President's Message

To all stakeholders of Nanya:

In 2022, The world has been impacted by a number of global uncertainties, including geopolitical conflicts in Europe, COVID-19 control measures in China, global high inflation, interest rate hikes, supply chain disruption and consumer spending weakness. As many industries have faced operating challenges, the DRAM sector has also experienced the worst setback in the last 15 years. Thanks to the collective efforts of our management teams and all employees, Nanya Technology has delivered its 10^th consecutive profitable years successfully, and is deeply grateful for all the support and recognition from our customers and supply chains.

Corporate Sustainability with Innovation

Nanya has set a sustainability strategy to well position the company in the DRAM industry, pursuing innovation and self-developed technology. We have successfully transitioned our company into a technological autonomy by accumulating R&D experience and cultivating an outstanding technology team. Our R&D expenses and manpower tripled over the past five years, and we have built an R&D team with a thousand members. Innovative R&D results were significant in 2022 and the cumulative number of patents granted has surpassed 5,900, ranking the second in Taiwan. In the development of new generation processes and products, we have begun small-scale production of our first product, 8Gb DDR4, using our first generation 10nm process technology (1A); trial production of our second product DDR5 has also begun. The leading product using second generation 10nm-class process technology (1B) is currently in the piloting production stage, with the goal to begin small-volume production in 2023. We expect our customers will enjoy around 60% of energy efficiency improvement as we implement our fully self-developed new technology. Furthermore, Nanya has developed 90 AI applications and cultivated 400 AI specialists in 2022, which has comprehensively improved our process and production efficiency, and has made our factory, an "AI smart manufacturing" facilities.

In order to enhance the future competitiveness, and meet our long-term development needs, Nanya has committed to invest NT$300 billion to build an advanced 10nm DRAM factory. The construction has formally begun in June 2022, is expected to create 2,000 employment opportunities when completed, and will drive significant economic and sustainability development in Taiwan.

Eco-friendly DRAM Products and Manufacturing

DRAM has become a critical component for the intelligence age. To best serve our customers, we have developed high performance and "eco-friendly products". All of our products has integrated with the life cycle thinking and designs for the environmental sensitiveness. Furthermore, our Green Product Promotion Committee (GPPC) has been responsible for green product management. In 2022, our energy-saving products accounted for approximately 90% of our total revenue, and helped customers saving more than 600 million kWh of electricity over the year, allowing our innovative "green products" and technologies to make quantifiable contributions to the environment. Nanya is also actively implementing cleaner production practices and incorporating green management into our business operations. We implemented 25 energy-saving action plans in 2022, saving over 4.37 million kWh of electricity. With regard to renewable energy, we purchased 7.88 million kWh of electricity from onshore wind farms in 2022, and will continue to purchase renewable energy (e.g., solar power or offshore wind power). We expect that our renewable energy consumption will reach 250 million kWh within 10 years starting from 2023. Furthermore, we continue to dedicate efforts to obtain the green building label, and installed a water resource management system that recycles 92.9% of process water.

Nanya published its first TCFD report in 2022 and disclosed its climate change management strategy and actions. Our carbon reduction goals were formally certified by the SBTi, and we target to reduce carbon emissions by 25% in 2030 on our path towards net zero emissions.

Talent Development and Cultivation

"Talents" are the foundation of our company's innovation, operation, and sustainable development. We have implemented various methods to deepen the company's core values, which was designated as "integrity and responsibility", "efficiency and innovation", and "sustainable management", to unite our employees, while building a business with pride. In 2022, we continued the implementation on the talent cultivation action plan [We Together, We Learn, We Grow], which aimed for the development of comprehensive talents so that their knowledge and creativity could sprout. The average number of training hours per employee reached 42.8 hours in 2022—the highest in the past four years. Furthermore, demand on talent has increased due to the rapid growth of the Taiwanese semiconductor industry. In response, Nanya signed an agreement with Chang Gung University to establish a master's program on memory technology, and also established a Semiconductor Talent Cultivation College together with Taipei City University of Science & Technology, providing a site for internships, scholarships, and professional knowledge guidance. We hope to step up talent cultivation through industry-academia collaboration and create a win-win situation for industry, schools, and students. Nanya hopes to enhance the international competitiveness of Taiwan's memory industry through talent cultivation, recruitment, introduction, gathering, and retention, and hopes to provide more learning support and planning options for students.

Together with our Sustainable Partners

Nanya has also collaborated with upstream and downstream partners and peers in the industry to move forward as one, towards sustainability. We have guided 295 suppliers towards the ideas of sustainability and 100% of our partners have co-signed the Nanya Corporate Social Responsibility Guarantee. We have completed the first three-year sustainability audit in 2022, and provided suppliers with guidance to make improvements, which have been completed across our supply chain. Meanwhile, we launched the Nanya Technology Corporation Sustainable Development Mutual Benefit Initiative, and invited dozens of suppliers to jointly declare their commitment to ESG during the annual supplier seminar, so that suppliers will take action to reduce carbon emissions and use clean energy to mitigate the impact of climate change. Suppliers also made the commitment to protect human rights and create friendly and safe workplaces. Procurements from key suppliers that participated in the first phase reached 70%, and transactions with participating contractors reached 96%. We are actively participating in ESG actions and semiconductor ESG initiatives of the SEMI international semiconductor consortium, and became a co-founder of the Semiconductor Climate Consortium (SCC), in hopes of staying up-to-date on trends and working towards mutual benefits through exchanges and learning.

We Care our Employees and Society

During the outbreak of COVID-19 since 2020 through 2022, Nanya's Epidemic Response Task Forces have implemented a variety of epidemic prevention and response measures to protect employee health and maintain a safe work environment in Taiwan and oversea. We have also taken a number of actions to help our neighbors and society, including our donation of 50,000 vaccines, and a number of medical and health supplies to New Taipei Government for our communities to jointly weather the storm. After the epidemic situation subsided in the second half of the year, many employee activities resumed, and Nanya expanded its positive influence through the Love Connection Project and volunteer activities, continuing to organize "Doing one thing for Tamsui River," "Earth Hour Event," "Fair Trade," and numerous events that feature local culture; the events had a total of over 10,000 participants. Nanya also participated in the Cross-school Distance Learning of New Taipei City Government, with the goal of using the power of technology to assist elementary schools in rural areas to create a new distance learning model across schools. To promote sustainability concepts within company, Nanya implemented benefits measures, such as providing subsidies for purchasing electric scooters, calling on employees to "Ride to be Green." and provides employees with a childbirth subsidy to lift the burden on employees caring for the next generation.

Sustainability Recognitions

As a responsible corporate citizen, Nanya continues to dedicate efforts to sustainable development; in fact, our performance has been recognized in Taiwan and overseas. Nanya has demonstrated a balanced development of its business performance and ESG. In terms of international recognition, Nanya once again included in Dow Jones Sustainability (DJSI) World Index, and Dow Jones Emerging Market Index for the fourth time in 2022, ranked No.1 among the global memory industry. We were recognized as the highest honor with "A List" in the CDP Water Security category, "A-, Leadership Level" in the CDP Climate Change category, and selected as a component of the FTSE4Good Emerging Markets Index for the 5^th consecutive year. In terms of domestic recognition, Nanya received the National Enterprise Environmental Protection Award, Top 10 Sustainable Companies Award from the TCSA, Outstanding Professional Award in the GCSA, Classic Outstanding Enterprise in the New Taipei City Enterprise Classic Award, Work-Life Balance Award from the Ministry of Labor, selected as a component of FTSE4Good TIP Taiwan ESG Index for 5 consecutive years, and ranked in the top 5% of the Corporate Governance Evaluation for the 5^th time.

Together, We are Stronger

The global challenges may continue, however, Nanya has proven that we have a competent, and confident team, to further improve our competitiveness in business and ESG. Nanya will utilize team wisdom to enhance innovation and R&D capabilities, and will strive to achieve ESG goals through three strategies: "Creating Shared Value," "Promoting Sustainable Mutual Prosperity," and "Achieving Sustainable Development." Our vision is to become the "Best DRAM Partner for a Smart Generation." We will work closely with our global partners and stakeholders to further strengthen our competitive advantages and leadership in the global semiconductor industry. We will also show our resilience in a volatile environment and work together towards a sustainable future with net zero emissions.