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Financial Instruments
 12 Months Ended
Dec. 31, 2022
Text block [abstract]  
Financial Instruments
34.
FINANCIAL INSTRUMENTS
 
  a.
Fair value of financial instruments that are not measured at fair value
 
  1)
Fair value of financial instruments not measured at fair value but for which fair value is disclosed
Except bonds payable measured at amortized cost, the management considered that the carrying amounts of financial assets and financial liabilities not measured at fair value approximate their fair values. The carrying amounts and fair value of bonds payable as of December 31, 2021 and 2022 were as follows:
 
   
Carrying Amount
    
Fair Value
  
   
NT$
    
US$ (Note 4)
    
NT$
    
US$ (Note 4)
  
         
December 31, 2021
   $ 52,267,337             $ 52,429,758          
December 31, 2022
     47,850,324     $ 1,557,121       47,027,018     $ 1,530,329  
 
  2)
Fair value hierarchy
The aforementioned fair value hierarchy of bonds payable was Level 3 which was determined based on discounted cash flow analysis with the applicable yield curve for the duration. The significant unobservable inputs is discount rates that reflected the credit risk.
 
  b.
Fair value of financial instruments that are measured at fair value on a recurring basis
 
  1)
Fair value hierarchy
 
    
Level 1
     
Level 2
     
Level 3
     
Total
  
    
NT$
     
NT$
     
NT$
     
NT$
  
         
December 31, 2021
                                    
         
Financial assets at FVTPL
                                    
Derivative financial assets
                                    
Swap contracts
    $ —        $ 85,629      $ —        $ 85,629  
Forward exchange contracts
      —          23,373        —          23,373  
Call option and put option of convertible bonds
      —          8,463        —          8,463  
Target redemption forward contracts
      —          500        —          500  
Non-derivative
financial assets
                                    
Quoted ordinary shares
      2,683,193        —          —          2,683,193  
Private-placement funds
      —          —          1,322,686        1,322,686  
Contingent considerations
      —          —          394,943        394,943  
Unquoted preferred shares
      —          —          583,270        583,270  
Open-end
mutual funds
      334,223        —          —          334,223  
    
 
 
     
 
 
     
 
 
     
 
 
  
         
     $ 3,017,416      $ 117,965      $ 2,300,899      $ 5,436,280  
    
 
 
     
 
 
     
 
 
     
 
 
  
Financial assets at FVTOCI
                                    
Investments in equity instruments
                                    
Unquoted ordinary shares
    $ —        $ —        $ 820,779      $ 820,779  
Quoted ordinary shares
      102,124        —          —          102,124  
Unquoted preferred shares
      —          —          11,245        11,245  
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Total
 
 
  
NT$
 
  
NT$
 
  
NT$
 
  
NT$
 
Limited partnership
  
$
—  
 
  
$
—  
 
  
$
9,206
 
  
$
9,206
 
Investments in debt instruments
  
      
  
      
  
      
  
      
Unsecured subordinate corporate bonds
  
 
—  
 
  
 
—  
 
  
 
1,076,458
 
  
 
1,076,458
 
Trade receivables, net
  
 
—  
 
  
 
—  
 
  
 
6,092,462
 
  
 
6,092,462
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
 
  
$
102,124
 
  
$
—  
 
  
$
8,010,150
 
  
$
8,112,274
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
Financial liabilities at FVTPL
  
      
  
      
  
      
  
      
Derivative financial liabilities
  
      
  
      
  
      
  
      
Swap contracts
  
$
—  
 
  
$
360,797
 
  
$
—  
 
  
$
360,797
 
Forward exchange contracts
  
 
—  
 
  
 
56,863
 
  
 
—  
 
  
 
56,863
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
 
  
$
—  
 
  
$
417,660
 
  
$
—  
 
  
$
417,660
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
December 31, 2022
  
      
  
      
  
      
  
      
         
Financial assets at FVTPL
  
      
  
      
  
      
  
      
Derivative financial assets
  
      
  
      
  
      
  
      
Swap contracts
  
$
—  
 
  
$
3,205,828
 
  
$
—  
 
  
$
3,205,828
 
Forward exchange contracts
  
 
—  
 
  
 
246,710
 
  
 
—  
 
  
 
246,710
 
Non-derivative
financial assets
  
      
  
      
  
      
  
      
Quoted ordinary shares
  
 
2,521,964
 
  
 
—  
 
  
 
—  
 
  
 
2,521,964
 
Private-placement funds
  
 
—  
 
  
 
—  
 
  
 
1,599,932
 
  
 
1,599,932
 
Unquoted preferred shares
  
 
—  
 
  
 
—  
 
  
 
628,156
 
  
 
628,156
 
Contingent considerations
  
 
—  
 
  
 
—  
 
  
 
438,176
 
  
 
438,176
 
Open-end
mutual funds
  
 
293,385
 
  
 
—  
 
  
 
—  
 
  
 
293,385
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
 
  
$
2,815,349
 
  
$
3,452,538
 
  
$
2,666,264
 
  
$
8,934,151
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Financial assets at FVTOCI
  
      
  
      
  
      
  
      
Investments in equity instruments
  
      
  
      
  
      
  
      
Unquoted ordinary shares
  
$
—  
 
  
$
—  
 
  
$
419,491
 
  
$
419,491
 
Quoted ordinary shares
  
 
45,683
 
  
 
—  
 
  
 
—  
 
  
 
45,683
 
Unquoted preferred shares
  
 
—  
 
  
 
—  
 
  
 
13,883
 
  
 
13,883
 
Limited partnership
  
 
—  
 
  
 
—  
 
  
 
3,502
 
  
 
3,502
 
Investments in debt instruments
  
      
  
      
  
      
  
      
Unsecured subordinate corporate bonds
  
 
—  
 
  
 
—  
 
  
 
1,059,712
 
  
 
1,059,712
 
Trade receivables, net
  
 
—  
 
  
 
—  
 
  
 
5,402,714
 
  
 
5,402,714
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
 
  
$
45,683
 
  
$
—  
 
  
$
6,899,302
 
  
$
6,944,985
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Financial liabilities at FVTPL
  
      
  
      
  
      
  
      
Derivative financial liabilities
  
      
  
      
  
      
  
      
Swap contracts
  
$
—  
 
  
$
543,547
 
  
$
—  
 
  
$
543,547
 
Forward exchange contracts
  
 
—  
 
  
 
83,213
 
  
 
—  
 
  
 
83,213
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
         
 
  
$
—  
 
  
$
626,760
 
  
$
—  
 
  
$
626,760
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    
Level 1
     
Level 2
     
Level 3
     
Total
  
    
US$
(Note 4)
     
US$
(Note 4)
     
US$
(Note 4)
     
US$
(Note 4)
  
         
December 31, 2022
                                    
         
Financial assets at FVTPL
                                    
Derivative financial assets
                                    
Swap contracts
    $ —        $ 104,323      $ —        $ 104,323  
Forward exchange contracts
      —          8,028        —          8,028  
Non-derivative
financial assets
                                    
Quoted ordinary shares
      82,069        —          —          82,069  
Private-placement funds
      —          —          52,064        52,064  
Unquoted preferred shares
      —          —          20,441        20,441  
Contingent considerations
      —          —          14,259        14,259  
Open-end
mutual funds
   
 
9,547
 
   
 
—  
 
   
 
—  
 
   
 
9,547
 
    
 
 
     
 
 
     
 
 
     
 
 
  
         
     $      91,616      $    112,351      $ 86,764      $    290,731  
    
 
 
     
 
 
     
 
 
     
 
 
  
Financial assets at FVTOCI
                                    
Investments in equity instruments
                                    
Unquoted ordinary shares
    $ —        $ —        $ 13,651      $ 13,651  
Quoted ordinary shares
      1,486        —          —          1,486  
Unquoted preferred shares
      —          —          452        452  
Limited partnership
      —          —          114        114  
Investments in debt instruments
                                    
Unsecured subordinate corporate bonds
      —          —          34,485        34,485  
Trade receivables, net
      —          —          175,812        175,812  
    
 
 
     
 
 
     
 
 
     
 
 
  
         
     $ 1,486      $ —        $    224,514      $ 226,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Financial liabilities at FVTPL
                                    
Derivative financial liabilities
                                    
Swap contracts
    $ —        $ 17,688      $ —        $ 17,688  
Forward exchange contracts
      —          2,708        —          2,708  
    
 
 
     
 
 
     
 
 
     
 
 
  
         
     $ —        $ 20,396      $ —        $ 20,396  
    
 
 
     
 
 
     
 
 
     
 
 
  
For the financial assets and liabilities that were measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2 of the fair value hierarchy during the years ended December 31, 2021 and 2022.
 
  2)
Reconciliation of Level 3 fair value measurements of financial assets
For the year ended December
 31, 2020
 
                                                                                                                                        
    
Financial Assets at FVTPL
    
Financial Assets at
FVTOCI
        
Financial Assets
   
Equity

Instruments
    
Debt

Instruments
    
Equity

Instruments
    
Debt

Instruments
    
Total
  
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
           
Balance at January 1
   
$
1,005,714
 
  
$
—  
 
  
$
755,903
 
  
$
3,044,562
 
  
$
4,806,179
 
Recognized in profit or loss
   
 
(17,941
) 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(17,941
) 
Recognized in other comprehensive income
                                         
Included in unrealized losses on financial assets at FVTOCI
   
 
—  
 
  
 
—  
 
  
 
(149,856
) 
  
 
(2,136
) 
  
 
(151,992
) 
Effects of foreign currency exchange
   
 
(15,455
) 
  
 
—  
 
  
 
(15,562
) 
  
 
—  
 
  
 
(31,017
) 
Net increase in trade receivables
   
 
—  
 
  
 
    370,110
 
  
 
—  
 
  
 
  5,635,706
 
  
 
   6,005,816
 
Trade receivables factoring
   
 
—  
 
  
 
(370,110
) 
  
 
—  
 
  
 
(7,038,983
) 
  
 
(7,409,093
) 
Purchases
   
 
893,234
 
  
 
—  
 
  
 
259,168
 
  
 
—  
 
  
 
1,152,402
 
Disposals
   
 
(329,370
) 
  
 
—  
 
  
 
(121,255
) 
  
 
—  
 
  
 
(450,625
) 
Acquisition through business combinations
   
 
387,790
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
387,790
 
Exercise of call option
   
 
(25,988
) 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(25,988
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
           
Balance at December 31
   
$
1,897,984
 
  
$
—  
 
  
$
  728,398
 
  
$
1,639,149
 
  
$
4,265,531
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
For the year ended December
 31, 2021
 
                                                                                                                                        
    
Financial Assets at FVTPL
    
Financial Assets at FVTOCI
        
Financial Assets
   
Equity
Instruments
    
Debt
Instruments
    
Equity
Instruments
    
Debt
Instruments
    
Total
  
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
           
Balance at January 1
   
$
1,897,984
 
  
$
—  
 
  
$
728,398
 
  
$
1,639,149
 
  
$
4,265,531
 
Recognized in profit or loss
   
 
131,276
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
131,276
 
Recognized in other comprehensive income
                                         
Included in unrealized gains on financial assets at FVTOCI
   
 
—  
 
  
 
—  
 
  
 
129,726
 
  
 
63,722
 
  
 
193,448
 
Effects of foreign currency exchange
   
 
(79,614
) 
  
 
—  
 
  
 
(4,508
) 
  
 
—  
 
  
 
(84,122
) 
Net increase in trade receivables
   
 
—  
 
  
 
3,269,782
 
  
 
—  
 
  
 
14,940,539
 
  
 
18,210,321
 
Trade receivables factoring
   
 
—  
 
  
 
(3,269,782
) 
  
 
—  
 
  
 
(9,474,490
) 
  
 
(12,744,272
) 
Purchases
   
 
459,046
 
  
 
—  
 
  
 
32,246
 
  
 
—  
 
  
 
491,292
 
Disposals
   
 
(107,793
) 
  
 
—  
 
  
 
(14,873
) 
  
 
—  
 
  
 
(122,666
) 
Reclassify
   
 
—  
 
  
 
—  
 
  
 
(29,758
) 
  
 
—  
 
  
 
(29,758
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
           
Balance at December 31
   
$
2,300,899
 
  
$
—  
 
  
$
841,231
 
  
$
7,168,920
 
  
$
10,311,050
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
For the year ended December
 31, 2022
 
 
    
Financial Assets at FVTPL
    
Financial Assets at FVTOCI
        
Financial Assets
   
Equity
Instruments
    
Debt
Instruments
    
Equity
Instruments
    
Debt
Instruments
    
Total
  
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
           
Balance at January 1
   
$
2,300,899
 
  
$
—  
 
  
$
841,231
 
  
$
7,168,920
 
  
$
10,311,050
 
Recognized in profit or loss
   
 
100,134
 
  
 
605
 
  
 
—  
 
  
 
—  
 
  
 
100,739
 
Recognized in other comprehensive income
                                         
Included in unrealized losses on financial assets at FVTOCI
   
 
—  
 
  
 
—  
 
  
 
(366,862
) 
  
 
(16,746
) 
  
 
(383,608
) 
Effects of foreign currency exchange
   
 
195,415
 
  
 
—  
 
  
 
5,558
 
  
 
—  
 
  
 
200,973
 
Net increase (decrease) in trade receivables
   
 
—  
 
  
 
4,330,075
 
  
 
—  
 
  
 
(674,112
) 
  
 
3,655,963
 
Trade receivables factoring
   
 
—  
 
  
 
(4,330,075
) 
  
 
—  
 
  
 
(15,636
) 
  
 
(4,345,711
) 
Purchases
   
 
338,016
 
  
 
14,325
 
  
 
20,000
 
  
 
—  
 
  
 
372,341
 
Disposals
   
 
(268,200
) 
  
 
(14,930
) 
  
 
(63,051
) 
  
 
—  
 
  
 
(346,181
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
           
Balance at December 31
   
$
2,666,264
 
  
$
—  
 
  
$
436,876
 
  
$
6,462,426
 
  
$
9,565,566
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
       
    
Financial Assets at FVTPL
    
Financial Assets at FVTOCI
        
Financial Assets
   
Equity
Instruments
    
Debt
Instruments
    
Equity
Instruments
    
Debt
Instruments
    
Total
  
    
US$
(Note 4)
    
US$
(Note 4)
    
US$
(Note 4)
    
US$
(Note 4)
    
US$
(Note 4)
  
           
Balance at January 1
   
$
74,875
 
  
$
—  
 
  
$
27,375
 
  
$
233,287
 
  
$
335,537
 
Recognized in profit or loss
   
 
3,258
 
  
 
20
 
  
 
—  
 
  
 
—  
 
  
 
3,278
 
Recognized in other comprehensive income
                                         
Included in unrealized losses on financial assets at FVTOCI
   
 
—  
 
  
 
—  
 
  
 
(11,938
) 
  
 
(545
) 
  
 
(12,483
) 
Effects of foreign currency exchange
   
 
6,359
 
  
 
—  
 
  
 
181
 
  
 
—  
 
  
 
6,540
 
Net increase (decrease) in trade receivables
   
 
—  
 
  
 
140,907
 
  
 
—  
 
  
 
(21,936
) 
  
 
118,971
 
Trade receivables factoring
   
 
—  
 
  
 
(140,907
) 
  
 
—  
 
  
 
(509
) 
  
 
(141,416
) 
Purchases
   
 
11,000
 
  
 
466
 
  
 
651
 
  
 
—  
 
  
 
12,117
 
Disposals
   
 
(8,728
) 
  
 
(486
) 
  
 
(2,052
) 
  
 
—  
 
  
 
(11,266
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
           
Balance at December 31
   
$
86,764
 
  
$
—  
 
  
$
14,217
 
  
$
210,297
 
  
$
311,278
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
  3)
Valuation techniques and assumptions applied for the purpose of measuring fair value
 
  a)
Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement
 
Financial Instruments
   
Valuation Techniques and Inputs
   
Derivatives - swap contracts and forward exchange contracts
   
Discounted cash flows - Future cash flows are estimated based on observable forward exchange rates at balance sheet dates and contract forward exchange rates, discounted at rates that reflected the credit risk of various counterparties.
   
Derivatives - redemption option and put option of convertible bonds
   
Option pricing models - Use of present value techniques and reflect the time value and intrinsic value of redemption option and put option.
   
Target redemption forward contracts
   
Valuation based on the spot exchange rate on the valuation date, the exercise price, the volatility in exchange rate, the contract period and the quoted risk free interest rate during the contract period.
 
  b)
Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement
The fair value of unquoted ordinary shares, unquoted preferred shares, limited partnership and private-placement funds were determined by using market approach and asset-based approach. The significant unobservable inputs were the discount rates for lack of marketability of 10% to 20%. If the discount rates for lack of marketability to the valuation model increased by 1% to reflect reasonably possible alternative assumptions while all other variables held constant, the fair value of the abovementioned investments would have decreased approximately by NT$19,300 thousand and NT$6,600 thousand (US$215 thousand) as of December 31, 2021 and 2022, respectively.
The fair values of the unsecured subordinate corporate bonds were determined using income approach based on a discounted cash flow analysis. The significant unobservable input was the discount rate that reflects the credit risk of the counterparty. If the discount rate increased by 0.1% while all other variables held constant, the fair value of the bonds would have decreased approximately by NT$4,000 thousand and NT$3,000 thousand (US$98 thousand) as of December 31, 2021 and 2022, respectively.
The fair value of accounts receivables measured at FVTOCI are determined based on the present value of future cash flows that reflect the credit risk of counterparties. Since the discount effect was not significant, the Group measured its fair value by using the nominal values.
The fair value of the contingent considerations were determined by using the Monte Carlo Simulation method. If the estimated net profit margin fails to reach the performance specified in the agreement, the Group could receive the contingent considerations according to the agreement, refer to Note 29 for business combinations
.
 
  c.
Categories of financial instruments
 
   
December 31
  
   
2021
    
2022
  
   
NT$
    
NT$
    
US$ (Note 4)
  
       
Financial assets
                        
       
FVTPL
                        
Mandatorily at FVTPL
   $ 5,436,280     $ 8,934,151     $ 290,731  
Measured at amortized cost (Note 1)
     200,732,680       188,733,772       6,141,678  
FVTOCI
                        
Equity instruments
     943,354       482,559       15,703  
Debt instruments
     1,076,458       1,059,712       34,485  
Trade receivables, net
     6,092,462       5,402,714       175,812  
       
Financial liabilities
                        
       
FVTPL
                        
Held for trading
     417,660       626,760       20,396  
Financial liabilities for hedging
     11,497,896       12,204,620       397,157  
Measured at amortized cost (Note 2)
     339,445,544       318,478,685       10,363,771  
 
  Note 1:
  
The balances included financial assets measured at amortized cost which comprised cash and cash equivalents, trade and other receivables and other financial assets.
  Note 2:
  
The balances included financial liabilities measured at amortized cost which comprised short-term borrowings, trade and other payables, bonds payable and long-term borrowings.
 
  d.
Financial risk management objectives and policies
The derivative instruments used by the Group were to mitigate risks arising from ordinary business operations. All derivative transactions entered into by the Group were designated as either hedging or trading. Derivative transactions entered into for hedging purposes must hedge risk against fluctuations in foreign exchange rates and interest rates arising from operating activities. The currencies and the amount of derivative instruments held by the Group must match its hedged assets and liabilities denominated in foreign currencies.
The Group’s risk management department monitored risks to mitigate risk exposures, reported unsettled position, transaction balances and related gains or losses to the Group’s chief financial officer on monthly basis.
 
  1)
Market risk
The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. Gains or losses arising from fluctuations in foreign currency exchange rates of a variety of derivative financial instruments were approximately offset by those of hedged items. Interest rate risk was not significant due to the cost of capital was expected to be fixed.
There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.
 
  a)
Foreign currency exchange rate risk
The Group had sales and purchases as well as financing activities denominated in foreign currency which exposed the Group to foreign currency exchange rate risk. The Group entered into a variety of derivative financial instruments to hedge foreign currency exchange rate risk to minimize the fluctuations of assets and liabilities denominated in foreign currencies.
 
The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities (including those eliminated upon consolidation) as well as derivative instruments which exposed the Group to foreign currency exchange rate risk at each balance sheet date are presented in Note
40
.
The Group was mainly subject to the impact from the exchange rate fluctuation in US$ and JPY against NT$, RMB or EUR. 1% fluctuation is used when reporting foreign currency exchange rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign currency exchange rates. The sensitivity analysis included financial assets and liabilities and inter-company receivables and payables within the Group. The changes in profit before income tax due to a 1% change in US$ and JPY against NT$, RMB and EUR would be NT$35,000 thousand, NT$38,000 thousand and NT$60,000 thousand (US$1,952 thousand) for the years ended December 31, 2020, 2021 and 2022, respectively. Hedging contracts and hedged items have been taken into account while measuring the changes in profit before income tax. The abovementioned sensitivity analysis mainly focused on the foreign currency monetary items at each balance sheet date. As the
period-end
exposure did not reflect the exposure for the years ended December 31, 2020, 2021 and 2022, the abovementioned sensitivity analysis was unrepresentative of those respective years.
Hedge accounting
The Group’s hedging strategy was to lift borrowings denominated in foreign currencies to avoid exchange rate exposure from its investments in equity instruments denominated in foreign currencies (recognized under the line item of financial assets at FVTPL) and net investment in foreign subsidiary, USIFR, which has EUR as its functional currency. Those transactions were designated as fair value hedges and a hedge of net investment in foreign operation, respectively. Hedge adjustments were made to totally offset the foreign exchange gains or losses from those equity instruments denominated in foreign currencies and foreign operations when they were evaluated based on the exchange rates on each balance sheet date.
The source of hedge ineffectiveness in these hedging relationships arose from the material difference between the notional amounts of borrowings denominated in foreign currencies and the fair value of investments in equity instruments denominated in foreign currencies and net investment in foreign operations. No other sources of ineffectiveness is expected to emerge from these hedging relationships.
December 31, 2021
 
Hedging Instrument/
   
Line item in
   
Carrying Amount
  
Hedged Items
   
Balance sheet
   
Asset
     
Liability
  
         
     NT$     
     
     NT$     
  
       
Fair value hedge
                       
Borrowings denominated in foreign currencies/ Financial assets at FVTPL
   
Financial liabilities for hedging - current
    $ —        $ 2,954,921  
Hedge of net investment in foreign operation
   
Financial liabilities for hedging - current
      —          3,762,044  
Hedge of net investment in foreign operation
   
Financial liabilities for hedging - non-current
      —          4,780,931  
 
   
Change in Value Used for

Calculating Hedge Ineffectiveness
    
Accumulated Gains or

Losses in Other Equity
    
Carrying
Amount of
Hedged Item in
Fair Value
Hedge
    
Accumulated
Amount of Fair

Value Hedge
Adjustments on
Hedged Item
  
Hedging Instrument/
Hedged Item
  
Hedging
Instrument
    
Hedged Item
    
Continuing
Hedges
    
Hedge
Accounting No
Longer Applied
    
Asset
    
Asset
  
   
NT$
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
             
Fair value hedge
                                                
Borrowings denominated in foreign currencies/ Financial assets at FVTPL
   $ 94,145     $ (94,145 )    $ —       $ —       $ 2,318,517     $ (236,362 ) 
Hedge of net investment in foreign operation
     (738,600 )      738,600       163,776       —         —         —    
 
December 31, 2022
 
Hedging Instrument/
   
Line item in
   
Carrying Amount
  
Hedged Items
   
Balance sheet
   
Asset
     
Liability
  
         
NT$
     
US$
(Note 4)
     
NT$
     
US$
(Note 4)
  
           
Fair value hedge
                                         
Borrowings denominated in foreign currencies/ Financial assets at FVTPL
   
Financial liabilities for hedging - current
    $ —        $ —        $ 3,278,805      $ 106,697  
Hedge of net investment in foreign operation
   
Financial liabilities for hedging - current
      —          —          8,925,815        290,460  
 
   
Change in Value Used for

Calculating Hedge Ineffectiveness
    
Accumulated Gains or

Losses in Other Equity
    
Carrying

Amount of

Hedged Item in

Fair Value

Hedge
    
Accumulated

Amount of Fair

Value Hedge

Adjustments on

Hedged Item
  
Hedging Instrument/
Hedged Item
  
Hedging

Instrument
    
Hedged Item
    
Continuing

Hedges
    
Hedge
Accounting No

Longer Applied
    
Asset
    
Asset
  
   
NT$
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
             
Fair value hedge
                                                
Borrowings denominated in foreign currencies/ Financial assets at FVTPL
   $ (323,884 )    $ 323,884     $ —       $ —       $ 2,282,243     $ 87,522  
Hedge of net investment in foreign operation
     (509,229 )      509,229       673,005       —         —         —    
         
   
Change in Value Used for

Calculating Hedge Ineffectiveness
    
Accumulated Gains or

Losses in Other Equity
    
Carrying
Amount of

Hedged Item in

Fair Value

Hedge
    
Accumulated
Amount of Fair

Value Hedge

Adjustments on

Hedged Item
  
Hedging Instrument/
Hedged Item
  
Hedging
Instrument
    
Hedged Item
    
Continuing
Hedges
    
Hedge
Accounting No

Longer Applied
    
Asset
    
Asset
  
   
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
  
             
Fair value hedge
                                                
Borrowings denominated in foreign currencies/ Financial assets at FVTPL
   $ (10,540 )    $ 10,540     $ —       $ —       $ 74,568     $ 2,848  
Hedge of net investment in foreign operation
     (16,571 )      16,571       21,901       —         —         —    
 
  b)
Interest rate risk
Except a portion of long-term borrowings and bonds payable at fixed interest rates, the Group was exposed to interest rate risk because group entities borrowed funds at floating interest rates. Changes in market interest rates led to variances in effective interest rates of borrowings from which the future cash flow fluctuations arise. The Group utilized financing instruments with low interest rates and favorable terms to maintain low financing cost, adequate banking facilities, as well as to hedge interest rate risk.
 
The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at each balance sheet date were as follows:
 
   
December 31
  
   
2021
    
2022
  
   
NT$
    
NT$
    
US$ (Note 4)
  
       
Fair value interest rate risk
                        
Financial assets
   $ 5,474,105     $ 16,434,562     $ 534,805  
Financial liabilities
     76,206,394       91,152,265       2,966,231  
       
Cash flow interest rate risk
                        
Financial assets
     69,654,969       41,964,775       1,365,596  
Financial liabilities
     158,557,225       121,370,564       3,949,579  
For assets and liabilities with floating interest rates, a 100 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel. If interest rates had been 100 basis points (1%) higher or lower and all other variables held constant, the Group’s profit before income tax for the years ended December 31, 2020, 2021 and 2022 would have decreased or increased approximately by NT$862,000 thousand, NT$959,000 thousand and NT$794,000 thousand (US$25,838 thousand), respectively.
 
  c)
Other price risk
The Group was exposed to equity price risk through its investments in financial assets at FVTPL and financial assets at FVTOCI. If equity price was 1% higher or lower, profit before income tax for the years ended December 31, 2020, 2021 and 2022 would have increased or decreased approximately by NT$59,000 thousand, NT$49,000 thousand and NT$50,000 thousand (US$1,627 thousand), respectively, and other comprehensive income before income tax for the years ended December 31, 2020, 2021 and 2022 would have increased or decreased approximately by NT$7,000 thousand, NT$9,000 thousand and NT$5,000 thousand (US$163 thousand), respectively.
 
  2)
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s credit risk arises from cash and cash equivalents, contract assets, trade and other receivables and other financial assets. The Group’s maximum exposure to credit risk was the carrying amounts of financial assets in the consolidated balance sheets.
As of December 31, 2021 and 2022, the Group’s five largest customers accounted for 33% and 30% of trade receivables, respectively. The Group transacts with a large number of unrelated customers and, thus, no concentration of credit risk was observed.
 
  3)
Liquidity risk
The Group manages liquidity risk by maintaining adequate working capital and banking facilities to fulfill the demand for cash flow used in the Group’s operation and capital expenditure. The Group also monitors its compliance with all the loan covenants. Liquidity risk is not considered to be significant.
In the table below, financial liabilities with a repayment on demand clause were included in the earliest time band regardless of the probability of counter-parties choosing to exercise their rights. The maturity dates for other
non-derivative
financial liabilities were based on the agreed repayment dates.
To the extent that interest flows are floating rate, the undiscounted amounts were derived from the interest rates at each balance sheet date.
 
December 31, 2021
 
                                                                                                                                        
    
On Demand or

Less than

1 Month
     
1 to 3 Months
     
3 Months to

1 Year
     
1 to 5 Years
     
More than

5 Years
  
    
NT$
     
NT$
     
NT$
     
NT$
     
NT$
  
           
Non-derivative
financial liabilities
                                             
           
Non-interest
bearing
   
$
52,353,176
 
   
$
48,140,652
 
   
$
10,216,253
 
   
$
291,480
 
   
$
114,201
 
Obligation under leases
   
 
84,978
 
   
 
157,710
 
   
 
687,144
 
   
 
2,585,624
 
   
 
4,929,602
 
Floating interest rate liabilities
   
 
12,565,548
 
   
 
5,180,527
 
   
 
13,416,893
 
   
 
112,493,242
 
   
 
7,494,670
 
Fixed interest rate liabilities
   
 
10,262,781
 
   
 
3,093,668
 
   
 
12,978,593
 
   
 
43,555,458
 
   
 
5,479,867
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
           
    
$
75,266,483
 
   
$
56,572,557
 
   
$
37,298,883
 
   
$
158,925,804
 
   
$
18,018,340
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Further information for maturity analysis of obligation under leases was as follows:
 
                                                                                                                                                       
   
Less than

1 Year
    
1 to 5 Years
    
5 to 10 Years
    
10 to 15 Years
    
15 to 20 Years
    
More than

20 Years
  
   
NT$
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
             
Obligation under leases
  
$
   929,832
 
  
$
2,585,624
 
  
$
1,731,995
 
  
$
883,335
 
  
$
802,765
 
  
$
1,511,507
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
December 31, 2022
 
                                                                                                                                        
    
On Demand or

Less than

1 Month
     
1 to 3 Months
     
3 Months to

1 Year
     
1 to 5 Years
     
More than

5 Years
  
    
        NT$      
     
        NT$      
     
        NT$      
     
        NT$      
     
        NT$      
  
           
Non-derivative
financial liabilities
                                             
           
Non-interest
bearing
   
$
65,356,106
 
   
$
33,887,460
 
   
$
11,145,612
 
   
$
20,498
 
   
$
74,643
 
Obligation under leases
   
 
120,733
 
   
 
201,686
 
   
 
790,427
 
   
 
2,685,977
 
   
 
5,147,266
 
Floating interest rate liabilities
   
 
9,251,237
 
   
 
10,982,036
 
   
 
9,652,804
 
   
 
93,837,521
 
   
 
5,648,699
 
Fixed interest rate liabilities
   
 
12,530,681
 
   
 
9,209,134
 
   
 
9,055,918
 
   
 
44,756,570
 
   
 
29,280
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
           
    
$
87,258,757
 
   
$
54,280,316
 
   
$
30,644,761
 
   
$
141,300,566
 
   
$
10,899,888
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
                                                                                                                                        
    
On Demand or

Less than

1 Month
     
1 to 3 Months
     
3 Months to

1 Year
     
1 to 5 Years
     
More than

5 Years
  
    
US$ (Note 4)
     
US$ (Note 4)
     
US$ (Note 4)
     
US$ (Note 4)
     
US$ (Note 4)
  
           
Non-derivative
financial liabilities
                                             
           
Non-interest
bearing
   
$
  2,126,785
 
   
$
  1,102,748
 
   
$
362,695
 
   
$
667
 
   
$
2,429
 
Obligation under leases
   
 
3,929
 
   
 
6,563
 
   
 
25,722
 
   
 
87,406
 
   
 
167,500
 
Floating interest rate liabilities
   
 
301,049
 
   
 
357,372
 
   
 
314,117
 
   
 
3,053,613
 
   
 
183,817
 
Fixed interest rate liabilities
   
 
407,767
 
   
 
299,679
 
   
 
294,693
 
   
 
1,456,445
 
   
 
953
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
           
    
$
2,839,530
 
   
$
1,766,362
 
   
$
     997,227
 
   
$
    4,598,131
 
   
$
     354,699
 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Further information for maturity analysis of obligation under leases was as follows:
 
                                                                                                                                                       
   
Less than

1 Year
    
1 to 5 Years
    
5 to 10 Years
    
10 to 15 Years
    
15 to 20 Years
    
More than

20 Years
  
   
NT$
    
NT$
    
NT$
    
NT$
    
NT$
    
NT$
  
             
Obligation under leases
  
$
1,112,846
 
  
$
2,685,977
 
  
$
1,536,779
 
  
$
939,751
 
  
$
881,803
 
  
$
1,788,933
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
                                                                                                                                                       
   
Less than

1 Year
    
1 to 5 Years
    
5 to 10 Years
    
10 to 15 Years
    
15 to 20 Years
    
More than

20 Years
  
   
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
    
US$ (Note 4)
  
             
Obligation under leases
  
$
     36,214
 
  
$
     87,406
 
  
$
     50,009
 
  
$
  30,581
 
  
$
  28,695
 
  
$
     58,215
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
The amounts included above for floating interest rate instruments for
non-derivative
financial liabilities were subject to change if changes in floating interest rates differ from those estimates of interest rates determined at each balance sheet date.
 
The following table detailed the Group’s liquidity analysis for its derivative financial instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments settled on a net basis, and the undiscounted gross cash inflows and outflows on those derivatives that require gross settlement. When the amounts payable or receivable are not fixed, the amounts disclosed have been determined by reference to the projected interest rates as illustrated by the yield curves at each balance sheet date.
 
    
On Demand or

Less than

1 Month
     
1 to 3 Months
     
3 Months to

1 Year
  
    
NT$
     
NT$
     
NT$
  
       
December 31, 2021
                           
       
Net settled
                           
Forward exchange contracts
    $ (21,379 )     $ (1,410 )     $ —    
    
 
 
     
 
 
     
 
 
  
Gross settled
                           
Forward exchange contracts
                           
Inflows
    $    2,382,315       $    6,817,411       $       531,596   
Outflows
      (2,380,359 )       (6,784,689 )       (525,920 ) 
    
 
 
     
 
 
     
 
 
  
       
       1,956        32,722        5,676  
    
 
 
     
 
 
     
 
 
  
Swap contracts
                           
Inflows
      23,759,435        21,272,450        37,841,805  
Outflows
      (23,814,701 )       (21,314,442 )       (37,965,438 ) 
    
 
 
     
 
 
     
 
 
  
       (55,266 )       (41,992 )       (123,633 ) 
    
 
 
     
 
 
     
 
 
  
Target redemption forward contracts
                           
Inflows
      19,376        43,596        33,216  
Outflows
      (18,845 )       (42,401 )       (32,243 ) 
    
 
 
     
 
 
     
 
 
  
       531        1,195        973  
    
 
 
     
 
 
     
 
 
  
       
     $ (52,779 )     $ (8,075 )     $ (116,984 ) 
    
 
 
     
 
 
     
 
 
  
       
December 31, 2022
                           
       
Net settled
                           
Forward exchange contracts
    $ (11,136 )     $ 11,994      $ —    
    
 
 
     
 
 
     
 
 
  
Gross settled
                           
Forward exchange contracts
                           
Inflows
    $ 13,398,921      $ 4,688,786      $ 599,796  
Outflows
      (13,310,433 )       (4,687,958 )       (534,354 ) 
    
 
 
     
 
 
     
 
 
  
       88,488        828        65,442  
    
 
 
     
 
 
     
 
 
  
Swap contracts
                           
Inflows
      32,274,691        16,429,850        62,187,750  
Outflows
      (31,891,439 )       (15,016,775 )       (59,838,031 ) 
    
 
 
     
 
 
     
 
 
  
       383,252        1,413,075        2,349,719  
    
 
 
     
 
 
     
 
 
  
       
     $ 471,740      $ 1,413,903      $ 2,415,161  
    
 
 
     
 
 
     
 
 
  
    
On Demand or

Less than

1 Month
     
1 to 3 Months
     
3 Months to

1 Year
  
    
US$ (Note 4)
     
US$ (Note 4)
     
 US$ (Note 4) 
  
       
December 31, 2022
                           
       
Net settled
                           
Forward exchange contracts
    $ (362 )     $ 390      $ —    
    
 
 
     
 
 
     
 
 
  
Gross settled
                           
Forward exchange contracts
                           
Inflows
    $ 436,021      $ 152,580      $ 19,518  
Outflows
      (433,141 )       (152,553 )       (17,389 ) 
    
 
 
     
 
 
     
 
 
  
       2,880        27        2,129  
    
 
 
     
 
 
     
 
 
  
Swap contracts
                           
Inflows
      1,050,266        534,652        2,023,682  
Outflows
      (1,037,795 )       (488,668 )       (1,947,219 ) 
    
 
 
     
 
 
     
 
 
  
       12,471        45,984        76,463  
    
 
 
     
 
 
     
 
 
  
       
     $ 15,351      $ 46,011      $ 78,592