Risk Management

To ensure steady operation and sustainable development, the Risk Management Policy and Procedures were stipulated by the Board of Directors on February 27, 2020 based on the Regulations Governing Establishment of Internal Control Systems by Public Companies promulgated by the Financial Supervisory Commission. The Procedures stipulate the Board of Directors, Audit Committee, Auditing Office, President and President’s Office, individual risk management units, and subsidiaries shall together participate in, promote, and implement relevant risk management measures.

Risk Management Organization Structure and Risk Management Categories

The year 2020 witnessed the beginning of the status on risk management reported to the board of directors every year.

The 2022 status was reported to the board of directors on January 10, 2023, and the report details are tabulated as below.
Risk Management Status Report in 2022

The 2021 status was reported to the board of directors on January 11, 2022, and the report details are tabulated as below.
Risk Management Status Report in 2021

The 2020 status was reported to the board of directors on January 22, 2021, and the report details are tabulated as below.
Risk Management Status Report in 2020

TIPS Implementation Status in 2022

Walsin Lihwa implemented the Taiwan Intellectual Property Right Management System (TIPS) to Hsinchuang plant this year in addition to Yenshui plant and headquarter in 2021. For the purpose of improving the internal control of intellectual property management, Walsin Lihwa kept promoting and executing the TIPS in all plants in 2022. The intellectual property right management policies and the targets are planned according to the TIPS regulation 5.2 and 5.3. The implementation status and annual plan are reported at a board meeting on November 4, 2022.

Intellectual Property Management Plan

    • Intellectual Property Right Management Policies
      1. R&D for innovation and competitiveness enhancement,
      2. Employees’ awareness of intellectual property rights for more effective intellectual property right management
      3. Confidential document management, and
      4. Execution corporate governance with compliance

      ※ The targets and implementation status according to the intellectual property right management policies, are listed in the “Annual implementation status and achievement” section.

    • Intellectual Property Management Measure
    • Walsin Lihwa have made an inventory of patents, trademarks and trade secrets and new regulations regarding invention encouragement, annual IP related training, trademark management process and contract review as a results of TIPS implementation since 2021.
      Management processes of IP risk assessment, proposal review of IP right application, IP right protection evaluation, Infringement handling procedure and attentions for the outsourcing of intellectual property affairs are regulated as intellectual property management measure. Especially in terms of patents, as the patent reward system implemented in 2021, numbers of patent application and grant patents is growing in 2022.
      In the future, Walsin Lihwa will review the intellectual property right management policies and adjust targets and intellectual property management regulations annually in accordance with operation strategy and the changes in government policy and market. Also, to ensure the management system operated effectively, Walsin Lihwa will review our intellectual property management and improve the management system through TIPS verification, in case of potential risk and IP related dispute.

Annual implementation status and achievement

    • IP Management Targets and Implementation Status
    No. IP Management Targets Implementation Status
    1 11 patent applications filed before end of 2022 11 patent applications are filed before October, 2022.
    2 Promoting integration of R&D process and patent application process Revise the patent management measure to fit patent application process to R&D process both in Yenshui and Hsinchuang plant.
    3 To organize training sessions to all employee with topics of intellectual property and TIPS Online training sessions of intellectual property and TIPS were provided to all employee at 7th, March.
    4 To organize training sessions to all employee with topics of trade secret and confidentiality Online training sessions of trade secret and confidentiality were provided to all employee at 21th, March.
    5 Made an inventory of confidential documents and trade secrets management Microsoft sensitivity labels were introduced to improve confidentiality protection from 1st, August.
    The confidential documents was checked during August, 2021.
    6 Report the execution status of TIPS to the board of directors and disclose it on Walsin official website The execution status of TIPS was reported to the board of directors at 4th, November and it will be disclosed on Walsin official website before end of November.
    • Achievements of Intellectual Property acquisition
    • In 2022, 5 patents are granted. Walsin Lihwa have file 11 global patents based on 6 R&D proposals. As of September 30th, Walsin Lihwa have 20 granted patents, including 11 invention, 7 utility model and 1 design; 16 pending patent applications, including 14 invention and 2 design; 148 registered trademarks. The global IP layout is as following figure.
    • Advantages and contribution of IP to cooperation operation
      1. Execution of IP protection and document hierarchical management:Organize training sessions of topics of intellectual property, TIPS, trade secret and confidentiality to improve confidential information protection during employee business execution process.
      2. Trademark right and brand image protection:Refine management process of trademark and patent and perform the IP management work.
      3. R&D process improvement:Strengthen the R&D project-oriented R&D process and provide a reasonable reward system to increase the willingness of R&D employee for invention and patent application, so as to increase the company’s R&D and intellectual property capabilities.
      4. 4.Disclose the intellectual property management plan implementation status on Walsin Lihwa official website.
    • TIPS verification
    • Walsin Lihwa passed TIPS verification and the TIPS certificate is valid through December 31, 2023. On June 6th 2022, Walsin Lihwa passed TIPS random check. The TIPS random check report revealed that we have total 9 drawbacks (5 observations and 4 suggestions) requiring improvement. Comparing to the total 29 drawbacks (2 minor nonconformities and 27 observations) in 2021 TIPS verification report, Walsin have obvious progress in TIPS execution with continuing improvement and implementation.
    • Potential IP risk type and Countermeasures
    • To ensure the R&D achievement and the corresponding rights are protected, preserve its economic values and prevent the IP right infringement, the IP risk type and countermeasures are listed below:
      IP risk type Countermeasures

      .Patent risk evaluation in R&D process
      .Encourage R&D employee to propose patent application

      Trademark .Strengthen control power of trademark application, maintenance and usage
      Confidential information management

      .Strengthen and implement IP training for employee
      .Improve confidential mark usage
      .Attention for reviewing contract with external vendors

Prospects for Intellectual Property Management

Looking forward to the future, Walsin Lihwa expects to encourage internal R&D energy, protect technology and R&D results by establishing a complete intellectual property management system. With Industry 4.0 implementation, process is gradually optimized, product innovation is promoted and upgraded, thus leads smart manufacturing and the high-value transformation strategy is realized. Furthermore, obtain the trust of financial institutions and investors by disclosing the energy of intellectual property. With complete information, customers and investors would correctly evaluate the true value and competitiveness of Walsin Lihwa. Based on Industry 4.0, stick to energy conservation and environmental protection and invent product and technology for environmental sustainability. Realize environmental friendly and society caring achievement and which meets the purpose of sustainable company operation.

Information Security Management Structure Implementation

  • In response to company transformation and enhancement of information security management, Walsin Lihwa established a Big Data & Cyber Security Division under its IT Center in 2017. The division is responsible for information security policy development and amendment; planning, coordination, and implementation of relevant information security measures; and strengthening information security management solutions year by year.
  • Pursuant to its Regulations Governing Information Security Organization Management , Walsin Lihwa established its IT Steering Committee in 2018 as an information security management and decision-making body for the headquarters and individual business units. Responsible for review and resolution of information security management matters, the IT Steering Committee has an information security promotion team responsible for risk appraisal, information security technologies, and information security compliance review.

Information Security Policy

  • Objectives of information security: To maintain the confidentiality, completeness, and availability of business information including sensitive information at Walsin Lihwa, all the employees, internal and external information service users, and 3rd-party service contractors are expected to work steadfastly together to achieve the following objectives:
    1. Comply with relevant laws and regulations to protect company confidential information; prevent unauthorized access, tempering, damage, and/or improper disclosure to ensure the correctness of every category of business information.
    2. Set up comprehensive business continuity planning and procedures for the management of information security events to ensure such events are properly responded, controlled, and processed, and conduct scenario drills on a regular basis to ensure ongoing operation of IT systems and information services in case of any information security events.
    3. Cautiously handle and protect personal information and intellectual property rights pursuant to relevant domestic and overseas requirements.
    4. Enhance employees’ awareness of information security and reduce the risks associated with how information is used through management review, risk appraisal. internal auditing, education and training, and information security drills.
    5. Require all the employees to strengthen compliance with the Information Security Policy as well as relevant regulations governing information security and SOPs.

Specific Program for Information Security Management

  • Develop information security plans for information security policy implementation year by year, bring in information security systems and workflow standards, and continue making information security technologies and relevant protection measures more complete.
  • The specific management program has 5 objectives, separation of intranet from extranet, multi-layered security defense, identification of security loopholes or other potential risks by log analysis and security inspection, smart security protection, and behavior analysis by log and big data analysis at the security operation center, which can be achieved step by step through 4 approaches, IT governance, data and equipment protection, network and system control, and boundary defense.
  • The specific management program includes:
    1. Implement adequate access authorization and protection based on the confidentiality levels of information assets to reduce exposure to risks.
    2. Continue bringing in advanced information solutions to enable effective system, host, and network behavior management and protection.
    3. Provide education and training on a regular basis to share new knowledge on information security and strengthen employees’ awareness of information security.
    4. Focus on important systems to conduct disaster backup drills on a regular basis to rapidly resume operation in case of any disasters.
    5. Evaluate and improve endpoint, server, and network equipment protection, and engage 3rd party professional services such as the information security inspection and diagnosis provided by the Industrial Development Bureau, Ministry of Economic Affairs.
    6. In the future, information security at Walsin Lihwa will focus on prevention of online leaks of R&D results and intellectual property rights, production line and equipment protection from hacker attacks, and capability development for rapid responsiveness to information security events to cope with the challenges from comprehensive digitalization brought in by Industry 4.0.
    7. The ISO 27001 Information Security Management System implementation at Walsin Lihwa has obtained 3rd party verification by SGS to live up the commitment to information security by Plan, Do. Check, and Act (PDCA). Therefore, a comprehensive information security management system is in place to ensure the confidentiality, integrity, and availability of all the company data and keep strengthening information security management by effective prevention, monitoring, and responsiveness before and throughout any information security event.

The Procedures for Handling Material Inside Information and Prevention of Insider Trading of Walsin Lihwa are adopted to establish sound mechanisms for the handling and disclosure of material inside information to prevent improper information disclosures, ensure the consistency and accuracy of information released by the Company to the public, and prevent insider trading.
Moreover, to strengthen stock trading control measures, the Company may amend the Procedures for Handling Material Inside Information and Prevention of Insider Trading based on its Corporate Governance Best Practice Principle. The 2022 implementation status is tabulated as below.

Period Board Meeting Date and Public Announcement Date Closed Period Prevention Measures Implemented Note
2022 Q1 Financial Reports 2022/5/6 2022/4/21-2022/5/5

Relevant insiders including but not limited to directors of the board emailed in advance by the Corporate Governance Director that they shall not purchase or sell, in their own names or in the name of any other person, shares of the Company that are listed on an exchange or an over-the-counter market, or any other equity-type security of the Company during the closed period.

Also In compliance with Article 157-1 of the Securities and Exchange regarding prohibition of such purchasing or selling within 18 hours after public disclosure of material information.
2022 Q2 Financial Reports 2022/8/5 2022/7/21-2022/8/4
2022 Q3 Financial Reports 2022/11/4 2022/10/20-2022/11/4

Walsin Lihwa has been promoting relevant laws and regulations against insider trading to its board of directors and executives above managers every year since 2019. Please refer to the following link for details.

Implementation of Internal Promotion in 2022 (online and offline courses totaling 2 hours)

Object Course Number of Attendees
All employees Promotion of insider trading prevention 1,019
All employees Ethical management 1,020
Directors of the board and managerial officers Prevention of insider trading and short-term trading 20
Directors of the board and managerial officers Practice of integrity and ethics 20

Report on Promotion of Insider Trading Prevention in 2022
Report on Promotion of Insider Trading Prevention in 2021
Report on Promotion of Insider Trading Prevention in 2020
Report on Promotion of Insider Trading Prevention in 2019