Pursuant to the ROC Labor Standards Law, the Company has established a defined benefit pension plan covering full-time employees in the ROC that provides retirement benefits to retiring employees based on years of service and the average salary for the six-month period before the employee’s retirement.

Reconciliations of defined benefit obligation at present value and plan asset at fair value are as follows:


	December 31,		December 31,
	2021		2022

		(in thousands)

Present value of the defined benefit obligations	$	3,489	3,060
Fair value of plan assets		(4,065)	(4,307)
Prepaid pension costs	$	(576)	(1,247)

(i) Plan assets

The Fund is administered by a pension fund monitoring committee (the “Committee”) and is deposited in the Committee’s name in the Bank of Taiwan. Under the ROC Labor Standards Law, the minimum return on the plan assets should not be lower than the average interest rate on two-year time deposits published by the local banks. As of December 31, 2022, the Funds deposited in the Committee’s name in the Bank of Taiwan amounted to $4,307 thousand.

(ii) Movements in present value of the defined benefit obligations


	Year ended December 31,
	2021		2022

	(in thousands)
Balance at beginning of year	$	3,562	3,489
Service costs		-	4
Interest expense		15	27
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
-Changes in demographic assumptions		32	24
-Experience adjustment		116	167
-Change in financial assumptions		(253)	(551)
Effect of changes in exchange rates		17	(100)
Balance at end of year	$	3,489	3,060

(iii) Movements in the fair value of plan assets


	Year ended December 31,
	2021		2022

	(in thousands)
Balance at beginning of year	$	3,952	4,065
Interest income		17	31
Remeasurements gain :
-Return on plan assets excluding interest income		60	305
Contributions paid by the employer		20	-
Effect of changes in exchange rate		16	(94)
Balance at end of year	$	4,065	4,307

(iv) Expenses recognized in profit or loss


	Year ended December 31,
	2020		2021	2022

	(in thousands)

Current service costs	$	6	-	4
Interest income		(4)	(2)	(4)
	$	2	(2)	-
Cost of revenues	$	6	6	3
Research and development		(5)	(8)	(3)
General and administrative		1	-	-
Sales and marketing		-	-	-
	$	2	(2)	-

(v) Remeasurement of net defined benefit liability recognized in other comprehensive income


	Year ended December 31,
	2021		2022

	(in thousands)

Balance at beginning of year	$	116	(22)
Recognized during the period		(138)	(577)
Balance at end of year	$	(22)	(599)

(vi) Actuarial assumptions

The principal actuarial assumptions were as follows:


	December 31,		December 31,
	2021		2022
Discount rate	0.82%-0.85	%	1.4%-1.41	%
Rate of increase in compensation levels	3.00	%	3.00	%

The Company expects to make contribution of $8 thousand to the defined benefit plans in the next year starting from January 1, 2023.

As at December 31, 2022, the weighted average duration of the defined benefits obligation was between 16 years to 17 years.

(vii) Sensitivity analysis

Reasonably possible changes at December 31, 2021 and 2022 to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.


	December 31, 2021		December 31, 2022
	+ 0.5%	- 0.5%	+ 0.5%	‑0.5%

	(in thousands)
Discount rate	(290)	319	(238)	261
Rate of increase in compensation levels	310	(285)	255	(235)

Defined contribution plans

Beginning July 1, 2005, pursuant to the newly effective ROC Labor Pension Act, the Company is required to make a monthly contribution for full-time employees in the ROC that elected to participate in the Defined Contribution Plan at a rate no less than 6% of the employee’s monthly wages to the employees’ individual pension fund accounts at the ROC Bureau of Labor Insurance. Expenses recognized in 2020, 2021 and 2022, based on the contribution called for were $3,330 thousand, $3,683 thousand and $3,828 thousand, respectively.

The Company established a defined contribution plan in the United States that qualifies under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet the service requirement. The Company’s contribution to the plan may be made at the discretion of the board of directors. Expenses recognized in 2020, 2021 and 2022, based on the contribution called for were nil, nil and $47 thousand, respectively.

All PRC employees participate in employee social security plans, including pension and other welfare benefits, which are organized and administered by governmental authorities. The Company has no other substantial commitments to employees. The premiums and welfare benefit contributions that should be borne by the Company are calculated in accordance with relevant PRC regulations, and are paid to the labor and social welfare authorities. Expenses recognized based on this plan were $707 thousand, $1,695 thousand and $2,088 thousand for the years ended December 31, 2020, 2021 and 2022, respectively.

Other foreign subsidiaries recognized pension expenses of $497 thousand, $617 thousand and $564 thousand for the years ended December 31, 2020, 2021 and 2022, respectively, for the defined contribution plans based on their respective local government regulations.

Cash award

On September 28, 2021 and 2022, the Company’s compensation committee granted annual bonuses by cash payouts totaling $47,657 thousand and $19,346 thousand, respectively to the Company’s employees among which $1,582 thousand and $1,015 thousand, respectively was immediately vested on the grant date. The remainder will be equally vested at the first, second and third anniversaries of the grant date.

The amounts of cash award expenses included in applicable costs of revenues and expense categories and related tax effects are summarized as follows:


	Year ended December 31,
	2021		2022

	(in thousands)

Cost of revenues	$	511	505
Research and development		5,876	20,792
General and administrative		678	2,250
Sales and marketing		1,223	4,147
Total compensation	$	8,288	27,694
Income tax benefit	$	1,444	5,641