Sustainable Issues
Corporate Governance Structure
According to Article 20 of the “Corporate Governance Best Practice Principles” established by our company, the board of directors of the company shall guide the company’s strategy, supervise the management, and be responsible to the company and shareholders. The various operations and arrangements of the corporate governance system shall ensure that the board of directors exercises its powers in accordance with laws and regulations, the company’s articles of association, or the resolutions of the shareholders meeting.
Corporate Governance Framework
In accordance with Article 17 of the Integrity Management Guidelines for listed and OTC companies, in order to establish a management system that operates with integrity, listed and OTC companies should establish a dedicated unit under the board of directors. Our company has set up an “Integrity Management Committee” under the board of directors, and reports on its operations and execution to the board of directors annually.
Integrity Management Policy of Our Company
Based on the principles of honesty, transparency, and accountability in operation, we have established a policy foundation grounded in integrity. We have also developed sound corporate governance and risk management mechanisms to create a sustainable operating environment.
The “Integrity Management Committee” of our company is chaired by Mr. Zeng Wenliang, who serves as the convener. In accordance with the responsibilities and scope of each unit, the committee assists the board of directors and management in formulating and overseeing the implementation of integrity-based policies and preventive measures against dishonest behavior to ensure the effective implementation of the integrity management policy.
Link to related measures:
Code of Ethics、Integrity Operations Procedures and Behavioral Guidelines
Operation and Execution
The company’s website and Market Observation Post System disclose the “Code of Ethics” and “Integrity Operation Procedures and Behavioral Guidelines” for reference by stakeholders.
The “Integrity Operation Committee” of the company reported the following contents at the board meeting on November 7, 2024:
1. Assist in integrating integrity and moral values into the company’s business strategy and cooperate with legal systems to establish measures to ensure integrity in operations.
2. Regularly analyze and assess the risks of unethical behavior within the scope of operations, formulate plans to prevent unethical behavior accordingly, and establish relevant standard operating procedures and behavioral guidelines in each plan.
3. Plan internal organization, staffing, and responsibilities to establish mechanisms for mutual supervision and balance in activities with higher risks of unethical behavior within the operational scope.
4. Promote and coordinate integrity policy advocacy and training.
5. Plan a whistleblowing system to ensure its effectiveness.
6. Assist the board of directors and management in auditing and evaluating the effectiveness of the prevention measures established for integrity operation, and periodically evaluate compliance with relevant business processes and prepare reports.
7. Create and properly maintain documented information on integrity operation policies, compliance statements, implementation commitments, and execution status.
● The company clearly communicates the rights and obligations of new employees on their first day of employment to cultivate their sense of integrity and strengthen self-discipline. Total of 97 individuals attended internal and external education and training sessions related to integrity management issues, including compliance with integrity regulations, accounting systems, internal controls, totaling 112 hours.
● In October of 2024, the company displayed integrity management guidelines, relevant regulations, responsible units, and contact points on the internal computer startup screen for all employees.
● The company provides a “Compliance with Integrity Management Policy Statement” to all directors as a behavioral guide. The statement includes compliance with integrity management policies, refraining from insider trading and any actions violating company and securities laws. All seven directors of the company has signed the statement, and the signing rate is 100%.
● The company regularly announces information on anti-workplace bullying and complaint channels on the internal electronic bulletin board to promote awareness. Clear disciplinary and complaint systems are established, and a “Whistleblowing Inbox” is provided on the company website.
● To implement integrity management effectively, the company has established sound accounting systems and internal control mechanisms, continuously reviewing them to ensure the ongoing effectiveness of their design and implementation.
8. The company held integrity awareness training for new employees and current employees in 2024, including:
● For new employees, 93 newcomers received integrity education training, totaling 93 hours of training.
● For current employees, 522 people participated in integrity education training, totaling 522 hours of training.
● In total, 615 people participated in integrity education training throughout the year, with a total of 615 hours of training.
Regulations and Implementation of Insider Trading of Company Stocks by Internal Personnel
1. In October 2024, the company promoted insider trading awareness to all employees through the internal computer startup screen. The content included legal regulations, internal company policies, and practical examples.
2. The tenth provision in the ” Practice principles of corporate governance” of the company states:
The company’s internal controls on stock trading by insiders, starting from the date they become aware of the company’s financial reports or related performance details, include (but are not limited to) the restriction that directors are prohibited from trading their stocks during the blackout periods, which are 30 days prior to the annual financial report announcement and 15 days prior to each quarterly financial report announcement.
3. The sixth provision in the “Internal Significant Information Processing and Internal Personnel Data Reporting Procedures” of the company states:
(1) Directors, executives, and employees of the company are prohibited from inquiring or collecting non-job-related internally significant undisclosed information from individuals who are aware of such information within the company. They are also barred from disclosing internally significant undisclosed information of the company to others if not obtained through business operations.
(2) The company strictly prohibits internal personnel (including directors, executives, and employees) from trading securities using undisclosed market information.
Link to related measures:
Internal Major Information Processing and Internal Personal Data Declaration Operation Procedure
Implementation of the specific situations of this regulation
The Board of Directors of the Company approved the revised “Internal Major Information Processing and Internal Personal Data Declaration Operation Procedure” on August 4, 2022, clearly stipulating: In order to protect the rights of shareholders and ensure equal treatment of shareholders, the internal personnel of the Company shall be subject to the following stock trading control measures upon becoming aware of the company’s financial reports or related performance content: Directors are prohibited from trading their stocks during the 30 days prior to the announcement of the annual financial report, and the 15 days before the announcement of each quarterly financial report. The Company shall notify the Directors 30 days/15 days before the announcement of the financial report.
Risk Management Organization Structure and Responsibilities
(1) Board of Directors
The highest responsible unit for risk management in the company is the Board of Directors, which establishes risk management policies and related regulations, supervises the effective operation of risk management mechanisms, and allocates appropriate resources.
(2) Audit Committee
The Audit Committee is responsible for overseeing and ensuring the execution of risk management, and reports the overall risk management results to the Board of Directors at least once a year.
(3) Risk Management Team
Comprised of managers from various departments, the Risk Management Team is responsible for risk identification, assessment, and control planning to ensure the proper implementation of risk management systems in each department. They supervise and monitor the execution of risk controls in operational units, reporting to the corporate governance supervisor.
(4) Corporate Governance Supervisor
Planning, leading, and overseeing risk identification, assessment, control, and monitoring in operational units, the Corporate Governance Supervisor provides improvement recommendations as needed. They supervise the implementation of risk controls in various departments, compile a group risk matrix based on feedback data from each unit, outline the execution status of the current year, the risk management plan for the following year, and report to the Audit Committee at least once a year.
Risk Management Organizational
Implementation of risk
To strengthen corporate governance and establish an effective risk management mechanism to achieve stable operations and sustainable development, the Company resolved to adopt the “Risk Management Policies and Procedures” in August 2024. For stable operations and sustainable development, the Board of Directors is the highest decision-making unit of the risk management mechanism and is responsible for approving the overall risk management policies and major decisions. The risk management process includes risk identification, risk measurement, risk control, risk monitoring and risk disclosure to manage and reduce the possibility and impact of risks. The scope of risk management includes seven risk categories, including strategic risk, operational risk, financial risk, hazard risk, legal compliance risk, information security risk and other risks.
The risk management policy of the Company is to define various risks in accordance with the Company’s overall operating policy, establish a risk management mechanism for early identification, accurate measurement, effective supervision and strict control, and prevent possible loss within the acceptable risk range. Based on changes in the internal and external environment, we will continue to adjust and improve the best risk management practices to protect the interests of employees, shareholders, partners and customers, increase the Company’s value, and achieve the optimal allocation of company resources.
The implementation of risk management in 2024 has been reported to the Audit Committee and the Board of Directors in November 2024.
Risk Management Strategies
Risk Category | Risk Description | Risk Management Strategies | Management goals or targets | Responsible Department |
Sustainable Environment |
The proportion of recycled materials purchased in the factory is too low. | 1. Evaluate and verify the use of recycled materials (e.g. recycling of plastic sheet). 2. Purchase recycled materials and reduce costs while meeting quality requirements. |
OM material cost control ratio. | Procurement Management General Division |
The utilization rate of renewable energy in the factory is too low. | 1. Comply with regulations to increase corporate reputation. 2. Our company’s greenhouse gas emissions in Scope 1 and Scope 2 have not yet reached 25,000 tons, which does not meet the standards of a major carbon emitter by the competent authority. We are not at immediate risk of being levied a carbon tax. In addition, our electricity consumption is not large, it is not easy to obtain green electricity sources. In the future, the use of renewable energy will be planned based on the supply and demand of the green electricity market and the reduction of the carbon tax threshold by the competent authorities. |
Pay attention to changes in carbon tax regulations and take corresponding measures. | Operation Management Center | |
Energy intensity within the plant cannot be reduced. | 1. Add energy-saving facilities. 2. Implement production and sales plans and cost control. 3. Implement pricing strategies to reduce financial impact. 4. Reduce the unit energy consumption of the process. |
Electricity saving: Electricity intensity per unit of output reduced by 2% compared with the previous year. | Operation Management Center | |
Greenhouse gas emission intensity within the plant cannot be reduced. | 1. Local procurement and production in major sales locations to reduce the harm to the environment caused by transportation. 2. Replace and update production equipment to reduce energy loss. 3. Promote low-carbon automated production and reduce greenhouse gas emissions. |
Reduction in greenhouse gas emissions: greenhouse gas emissions intensity per unit of output decreased by 2% compared to the previous year. | Operation Management Center | |
Water intensity in the plant cannot be reduced. | 1. Increase the amount of recycled secondary water and reduce dependence on raw water. 2. Evaluate plans to mitigate short-term and long-term water resource risks. 3. All sites continue to conserve water and encourage employees to conserve water. 4. Continue to promote water conservation. 5. Regularly check the raw water and wastewater pipelines in the factory to avoid water leakage and waste. |
1% reduction in water intensity per million units of output compared to the previous year. | Operation Management Center | |
The product itself consumes too much energy. | 1. Develop power-saving and low-energy consumption products to enhance product value. 2. Develop technical solutions to extend the life of LED products. |
1.LED energy consumption specification (lm/W), increasing by 5% year by year. 2. Introduce a plan to increase LED life every year. |
General Manager’s Office | |
The intensity of waste in the factory cannot be reduced. | 1. Implement resource recycling and reuse, strengthen waste management, and increase the proportion of resource recycling. 2. Design products that reduce volume and materials to reduce waste generation. 3. Give priority to the use of recycled materials to reduce waste and implement recycling. 4. Entrust legal manufacturers to clean up the waste. |
Waste reduction target: Reduce waste intensity per unit of output by 1% compared to the previous year | Operation Management Center | |
Lack of water and electricity. | 1. Evaluate the installation of emergency backup power generation equipment or energy storage facilities. 2. Establish and improve water status monitoring system, emergency response procedures, and conduct regular drills. 3. Add water storage facilities to implement water-saving management, build a backup water tank, and use water trucks to transport water to the factory when there is water shortage to maintain factory operations. 4.In response to the risk of drought and water shortage, we save water, prepare water trucks and set up backup water tanks with 3 days of supply in each factory. |
Sign a water trucking contract to ensure water allocation during the dry season. | Operation Management Center | |
Natural disasters such as typhoons and floods. | 1. Formulate risk management and response measures. 2. Implement emergency preparedness and response planning. 3. Identify climate-related risks and transfer risks through insurance. In addition to commercial fire insurance, add typhoon and flood insurance to protect buildings, business decoration, business assets, machinery and equipment, goods, etc., to avoid the hazards derived from climate change and extreme weather. Reduce operational losses. 4. Assess flood and drought risks in the factory area, formulate and implement risk mitigation measures to avoid factory interruptions or impacts on work safety. |
Water truck water transport drills during the dry season | Operation Management Center | |
Violation of environmental regulations. | 1. Appoint dedicated personnel to operate and maintain wastewater and waste gas facilities. 2. Environmental protection business personnel and human resources managers regularly conduct environmental protection training and energy-saving technology knowledge promotion for colleagues in charge of their positions. |
The number of defect improvement notifications from the competent authority is less than 1 per year. | Operation Management Center | |
Employee | Occupational accident. | Inform employees in occupational hazard positions of occupational hazard factors so that they can understand the corresponding job hazard factors and preventive measures, and conduct relevant occupational hazard prevention education and training. | There is less than one major occupational accident each year, and no fatal occupational accidents. | Operation Management Center |
Fire incident. | 1. Ensure that the fire alarm system and automatic fire extinguishing system are functioning properly. The factory is equipped with fire suits, various levels of chemical protection clothing and emergency trolleys to ensure smooth operation. 2. Establish an industrial safety monitoring center to integrate industrial safety area monitoring of production lines and factory areas. 3. The factory has a fire protection system to prevent emergency rescue, implement 5S work on site, and conduct fire drills regularly every year. |
1. Conduct fire safety inspections every year and complete no deficiency declarations. 2. Conduct monthly inspections of various firefighting equipment. |
Operation Management Center | |
Human rights violations such as workplace bullying and sexual harassment occur. | 1. Establish work rules in accordance with the relevant provisions of the Labor Standards Act, and establish sexual harassment prevention measures, complaints and management standards in accordance with the relevant provisions of the Gender Equality in Employment Act and the Sexual Harassment Prevention Act to protect the rights and interests of employees and prevent harassment at work environment. 2. Implement human rights policies and internal procedures to eliminate illegal discrimination and reasonably ensure equal employment opportunities. 3. Child labor and forced labor are prohibited. |
1. There are 0 cases of workplace bullying and sexual harassment each year. 2. Full training for new employees & annual refresher training. |
General Management Division | |
Employee turnover is too high, facing labor shortage and overwork. | 1. Adopt multiple recruitment channels. In addition to recruiting by human resources personnel, we also recruit through employee recommendation and external talent matching companies. 2. The company will determine employee remuneration based on market conditions, company profitability, employee education and experience, and job duties. 3. The company’s articles of association clearly stipulate that if the company makes a profit in the year, it will contribute no less than 5% to employee remuneration, and appropriately distribute remuneration and bonuses based on individual performance appraisal results to motivate employees. 4. Through employee exit interviews and employee surveys, we propose improvement measures based on the factors that motivate employees to leave, in order to improve talent retention rates. |
1. Job opening recruitment time under 2 months. 2. The turnover rate of new employees within one year under 40%. |
General Management Division | |
Inadequate staff training. | 1. Provide new employees with education and training to help them understand the work environment and relevant rules and regulations as quickly as possible. 2. Develop a license management system and related methods. Colleagues must complete relevant training and pass certification exams before they can operate production machines independently. 3. In accordance with the employee education and training management regulations, various professional trainings such as engineering and quality control are held to ensure the professional ability of employees to perform their duties. 4. Provide management training to supervisors according to their level (basic level, middle level, senior level) to assist and strengthen their management and organizational capabilities. 5. Organize courses to enhance work ability and skills to cultivate colleagues to improve work efficiency and self-work management ability. 6. Colleagues can apply for external training based on their needs to understand market trends and the latest knowledge and technology and improve their work capabilities. |
Annual training plan execution rate is over 90%. | General Management Division | |
Corporate Governance/ Operational Performance |
Employees violate integrity. | 1. Evaluate the integrity record of the transaction partners and clearly stipulate the integrity commitment in the signed contracts. 2. Set up a dedicated unit under the Board of Directors to promote corporate integrity management [Integrity Management Committee] to implement the revision, implementation, interpretation, consulting services and other related operations and supervision of integrity management operating procedures and behavioral guidelines, and report the implementation status to the Board of Directors on a regular basis . 3. Establish an effective accounting system and internal control system, review and revise it according to legal changes and practical needs, and have internal auditors conduct regular audits. 4. Regularly organize internal and external education, training and promotion of integrity management, and clearly communicate relevant concepts and regulations to new employees on their first day of employment. |
1. There are 0 cases of workplace bullying and sexual harassment each year. 2. Full training for new employees & annual refresher training. |
General Management Division |
Revenue decline. | 1. Strengthen the quality monitoring system, continuously improve product quality, and enhance customer service. 2. Focus on value-oriented customers, carefully choose the entry time, and seek higher returns on investment. 3. Vertically integrate technology and manufacturing capabilities to provide customers with comprehensive services. |
1. The number of customer complaints decrease 2. Supply chain price negotiation 3. Improve product specifications and quality |
Business Development Center | |
Insufficient resources for innovation. | 1. Resource optimization allocation ● Prioritization: clarify which innovation projects are critical to the survival and development of the enterprise, and focus limited resources on these projects). ● Cost Control: Strictly control the costs of innovation projects; for example, by utilizing cooperative innovation: collaborating with strategic partners and academia to reduce R&D costs. ● Resource Sharing: Encourage resource sharing between departments to avoid waste. 2. Collaborative innovation and government support Collaborate with strategic partners such as academia, customers, suppliers, and government support to jointly develop new products or services. |
1. (1) Success rate of development projects (2) Revenue contribution of development projects. 2. (1) Government subsidy programs and (2) Strategic customer POC (Proof of Concept) development projects. |
General Manager’s Office | |
Lack of supply chain resilience. | 1. Communicate with suppliers regularly to ensure that the contact channels and platforms are unobstructed. Dedicated personnel are responsible for managing and monitoring various import and export regulations and policy changes to respond accordingly. 2. Strengthen the management of key material suppliers, conduct regular assessments and audits, and provide guidance to suppliers who do not meet the standards for improvement. |
Audit rate of qualified suppliers of key materials. | Procurement Management General Division | |
Product Liability/Safety. | 1. Continuously and effectively implement the hazardous substance process management system, and regularly monitor and identify the hazardous substance risk levels of key materials, processes and products. 2. Collect international environmental regulations, set hazardous substance management goals, and continuously improve. 3. When abnormalities of hazardous substances are found, they should be reported to management immediately and handled in accordance with the abnormality handling procedures specified in the environmental restricted substances regulations. |
Product HSF test compliance rate. | Quality Management Division | |
Security incidents occurred. | 1. Cultivate the momentum for continuous improvement of information security and introduce ISMS management system. 2. Improve the ability to quickly recover from disasters. 3. Ensure the legal use of software 4. Enhance employees’ awareness of information security protection. |
1. It is expected to obtain ISO27001 certification by the end of 2025. 2. Conduct disaster recovery drills once a year. 3. Continue to use asset inventory tools to check compliance software and automatically generate reports. 4. Announce new information security knowledge and implement employee information security education and training. |
Management Information System Division |
From an industry perspective, despite the slowdown in market demand, the LED industry continues to undergo rapid changes, especially in technology and market development trends, to meet the ever-changing consumer demands.
In the development of Mini LED, data from market research institutions show that the Mini LED market has experienced rapid growth in recent years, and it is expected to maintain steady growth in the coming years.
The LED backlight market is still expected to grow in the future. With the increasing demand for high quality, high efficiency and environmental protection from consumers, the LED backlight technology will continue to be widely used.
As consumers’ demands for high quality, high efficiency, and environmental protection continue to increase, the demand for Micro LEDs will also increase.
In addition, with the advancement of technology and reduction of costs, the production and application of sensing LEDs will be widely promoted. Therefore, the sensor market is expected to achieve a rapid growth trend in the future.
As one of the lighting technologies, LED has become one of the mainstream application technologies of automotive lighting due to the rising penetration rate in the automotive lamp market in recent years against the background of the rapid development of domestic new energy vehicles and the new four modernizations of vehicles. With the gradual recovery of the automobile market in the first half of the year, the demand for LED automotive lighting also bucked the trend and brought new performance growth momentum to the LED industry chain enterprises during the economic downturn. It has become one of the fastest growing emerging applications in the LED field.
In line with the above, AOT will continue to invest in technology and research and development by:
- R&D expenditures during the most recently year and 2024Q1:
Unit: NT$ thousand
Year
Item |
2023(Consolidated) | 2024Q1(Consolidated) |
R&D expenditures | 127,531 | 42,989 |
Net Revenue | 1,972,624 | 508,787 |
Percentage of RD expenditure to Net Revenue (%) | 6.47 | 8.45 |
- Overview of Technologies and/or Products successfully developed:
Year | Items of Technologies and/or Products successfully developed |
2024.Apr | 1. VR Display Modules and Local Dimming Algorithms. 2. Customized High-Efficiency Projection Light Source Modules for AR Glasses. 3. Ultra-Compact Projection Light Source Modules for Customized AR Glasses. 4. Mini LED Modules and Local Dimming Algorithms. 5. Dual-GaN (Gallium Nitride) High Color Rendering Mini LED Modules, DriveCircuits, and Local Dimming Algorithms. |
- The list of intellectual property acquired so far and the results are as follows:
As of September 30, 2024, the Company has been granted a total of 1,280 patents worldwide, including 560 patents in Taiwan, 346 patents in China, 315 patents in the United States, and 59 patents in other countries. In 2016, 2019-2020, and 2023, patents were inventoried, and some patents were resold or eliminated, as well as expired patents. Patents subject to fees in that year are also reviewed every year thereafter to evaluate whether to continue the maintenance. The total number of patents granted worldwide currently under maintenance is 273 patents, including 102 patents in Taiwan, 58 patents in China, 109 patents in the United States, and 4 patents in other countries.
Automation and Modularization
Looking ahead, AOT will adopt automation and modularization as the operational strategies to guide the company’s future growth.
Automation:In response to the US-China trade tensions, AOT transform into production automation and artificial intelligence(AI) to lower costs and boost competitiveness.
Modularization:To combine the advantage of AOT’s component production and APK’s Modular technology, aimed at reducing customer development time.