Category: Governance

Cornerstone of Business Operation and Road to Excellence

Continued growth in 2022! 28% increase in group operating revenue

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WT’s operating revenue increased by 28%‭ ‬from NTD447.9‭ ‬billion in 2021‭ ‬to NTD571.2‭ ‬billion in 2022‭. ‬The net profit for 2022‭ ‬was NTD7.6‭ ‬billion‭, ‬and the after-tax EPS was about NT$8.61‭ ‬based on the weighted average number of shares‭.‬

Continuous optimization and upgrade in the semiconductor sector

Digital transformation has been accelerating since the pandemic began‭. ‬With sustainable development‭, ‬energy conservation‭, ‬and carbon reduction as the shared goals‭, ‬the semiconductor sector will maintain strong market potential in the long run‭. ‬Despite the‭ ‬challenges from macroeconomic uncertainties and inventory adjustments in the semiconductor sector in the short term‭, ‬WT will continue to develop high-growth products for applications such as third-generation semiconductors‭, ‬electric vehicles‭, ‬energy management‭, ‬green energy‭, ‬cloud data centers‭, ‬5G communications‭, ‬etc‭, ‬of which the rapid development also demands semiconductor components‭. ‬In addition to further developing high-growth product application markets and increasing the market share‭, ‬WT will carry on digital optimization to improve operational efficiency‭, ‬optimize operational management systems‭, ‬strengthen financial control‭ ‬systems‭, ‬and strengthen human resource management to enhance our ability to provide added value in the semiconductor industry chain‭, ‬and build the foundation for a sustainable corporate‭.‬

 

A dedicated division was set up to strengthen information security management

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In view of the growing importance of information security and increasingly rampant cyber attacks‭, ‬WT set up a dedicated Information Security Department and installed a Chief Information Security Officer at the level of deputy general manager in 2022‭. ‬The Department‭, ‬composed of one dedicated director and two dedicated personnel‭, ‬is responsible for information security incident investigations‭, ‬system vulnerabilities disclosure‭, ‬and new information security architecture evaluation and introduction‭, ‬etc‭. ‬The main tasks that have been completed are as follows‭:‬

  1. The ISO/IEC 27001:2013‭ ‬and CNS 27001:2014‭ ‬verifications were obtained in 2022‭ (‬valid until October 31‭, ‬2025‭), ‬and the threats and impacts posed by information security incidents were reduced through standardized and systematic control and management‭;‬
  2. A dedicated information security mailbox was set up to receive external information security notifications from customers‭, ‬suppliers‭, ‬integrated cyber threat intelligence providers‭, ‬information equipment suppliers‭, ‬service providers‭, ‬etc‭.‬
  3. A dedicated person was appointed to collect‭, ‬analyze and keep record of information on important information security news‭, ‬vulnerability releases‭, ‬zero-day attacks‭, ‬and vulnerability utilization trends‭, ‬and rate incidents for severity‭. ‬Incident severity levels have been internally defined‭. ‬The contact person in the information division keeps record of incidents‭, ‬and‭, ‬in the case of a major information security incident‭, ‬immediately notify the Chief Information Security Officer‭. ‬The Information Security Department must verify‭, ‬eliminate and resolve the information security incident within the target processing time‭. ‬After the handling is completed‭, ‬the Incident Response team‭ (‬IR team‭) ‬must conduct root cause analysis‭, ‬track and record the implementation effectiveness of corrective measures‭, ‬so as to continuously improve the intervention methods and prevent recurrence of similar incidents‭. ‬In addition‭, ‬information security incidents have been divided into four severity levels‭, ‬and their response mechanisms and‭ ‬standard operating procedures are formulated respectively to speed up the recovery time of information system services‭.‬

Information Security Management and Protection

Software‭, ‬hardware and network protection and monitoring

WT has a dedicated information security mailbox to receive external information security notifications from customers‭, ‬suppliers‭, ‬Taiwan Computer Emergency Response Team‭ (‬TWCERT‭), ‬information equipment suppliers‭, ‬service providers‭, ‬etc‭. ‬A dedicated person‭ ‬is also appointed to collect‭, ‬analyze and keep record of information on important information security news‭, ‬vulnerability releases‭, ‬zero-day attacks‭, ‬etc‭. ‬and rate incidents for severity‭. ‬Incident severity levels have been internally defined‭. ‬The contact‭ ‬person in the information division keeps a record of incidents‭, ‬and‭, ‬in the case of a major information security incident‭, ‬immediately notify the Chief Information Security Officer‭. ‬The Information Security Department must eliminate and resolve the information security incident within the target processing time‭. ‬After the handling is completed‭, ‬the Department must conduct root cause analysis‭, ‬track and record the implementation of corrective measures‭, ‬verify their effectiveness‭, ‬and use Plan-Do-Check-Act‭ (‬PDCA‭) ‬for continuous improvement and recurrence prevention‭.‬

10‭ ‬tips to improve personal cybersecurity

System backup and information security incident management

Backup and recovery plan in case of malicious intrusion

WT has comprehensive network and computer-related information security protection measures in place‭. ‬Nevertheless‭, ‬no matter how‭ ‬perfect the protection measures are‭, ‬they cannot 100%‭ ‬guarantee that the Company’s core system is safe from black swan or gray‭ ‬rhino incidents‭. ‬Therefore‭, ‬our top priority is to increase the Company’s resilience and ensure the system can be quickly brought back to operation‭. ‬Therefore‭, ‬in addition to further investing in information security software and hardware‭, ‬we continue to strengthen our continuous operation capabilities‭, ‬so that the Company’s operations can be resumed in the shortest time in the event of an information security incident‭.‬

Information security capabilities was further improved to equip the Company with first-class operating capabilities

WT’s operation is based on continuous delivery capability‭. ‬WT is committed to providing products and services that meet confidentiality‭, ‬integrity and usability requirements‭. ‬In order to be a first-class enterprise in the sector‭, ‬we apply and introduce international information security frameworks‭, ‬and continuously strengthens the security control measures to ensure a high level of‭ ‬information security protection capabilities‭. ‬We therefore constantly evaluate the information security protection mechanism from point‭, ‬line and plane‭, ‬and develop different technical combinations to shorten the system recovery time‭. ‬In addition‭, ‬information security management system verification and red team exercises‭, ‬etc‭. ‬were introduced to review and upgrade the system with‭ ‬the assistance of independent organizations‭. ‬In 2022‭, ‬a number of external power outages happened unexpectedly‭. ‬As a precaution‭ ‬against unexpected power outages‭, ‬WT conducted a power supply abnormality exercise to ensure that emergency generators can be activated immediately and normal operation of the facilities and systems can be maintained‭. ‬After the exercise‭, ‬it was confirmed that the emergency response procedures were appropriate and all the facilities and systems were in normal operation‭.‬

 

By strengthening information security and employees‭’ ‬security awareness‭, ‬there were no sensitive information leakage or major information service interruption incidents‭, ‬nor financial losses caused to customers or suppliers in 2022‭.‬

Information security concerns of stakeholders were addressed

Through annual routine information security self-assessment questionnaires returned from our customers and suppliers‭, ‬information security management evaluations conducted by the competent authorities‭, ‬and inquiries raised on specific information security‭ ‬topics‭, ‬the questions and concerns we heard from the customers in 2022‭ ‬were mainly about the handling of major vulnerabilities‭, ‬security controls and measures‭, ‬ISO 27001‭ ‬certification‭, ‬information security management for sustainable operation‭, ‬etc‭. ‬The Information Security Department has answered all the questions to meet stakeholders‭’ ‬expectations and requirements‭.‬

Strengthened risk control and self-monitoring to adapt to market conditions

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Board Composition and Functions

WT has established a corporate governance structure to manage the company’s business in accordance with the Company Act‭, ‬the Securities and Exchange Act and other relevant laws and regulations of the Republic of China‭. ‬We have been strengthening the company’s performance and responsibility‭, ‬and balancing the interests between stakeholders in pursuit of long-term interests of shareholders‭.Under the Board of Directors‭, ‬there are Audit Committee‭, ‬Remuneration Committee and Risk Management Committee‭. ‬The Risk Management Committee is composed of three Independent Directors‭, ‬the Chairman and the Chief Financial Officer‭. ‬Its role is to review risk management policies and management reports on major risk issues‭, ‬oversee corrective measures‭, ‬and routinely report the implementation of risk management to the Board of Directors‭.‬

 

In May 2019‭, ‬the Board of Directors appointed Kerry Hsu‭, ‬senior vice president‭, ‬as the head of corporate governance‭, ‬responsible‭ ‬for organizing the meeting schedule and agenda of the Board of Directors and shareholder meetings‭, ‬assisting directors in their‭ ‬training plans‭, ‬providing directors with information needed to perform duties in compliance with laws and regulations‭, ‬and disseminating information to directors on a regular or occasional basis‭, ‬depending on the topic‭, ‬to strengthen corporate governance‭ ‬functions‭.‬

Diverse Board with more than 40%‭ ‬of the directors being women

The Board of Directors is WT’s highest governance body‭. ‬The tenth terms of Board was elected on May 20‭, ‬2022‭, ‬is composed of four Directors and three Indepentent Directors‭. ‬In order to strengthen the sound development of corporate governance‭, ‬the policy of‭ ‬diversity is implemented in accordance with the Corporate Governance Best Practice Principles formulated by WT‭. ‬Of the Board Members‭, ‬there are three Independent Directors‭ (‬43%‭), ‬three female Directors‭ (‬43%‭), ‬and two Directors are employees‭ (‬29%‭). ‬In addition‭, ‬four of the current directors are aged from 51‭ ‬to 60‭ ‬years old‭, ‬one‭ ‬from 61‭ ‬to 70‭ ‬years old‭, ‬and two from 71‭ ‬to 80‭ ‬years old‭. ‬For the implementation of the Board Member diversity policy‭, ‬please visit the corporate governance section of the WT official website‭.‬

The Board of Directors meets at least once a quarter to monitor the achievement of the Company’s operational goals and performance‭, ‬provide strategic guidance to the management team‭, ‬and oversee the Company’s compliance with laws and regulations to ensure‭ ‬the best interests of shareholders‭. ‬In fiscal 2022‭, ‬the directors‭’ ‬in person attendance rate at the thirteen Board meetings was‭ ‬98.9%‭ ‬on average‭, ‬and the Independent Directors‭’ ‬was 100%‭. ‬Conflicts of interest with directors are avoided in accordance to the‭ ‬provisions of Article 15‭ ‬of WT’s Rules of Produre for Board of Directors‭’ ‬Meeting‭. ‬Meeting items involving a director’s interests are disclosed in the annual reports‭, ‬with the names of the director involved‭, ‬the content of the item‭, ‬and the reasons for avoiding conflicts of interest‭. ‬In addition‭, ‬information such as‭  ‬the existence of a controlling shareholder‭, ‬and related party transactions are all disclosed in the annual report to avoid or reduce the possibility of conflicts of interest‭.‬

 

For information on the diversity of the Board of Directors‭, ‬the Audit Committee‭, ‬the Remuneration Committee and the Risk Management Committee‭, ‬including the members‭’ ‬age range‭, ‬experience‭, ‬tenure‭, ‬as well as information on their in-person attendance rate at the Board meetings‭, ‬status of continuing training and education‭, ‬and how conflicts of interest have been avoided or handled in‭ ‬2022‭, ‬please see Chapter Three Report on Corporate Governance in the Annual Report 2022‭.‬

 

Basis for effectiveness assessment of the Board of Directors and the functional committees

In order to implement corporate governance‭, ‬improve the function of the Board of Directors‭, ‬and establish performance goals to strengthen the operational efficiency of the Board of Directors‭, ‬WT has formulated the Rules for Board of Directors Performance Assessments‭ ‬in 2016‭, ‬which clearly stipulates that the Board of Directors and the functional committees should routinely conduct internal self-assessment every year‭. ‬An assessment evaluation must also be preformed once every three years by an external professional independent organization or an external team of experts and scholars‭. ‬The assessment results must be reported to the Board of Directors‭, ‬and be used as a reference to determine individual directors‭’ ‬remuneration payment and nomination for the Board re-election‭.‬

Internal Self-Assessment

The internal self-assessment questionnaires for the entire Board of Directors‭, ‬individual members of the Board of Directors‭, ‬individual members of the Audit Committee and individual members of the Remuneration Committee for the year 2022‭ ‬were completed in‭ ‬January 2023‭. ‬The results indicated that the Board of Directors and the functional committees were functioning well‭.‬

External Assessment

In 2020‭, ‬an external professional organization‭, ‬the Taiwan Institute of Ethical Business‭, ‬was commissioned to conduct the effectiveness assessment of the Board of Directors for 2020‭. ‬The Institute and its executive experts have no business dealings with WT‭ ‬and thus are independent‭. ‬The assessment was conducted through document review‭, ‬questionnaires and on-site interviews in four major aspects‭, ‬including the Board’s professional functions‭, ‬decision-making effectiveness‭, ‬attention to and oversight of internal controls‭, ‬and attitude toward corporate social responsibility‭. ‬The assessment recommended that the communication improve between the Board and the management team and the Board pay more attention to corporate social responsibility issues‭ (‬known now as sustainability issues‭). ‬In response to the recommendations‭, ‬the corporate governance department took the initiative to collect questions raised by individual Directors and pass them on to the management team‭. ‬When necessary‭, ‬relevant managers were invited to‭ ‬attend the Board meeting to explain to the Directors‭.‬

Rigorous internal audit to ensure fairness and impartiality

In WT Microelectronics, the Internal Audit Department (referred to as “the Department” hereunder) is an independent unit under the Board of Directors. The appointment and dismissal of the company’s internal audit supervisor are approved by the Audit Committee and passed by the Board of Directors. The appointment/dismissal, evaluation/review, salary/compensation of internal auditors of the Company are handled in accordance with the Corporate Governance Best Practice Principles ,shall be submitted by the chief internal auditor to the Board Chairperson for approval and to evaluation and review at least once a year.

 

The purpose of internal audits is to assist the Board of Directors and managers in inspecting and reviewing defects in the internal control systems, measure operational effectiveness and efficiency, and to make timely recommendations for improvements to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction.

Implement self-monitoring to strengthen the system

The Department shall implement regular auditing based on the annual audit plan, which is passed by the Board of Directors and based on the identified risks‭. ‬The Department shall also implement special audit plans separately based on actual needs‭. ‬After implementing each audit‭, ‬the Department shall present the audit reports and follow-up reports‭, ‬and submit them for review by the Audit Committee before the prescribed statutory date‭. ‬The officer of the Department shall attend and deliver a report on the situation of each audit plan to a regular board meeting‭.‬

 

The Department shall supervise all internal departments and subsidiaries to conduct self-assessments‭  ‬once a year and implement‭ ‬the company’s self-monitoring mechanism‭. ‬The Department shall adjust the design and implementation of the internal control system in a timely manner in response to changes in the environment.The Departments shall review the self-inspection reports and evaluate the overall efficacy of all internal control systems to serve as the primary basis for the Board of Directors and General‭ ‬Manager to produce Internal Control System Statements‭.‬

The global corporate governance philosophy of transparency and anti-corruption has been followed

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Integrity is WT’s most important core value and business philosophy‭. ‬Employees must abide by clear moral standards and code of conduct‭, ‬and do their utmost to fulfill our commitments to shareholders‭, ‬banks‭, ‬customers‭, ‬employees‭, ‬vendors and other suppliers‭, ‬and ensure that the rights and interests of all stakeholders are in balance‭.‬

 

In 2020‭, ‬WT formulated the Social Policy and Code of Conduct‭, ‬United Nations Anti-Corruption Policy‭, ‬and United Nations Sustainable Development Goals Policy in line with global corporate governance and anti-corruption concepts and frameworks‭, ‬including Responsible Business Alliance Code of Conduct‭, ‬the UN Global Compact‭, ‬the International Labor Standards‭, ‬the OECD Guidelines for Multinational Corporations‭, ‬etc‭.‬

 

WT has always believed that Social Policies and Code of Conduct are core requirements for conducting all operational activities‭ ‬in order to gain a competitive advantage and to do the right thing‭. ‬The high ethical standards of all members of the leadership‭ ‬team not only inspire employees‭’ ‬confidence in the Company’s operations‭, ‬but also create a supportive working environment for employees‭. ‬The Social Policies and Code of Conduct are also principles for Members of the Board‭, ‬all employees‭, ‬group subsidiaries‭, ‬independent contractors‭, ‬suppliers and all those who deal with WT‭.‬

 

In the past five years‭, ‬WT has not directly or indirectly donated to political activities‭, ‬political parties/associations/NGOs or politics-related organizations‭, ‬individual politicians or other voting/referendum initiatives‭, ‬and the amount of political donations was NT$0‭. ‬Likewise‭, ‬it did not lobby for specific issues or engage in interest group activities‭.‬

 

In order to improve the ethical corporate management, the HR, Legal and Auditing Office jointly formed an Ethical Management Team, the chief human resources officer serve as the leader of the team, decentralizing the formulation and supervision of ethical corporate management policies and preventive measures based on the work responsibility and scope of each unit, to ensure the implementation of the Ethical Corporate Management Best Practice Principles.

 

In order to implementation of ethical corporate management, WT establish mechanisms for assessing the risk of unethical conduct, periodically analyze and assess operating activities within the scope of business with relatively high risk of unethical conduct, establish comprehensive and effective control mechanisms in accounting and internal control systems to prevent potential business activities and operational procedures that may involve higher levels of dishonest behavior. The internal audit team also prioritizes high-risk operations for annual audit plans based on risk assessments to strengthen preventive measures, and reports on the actual implementation of audit plans to regular board meetings. In addition, through annual self-assessment of internal control operations, all departments and subsidiaries of the company are required to self-examine their internal control systems to ensure the effectiveness of their design and implementation.

 

The Ethical Management Team reports the implementation of ethical corporate management in the previous year to the Board of Directors every year. The Ethical Management Team reported to the Board of Directors on January 6, 2023, including Ethical Values and Business Practice Principles training、risk assessment results and whistleblowing for any violation of the code of conduct, etc., to assist the Board of Directors in assessing whether the ethical corporate management measures established by the Company is operating effectively.

WT has formulated the Ethical Corporate Management Best Practice Principles‭, ‬Procedures for Ethical Management and Guidelines for Conduct‭, ‬Codes of Ethical Conduct‭, ‬and Supplier Code of Conduct‭, ‬which the Board of Directors has passed by resolution‭. ‬They are publicized in the Corporate Governance section of the Company’s official website and the Intranet in Traditional Chinese‭, ‬Simplified Chinese and English‭. ‬Information on Ethical Values and Professional Code of Conduct and Insider Trading Prevention Education and Advocacy are made available on the Intranet for all employees‭’ ‬reference‭. ‬In addition‭, ‬relevant personnel are also appointed to participate in lectures and symposiums held by industrial associations or professional groups‭, ‬so as to strengthen the‭ ‬Group’s ethical operation policies‭.‬

 

In order for all employees to fully understand and abide by the applicable regulations and standards‭, ‬relevant on-board training‭ ‬is given to new hires‭, ‬and refresher training is conducted routinely for all in-service employees of the entire Group every year‭. ‬At the start of the 2022‭ ‬refresher training on Ethical Values and Code of Conduct‭, ‬2,532‭ ‬employees across the Group were in-service and thus required to take the course‭. ‬All of them have completed the course and passed the test‭ (‬100%‭ ‬pass rate‭). ‬In 2022‭, ‬a total of 1,956‭ ‬hours of ethical operation training‭, ‬including those given in on-board training for new hires‭, ‬were given to‭ ‬an accumulated attendance of 3,309‭ ‬persons‭, ‬with 100%‭ ‬completion rate‭.‬

 

In terms of contracting company employees, contractors are required to conduct regular training on integrity behavior every year regarding the company’s confidential information, personal data, and avoidance of improper advantage. If the employees become aware of (or suspects) any violation of ethical values and code of conduct, it should be reported to the contractor supervisor and forwarded to WT. WT takes good measures to keep the whistleblower confidential so that he or she will not be maliciously retaliated or harmed for reporting. After reviewing relevant training records, 100% of employees of contracting companies in Taiwan have completed ethical training in 2022.

 

WT’s whistleblower channels include an internal whistleblower mailbox and a whistleblower section on the official website for whistleblowers to report illegal conduct of company personnel‭. ‬The Ethical Operation Management Team is responsible for accepting reports‭, ‬opening cases‭, ‬forwarding them to the heads of relevant units for investigation‭, ‬and following them up until the cases are‭ ‬closed‭. ‬The identity of the whistleblower‭, ‬the content of the report‭, ‬and the investigation process are all kept confidential‭. ‬A‭ ‬complete record of the case acceptance‭, ‬investigation process‭, ‬and results is kept for five years‭.‬

 

In 2022‭, ‬five reports were accepted and handled‭. ‬No serious corruptive activities were found‭. ‬Nevertheless‭, ‬the investigation of‭ ‬one of the cases determined that the employee had indeed violated professional ethics‭, ‬and the employee was therefore dismissed‭ ‬in accordance with the Group’s internal punishment regulations‭.‬

 

An independent hotline and dedicated mailbox have been set up for sexual harassment complaints‭. ‬In order to protect the rights and interests of the complainant‭, ‬a complaint is accepted and handled in a confidential manner‭. ‬The name of the complainant or other relevant information sufficient to identify the complainant will not be disclosed‭. ‬The handling process and information of a‭ ‬complaint case are documented in writing‭, ‬and kept in a sealed archive for five years‭. ‬In 2022‭, ‬no sexual harassment complaints‭ ‬were received‭.‬

 

WT seeks to promote honest and ethical conduct‭, ‬deter illegal conduct‭, ‬and abide by all applicable laws and regulations of the places where it operates‭. ‬As of the end of 2022‭, ‬there were neither violations of laws and regulations in economic aspects‭ (‬such‭ ‬as investment‭, ‬securities‭, ‬taxation‭, ‬etc‭.), ‬environmental aspects‭ (‬pollution-related violations‭, ‬such as air pollution‭, ‬waste water‭, ‬waste‭, ‬etc‭.), ‬or social aspects‭ (‬such as labor regulations‭, ‬human rights‭, ‬disabling injuries‭, ‬etc‭.), ‬nor resulting punishments imposed by the competent authorities‭. ‬The numbers of violations and the amount of penalty were both NTD 0‭.‬

WT has zero tolerance for corruption and has a whistleblower mechanism in place

WT offers transparent and accessible whistleblower channels‭. ‬The channels have been made known through on-board training‭, ‬in-service refresher training‭, ‬answers to suppliers‭’ ‬or customers‭’ ‬questionnaires‭, ‬etc‭. ‬WT encourages all employees to blow the whistle without hesitation when they found a violation of the Company’s ethics policy‭. ‬The whistleblower channels are open to all‭, ‬including suppliers‭, ‬customers and other third parties‭.‬

  • Take the initiative to communicate with employees
  • Put in place an independent whistleblower hotline
  • Set up a whistleblower section on WT’s official website
  • Localize the whistleblower channels in local languages
  • Anonymous tips and reports will be kept confidential
  • Disclose the number of reports received‭, ‬types of misconduct and actions taken‭.‬
  • Conduct integrity and ethics training to ensure employees fully understand company policies‭, ‬procedures and control measures‭.‬

Focus on risk management Strive for self-monitoring to align with the times

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WT has established a corporate governance structure to manage its business in accordance with the ROC Company Act, the Securities and Exchange Act and other relevant laws and regulations. We aim to pursue the long-term interests of our shareholders by enhancing corporate performance and accountability and by balancing the interests of our stakeholders.

 

Under the Board of Directors are an Audit Committee, a Remuneration Committee and a Risk Management Committee. The Risk Management Committee is composed of three independent directors, the Chairman and the CFO, and is responsible for submitting risk management-related proposals to the Board of Directors for discussion.

The Board of Directors is the highest governing body of WT. The ninth term of the Board was elected on 21 June 2019 for a term of three years and consists of seven directors who pursue a policy of diversity to strengthen the development of corporate governance. Three of the Board members are independent directors (42.86% of all directors are independent directors) and three of the Board members are women (42.86% of all directors are women). Two of the directors are employees (28.57% of all directors are employee directors). In addition, all directors of the Board are currently aged 50 or above.

 

The Board of Directors meets at least once a quarter to monitor the achievement of the Company’s operational goals and performance, provide strategic guidance to the management team, and supervise the Company’s compliance with laws and regulations to ensure the best interests of shareholders. In fiscal 2021, 12 Board of Directors meetings were held with an average attendance rate of 98.8% for all directors and 100% for independent directors. For information on the diversity of the Board of Directors, the Audit Committee, the Remuneration Committee and the Risk Management Committee, including their members, age range, experience and tenure, as well as information on the actual attendance rate of the Board of Directors, the status of continuing education and the implementation of the recusal of interests, please refer to the “Third. Report on Corporate Governance” in WT’s 2021 Annual Report.

100% attendance of Audit Committee members in person

The Audit Committee was established on June 21, 2019 and consists of all three independent directors, two of whom have accounting or financial expertise, to assist the Board of Directors in overseeing the fair presentation of the Company’s financial reports, the effective implementation of the internal control system, compliance with relevant laws and regulations, and the management of existing or potential risks. The Audit Committee meets at least quarterly, and the accountants communicate and interact with the independent directors from audit planning to audit or review results during the year. The Internal Audit Officer reports to the Audit Committee at each regular meeting of the Board of Directors on the performed of the audit. Whether the internal audit officer or the accountants can contact with independent directors directly. The Audit Committee held 10 meetings in fiscal 2021, with 100% attendance of all members in person.

 

The fourth term of Remuneration Committee is composed of two independent directors and one independent member. The purpose of the Committee is to make objective and professional recommendations to the Board of Directors, taking into account the Company’s operational performance, and to assist the Board of Directors in implementing and evaluating the Company’s overall compensation and welfare policies. In addition, the remuneration of directors and managers is determined and reviewed in accordance with the “Procedures for Remuneration of Directors and Functional Committee Members” and “Remuneration for Managers” as necessary to strike a balance between sustainable management and risk control. 7 meetings were held in fiscal 2021, with an average attendance rate of 85.71%(note) of all members.

Performance evaluation of the Board and functional committees

In order to implement corporate governance and enhance the functions of the Board of Directors, and to establish performance targets to strengthen the operational efficiency of the Board of Directors,WT has formulated the “Rules for Board of Directors Performance Assessments” in 2016, which stipulates that the Board of Directors and functional committees shall conduct internal self-evaluation on a regular basis every year and be evaluated by an external independent institution or an external team of academic experts at least once every three years. The evaluation results shall be reported to the Board of Directors, and the evaluation results shall be used as reference for the payment of individual directors’ remuneration and the nomination of directors for re-election.

Rigorous internal auditing to ensure fairness and impartiality

In WT Microelectronics, the Internal Audit Department (referred to as ″the Department″ hereunder) is an independent unit under the Board of Directors. A total of three full-time Internal Auditing Officer and his/her affiliated auditors are allocated. The appointment and dismissal of the company’s Internal Audit Supervisor are approved by the Audit Committee and passed by the Board of Directors. The appointment/dismissal, evaluation/review, salary/compensation of internal auditors of the Company are handled in accordance with the Corporate Governance Best Practice Principles ,shall be submitted by the Chief Internal Auditor to the Board Chairperson for approval and to evaluation and review at least once a year.

 

The purpose of internal audits is to assist the Board of Directors and managers in inspecting and reviewing defects in the internal control systems, measure operational effectiveness and efficiency, and to make timely recommendations for improvements to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction.

Implement self-monitoring, strengthening the system’s responsiveness

The Department shall implement regular auditing based on the annual audit plan,which is passed by the Board of Directors and based on the identified risks. The Department shall also implement special audit plans separately based on actual needs. After implementing each audit, the Department shall present the audit reports and follow-up reports, and submit them for review by the Audit Committee before the prescribed statutory date. The officer of the Department shall attend and deliver a report on the situation of each audit plan to a regular board meeting.

 

The Department shall supervise all internal departments and subsidiaries to conduct self-assessments once a year and implement the company’s self-monitoring mechanism. The Department shall adjust the design and implementation of the internal control system in a timely manner in response to changes in the environment.The Departments shall review the self-inspection reports and evaluate the overall efficacy of all internal control systems to serve as the primary basis for the Board of Directors and General Manager to produce Internal Control System Statements.

Jumpstarting growth in 2021! 107% increase in profit for the year

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Our operating revenue increased by 27% from NT$353.152 billion in 2020 to NT$447.896 billion in 2021. Our profit for the year increased by 107% from NT$3.795 billion in 2020 to NT$7.855 billion in 2021, increase of NT$4.06 billion.

Post-Pandemic Era Approaches, Positive Outlooks for Semiconductors

With the accelerated global digitization driven by the pandemic and the increased demand for energy saving and carbon reduction due to climate change, the main drive for growth in 2021 comes from as increased semiconductor content in electronic products and the rapid growth in applications such as automotive electronics, industrial control, data centers, and 5G communications. In the future, in addition to developing high-growth product markets and increasing customer penetration, we will continue to carry out digital optimization to continuously improve operational efficiency, optimize our operations management system, enhance our financial control system, and strengthen our human resources management to deepen our ability to provide added value in the semiconductor industry chain, thereby building a foundation for sustainable business operations.

Introducing RPA Establish efficient and highly automated processes and systems

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To improve various major operation efficiency and enhance corporate insight, WT advances continuously on process optimization. By promoting digital optimization, we can internally set up new operations to match the current scale and help automate operations and reports for relevant operation units. Externally, we can promote B2B transaction operations to vendors and customers by linking them with Electronic Data Interchange, further establish efficient standard operation processes and management mechanisms, so that the person in charge of various departments can immediately grasp data changes and deploy relevant strategies and response in advance.

 

Business dashboard for quick access to practical work information

In order to assist the company’s business-related personnel at various levels in making decisions, WT customizes business dashboards to meet the requirements of each unit and level. Business data Which are collected daily, classified and compiled through system automation. Practical information is produced according to different usage objectives, which is provided to supervisors and responsible colleagues for quick review on mobile devices or the company’s internal website, so as to grasp the current status and trends of operations and identify abnormal situations for tracking and management. As of 2021, we have completed the digitization of data collection for all product lines, and with the rapid changes in market demand, we will continue to optimize the data content to enhance the efficiency of decision making.

 

In addition to data analysis as an aid to decision making, the business dashboard also provides real-time inquiry of shipment information from the shipping location to the customer’s receiving location, making it easy to track shipments and enhance customer satisfaction. In addition, the dashboard also supports real-time exception alerts and reminders for important to-do items.

 

Digital approval processes substitute paper work: efficient and energy-saving

Starting from 2019, WT has been continuing to promote the use of digital tools to replace paper-based approval process. We completed the digitization of general procurement process in 2020, improving administrative efficiency and reducing the amount of paper used. Compared to 2019, the paper consumption in 2020 is reduced by 20%, and by 2021, all approval process of general procurement is digitalized, which reduces paper consumption by approximately 35,000 sheets, achieving a significant reduction in paper consumption.

Control of risk The first step towards sound growth and sustainable operation

Posted on by janis_wu@bwnet.com.tw

Tax is the basis for governments to provide local infrastructure and public services, and is an important source of funding to advance global sustainable development goals. In response to changes in global tax environment, increasingly complex cross- border transactions and global anti-avoidance trends, we continue to interact and cooperate with tax authorities in countries where we operate.

 

Under the trend of international tax equity, WT implements corporate governance and establishes a corporate tax culture through the formulation of tax governance policies and transfer pricing policies, while taking into account the overall development of operations and the creation of operating profits. We review our policies annually in accordance with international tax trends and evaluate the need for revisions. We file honestly in accordance with the regulations of each location where we operate, and make proper use of relevant government tax incentive policies.

 

Tax irregularities or unethical matters can be reported internally and externally through WT’s established reporting mechanism. Tax information is disclosed in relevant public channels, such as annual reports of the shareholders’ meeting. Such information is derived from financial statements certified by the accounting firm.

 

The effective income tax rate of 22.8% in 2021 is higher than the statutory income tax rate of 20% for profit-making businesses in the ROC. This is mainly due to the fact that the board has considered the working capital required for the future growth of the Group’s operations and retained a portion of the current year’s earnings before distribution, which is subject to the tax on undistributed earnings.

Control of risk The first step towards sound growth and sustainable operation

For the purpose of enforcing the Company’s risk management mechanisms and strengthening corporate governance while reasonably assuring the Company’s strategies, plans, and targets are achieved, the Board of Directors passed the risk management policy on January 5, 2021. The policy provides the top principles for risk management. The policy covers the purpose of management, the scope of risks, organizational structure and responsibilities, management procedures, risk categories, and risk management operations and implementation evaluation. Risks arising from the business activities are kept within the range of tolerance in order to achieve sustainability and stability.

The Risk Management Committee is responsible for risk assessment

The Risk Management Committee of WT Microelectronics is a functional committee under the Board of Directors.The risk management committee members is composed of three Independent Directors, Chairman of the Board and the Chief Financial Officer. Each Accountability Unit is responsible for the actual implementation of risk management, and the head of the accountability unit is responsible for analyzing, monitoring and reporting the risks faced by the business under its jurisdiction, and ensuring that the risk management mechanism and procedures can be effectively implemented.

Enhancement of information security protection capacity Becoming a Tier 1 operation

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Delivering products to customers on time is the basis of WT’s operations, and system downtime will result in delayed delivery or the inability to deliver products. WT expects to become an enterprise with first-class operational capability in the industry, and a high degree of information security capability is the cornerstone for providing quality services. Third-party organizations such as international certifications and red team assessment are used to assist in the review. With enhanced information security protection and employee security awareness, no sensitive information was leaked in 2021, and there were no significant information service disruptions that caused financial losses to customers or suppliers’ operations.

 

Setting up a dedicated department to strengthen information security management

Because of information security’s increasing importance and proliferation of cyber-attacks, WT will set up a dedicated information security department in 2022. With a dedicated manager and two dedicated staff to focus on information security incident investigation, system vulnerability disclosure, and the assessment and implementation of new information security architecture. In addition, WT will evaluate the implementation of ISO 27001 to reduce the threat and impact of information security incidents through formalized and systematic control and management.

 

WT has set up dedicated emails to receive cyber security notifications from external customers, suppliers, the Taiwan Computer Network Crisis Management and Coordination Center (TWCERT), and information technology equipment and service vendors. WT has dedicated personnel to regularly collect information on major information security news, vulnerability disclosure, zero-day attacks, etc., to analyze, record, and set event levels. Internally, we set event levels according to severity while the information department records them. In case of a major information security incident, the Chief Operating Officer shall be notified immediately.

 

The information technology department must remediate and fix information security incidents within the target processing time and find the root cause, track and records the remediation and verify the effectiveness, and follows the PDCA method for continuous improvement to prevent the recurrence of incidents. In addition, WT classified information security incidents into several levels of severity and defined the recovery mechanisms and standard operating procedures to speed up the recovery point objective.

Build safety awareness among staff

The pandemic has swept through the world, changing people’s lifestyles and work styles. Working from home and remote work has become the norm. This causes employees to be detached from the protection of the corporate intranet and becomes a potential breach of corporate information security.

 

Strengthening employees’ security awareness has become an important part of information security. In the second half of 2021, WT introduced security awareness training and planned a basic phishing course and a discovery phishing game course. In 2021, 4,198 training sessions were completed (100% completion rate). Through video presentation and interactive teaching, we have enhanced our staff’s knowledge and awareness of information security and integrated security awareness into their daily work through continuous social engineering practices.

 

Backup and recovery plan in case of malicious intrusion

The Group has established comprehensive information security protection mechanisms. However, it cannot guarantee complete prevention from third-party attacks to crash the critical corporate system. When a severe attack occurs, the system may not be operational, leading to operational interruptions due to the inability to ship orders or compensation for customer losses due to shipment delays. Therefore, rapid system recovery is of the utmost importance. Apart from keeping investments in information security devices and software, The Company continually strengthens the system recovery mechanism.

Introduction of the latest artificial intelligence NDR and EDR

Techniques for hack intrusions have been changing rapidly. In addition to exploiting the vulnerability and furthermore , hackers are using zero-day attacks to hack into systems before the patch. Hackers are also stealing employee accounts and passwords through phishing to gain direct access to the company’s system. Traditional pattern-matching protective measures no longer stop these numerous tactics.

WT introduced Network Detection Response (NDR) and Endpoint Detection Response (EDR) with an artificial intelligence machine learning mechanism in 2021. NDR performs front-line blocking and isolation when abnormal behavior deviation occurs on the network side. When the network side cannot identify and block in time and the threat enters the endpoint, the EDR mechanism blocks and isolates it again. Since there is no respite from network threats, we have also signed SOC/MDR services with third-party vendors to monitor information security threats 24/7.

Respond to customer’s information security concerns

WT assesses and responds to customers’ information security concerns through regular annual supplier self-assessment questionnaires or business communication. In 2021, the main issues concerning customers were the handling of major loopholes and whether they had passed ISO 27001 certification, all of which have been handled by the information department through self-assessment questionnaires or emails to meet clients’ needs.

WT’s Information Security Management Plan in 2022

Management level

We have implemented ISO 27001 to establish an internal organization for information security management operations, to continuously strengthen and improve our information security management mechanism, and to enhance our ability to respond to information security incidents and emergency response.

Technical aspects

We have gradually built a complete information security infrastructure to protect the information security framework of new technology types following the introduction of new information architecture (e.g., cloud application, AI artificial intelligence, and IoT Internet of Things).

Cognitive Training Level

We raise information security awareness among all employees, and have gradually extended this awareness to our suppliers. Through supplier education training and information security assessment, we help suppliers improve their information security capabilities and establish a protective network for the entire supply chain.

Transparency, anti-corruption Convergence with the global corporate governance business philosophy

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In 2020, WT developed the Social Policy & Code of Conduct, UNCAC Anti-corruption Policy, and the SDGs Policy. These standards align with global corporate governance and anti-corruption concepts and frameworks, including Responsible Business Alliance Code of Conduct, the UN Global Compact, the International Labour Standards, the OECD Guidelines for Multinational Corporations, etc.

 

WT has always believed that a social policy and code of conduct are core requirements for conducting all operational activities in order to gain a competitive advantage and to do the right thing. The high ethical standards of all members of the leadership team not only inspire trust in the Company’s operations, but also create a strong and supportive working environment for employees. the social policy and code of conduct are also principles for members of the Board, all employees, group subsidiaries, independent contractors, consultants, suppliers and all those who deal with WT.

 

WT expects employees to be fully aware of company policies, procedures and controls to protect the company and themselves from potential legal, regulatory or disciplinary risks. An annual mandatory course on Ethical Values and Code of Conduct is taught to employees. 2,309 employees of the entire group were listed as trainees at the start of the course in 2021, and 2,309 of them have completed the course and passed the test (100% pass rate). In addition, important management rules and regulations, such as the Corporate Governance Best Practice Principles, the Corporate Social Responsibility Best Practice Principles, the Ethical Corporate Management Best Practice Principles, the Codes of Ethical Conduct, Procedures for Ethical Management and Guidelines for Conduct and the Supplier Code of Conduct, were introduced during orientation training. In 2021, the total number of trainees at each of the Taiwan operations sites reached 206, all of whom have completed training, with a total of 412 hours of training.

 

WT’s reporting channels include an internal reporting mailbox and a reporting sector on the official website for informants to report illegal acts of the company’s personnel. The Ethical Business Promotion Team accepts cases and is responsible for forwarding them to the highest supervisors of relevant units for investigation and tracking the final outcome of the cases. The identity of the informant, the contents of the report and the investigation process will be kept confidential, and complete records will be kept. In addition, there is a sexual harassment complaint mechanism and a reporting hotline for employees to file complaints, and the contents of the reports and the investigation process are treated with strict confidentiality. No cases were received from external parties or directly reported by employees in 2021, and no significant dishonest acts or sexual harassment occurred.

 

WT seeks to promote honest and ethical conduct, to deter wrongdoing, and to comply with the laws and regulations applicable to all locations in which it operates. As of the end of 2021, there were no significant violations in the economic, environmental and social fields (including human rights, disability injuries, etc.) that were sanctioned by the competent authorities.

Zero Tolerance for Corruption! WT’s communication mechanism for whistle blowers

WT responds to whistleblowing incidents, providing a transparent and accessible channel for communication. All employees are encouraged to speak up without fear when they discover a violation of the Company’s ethics policy. It is available to suppliers, customers and other third parties.