Ladies and Gentlemen,

We extend our sincere gratitude to all shareholders for your unwavering support of Accton throughout the past year. This report provides an overview of Accton’s business performance in 2023 and outlines our forward-looking plans for 2024.

I. 2023 Business Results

(I)Implementation and Results of the 2023 Business Plan
In 2023, Accton achieved a consolidated revenue of NT$ 84,188 billion, marking a 9.0% increase compared to the previous year. Furthermore, our consolidated net profit after tax amounted to NT$ 8,920 billion, reflecting a 9.2% increase over the previous year. Revenue contributions from various product lines were as follows: network switches accounted for 68% of total revenue, network application equipment accounted for 23%, metro access equipment accounted for 6%, wireless network equipment accounted for 1%, with the remaining percentage attributed to Other Services. Looking ahead, our continuous investment in core competencies essential to the new era of network infrastructure positions us to explore adjacent markets, fostering long-term business growth.

(II)Budget Execution Status
In 2023, both revenue and profitability exceed internal objectives.

(III)Research and Development Status
In 2023, Accton delivered a series of industry-leading new products with accelerated customer adoptions. We remain committed to investing in innovative technologies and services, positioning ourselves as a premium networking infrastructure provider in both hardware and software domains. Noteworthy highlights of our R&D efforts in 2023 include:

1. Introduction and customer delivery of the industry-leading 51.2T switch with 800G optics, alongside forward development into next-generation switch and interconnectivity optical technology.
2. Continued mass production of high-density 100G/400G switches for both Hyperscalers and generic Data Centers.
3. Development of industry-leading AI fabric switch, CXL switches, and appliances, among others.
4. Ongoing innovation in AI engine development for both Training and Inference purposes.
5. Advancements in wireless technologies, including but not limited to WiFi 7.
6. Continuous Research and Development of foundation technologies such as Power, Cooling, and Immersion Liquid Cooling, Signal Integrity/Power Integrity, etc. among others.
7. Development of smart manufacturing to facilitate global expansion for Manufacturing as a Service.

II. Executive Summary of the Business Plan for 2024

(I)Business Strategy
Our strategic focus for 2024 revolves around maximizing the four-pillar strategy encompassing ODM service, JDM services, Open Networking segments, and strategic technology partnerships. This approach aims to drive continuous innovation, delivering premium products and services for networking infrastructure with enhanced quality and reduced time to market. Additionally, we seek to nurture and expand strategic partnerships to foster co-development, co-innovation, and co-Go-To-Market initiatives, laying the foundation for long-term technology and business development and adoption.
We are committed to renovating and modernizing our manufacturing and supply chain operations on a global scale to enhance operational efficiency and enable agile capacity planning amidst dynamic business needs, particularly in light of current geopolitical challenges. Moreover, our dedication to Open Networking, both from hardware and software perspectives, remains unwavering, providing agility, flexibility, and openness for practitioners in the open networking space. We prioritize agility and remain open to exploring new adjacent markets for additional revenue streams, investing in both R&D and business model innovation on a global scale. Furthermore, we emphasize global talent acquisition to bolster our workforce capabilities.

(II)Manufacturing and Sales Strategy
In 2023, we adeptly navigated the evolving global macroeconomic and geopolitical landscape by expanding our manufacturing footprint and capacity globally through wholly owned facilities and joint ventures. We also exported our Manufacturing as a Service to various regions worldwide. Our core competencies in agility, flexibility, quality, and on-time delivery remain pivotal, driving continuous investment in these areas. We will continue to seamlessly execute this strategy in 2024.

Our diverse customer mix spanning Network Equipment Providers, Hyperscalers, Network as a Service providers, and emerging AI/ML infrastructure providers provides a robust foundation to navigate market dynamics. The rapid growth in AI presents new opportunities to balance the slower growth observed in other sectors, positioning it as a leading growth engine for Accton. We will continue to execute our sales strategy with flexibility, investing in emerging markets with tailored sales coverage and business development efforts to expand our customer base.

III. Future Growth Strategies for the Company
Accton’s evolution from a traditional ODM player to a leading technology and service company underscores our commitment to fostering continued growth and innovation. To sustain our leadership position in the market, we will continue to invest in R&D, sales, manufacturing, supply chain, partnerships, technical alliances, and talent acquisition. Brand development will be a critical focus area as we strive for global recognition as a premier provider of networking infrastructure solutions. With the convergence of Networking, Compute, and Storage, alongside the proliferation of AI/ML workloads, Accton will intensify efforts to enhance and expand our core competencies beyond networking.

IV. Impact of External Competition, Legal Environment and Overall Business Environment
The challenges posed by the macroeconomic and geopolitical landscape persist into 2024. Inventory management remains a prevalent challenge due to high levels of unconsumed inventory accumulated during the COVID-19 pandemic, contributing to slower-than-expected recovery in sectors such as Enterprise and Telco. Despite these challenges, the surge in demand for new Networking, Compute, and Storage architectures driven by advancements in AI/ML presents significant opportunities for Accton. We are well-positioned to capitalize on this demand, leveraging our past investments and business agility to excel in design, architecture, and innovation.

In conclusion, we recognize the dedication of our hardworking management and staff teams in driving Accton’s success.We extend our appreciation to our customers and technology partners for their invaluable contributions, as well as to our shareholders for their enduring support of our vision.

We appreciate our customers and technology partners for their contributions to exciting ideas and initiatives. We thank our shareholders for their long-term support of our vision and recognize the efforts of our hardworking management and staff teams.

We wish you good health, good fortune and wisdom, best of luck and happiness.

Chairman: Kuan Xin Investment Corp.

Representative: Lin, Meen-Ron

President: Jun Shi