Letter to Shareholders

Dear Shareholders,

In 2021, the global pandemic persisted amid geopolitical conflicts and disruptions in the semiconductor supply chain that caused shortages and price hikes of certain materials. The demand for powering CPU and GPU in cloud and networking devices has led to an increase in the volume and gross margin of power supply products. FSP followed trends and adjusted its material preparation policy and product portfolio to achieve a 13% growth in overall revenue compared to the previous year, totaling approximately NT$16.7 billion. Telecom cloud and industrial products accounted for over 60% of the total revenue, and the overall number of power supplies sold totaled nearly 21.2 million units, exceeding the target of 20.9 million units. The results of operations in 2021 and the business outlook for 2022 are explained below:

I. Results of Operations in 2021

(I) Business Plan Implementation Results

FSP's consolidated revenue for 2021 was NT$16,650,252 thousand, an increase of 13% compared to consolidated revenue of NT$14,796,460 thousand for 2020; the net income before tax for 2021 was NT$960,600 thousand, an increase of 3% compared to net income before tax of NT$934,044 thousand for 2020; net income after tax for 2021 was NT$801,279 thousand, an increase of 16% compared to net income after tax of NT$692,075 thousand for 2020; basic earnings per share before and after tax for 2021 were NT$4.67 and NT$4.03, respectively.

Unit: NT$ thousands; %
Item 2021 2020 Change, by Amount Change, by Percentage
Operating Revenue 16,650,252 14,796,460 1,853,792 12.53%
Gross Profit 2,424,205 2,063,548 360,657 17.48%
Operating Income 671,909 462,337 209,572 45.33%
Non-Operating Income and Expenditures 288,691 471,707 (183,016) (38.80%)
Net Income Before Tax 960,600 934,044 26,556 2.84%
Net income After Tax 801,279 692,075 109,204 15.78%

(II) Budget Implementation Status

The Company did not formulate a financial forecast for 2021.

(III) Analysis of Financial Gains and Losses and Profitability

Unit: NT$ thousands; %
2021 2020 Percentage of Increase (Decrease)
Financial Revenue and Expenditures Operating Revenue 16,650,252 14,796,460 12.53%
Gross Profit 2,424,205 2,063,548 17.48%
Net Profit After Tax 801,279 692,075 15.78%
Profitability Analysis Return on total assets (%) 4.00 4.11 (2.68%)
Return on equity (%) 6.30 6.72 (6.25%)
Ratio of income before tax to paid-in capital (%) 51.30 49.88 2.85%
Net profit margin (%) 4.81 4.68 2.78
Earnings Per Share (NT$) 4.03 3.55 13.52%

(IV) Research and Development

The results of R&D in 2021 were as follows:
  • Increased ATX power density.
  • Continuous development of highly automated products to reduce the cost of labor and increase production capacity.
  • Development of power supply to support the 12Vo platform developed by Intel: SFX 650/750W.
  • Conducted research and assessment of new component materials and plan the introduction of suitable products.
  • High-wattage SFX power supply with multiple output rated for 750W/850W.
  • GaN USB PD 65W products.
  • 90W/120/135/150W/180W U3 series compact models.
  • 50/65W products with wide temperature adaptation.
  • Development of 300W 5V, 12V, and 24V power supply for industrial computer products with touch screens or motors.
  • CRPS 2400W and 3000W high-power density devices.
  • Completed CRPS modularized back panel and entry-level housing to meet the high-mix low-volume demand for edge computing: FC210E.
  • 80W and 150W @2" x 4" power supply for telecom applications.
  • 30W, 50W, and 75W power supply for industrial applications.
  • 250W @ 2" x 4" series.
  • 260W @ 3" x 5" series.
  • 450W @ 3" x 5" series.
  • 120W IP54.
  • 250W ATX.
  • 500W Class II substrate medical application power supply.
  • 600/700W ATX.
  • 600W/1100W 50.4V-58.8V On Board/Off Board Charger.
  • 1800W 60V/30V On Board Charger.
  • 300W CANBUS Charger.
  • 700W aluminum-cast high-end water, dust, and shock-proof product development.
  • AMR application charger development (1100W).

II. Summary of 2022 Business Plan

In 2022, the Company shall develop high-power digital power supply products with wide temperature adaptation for IOT networking products to meet the high-mix low-volume demand for such products. For USB PD products, the Company shall develop 240W USB PD products to meet the demand of most devices to respond the increase in USB 3.1 power needs. For gaming and Intel's new specifications, we shall develop Titanium-grade products with higher power and high efficiency. For the energy storage and battery market, we shall develop chargers and home energy storage systems targeting light-weight vehicles. The current target for total sales of power supply units is 20.9 million units.

The commissioning of the Company's new Taoyuan 3rd Plant constructed in 2021 is progressing smoothly and we shall make full use of the plant to support purchase orders for products that must be produced in Taiwan.

III. Future Development Strategy

FSP is committed to its corporate mission of "maximizing value for customers, employees, and shareholders with innovative services and high-quality products". We shall continue to develop advanced technologies and innovative power supplies for the industry to provide high value-added power supply products. We shall develop more efficient and durable power supply products for sustainability. They can be used in all kinds of telecom devices and open platform devices to reduce waste and inefficient manufacturing of products. We shall develop battery and charging systems for electric vehicles to reduce the use of vehicles with internal combustion engines and prevent air pollution. We shall also develop products for home energy storage to maintain partial supply of electricity for homes and protect the grid. The Company endeavors to develop and build business models that meet the urgent needs of people based on sustainability ideals.

IV. Impact of the External Competitive Environment, Regulatory Environment, and Overall Business Environment

FSP has set up the Sustainable Development Committee under the jurisdiction of the Board of Directors. With regard to current domestic and foreign laws and regulations that govern our operations, and our management team will continue to pay close attention to policies and laws on corporate governance issues that may affect the Company's financial and business. We shall provide guidance and review environmental issues related to the environment between operations and production, and social issues related to coexistence and mutual prosperity with society and stakeholders on all levels.

FSP is committed to protecting the environment with green energy, respecting customers, and creating a high-quality work environment. We seek to become the most reliable partner for customers, consumers, suppliers, and employees and maximize value for customers, shareholders, and employees.

I wish you good health and prosperity
Chairman: Cheng, Ya-Jen
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