Topics

Factors

Risk Scenarios

Mitigation Strategies

Low-Carbon Transition Risk

• Changing customer requirements
• Taiwan carbon fee levies
• 2050 net-zero emission requirements
• Mandatory reporting requirements

Driven by global net-zero carbon requirements and the implementation of Taiwan's carbon fee system, failure to meet customer decarbonization demands in a timely manner or accurately report emissions poses the risk of carbon costs eroding gross profit margins and losing international orders.

Additionally, physical threats from extreme weather could cause plant shutdowns or surging energy costs, endangering operational continuity.

• Continuously execute "autonomous energy-saving measures" and expand solar power generation installations at self-owned plants, achieving an autonomous carbon reduction of 272,458 kg CO₂e and 2,069.3 GJ in 2025.
• Develop and promote energy-saving and carbon-reducing products, assisting governments and enterprises in jointly advancing net-zero emissions.
• Implement the ISO 14001 Environmental Management System and conduct greenhouse gas emission assurance to ensure data transparency in carbon management.
• Follow the TWSE "Plan for Implementing IFRS Sustainability Disclosure Standards" to implement climate-related risk and opportunity disclosures, and conduct financial impact evaluations under climate scenarios.

Supply Chain and Trade Barriers

• Supply chain disruptions
• Raw material procurement
• Carbon Border Adjustment Mechanism (CBAM)
• Tax governance*

Geopolitical instability may lead to key raw material procurement disruptions or an increased burden from international carbon taxes (CBAM). In April 2025, the U.S. imposed reciprocal tariffs; failure to promptly execute tax governance and production ratio adjustments would cause export products to lose price competitiveness, severely impacting overseas market layout.

• Signed corporate social responsibility commitment letters with a cumulative total of 393 key suppliers, and regularly conducted supplier carbon footprint inventory educational training (13 participating companies in 2025).
• Launched tariff emergency response measures, convening a risk response project meeting during the routine morning meeting in April 2025 to gather senior executives from various business groups, the Chief Sustainability Officer, and Corporate Governance Officer to inventory potential impacts and draft preliminary countermeasures.
• Utilized cross-strait division of labor and production flexibility at the Vietnam manufacturing base to dynamically adjust overseas order origin allocation, mitigating trade barriers and geopolitical risks.
• Established backup supply chain plans to alleviate the impact of raw material restrictions or shortages, while maintaining close communication with customers to jointly address tariff impacts.
• Reduced economic dependence on a single market or country to avoid the impact of sales share contraction caused by geopolitical and economic fluctuations

Digital Transformation and Cybersecurity Risk

• Information security

With the deepening of smart factory operations and AI applications, cybersecurity has transformed into a core threat to business continuity. Experiencing large-scale cyberattacks or data breaches would not only paralyze production lines, but also result in hefty legal compensation and a breakdown of customer trust.

• Obtained ISO 27001 and TISAX certifications and underwent regular third-party audits; planned to engage a secondary expert to conduct a NIST CSF cybersecurity maturity assessment.
• Conducted vulnerability scans on core information systems and penetration testing on external websites annually, continuously automating the collection and tracking of the latest threat intelligence.
• Deployed EDR/MDR (24-hour expert monitoring and response) across core systems to strengthen antivirus capabilities and unknown threat detection, while implementing key service protection using firewalls and other equipment.
• Implemented file access permission settings, ensuring account passwords comply with strong password principles.
• Continuously deepened cybersecurity defense management and regularly conducted cybersecurity educational training (including IT cybersecurity briefings and social engineering drills) to enhance employee risk prevention awareness.

R&D and Innovation

• R&D and patents

The heavy electrical equipment industry is undergoing rapid technical shifts. If the speed of R&D and patent deployment falls behind competitors, or if new technologies are not converted into low-carbon products in a timely manner, the Company faces the threat of losing market advantage and product obsolescence.

• Maintained a stable output of patents annually, accumulating 385 valid patent certificates, and built a patent protection wall across power electronics and electrical motor drive sectors.
• Recruited high-tech industry elites and developed forward-looking products such as customized hollow motors tailored to new industry demands including semiconductors, CoWoS, and AI immersion server cooling.
• Maintained international quality management system certifications including ISO 9001 and IATF 16949, implementing rigorous testing procedures from R&D design to mass production.