In 2023, the global pandemic came to a complete end, but the macroeconomic recovery fell short of expectations. International turmoil posed challenges to businesses, and the ePaper industry, being part of the electronics supply chain, cannot remain unaffected.

Although facing challenges, E Ink's management team and staff made an all-out effort and deliver a consolidated revenue of NT$27.12 billion in 2023, with the operating margin of 26.9%, profit margin of 29%, net income of NT$7.81 billion, and EPS of NT$6.85. Even though the business outcomes did not show growth compared to 2022, it still reached a the second-highest record in history. We would like to especially thank our shareholders, directors, all E Ink colleagues, ecosystem partners, and customers for their continuous recognition of E Ink's vision and support of the company.

Business and Operations Review

Despite numerous uncertainties in the macro environment, E Ink continues to invest more R&D resources to achieve the goal of pursuing profits and sustainability in tandem and ensure technological leadership. E Ink reaped periodic results in business, operations, and technology R&D:

• Consumer Electronics (CE) Applications: Despite the consumer market has been affected by inflation, the market performance remains stable. Global brand customers continue to release color and larger-sized eReader and eNote to meet the expectations of end consumers.

• IoT Applications: The retail electronic shelf labels, which experienced exceptional growth during the pandemic, slowed down in 2023 due to the transition between new and old technologies. However, public display, the medical field, and logistics tags continue to grow. Solar-powered ePaper bus stop signs and outdoor signage have been installed at more than 1,600 locations in Taiwan, and globally exceeding 70,000 locations.

In 2023, the full range of color ePaper technology platforms are in place, including E Ink Spectra™ 6 Full-Color ePaper, E Ink Kaleido™ 3 Outdoor Print Color ePaper, E Ink Kaleido™ 3 Print Color ePaper, E Ink Gallery™ 3 Full-Color ePaper, and E Ink Prism™ 3 Variable Color ePaper. According to the display characteristics of different color technologies, developing suitable products and diverse applications. Several customers have validated and adopted, gradually launching new color ePaper products in the market.

With more eReader customers adopting new color technologies, E Ink has also planned the "Healthier Screen Time" project, promoting the research on the impact of blue light on the eyes published by the Harvard School of Public Health from an educational perspective. This aims to reinforce the advantages of ePaper in the reading market and establish a differentiated image from various display technologies. At the same time, conveying the message that ePaper without blue light is not harmful to the eyes, and the inclusion of E Ink ComfortGaze™ front light technology makes it three times healthier for your eyes than LCD screens.

In addition, E Ink has actively enhanced its research and development capabilities and has been recognized with multiple awards. These awards affirm E Ink's continuous innovation and dedication to the development of color ePaper and related energy-saving and power-efficient ePaper applications. Awards include:

• E Ink Spectra™ 6 Full-Color technology received the 32nd Taiwan Excellence Award, and the " Solar-powered Sustainable Smart ePaper Shelf Tag and Warehouse Picking System " was awarded the Silver Award at the Taiwan Excellence Award.

• E Ink Spectra™ 6 Color ePaper display technology awarded 2023 Gold Panel Awards- Best Technology Award by the Taiwan Display Union Association.

• Battery-free Color ePaper Device utilizing E Ink Gallery™ Palette seven-color ePaper for eBadge and won the Smart Healthcare Award at the Smart Display Application Award. It also received the Excellent Innovation Product Award from the Hsinchu Science Park.

• E Ink Spectra™ 6 Color ePaper’s breakthrough color performance and E Ink Kaleido™ 3 Print Color ePaper’s rapid updating efficiency both earned the Gold Award at the Smart Display Industrial Alliance Award.
  

Sustainable Development - E Ink PESG

The annual average global temperature was 1.45 °C above pre-industrial levels in 2023 and was the warmest year on record. Environment changes not only increase the difficulty of operations but also motivate E Ink to make greater efforts to demonstrate its commitment as an environmental solution.

E Ink firmly believes that environmental sustainability and corporate profitability are equally important. With the "Product" of environmentally sustainable ePaper as its core, E Ink combines the "Environment", "Social", and "Governance" aspects of ESG to create a unique "P, E, S, G" sustainability framework, and taking actions related to climate, society, and other aspects through products.

E Ink PESG results in 2023 showed that in striving towards the two primary goals of Net Zero 2040 and RE100 2030, E Ink's global operations and sales locations have already reached the RE36 goal of using 36% renewable energy by the end of 2023. Among them, the United States, China, Japan, and South Korea, have reached the RE100 goal of using 100% renewable energy. The Yangzhou plant in China, over 50% of renewable energy is already being used. Since Taiwan is the challenging markets to source green energy, the proportion of renewable energy used at the E Ink's Taiwan plant has doubled to 8% (RE8) compared to the previous year.

In terms of improving energy efficiency, the Hsinchu, Linkou, and Yangzhou plants in China have all implemented ISO50001 energy management systems and obtained certification. The U.S. plant is also undergoing verification. The company focuses on process improvement, equipment scheduling management, and independent research and development design to enhance energy efficiency. At the same time, it is advancing towards the EP100 initiative, aiming to double energy productivity by 2040 compared to the 2018 baseline.

E Ink has been committed to long-term PESG sustainability efforts. In the 2023 S&P Global Corporate Sustainability Assessment (CSA), it attained a remarkable score of 89, positioning itself as the top scorer globally within the Technology Hardware & Equipment Industry Group and consistently securing a position in both the Dow Jones Sustainability World Index (DJSI-World) and Dow Jones Sustainability Emerging Markets Index (DJSI-Emerging Markets). Additionally, it was achieved top 5% in the S&P Global Sustainability Yearbook and received the Best Progress Award for two consecutive years and also received several prestigious sustainability awards, including:

• Awarded the "Excellent Innovation Company" at the 8th National Industrial Innovation Award by the Ministry of Economic Affairs.

• Ranked among the top 5% of OTC companies in the 9th Corporate Governance Evaluation announced by the Taiwan Stock Exchange.

• Ranked 18th in the 2023 Taiwan's Excellence in Corporate Social Responsibility Award by CommonWealth Magazine, showing significant improvement compared to the previous year.

• Awarded the 2023 Global Views Monthly’ ESG Award- the First Place, Comprehensive Performance in Electronics Technology Industry.

• Recognized as a RE100 Best Newcomer from the RE100 Leadership Awards 2023 and achieved target setting through the Science Based Targets initiative (SBTi).

• Recognized by the Taiwan Corporate Sustainability Awards (TCSA) for 7 consecutive years, winning the Top 10 Taiwan Enterprise Sustainability Excellence Award- Manufacture Group, Platinum Award of Corporate Sustainability Report, Climate Leader Award, Sustainable Supply Chain Award, Social Inclusion Award, Enterprise Care Award, and Growth through Innovation Award.

• Responding to net-zero transformation awarded Nation Sustainable Development Award.

• Secured in the list of Best Taiwan Global Brands with a brand value of US$101 million.

• Achieved an A- Leadership Level on CDP Climate Change Rating and recognized efforts in climate change governance.

With the increasing importance of nature and biodiversity for the corporate sustainability development, E Ink focuses on environmental protection and actively implements the commitments to biodiversity and no gross deforestation. The company participates in the "Business for Nature" initiative, advocating for governments to adopt proactive policies to stop and reverse the loss of nature by 2030. Additionally, E Ink has initiated relevant strategies and has been recognized as one of global early adopter by the Task Force on Nature-related Financial Disclosures (TNFD) framework by the World Economic Forum. It ranked the top 14 pioneers in Taiwan and has committed to disclosing the natural-related risks and strategies in accordance with the TNFD framework.

Due to the continued instability in international politics and economy in 2024, the E Ink team will closely monitor market trends and maintain a cautious and steady approach to business operations to ensure sustained growth for the company. We will address challenges and seize opportunities in business, technology research and development, and operational management.

Business Development

• Consumer Electronics: Full-color ePaper has entered mass production and many global brand customers will launch eReaders and eNotes in 2024. Larger-sized eReader and eNote products will also be released, driving a wave of ePaper products replacement.

• IoT Applications: The color technology transition for electronic shelf labels has been completed. In addition to the ongoing growth in the European market, American supermarket chains have also launched installation and adoption. The development of ePaper signage will move towards larger sizes suitable for indoor or outdoor environments. The environmentally-friendly ultra-low carbon color ePaper signage have gained attention, and the market's growth momentum continues to rise. The application in smart healthcare, smart logistics, smart factories, and other fields are continuously expanding, fostering new growth opportunities.

Technology Development

E Ink will focus on developing ePaper technologies related to ePaper film, color, flexibility, modules, and those key areas including wireless power supply technologies, ePaper timing controller chips, and product reference designs. In addition, the company will continue to improve and develop environmentally friendly, low-power-consumption technologies, such as reducing stacks, minimizing materials, and enhancing energy efficiency. By prioritizing carbon reduction, energy efficiency, recycling, and innovation, E Ink hopes to create products with a smaller carbon footprint.

Operations Management

As the new office and factory building at the Hsinchu headquarters is set to be completed and operational in the second quarter of 2024, it will inject new research and development capabilities and production capacity into E Ink. This reflects E Ink's commitment to local investment and talent cultivation.

In response to E Ink's 2040 Net Zero and 2030 RE100 net-zero paths, the company will improve energy efficiency, reduce greenhouse gas emissions, and low-carbon measures in eco-friendly manufacturing. At the same time, E Ink is committed to building a low-carbon supply chain with plans to adopt the ISO 20400 Sustainable Procurement-Guidance to strengthen green supply chain management and create a sustainable development value chain for the ePaper industry.