Stakeholder

2024 Letter to Shareholders

Dear Shareholders,

In 2024, the global economy continued to face challenges from the previous year, slowing growth and high uncertainty. The high interest rate environment continues to suppress corporate investment and consumer spending. Although inflation has eased, central banks around the world are still cautious in adjusting monetary policy. China's economic recovery lacks momentum, and the weak real estate market and sluggish domestic demand are affecting global supply chains and trade activities. Geopolitical risks have further intensified, with the US-China technology war expanding to key supply chains, and the unresolved Russia-Ukraine war and Israel-Kazakhstan conflict deepening global market turmoil. In addition, supply chain restructuring, energy transformation and the rise of AI also bring challenges and opportunities to the economies of various countries.

According to the update of the World Economic Outlook released by the International Monetary Fund (IMF) in January 2025, the global economic growth rate in 2024 is 3.2%, and it is predicted to be 3.3% in both 2025 and 2026, which is lower than the historical average of 3.7%. Growth rates among countries diverge, with the US growth rate increasing but risks for other economies tending to the downside. Global inflation is expected to drop from 4.2% in 2025 to 3.5% in 2026. Inflation in developed economies will return to target earlier, providing room for interest rate cuts. The IMF pointed out that the medium-term growth rate of the global economy is still below historical levels, and policymakers must rebuild fiscal and monetary buffers, promote structural reforms, and strengthen multilateral cooperation to enhance growth prospects and ensure sustainable economic development.

According to Prismark's report, the overall economic challenges in 2024 include: weak demand and incomplete inventory liquidation, high inflation and high interest rates continue to affect the economic environment throughout the year, China, Europe, Japan and other places face macroeconomic challenges, intensified geopolitical conflicts, restricted exports of US semiconductor technology, and supply chain restructuring. The electronics market grew by 4.6% in 2024, mainly driven by AI, including servers, high-performance computing (HPC), data center networks, advanced packaging, high-speed circuit boards and low Dk materials. In 2024, the AI server market has shown explosive growth and has become a key driving force for the electronics industry, growing by 48%. It is expected to continue to expand in the next five years, with an average annual compound growth rate of 20.2%, becoming the main growth force. The expansion of PCB production capacity in Southeast Asia (Thailand, Malaysia, and Vietnam) will also become a key step in the development of the electronics industry.

The PCB market grew by 5.8% in 2024, among which 18-layer up multi-layer boards were the fastest growing segment, reaching 25.2%. Although part of the growth came from a smaller base, it also highlighted strong demand for data centers, network equipment and AI servers. The high-density interconnect (HDI) market grew by 17.8%, ranking second in terms of growth rate. It was mainly driven by HLC+HDI boards and is widely used in AI servers, high-speed networks, satellite communications, and automotive fields, demonstrating strong growth momentum.

Looking ahead, the PCB market is expected to grow by 6.1% in 2025, with a five-year compound annual growth rate (CAGR) of 5.6%. The global PCB production capacity is accelerating its transformation. China remains the world's largest production base. In the future, it will focus on high value-added products and expand the proportion of local production. At the same time, the trend of industrial integration is becoming increasingly obvious. Southeast Asia (SEA) is rising rapidly, covering areas such as MLB, HDI, FPC and substrates, and is expected to become the world's second largest production base in the next few years. In addition, Japan, Taiwan and South Korea will focus more on advanced technologies with high added value to further enhance their market competitiveness and push the continuous upgrading and development of the industry.

Dynamic's revenue grew by 13% in 2024, mainly benefiting from the strong growth of the HDI market, among which HDI revenue increased significantly by 55%, the proportion increased from 24% to 32%, and the product structure continued to be optimized. In terms of product applications, network communications and servers performed the best. Driven by strong market demand and growth of major customers, revenue increased significantly by 82%, demonstrating strong growth momentum. In addition, businesses such as computers and peripherals, storage devices, and automotive boards also achieved steady growth. The gross profit margin decreased slightly compared with last year, mainly due to the higher initial operating costs of the Thailand factory. However, as the production capacity of the Thai plant gradually expands and high-end products enter mass production in 2025, gross profit margin is expected to improve. Overall, net profit after tax in 2024 is expected to grow by 4.7%, with earnings per share (EPS) reaching $3.78, showing solid profitability.

In 2024, in order to strengthen sustainable development and sustainable governance, Dynamic has upgraded the original ESG Sustainability Committee to the "Sustainability Committee" under the Board of Directors in accordance with the provisions of the "Corporate Governance Code of Practice" and the "Sustainable Development Code of Practice", further enhancing the supervision and practice of sustainable issues and elevating the Company towards higher standards of sustainable operations. In order to establish carbon reduction commitments, enhance corporate sustainable competitiveness, and respond to stakeholder expectations, Dynamic has submitted specific scientific carbon reduction goals and methods to SBTi, and is expected to pass SBTi review in 2025. In terms of the use of renewable energy, in 2024, the Huangshi plant generated 2.2 million kWh of solar power and purchased approximately 91.48 million kWh of green electricity, bringing the green energy utilization rate to 34.42%. Dynamic will continue to promote green energy transformation and move towards a more sustainable future. In addition, in 2024, Dynamic has joined hands with supply chain partners to conduct ISO 14067 product carbon footprint (PCF) inventory, improve Dynamic's carbon footprint management system, provide customers with the information they need, and jointly reduce product carbon footprint to achieve the vision of sustainability and environmental coexistence.

In 2024, Dynamic's outstanding ESG performance has won high recognition from the international and industry circles, including:

1. International recognition: Selected into the S&P Global Sustainability Yearbook, showing Dynamic's deep cultivation and breakthroughs in the field of sustainable development, and gaining global recognition with its outstanding strength.
2. Sustainability Awards: Won the TCSA Sustainability Enterprise Performance Award and the Sustainability Report Silver Award, demonstrating the company's comprehensive efforts and outstanding vision in social responsibility and sustainable development.
3. Talent cultivation: The Taoyuan headquarters promoted the AI and health checkup two-way empowerment plan and was awarded as a model enterprise for training completion, demonstrating Dynamic’s leading position in AI talent cultivation and practical application.
4. Supply Chain Excellence:
   • Kunshan Plant won the 2024 Outstanding Supplier Award from HLDS.
   • Dynamic Huangshi won the 2024 Excellent Supply Chain of Continental Automotive Award.
   • Dynamic Huangshi won the 2024 Outstanding Supplier Award from LG Electronics Inc.
   • Dynamic Huangshi won the AMD PEEP Project Special Contribution Award.
5. Green and sustainable development:
   • Dynamic Huangshi was awarded the national green supply chain management enterprise certification.
   • Dynamic Huangshi was selected as a "Green Label Enterprise" by the Hubei Provincial Department of Ecology and Environment, demonstrating its outstanding environmental performance.
   • Dynamic Huangshi has become a joint innovation center for multi-layer high-layer count HDI between enterprises and universities, continuously promoting technological innovation and industry-university cooperation.

Dynamic will continue to deepen sustainable management and industrial innovation, and work with supply chain partners to create a green and low-carbon future.

Looking ahead, as we face the ongoing turbulence of the global economy and the escalating challenges of climate change, we stand at a pivotal moment—one filled with uncertainty, yet brimming with limitless possibilities. On this journey full of challenges, every employee and stakeholder is an indispensable partner in our path toward sustainability. We hope that everyone will embrace the mindset of "Think out of box, Do things differently, Achieve better result.” With this spirit and attitude, may we remain steady amidst change, find breakthroughs in adversity, and infuse the company with greater resilience and influence. Let us stay true to our original purpose and move forward hand in hand, building a shared vision of sustainability and creating a brighter, more prosperous future for the next generation.

Finally, I want to wish everyone health and safety for yourselves and your families.