 31, 2023, please refer to “Item 5. Operating and Financial Review and Prospects— Operating Results and Trend Information—Results of Operations—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” of our annual report on Form 20-F filed with the Securities and Exchange Commission on March 27, 2025. Quarterly Operating Revenues, Gross Profit and Gross Margin The following table sets forth our unaudited consolidated operating revenues, gross profit, and gross margin for the quarterly periods indicated. The unaudited quarterly results reflect all adjustments, consisting of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the amounts, on a basis consistent with the audited consolidated financial statements included elsewhere in this annual report. You should read the following table in conjunction with the audited consolidated financial statements and related notes included elsewhere in this annual report. Our operating revenues, gross profit, and gross margin for any quarter are not necessarily indicative of the results for any future period. Our unaudited quarterly operating revenues, gross profit and gross margin may fluctuate significantly. Quarter Ended, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, 2024 2024 2024 2024 2025 2025 2025 2025 NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ (in millions, except percentages) Operating Revenues Packaging 59,458.4 62,834.2 69,154.2 70,284.6 68,411.5 73,659.6 79,806.3 86,465.2 Testing 12,101.8 12,622.9 14,123.9 15,712.9 16,004.4 16,612.3 18,420.5 20,863.0 EMS 59,326.1 62,852.5 74,871.3 74,243.4 61,859.8 58,373.7 68,404.5 68,554.7 Others 1,916.6 1,928.4 1,955.7 2,022.7 1,877.6 2,104.7 1,937.6 2,032.3 Total 132,802.9 140,238.0 160,105.1 162,263.6 148,153.3 150,750.3 168,568.9 177,915.2 Gross Profit (Loss) Packaging 12,142.0 13,528.9 15,329.1 15,345.8 14,466.8 15,712.6 17,119.1 20,995.5 Testing 3,221.4 3,436.9 4,348.2 5,188.5 4,956.7 4,424.2 5,429.8 7,504.9 EMS 5,397.8 5,969.5 6,753.5 6,138.2 5,486.3 5,519.2 6,335.4 6,215.8 Others 60.0 118.9 (5.0) (41.9) (17.1) 31.5 (7.5) 19.7 Total 20,821.2 23,054.2 26,425.8 26,630.6 24,892.7 25,687.5 28,876.8 34,735.9 Gross Profit (%) Packaging 20.4% 21.5% 22.2% 21.8% 21.1% 21.3% 21.5% 24.3% Testing 26.6% 27.2% 30.8% 33.0% 31.0% 26.6% 29.5% 36.0% EMS 9.1% 9.5% 9.0% 8.3% 8.9% 9.5% 9.3% 9.1% Overall 15.7% 16.4% 16.5% 16.4% 16.8% 17.0% 17.1% 19.5% 63 Table of Contents Our results of operations are affected by seasonality. In general, our first quarter operating revenues have historically decreased over the preceding fourth quarter, primarily due to the combined effects of holidays in the U.S., Taiwan, and elsewhere in Asia. Moreover, the changes in operating revenues of a particular quarter as compared with the immediately preceding quarter varies significantly. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and ADSs.” Exchange Rate Fluctuations Fluctuations in the exchange rate between NT dollars and U.S. dollars will affect the U.S. dollar equivalent of the NT dollar price of our Common Shares on the TWSE and, as a result, will likely affect the market price of ADSs. Fluctuations will also affect the U.S. dollar conversion by the depositary under our ADS deposit agreement referred to below of cash dividends paid in NT dollars on, and the NT dollar proceeds received by, the depositary from any sale of Common Shares represented by ADSs, in each case, according to the terms of the deposit agreement dated April 30, 2018, Citibank N.A. as depositary, and the holders and beneficial owners from time to time of ADSs, which we refer to as the deposit agreement. For quantitative and qualitative disclosure of our exposure to foreign currency exchange rate risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Market Risk—Foreign Currency Exchange Rate Risk.” Taxation We have filed a consolidated corporate income tax return and a consolidated undistributed earnings tax for all qualified domestic subsidiary companies with the tax authority in accordance with the Article 45 of the R.O.C. Business Mergers and Acquisitions Act. The corporate income tax rate and tax rate on unappropriated earnings in the R.O.C. are 20% and 5%, respectively. We were entitled to tax credits under the R.O.C. Statute for Industrial Innovation Act for qualifying research and development expenses related to innovation activities, but the amount of tax credit is limited to only up to 15% of the total research and development expenses for the year, subject to a cap of 30% of the income tax payable for the year in which the expenses were incurred. Moreover, we are eligible for tax credits under amendment to the Article 10-1 of the R.O.C. Statute for investments in smart machinery, 5G mobile networks, and cyber security products/services, with expenditure of more than NT$1 million and under NT$1 billion in the same taxable year. We can select to claim the tax credit within three years using a 3% tax credit rate or within the current year using a 5% tax credit rate, subject to a cap of 30% of the income tax payable for the year in which the expenses were incurred. In addition, effective from January 1, 2023, we are eligible for tax credits under amendment to the Article 10-2 of the R.O.C. Statute for qualifying research and development expenses related to innovation activities and possess a leading position in global supply chain, but the amount of tax credit is limited to up to 25% of the total qualifying research and development expenses, and up to 5% on acquisition of machinery and equipment used in advanced manufacturing processes, both of which are subjected to a cap of 30% of the income tax payable for the fiscal year. The total amount of tax credits shall not exceed 50% of the income tax payable for the fiscal year. We apply for investment credits to increase effects of tax benefits. The R.O.C. government enacted the alternative minimum tax (the “AMT”) Act, which is a supplemental income tax which is taxable if the amount of regular income tax calculated pursuant to the R.O.C. Income Tax Act and relevant laws and regulations is below the amount of basic tax prescribed under the R.O.C. AMT Act. The taxable income for calculating the AMT includes most sources of income that are exempted from income tax under various legislations such as investment tax credits. However, there are grandfathered treatments for the tax holidays approved by the tax authority before the AMT Act took effect. The AMT rate for us is generally 12%. Under the amendment to the R.O.C. Statute of Industrial Innovation, amounts of unappropriated earnings from 2018 onward used for investments such as constructing or purchasing buildings, qualified equipment and technology may qualify for deductions when computing income tax on unappropriated earnings. To qualify, the accumulated amount of investments should exceed NT$1 million and the investments should be completed within 3 years after the year in which the earnings were generated. The investment amount calculated from the undistributed earnings for the year in accordance with the provisions of Article 66-9 of the R.O.C. Income Tax Act may be listed as a deduction item. We have only deducted the amount of capital expenditure from the unappropriated earnings that has been reinvested when calculating the tax on unappropriated earnings for tax reporting purposes. However, we did not deduct such investment amounts from the undistributed earnings in calculation of income tax on unappropriated earnings in 2024 and 2025 for financial reporting purposes. 64 Table of Contents In addition, we are subject to the R.O.C. Controlled Foreign Company (“CFC”) rules, which were enacted in 2016 and took effect on January 1, 2023, pursuant to which certain profits retained at a CFC located in a low-tax jurisdiction and without commercial substance would be taxed in advance at the Taiwan parent company level, subject to certain exemptions. Our non-R.O.C. subsidiaries are subject to taxation in their respective jurisdiction. Some of our P.R.C. subsidiaries qualified as high technology enterprises were entitled to a reduced income tax rate of 15% and were eligible to deduct certain research and development expenses from their taxable income. In 2021, the OECD issued administrative guidance for the Pillar Two Global Anti-Base Erosion rules (“Pillar Two”), which generally imposes a 15% global minimum tax on multinational companies. We are within the scope of Pillar Two model rules. We analyze the potential implications of the application of the Pillar Two rules, including evaluating whether the requirements in each jurisdiction qualify as income taxes, and as of the date of this annual report, there are no material impact on our income tax expense. We continue to monitor Pillar Two developments. In 2025, our effective income tax rate increased to 19.70% from 18.97% in 2024, primarily due to higher taxable income and higher withholding tax, as well as the increased additional income tax imposed on unappropriated earnings in the R.O.C and Pillar Two income tax. We believe that our future estimated taxable income will be sufficient to utilize our deferred tax assets recorded as of December 31, 2025. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2025, our primary source of liquidity was NT$92,468.9 million (US$2,947.7 million) of cash and cash equivalents and NT$7,754.2 million (US$247.2 million) of financial assets – current, consisting mainly of swap contracts, forward exchange contracts, quoted shares, open-end mutual funds, and convertible notes. As of December 31, 2025, we had total unused credit lines of NT$400,617.0 million (US$12,770.7 million). As of December 31, 2025, we had working capital of NT$65,315.9 million (US$2,082.1 million). As of December 31, 2025, we had total debts of NT$272,944.9 million (US$8,700.8 million), of which NT$43,328.3 million (US$1,381.2 million) were short-term debts, NT$6,687.8 million (US$213.2 million) were current portions of long-term debts, NT$8,848.1 million (US$282.0 million) were lease liabilities (including current and non-current), and NT$214,080.7 million (US$6,824.4 million) were long-term debts. In 2025, the maximum amount of our short-term and current portion of long-term debts was NT$88,265.5 million (US$2,813.7 million) and the average amount of our short-term and current portion of long-term debts was NT$74,287.3 million (US$2,368.1 million). The fluctuation was primarily because our working capital balance periodically fluctuated during 2025. The annual interest rate for short-term bank loans and current hedging financial liabilities ranged from 1.70% to 8.04% during the year ended December 31, 2025. Our short-term debts consist of bank loans, bills payable and hedging financial liabilities. Our short-term bank loans are primarily revolving facilities with a term of one year, each of which may be extended on an annual basis with lender consent. Our long-term debts consist of bonds payable and bank loans. Our long-term and current portion of bonds payable and bank loans typically carried variable annual interest rates which ranged from 1.70% to 4.48% in the year ended December 31, 2025. For the maturity information and interest rates by currencies, see “Item 11—Quantitative and Qualitative Disclosures about Market Risk—Market Risk—Interest Rate Risk.” We operate in a capital-intensive industry. Serving our current and future customers may require that we incur additional operating expenses and make significant investments in equipment and facilities, which may increase our exposure to payment obligations. We may consider making substantial investments to expand our manufacturing capabilities and technology advancements, which may lead to an increase in our funding requirements. We have historically been able to satisfy our working capital needs from our cash flow from operations. We have also historically funded our capacity expansion from internally generated cash and, to the extent necessary, the issuance of equity securities and borrowings. To the extent we do not generate sufficient cash flow from our operations to meet our cash requirements, we will have to rely on external financing. If adequate funds are not available on satisfactory terms, we may be forced to curtail our expansion plans. Moreover, our ability to meet our working capital needs from cash flow from operations will be affected by the demand for our packaging services, testing services, and EMS, which in turn may be affected by several factors. Many of these factors are outside of our control, such as economic downturns and declines in the prices of our services or products caused by a downturn in the industry. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our operating results are subject to significant fluctuations, which could adversely affect the market value of our Common Shares and ADSs.” We have provided a portion of our assets, with a carrying value of NT$52,372.2 million (US$1,669.5 million) as of December 31, 2025, as collateral to secure our obligations under our bank borrowings, tariff guarantees of imported raw materials, or collateral. 65 Table of Contents Cash Flows Year Ended December 31, 2023 2024 2025 NT$ NT$ NT$ US$ (in millions) Capital expenditures (54,158.2) (79,521.9) (164,642.5) (5,248.4) Net cash flows generated from (used in): Operating activities 114,421.8 90,787.8 142,249.3 4,534.6 Investing activities (55,122.0) (83,908.7) (165,644.3) (5,280.3) Financing activities (49,101.0) (7,271.2) 45,269.1 1,443.1 Net cash generated from operating activities amounted to NT$142,249.3 million (US$4,534.6 million) in 2025, primarily from (i) our operating performance with a profit before income tax of NT$51,303.1 million (US$1,635.4 million), (ii) our non-cash items of depreciation and amortization of NT$67,439.8 million (US$2,149.8 million), and (iii) net changes in working capital of NT$31,094.7 million (US$991.2 million), partially offset by the income tax payment of NT$7,108.6 million (US$226.6 million) and interest payment of NT$7,870.2 million (US$250.9 million). Net cash generated from operating activities amounted to NT$90,787.8 million in 2024, primarily from (i) our operating performance with a profit before income tax of NT$41,733.4 million, (ii) our non-cash items of depreciation and amortization of NT$59,815.2 million, and (iii) net changes in working capital of NT$2,290.9 million, partially offset by the income tax payment of NT$9,072.6 million and interest payment of NT$6,419.1 million. The increase in net cash generated from operating activities in 2025 compared to 2024 was primarily due to higher net income and higher cash inflows resulting from our business activities. Net cash used in investing activities amounted to NT$165,644.3 million (US$5,280.3 million) in 2025, primarily due to our net payment for property, plant and equipment of NT$162,149.4 million (US$5,168.9 million). Net cash used in investing activities amounted to NT$83,908.7 million in 2024, primarily due to our net payment for property, plant and equipment of NT$78,613.9 million. The increase in net cash used in investing activities in 2025 compared to 2024 was primarily due to the increased capital expenditures for semiconductor manufacturing equipment and facilities. Payments for property, plant and equipment can fluctuate based on the timing of the purchase, receipt and acceptance of the equipment. Net cash generated from financing activities amounted to NT$45,269.1 million (US$1,443.1 million) in 2025. This amount comprised net proceeds from short-term and long-term bank loans, bills payable, and bonds payable in the amount of NT$67,0472.8 million (US$2,137.2 million), partially offset by payments of cash dividends of NT$23,034.0 million (US$734.3 million) in 2025. Net cash used in financing activities amounted to NT$7,271.2 million in 2024. This amount comprises net proceeds from short-term and long-term bank loans, bills payable, and bonds payable in the amount of NT$16,486.8 million, partially offset by payments of cash dividends of the NT$22,459.4 million in 2024. The changes were primarily due to the higher net proceeds from long-term borrowings. Contractual Obligations The following table sets forth the maturity of our contractual obligations as of December 31, 2025. Payments due to period Total Less than 1 Year 1 to 3 Years 3 to 5 Years More than 5 Years (in NT$ millions) Short-term debts(1) 43,526.2 43,526.2 - - - Long-term debts(2) 234,600.3 12,776.9 155,178.1 60,264.9 6,380.4 Lease obligations(3) 11,614.1 1,180.9 1,646.4 1,402.3 7,384.5 Capital purchase obligations(4)(5)(6) 69,143.3 69,143.3 - - - Other purchase obligations 87.9 29.3 58.6 - - Total(7)(8)(9) 358,971.8 126,656.6 156,883.1 61,667.2 13,764.9 (1) Short-term borrowings and bills payable, including interest payments. (2) Long-term and current portion of borrowings, and bonds payable (before addition of unamortized premiums), including interest payments. 66 Table of Contents (3) Represents our commitments under leases liabilities and imputed interest which are mainly from land and buildings and improvements. See Note 16 to our consolidated financial statements included in this annual report. (4) Represents material commitments to purchase machinery and equipment of approximately NT$71,954.6 million (US$2,293.7 million), of which NT$2,811.3 million (US$89.6 million) had been paid as of December 31, 2025. (5) Excludes material commitments for construction of approximately NT$63,293.4 million (US$2,017.7 million), of which NT$17,751.1 million (US$565.9 million) had been paid as of December 31, 2025, since the schedule of payments is difficult to determine. (6) Excludes material commitments for the construction related to our real estate business of approximately NT$200.6 million (US$6.4 million), of which NT$98.4 million (US$3.1 million) had been paid as of December 31, 2025, since the schedule of payments is difficult to determine. (7) Excludes material commitments for purchasing renewable energy. As part of the normal course of business, we have entered into multiple long-tern agreements to purchase renewable energy under different terms and conditions. The amounts to be paid will be based on the actual volumes of electricity to be generated by the power generation equipment specified in the agreements. Our payment obligations under the agreements are difficult to determine. (8) Excludes our unfunded defined benefit obligation since the schedule of payments is difficult to determine. Under defined benefit pension plans, we made pension contributions of approximately NT$584.6 million (US$18.6 million) in 2025, and we estimate that we will contribute approximately NT$640.7 million (US$20.4 million) in 2026. See note 23 to our consolidated financial statements included in this annual report. (9) Excludes uncertain tax liabilities. We recognized additional taxes payable of NT$298.2 million (US$9.5 million) and accrued interest and penalties of NT$20.3 million (US$0.6 million) related to uncertain tax positions as of or for the year ended December 31, 2025. Because we were unable to make a reasonable estimate of the timing of the tax audits, such balances were not included in the table. As of December 31, 2025, we were not in breach of any of the financial covenants under our existing loan agreements. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Restrictive covenants and broad default provisions in our existing debt agreements may materially restrict our operations as well as adversely affect our liquidity, financial condition, and results of operations.” As of December 31, 2025, we had no contingent obligations, which normally consist of guarantees provided by us to our subsidiaries. Capital Expenditures Our capital expenditures for the years ended December 31, 2023, 2024, and 2025 for property, plant, and equipment were NT$48,758.7 million, and NT$96,207.5 million, and NT$171,616.5 (US$5,470.7 million), respectively. We are adaptable to changing customer needs and will be able to expand our footprint to other countries and regions as needed in the future. Any future expansion of our operating activities could result in additional capital expenditures. We anticipate our capital expenditures in 2026 will be financed through existing cash, expected cash flow from operations, and existing credit lines under our loan facilities and will consist of, among other things, additional machinery and equipment procurements for our capacity expansions. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources” for more information. We have made, and expect to continue to make, substantial capital expenditures in connection with the expansion of our production capacity. The table below sets forth our principal capital expenditures incurred for the years indicated. 67 Table of Contents Year Ended December 31, 2023 2024 2025 NT$ NT$ NT$ (in millions) Land and land improvements 424.1 3,931.9 561.7 Building and improvements 19,948.2 31,982.7 65,042.5 Machinery and equipment 28,386.4 60,292.9 106,012.3 Total 48,758.7 96,207.5 171,616.5 We had commitments for capital expenditures of approximately NT$135,248.0 million (US$4,311.4 million), of which NT$20,562.4 million (US$655.5 million) had been paid as of December 31, 2025, primarily in connection with the expansion of our operations. We may adjust our capital expenditures based on market conditions, the progress of our expansion plans, and cash flow from operations. Due to the rapid changes in technology in the semiconductor industry, we frequently need to invest more in land, buildings, factories as well as machinery and equipment, which may require us to raise additional capital. As we are responsive to changing customer needs and could expand our footprint to other countries and regions if needed in the future, we cannot ensure that we will be able to raise additional capital should it become necessary on terms acceptable to us, or at all. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—If we are unable to obtain sufficient funding in a timely manner or on acceptable terms, our results of operations and financial conditions may be materially and adversely affected.” We believe that our cash and cash equivalents, short-term investments, expected cash flow from operations, and existing credit lines under our loan facilities will be sufficient to meet our capital expenditures, purchase commitments, working capital, cash obligations under our existing debts and lease arrangements, and other business requirements associated with existing operations, over the next twelve months and beyond. We currently hold cash primarily in U.S. dollars, RMB, NT dollars, Korean Won, Japanese yen, and EUR. As of December 31, 2025, we had contractual obligations of NT$283,539.7 million (US$9,038.6 million) due in the next three years. We expect to meet our payment obligations through the expected cash flow from operations, long-term borrowings, and the issuance of additional equity. We will continue to evaluate our capital structure periodically and may decide to increase or decrease our financial leverage through equity offerings or borrowings. The issuance of additional equity securities may result in additional dilution to our shareholders. We regularly evaluate possible investments, acquisitions, or divestments and may, if a suitable opportunity arises, make an investment, acquisition, or divestment. Our exposure to financial market risks relates primarily to changes in foreign currency exchange rates that arise from ordinary business operations. To mitigate these risks, we utilize derivative instruments. All derivative transactions entered into by us were designated as either hedging or trading. We have sometimes entered into interest rate swap transactions to hedge our interest rate exposure. In addition, we have sometimes entered into forward exchange contracts, swap contracts, cross-currency swap contracts, and foreign currency options contracts to hedge our existing assets and liabilities denominated in foreign currencies. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and Notes 7, 8 and 34 to our consolidated financial statements included in this annual report. RESEARCH AND DEVELOPMENT For 2024 and 2025, our research and development expenses totaled approximately NT$28,830.3 million and NT$32,851.5 million (US$1,047.2 million), respectively. These expenses represented approximately 4.8% and 5.1% of operating revenues in 2024 and 2025, respectively. As of December 31, 2025, we had a research and development team of 14,258 employees. We cultivate and maintain a research and development engineering team that continuously surveys and adapts to the latest trends in technology. Our research and development activities are primarily directed toward optimizing relevant technologies in key components, manufacturing processes, and product development. Our research and development objectives are to enhance the performance of our products and drive greater business growth. To incentivize innovation and encourage our employees to engage in research and development, we offer cash rewards to employees that contribute significantly to our research efforts. 68 Table of Contents Packaging We centralize our research and development efforts in packaging technology in our Kaohsiung and Taichung facilities in Taiwan. After initial phases of development, we conduct pilot runs in one of our facilities before new technologies or processes are implemented commercially at other sites. Facilities with special product expertise, such as ASE Korea, also conduct research and development of these specialized products and technologies at their sites. One of the areas of emphasis for our research and development efforts is improving the efficiency and technology of our packaging processes, and these efforts are expected to continue. We are also investing significant research and development efforts into the development and adoption of innovative technology. We work closely with manufacturers of our packaging equipment and materials in designing and developing the equipment and materials used in our production process. We also collaborate with our significant customers to jointly develop new product and process technologies. In addition to investing in the development of more advanced packaging technology and improving production efficiency, some portion of our research and development efforts is focused on the development of IC substrate. Substrate is the principal raw material for BGA packages. Development and production of IC substrates involve complex technology. We are currently working closely with certain first-tier substrate suppliers in Asia, primarily including those located in Japan, Taiwan, Korea, and the P.R.C. We believe that our successful cooperation with substrate suppliers to enhance overall substrate production capability and meet future package requirements has enabled us to capture an increasingly important value-added component of the packaging process and helped ensure a stable and cost-effective supply of substrates for our BGA packaging operations and shortened time to market. Testing Our research and development efforts in testing have focused primarily on developing advanced package testing solutions for HPC, mm Wave, SiP, silicon photonics, and optical sensor modules; characterization of semiconductors, layout design and electrical simulation for high-frequency test board and developing software of parametric test data analysis. With the maturity of advanced processes, reliability becomes increasingly significant. We have developed a high-power cooling system that contains “package test handler” and “burn in” to improve the reliability of products for customers. We also develop WiFi6e/Wifi7 low-cost test technology, optical communication, and millimeter wave test technology to meet the development needs of today’s wireless communication technology. Besides working closely with our customers on the leading-edge test technologies, our research and development operations also include an equipment development group, which currently designs testing hardware and software for specific semiconductors to offer our customers cost-effective test solutions. EMS To further enhance the quality of our services and products and increase competitiveness, we focus on developing diversified and innovative products. By leveraging our proprietary research and development expertise, we are able to optimize our product design, engineering, and manufacturing capabilities to provide our customers with high-performance and cost-effective products and services. During the process of designing, as well as developing, the technology for our software and hardware, our research and development team also dedicates itself to discovering new information and applying it to create new, advanced, and improved products, processes, methodology, and services. We are currently investing in the development of products used in EMS in relation to computing products and peripherals, communications, consumer products, automotive, industrial, and server applications. TREND INFORMATION Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2025 to December 31, 2025 that are reasonably likely to have a material effect on our operating revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to not be indicative of future operating results or financial conditions. SAFE HARBOR Please see the section entitled “Special Note Regarding Forward-Looking Statements.” 69 Table of Contents