Dear Shareholders:

First of all, thanks for your long-term support to Harmony Electronics. I’d like show my deep gratitude to all of you on behalf of the operation team of the Company.

Looking back at the domestic and international industrial development situation in 2024, the hot topics of emerging technologies such as AI servers and related smart applications have driven the demand for upgrading quartz components. Meanwhile, the demand for consumer electronic products has rebounded and the high inventory of terminal products has been liquidated after two years, increasing the momentum of pulling goods. The overall operation in 2024 showed stable growth compared with 2023.

Facing new industry development trends and changes in the market environment, the Company's management team has adopted a prudent management strategy to enhance product development and innovation capabilities, strengthen management adaptability and improve cost structure so as to maintain steady growth in operations. Now I would like to report to all shareholders the operation of the past year.

The Company’s 2024 operating performance: Its consolidated operating income reached NT$2.934 billion, a increase of 8.3% from NT$2.709 billion in 2023. The annual consolidated net profit after-tax was NT$262 million, a increase of 110% from 2023. Looking forward to this year (2025), in addition to consolidating the production and marketing benefits of existing products, the proportion of industrial applications, data communications, and other non-consumer electronic products will be promoted in order to create opportunities for breakthroughs. Regarding the Company’s 2024 business results and 2025 business plan summary, as well as the impact of future company development strategies, external environmental laws and regulations, and the overall economic environment, the reports are as follows:

I. Business results in the year of 2024

(1)Implementation status of the operation plant:

The consolidated operating revenue of the Company in 2024 was NT$ 2,934,011 thousands, with the consolidated operating profit of NT$ 352,460 thousands, the consolidated net profit after tax of NT$262,023 thousands, and the consolidated comprehensive income of NT$334,546 thousands. If compared with those figures in 2023, the consolidated operating revenue was increased by NT$ 224,894 thousands (YoY 8.30%), the consolidated operating profit was increased by NT$196,724 thousands (YoY 126.32%), the consolidated net profit after tax was increased by NT$ 137,300 thousands (YoY 110.08%), and the consolidated comprehensive income was increased by NT$10,750 thousands (YoY 3.32%).

(2)Budget implementation status:

The Company didn’t announce the financial prediction publicly in 2023, so it doesn’t have to disclosure the budge implementation status.

(3)Financial revenue & expenditure, and profitability:

(4)Research and development status:

The Company’s product development mainly focuses on quartz components and micro-electromechanical sensing components. Quartz components include quartz crystals, general quartz oscillators, temperature compensated quartz oscillators, piezoelectric controlled quartz oscillators and differential output quartz crystal oscillators. The size of its miniaturized products is reduced from 2.0mm x 1.6mm, 1.6mm x 1.2mm to 1.2mm x 1.0mm; the accuracy can reach a frequency change of ±10~±50ppm under the operating temperature of -40~+150℃, meeting the needs of various fields such as consumer electronics products, network communications, and automotive applications. In terms of temperature-compensated quartz oscillators, its accuracy can reach ±0.5ppm. Micro-electromechanical sensing components focus on the layout of product structure design and packaging technology.

With the transformation of post-epidemic social activities, the acceleration of 5G networks, and the promotion of cloud technology and AI, the application of communication technology is rapidly entering the fields of home appliances, vehicles, and industries, etc. In order to strengthen the depth and breadth of existing core products, the Company has introduced semiconductor Photo-Etching technology and various sensor integrated packaging, and applied them to ultra-high frequency chip processes.

1. R&D achievements in 2024:

In terms of quartz components, the Company has currently completed the development of high-frequency quartz crystal 96Mhz and 80MHz 2.0mm×1.6mm, 1.2mm×1.0mm 80MHz products.The relevant chips use semiconductor Photo-Etching technology, and among them, the 2.0mm×1.6mm product has been put into mass production. In terms of micro-electromechanical components: pressure sensors, gas sensors, speakers, RF components, and bone conduction sensors have been developed for product packaging. They use invisible cutting, multi-functional sensing element mounting, and multi-sensor integrated packaging technologies for related packaging. In particular, pressure sensors (used to sense diving water depth) are in mass production.

2. R&D projects:

A. Miniaturization and high frequency products

The application of Photo-Etching technology in the semiconductor industry is used to improve the size of miniaturized products and the accuracy of electrode shapes. The current product has been extended to 1.2mm x1.0mm, and in the future, it will develop smaller specifications of 1.0mmx0.8mm. In terms of miniaturized product development, trial mass production of high-frequency products such as 1.2mm×1.0mm 80MHz and 96MHz is planned. The accuracy and stability of existing quartz crystal series products will continue to be optimized.

B. Low-power high-order oscillators

The frequency of the quartz oscillators that the Company has mass-produced ranges from 1 to 212.5 MHZ. Since its technology is mostly processed by frequency multiplication, the phenomenon of jitter is prone to occur, resulting in signal loss during transmission. In order to solve the above problems, the Company has long-term investment in the development of high-frequency chips with basic frequency. Meanwhile, it continues to expand high unit price and functional quartz oscillator product lines such as VCXO, TCXO, and LV-PECL/ LVDS/ HCSL in 5G equipment and automotive applications.

C. High-sensitivity products and integrated packaging technology

The Company began to invest in the research of sensing components in 2013, focusing on product structure design and packaging technology layout. After years of hard work, the Company has mastered gold-tin, ceramic, multi-layer substrate, and tubular metal shell-mounted packaging technologies, which are now used in the packaging of pressure gauges, gas sensors, speakers, RF components, bone conduction and other sensing components. In 2025, it is expected to improve the testing standards of various sensing products and complete the mass production packaging of bone conduction sensing components.

II. 2024 operation plan summary

(1)Operation principles:

1. Actively develop the market, deepen service quality, and cultivate customer relationships.
2. Improve R&D technology, develop new products, and increase competitive advantage
3. Abide by the quality policy, adhere to green product design, and win the trust of customers.
4. Implement corporate governance, fulfill social responsibilities, and establish sustainable development.

(3)Key production and sale policies:

1. Build up intelligent production lines and strengthen product competitiveness, in order to improve the Company’s profitability.
2. Implementing supply chain management, improving quality requirements, and introducing green products in order to obtain customers’ trusts.
3. Actively develop first-tier international customers and partners, expand market share and sales opportunities, and optimize service quality to enhance brand trust.
4. Strengthen internal management flexibility and deployment capabilities in order to quickly respond to market demand and changes.

III. The future development strategies of the Company, and the impacts of external competitive environment, regulatory environment and the overall business environment.

Looking forward to 2025, in response to the emergence of demand for information electronics, AI servers and automotive applications, quartz components are expected to grow in the new year compared with the previous year. However, affected by negative factors such as geopolitics and the Trump administration's tariff policy, the Company will adjust its business strategy in a timely manner, while strengthening management adaptability, cost control and resource allocation to reduce impacts on the application markets such as AI, 5G communications, automotive electronics and the Internet of Things (IoT). We hope to maintain steady growth in operations and create benefits for all colleagues, customers, suppliers, partners and shareholders.

I firmly believe that with the efforts of all colleagues and the support of all shareholders, Harmony Electronics will face various challenges with a steady business strategy in the new year. In addition, the Company will continue to promote environmental protection, social responsibility and corporate governance issues in order to become a sustainable development enterprise.

At last, best wishes for all of you!