Company Profile

Established in May 1988, Quanta Computer is a one of the Fortune Global 500 Companies and also one of the world's leading manufacturers in notebooks, AI servers, advanced computing equipment, and cloud infrastructure related products. The scope of our business includes cloud computing solutions, mobile computing equipment, smart home, smart mobility, smart manufacturing, smart medicine AIoT market, and etc. We proactively devote R&D resources into technology and innovations to expand new business opportunities and new applications.

Leveraging our strong R&D capacity, high-efficiency and high-quality product development and production capability, global logistics, speedy and flexible delivery services, and economies of scale, Quanta has taken the lead in the first wave of infrastructure build out for generative AI. Our product offerings in 3A categories, including AI PCs, AI servers, and AI car computer, are firmly established. As AI applications and services become widely available, we aim to capitalize our 3A product categories with the rise of AI revolution to propel Quanta forward in becoming an "A+" company.

Aside from maintaining our leadership position in key market segments, such as global notebook design, ODM, manufacturing and cloud computing hardware, we also expand focuses on the needs of large-scale cloud service providers to accelerate the deployment of AI data center infrastructure and related application services, doing so will strengthen our share in AI server market. Furthermore, we target at the business opportunities from the infrastructure reform of private cloud service providers, telecommunication operators, and the raising demand of cloud data centers. Quanta has established strategic partnerships with worldwide system integrators and already set up local sales offices in the U.S., Germany, Mainland China, Japan, South Korea, and Singapore to stay proximity to markets and to respond fast to customer demands. We have business presence across North America, Europe, and Asia Pacific regions, becoming an important AI-enabled cloud infrastructure and applications supplier with global deployment.Please refer to the section "V. Business Activities" of the Quanta Computer Inc. Annual Report 2023 for details of the relevant informations.

The total number of employees in the scope of this report is approximately 51,000 (including employees of QRDC, QTMC, QSMC, QCMC and QMB). Quanta Computer Inc. was listed in Taiwan Stock Exchange (TWSE) with the ticker of 2382 TTIn 2023, the Company did not merge or acquire shares of other companies to issue new shares. For related information, please refer to the section "4.1.1 Sources and Types of Capital " in Quanta Computer Inc. Annual Report 2023.

Overview of Market and Sales

Our Major products include notebook PCs, servers, automotive products, and other consumer products and are mostly for export. Major exporting regions are as follows:

Our products are sold worldwide and a diversified composition of customer portfolio, with the U.S. being the major exporting region, followed by Mainland China. We have assembly sites and after-sales service centers established in Taiwan, California and Tennessee in the U.S., Mexico, Germany, South Korea, Japan, Singapore, Thailand, and Vietnam. With SAP information systems implemented, we provide branded notebook suppliers and mega data center customers with more efficient global services and technical supports.

Sources and Types of Capital

Technology advancement happens rapidly, and market dynamics are difficult to predict, Quanta has taken the lead in the first wave of infrastructure build out for generative AI. Our product offerings in 3A categories, including AI PCs, AI servers, and AI car computer, are firmly established. As AI applications and services become widely available, we aim to capitalize our 3A product categories with the rise of AI revolution to propel the value of company.

The technology industry has gone through several cycles of changes. Drawing from past experiences, the key success factors in adopting new technologies depend not only on the technology itself, but also on changes in user behavior, as well as the formation of new business models. We must continuously monitor and observe the trends of innovation, and incorporate the AI technology in the three major fields of "SMART X", including "Smart Medicine, Smart Manufacturing, and Smart Mobility." We shall provide the most appropriate tools in SMART X to assist our clients in developing high-quality services and solutions. Doing so would enable Quanta to seize the moment of business opportunities precisely when applications of new technology arise.

R&D Expensesin the past two years:

R&D expenses in FY2023 was around NT$23.2 billion, an increase of NT$2 billion from NT$21.3 billion in 2022 or 9% increase. R&D expenses as a percentage of revenue in these two years are 2.15% and 1.67% respectively.

Quanta's production and service sites are across Asia, the Americas, Europe, and Southeast Asia countries in Thailand and Vietnam, etc. Our product lines are across information, communications, consumer electronics, and cloud computing areas. We also actively develop our R&D and manufacturing center in Taiwan to achieve our strong competitiveness in global manufacturing and sales.

Quanta spares no effort to develop new technologies and products. In protection of intellectual property rights of our R&D efforts, we have applied for 8,425 patents by 2023 in Taiwan, the U.S., Mainland China, Japan, and Europe and acquired 6,447 patents covering notebook PCs, servers, AI, big data, cloud applications, and AR/VR from Mainland China, the U.S., England, France, Germany, and Japan. In 2023, a total of 11 ESGrelated patents were granted, demonstrating Quanta's investment and achievements in sustainable design through innovative technology research and development throughout the product life cycle, including design, production, packaging, use, and recycling.

In the field of AI development, innovation and breakthroughs often require advanced planning and continuous exploration efforts. In the early stages of current technological revolution, Quanta has invested a substantial amount of resources in actively exploring untapped opportunities. We have undergone a comprehensive process of development of applications, verification testing, production planning, and market feedback analysis in collaboration with partners. The investments are evident in our success in capitalizing on AI infrastructure business opportunities. These achievements not only symbolize technological innovation, but also demonstrate our customers' long-term recognition and trust in Quanta's core capabilities.

In addition, Quanta continuously monitors the progress of new technologies through the Quanta ELITE School. The curriculum includes online and physical courses, accumulating a database of over a thousand courses to enable employees to stay updated and learn in line with the latest advancements. Quanta also incentivizes employees who propose research and development outcomes by providing bonuses upon patent applications and approvals. Each year, the best patent designs and inventors are selected, and awards are presented at the company's annual gathering, motivating employees to continue innovating.

Sales in The Past Two Years

Quanta believes that honest operation is the way for the company's long-term development and has set a goal to establish a culture of integrity among all employees. To ensure that all Quanta employees, including directors, managers, employees, and suppliers, understand the principles of honest operation and have a shared understanding of compliance, the company has established the "Ethical Corporate Management Best Practice Principles," "Corporate Governance Best Practice Principles," "Code of Ethical Conducts," and "Procedures for Insider Trading Prevention." After being approved by the Board of Directors, these regulations can be read and queried on the Quanta Computer official website under Corporate Governance and Important Company Regulations.

In 2022, to strengthen the moral and ethical awareness of all employees, Quanta has formulated the "Policies on Ethics and Integrity," which have been announced on the website after being approved by the General Manager. The company also has an "Employee Code of Ethics," which is regularly disseminated to colleagues every year. Please refer to company website for details of the relevant operations.

All of Quanta's honest operation policies and procedures clearly indicate that the company has a zero-tolerance policy for any form of violation of business ethics, corruption, or bribery. Quanta's employees are not allowed to accept inappropriate gifts or engage in insider trading. When engaging in business activities related to the company, employees mustn't sacrifice the company's interests due to conflicts of interest with their personal interests. We are committed to respecting intellectual property rights and will not engage in business activities that violate the Fair-Trade Act or the Antitrust Act. When personal information needs to be collected for business purposes, we will also comply with the laws and regulations of each country. We pledge to disclose economic performance and business activities transparently in accordance with the law, and charitable donations will also be made based on legal requirements and publicly disclosed.

Since 2015, Quanta has required selected suppliers to sign the "Quanta Supplier RBA Code of Conduct Compliance Statement," which requires suppliers to comply with the standards and regulations for labor, ethics, safety and health, environment, and management systems outlined in the code of conduct. We also encourage suppliers to voluntarily undergo RBA audits or to be audited by our own CSR team. This will help promote consensus and gain support from customers, suppliers, business partners, and other stakeholders involved in business transactions.

All our efforts to have suppliers sign the "Quanta Supplier RBA Code of Conduct Compliance Statement" have paid off, with all 146 targeted suppliers achieving compliance by 2023. We are proud to announce that a total of 1406 suppliers have completed this process to date. The communication ratio is 100 percent.

Our company has implemented many procedures to prevent conflicts of interest. First, when directors or managers engage in activities within the scope of the company's business, whether for themselves or others, they should obtain prior approval from the shareholders' meeting or the board of directors in accordance with legal requirements. This is to ensure corporate governance, strengthen supervisory functions, and enhance management capabilities, so that the board of directors and senior management can collaborate in implementing ethical business practices. Therefore, appropriate measures have been established in accordance with legal regulations for compliance. Major matters such as operational policies, investment projects, asset acquisition or disposal, lending of funds to others, and endorsement guarantees are also analyzed and executed in compliance with relevant regulations. The corresponding rights and responsibilities are reported and announced in accordance with the law. At the same time, we conduct annual self-inspection operations to ensure that we review the appropriateness and implementation of internal controls in a timely manner, taking into account organizational and environmental changes. This helps us ensure the effective implementation of internal controls.

For details of the implementation, please refer to "3.4.6 Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies" in the Quanta Computer Inc. Annual Report 2023.

The Company has established "Rules and Procedures for the Board of Directors Meeting" as a guideline for BoD operation to enforce corporate governance, to optimize organizational supervision, and to strengthen organizational management. In the event that a proposal involves conflict of interests of a director and such proposal may harm the organization's interests, the related director will follow the principle of directors' avoidance of motions in conflict of interests to protect the interests of the Company and its shareholders.For details of the implementation, please refer to "3.4.1.2.2 Execution of Directors' avoidance of motions in conflict of interests" in the Quanta Computer Inc. Annual Report 2023.

To help employees develop a deeper understanding of the Company's principles of integrity, the Company reminds all managers and employees to read the Code of Ethics and sign off as acknowledgement the code. Matters involving avoidance of interests should also be truthfully reported, and should be confirmed by supervisors at all levels whether there is any impact, and necessary preventive actions should be taken. Upon verification from the President, the annual declaration of ethics and avoidance of interests should be completed. Except for employees who are on leave or suspension during the declaration period, all governance staff and indirect personnel with computers are required to complete the interest conflict declaration within two weeks. In 2023, a total of 4,373 senior managers from the Taiwan plant (3,498), the China plant (875), and the Thailand plant (5) have completed the declaration, with a ratio of 100%. (Senior managers are defined as deputy managers to managers or above.)

During new employee training, each plant's new recruits receive training on the company's integrity and ethical policies and are explicitly informed that the company prohibits any form of corruption, bribery, fraud, extortion, or embezzlement of public funds. Any violation will result in strict disciplinary action or legal action. Employees are also informed of the upper limit for receiving gifts based on normal social relationships, and the handling principles when the gift value exceeds that limit. Employees are aware of the channels for anonymous or named reporting of violations of business ethics. Related regulations can also be found in the new employee handbook.

In the mandatory training courses for supervisors, such as management case studies, talent selection, goal setting, and performance management, the concept of anticorruption is integrated into the core competencies of 2B culture, such as "proactivity" and "high self-demand", through the supervisor's manual. The CSR annual training includes classroom courses and online corporate social responsibility training videos, which aim to promote and educate anti-corruption policies in Quanta.

A total of 8,211 employees in the Taiwan plant, 73,295 in the China plant, and 3,917 in the Thailand plant have received training on integrity policies, with a ratio of 100%.

All employees should remain vigilant against any violation of the employee code of ethics. When there are concerns or discoveries of any violations of the employee code of ethics, it is the responsibility of all employees to report them to their supervisors. If necessary, they may report directly to the HR director, the internal audit manager, or through an employee complaint channel.

Employees can use the following channels on the official website to file complaints, express opinions, or make inquiries with all stakeholders at Quanta, in addition to the aforementioned channels: The Channels are as follows:

• ESG Contact Window for each site
• Code of Business Conduct (Independent Window at Headquarters)

All complaints can be filed anonymously or with identification. If a reported violation involves a member of the governance level, the report will be submitted to the chairman or vice chairman, who will then assign dedicated supervisor and audit personnel to conduct an independent investigation. If the reported violation involves an ordinary employee, the audit team will investigate and provide a report to the highest-level executive in charge of the relevant area for further handling. If an employee violates the employee code of ethics, they will be punished in accordance with the relevant rules and regulations, and in serious cases, law enforcement agencies will be notified. If a supplier violates Quanta's employee code of ethics, the partnership will be suspended in accordance with the contract provisions. The annual results of these actions will be reported to the Board of Directors, including details of the investigation and improvement plans. Quanta promises to protect any stakeholder who reports any violations of the employee code of ethics and participates in the investigation process to avoid unfair retaliation or treatment.

Information security is a crucial cornerstone for sustainable development and maintaining core competitiveness in the enterprise. At Quanta, we are committed to enhancing the overall management of information security as our goal. We have established a layered defense framework to enhance overall protection and conduct comprehensive risk monitoring. We will continue to refer to domestic and international trends, international standards, and advice from external professional consultants to allocate appropriate security budgets annually, optimize various protective control measures, strengthen education and training for all personnel, improve security awareness and response capabilities, and safeguard the company's operations and information security.

"Everyone participates, controls risks, and ensures the effective operation of the information security system to protect the normal operation of the company. " is the motto of Quanta's information security strategy.

Quanta's information and communication security policy has three objectives: "Everyone participates and controls risks", "actively prevents, continually improves," and "customer trust, sustainable operation".

• Everyone participates and controls risks: Establishing an information security management system, determining the functions and responsibilities of information security, and managing information security comprehensively across all processes and staff. According to the characteristics of the company's information security, the requirements of laws and regulations, the risk assessment procedures are established, and the risk acceptance criteria are determined. Conducting regular risk assessment and taking appropriate measures to reduce potential risks.
• Actively prevents, continually improves: In business operations, emphasis is placed on information security, identifying, and analyzing weaknesses and potential threats in information systems, considering the balance of costs, benefits, and risks, classifying and protecting assets, and protecting information systems at an appropriate cost.
• Customer trust, sustainable operation: By conducting performance evaluations and continuous improvement, we ensure the effectiveness of the information security management system and achieve the goals of customer trust and sustainable business operation.

In the first quarter of 2022, the Board of Directors approved the establishment of a Cybersecurity unit and the appointment of a full-time minister. The cybersecurity unit is called the "Information Security Center" and reports directly to the general manager or his designated representative. It is responsible for convening meetings of the Proprietary Information Security Committee (PIS)。The "Information Security Center" has set up the "Information Security Management Department" and the "Information Security Technology Department", responsible for the management of cybersecurity matters within the group. This includes coordinating cybersecurity policies, international cybersecurity standards verification and auditing, implementing and verifying cybersecurity mechanisms, building layered defenses, enhancing cybersecurity levels, and aligning with international standards. The center regularly reports on relevant risks, issues, and management effectiveness.

To demonstrate the company's good cybersecurity management and strengthen cross-departmental collaboration within the group, the existing PIS committee has been expanded to become the highest guidance unit for group-wide information security. Through biannual committee meetings, monthly meetings of the Information Security Center, and regular and ad hoc project meetings, various information security management policies and measures are continuously promoted. Comprehensive reviews and optimizations of information security policies and cybersecurity measures are conducted at least once a year, and the execution of information security is reported to the board of directors at least once a year. The most recent report was submitted on November 10, 2023.