King Yuan Electronics Co., Ltd.

King Yuan Electronics Co., Ltd. (2449TW) on the 26th day of April announce for subsidiary, KYEC Microelectronics Co. Ltd. to dispose of its entire 92.1619% share in King Long Technology (Suzhou) Ltd.(“KLT”) to King Legacy Investments Limited, Dense Forest Limited, LePower (HK) Limited, Anchor Light Holdings Ltd,.Cypress Solaia Venture Capital SPV, VK Global Investments Limited, Suzhou Industrial Park Industrial Investment Fund (L.P.), TongFu Microelectronics Co., Ltd., Suzhou Xinrui Equity Investment Partnership (L.P.), Shanghai State-owned Enterprises Integrated Improvement and Experiment Private Equity Fund Partnership (L.P.).and the estimated total sale price is RMB 4.885 billion, approximately NT$21.715 billion (exchange rate 1: 4.4456). King Yuan Electronics Co., Ltd. (”KYEC”) invests in KYEC Microelectronics Co. Ltd. through 100% holdings of KYEC Investment International Co. Ltd. and KYEC Technology Management Co. Ltd., and indirectly holds KLT 92.1619% equity. After this sale, KYEC indirect holding of KLT's equity is reduced to 0%. The estimated disposal gain after long-term investment costs and related taxes and other effects is approximately NT$3.827 billion, the earnings per share will be increased by approximately NT$3.13, and the book value per share will be increased by approximately NT3.23. In order to give back to the shareholders who have supported the Company for a long time, NT$3.668 billion will be allocated to distribute cash dividends in 2025 and 2026 (NT$1.5 per year). This transaction still needs to be approved by the relevant competent authorities. After being registered or filed in accordance with the law, it is expected to be completed before end of Q3 this year.

The price of this transaction was determined based on the financial statements of KLT for the year of 2023, as well as various factors such as its operating profits, peer status, net book value, and future prospects. The independent expert and accounting firm, Diwan & Company, was also appointed and issue an opinion letter on the reasonableness of the price and the impact on the Company's shareholders' rights. According to the opinion letter, the registered capital of KLT that KYEC indirect shareholding is RMB 504,992,570. The transaction price is approximately RMB 9.67 per registered capital RMB 1. (The net value of KLT as of 2023 is RMB 5.52 per registered capital RMB 1.) The transaction price is between RMB 8.90 and RMB 10.27 per registered capital RMB 1 and is within the value conclusion range of the subject KLT, and it is reasonable to think that it has not impacted the shareholders' rights and interests. After the Company's audit committee reviewed and approved the fairness and rationality of the transaction, it was submitted to the board of directors for discussion and approval.

As KYEC parent Company financial report in the year of 2022 and 2023, the net sales is NT$27.619 billion and NT$24.006 billion, respectively; gross profit margin is 34% and 33%; operating profit margin is 24% and 22% respectively. KLT’s profit contribution to the earnings per share of the consolidated statement is NT$1.06 and NT$1.13, respectively. Around 90% of KLT's sales come from China local customers. The customer structure overlaps with that of the parent Company in Taiwan is limited, and competition with each other is low.

Due to the impact of geopolitics on the global semiconductor supply chain, such like United States' restrictions on China's semiconductor industry technology, the ecological environment of semiconductor manufacturing in China has changed, along with intensified market competition. KYEC fully considers the environment in which KLT operates, weighs KYEC’s strategic planning for future operational development and growth, and aims the long-term use of financial resources more effectively. The board of directors has made a decision to withdraw from China’s semiconductor manufacturing business.

In view of the more rapid development of technology, and the more complexity of product, such as mobile devices, auto, Internet of Things, high performance computing (HPC) and artificial intelligence (AI), efficient production for our global customers is required. KYEC operational development strategy will focus resources on Taiwan's semiconductor manufacturing supply chain, work closely with customers and suppliers, strengthen fabless advanced process high-end product testing services, and increase outsourcing order from integrated device manufacturer (IDM), for continued growth in revenue and profits. The net cash inflow from the sale of long-term investment transactions after deducting relevant taxes and other effects is approximately NT$16.6 billion. After the funds repatriated to Taiwan, the funds will be used in addition to accelerating the construction of factory and equipment, enriching working capital, and be invested in more high-end testing technology and testing equipment to meet the strong demand in AI, HPC and related markets. KYEC has also passed a resolution of the board of directors today to increase the capital expenditure for the year of 2024 from NT$7 billion to NT$12.281 billion. At the same time, approximately NT$3.668 billion of funds obtained from the disposal of assets will be appropriated, and cash dividends of NT$1.5 per share will be added in 2025 and 2026 respectively to shareholders. We do not rule out strategic cooperation with upstream, downstream, and industry peers to seek better global development opportunities.