In 2022, the global economy faced high uncertainty due to the turmoil in international situations, inflation causing economic recession, and extreme weather leading to climate disasters. Companies faced challenges in operations, manufacturing, and supply chain resilience in the highly uncertain macroeconomic environment. Although many general environment factors were unfavorable, E Ink's management team and staff made an all-out effort and delivered stellar business outcomes, setting an 11-year high with a consolidated revenue of NT$30.06 billion in 2022. E Ink reached a record high with the operating margin of 30.6%, profit margin of 33%, net income of NT$9.91 billion, and EPS of NT$8.69. We would like to especially thank our shareholders, directors, all E Ink colleagues, ecosystem partners, and customers for their support of the company.

Business and Operations Review

With the goal of pursuing profits and sustainability in tandem, E Ink reaped fruitful results in business, operations, and technology R&D in 2022:

• Consumer Electronics (CE) applications: Global brand customers continue to release color and large-sized eReaders and eNotes. Despite the tightening consumer market, sales of eReaders and eNotes maintained steady growth.
  
•  IoT Applications: ePaper with its characteristics of continuous display without power consumption, non-emissive reflective display, and replacing disposable paper with digital displays, has the environmentally friendly features of low carbon and no light pollution. This has driven the active growth in products such as electronic shelf labels, ePaper bus stop signs, commercial and public display, healthcare signage, and logistics tags.
  

In terms of the development of color electronic paper technology, the full range of color electronic paper technology platforms are in place, allowing for diverse applications and meeting market demands in various fields. This enables the designs of products to better cater to the needs of customers by utilizing different color electronic paper technologies.

•  E Ink Spectra™ 6: Based on the E Ink Spectra technology platform, it enhances color spectrum and advanced color imaging algorithms, offering full-color displays. It has a resolution of 200 PPI, a contrast ratio of 30:1, and operates within a temperature range of 0 to 50 degrees Celsius. It is suitable for in-store digital advertising or replacing paper printouts, including POP displays, signage, and posters.
  
•  E Ink Kaleido™ 3 Outdoor: Built on the Print Color ePaper technology, this outdoor color printing electronic paper utilizes RGB color display principles, allowing the black and white electronic paper film to display rich colors, providing 4,096 colors and delivering a display effect similar to color-printed paper signs. Moreover, it is specifically designed for digital outdoor advertising signage applications and can operate within a temperature range of -15°C to 65°C. It can function properly in extremely cold or hot climates without the need for expensive high-energy heating or cooling devices, reducing additional power consumption.
  
• E Ink Kaleido™ 3 print color ePaper: E Ink Kaleido™ 3 enhances color saturation, vividness, and visual clarity by optimizing the structural design of the ePaper module. It also features the ability to play animations and videos, making it suitable for devices that display rich image information. It can be used in smart education and digital reading devices.
  
• E Ink Gallery™ 3 Full-Color Electronic Paper: Significantly improves the page-turning speed of color images while maintaining the same performance as black and white electronic paper. It is suitable for displaying picture books, textbooks, magazines, and other color content, making it ideal for color e-book readers and electronic paper notebooks.
  
•  E Ink Prism™ 3 Variable Color Electronic Paper: Unlike matrix-based color electronic paper technology, E Ink Prism™ 3 variable color electronic paper utilizes segment-based display technology. It possesses dynamic color-changing characteristics and offers 8 color options. Through programmable editing of color variation and pattern design, it can create rich and dynamic display surfaces. It is applicable to consumer electronics, fashion, automotive, residential, and other application fields.

In response to the diverse development of ePaper technology and the steady growth of product applications, E Ink announced the expansion of four ePaper material production lines from 2020 to 2021. Among them, three production lines have entered production in 2022, and the fourth production line will be put into mass production in the first half of 2023

In addition, E Ink has actively enhanced its research and development capabilities and has been recognized with multiple technology awards. E Ink Prism™ Variable Color Electronic Paper was awarded the Gold Award at the 31st Taiwan Excellence Awards. E Ink Spectra™ 3100 Plus received the Taiwan Excellence Award, and E Ink Spectra™ 3100 won the Smart Retail Award at the Taiwan Display Industry Association's Smart Display Application Awards. E Ink Gallery™ 3 received the Excellent Innovation Product Award from the Hsinchu Science Park, and its foldable characteristics earned it the Silver Award at the Display Innovation Awards by the Cross-Industry Cooperation Alliance for Smart Display Industry. The E Ink Driver IC with Dynamic and Interlaced Scan by AI Computing, an independently developed solution by E Ink Corporation, received the IC & Components category award at the 2022 Computex Best Choice Awards. The design of the wireless power supply device for electronic paper received the Bronze Award at the 2022 Taiwan Innovation Technology Expo. Furthermore, E Ink Spectra 6 received the 2023 Display Component Technology Award, and the batteryless color electronic paper received the 2023 Smart Display Application Award. These awards affirm E Ink Corporation's continuous innovation and dedication to the development of color electronic paper and related energy-saving and power-efficient electronic paper applications. Additionally, research from the Harvard School of Public Health has shown that electronic paper without blue light is not harmful to the eyes, and the inclusion of E Ink ComfortGaze™ front light technology makes it three times better for eye health compared to LCD screens.

Sustainable Development - E Ink PESG

E Ink firmly believes that environmental sustainability and corporate profitability are equally important missions. 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 is fully implementing this framework comprehensively.

To promote sustainability efficiently and strengthen the governance and supervision of the results, E Ink's Board of Directors approved the establishment of the Sustainable Development Committee that functions at the board level. The scope of work includes creating environmentally friendly products, green manufacturing and climate change responses, employee development and occupational safety and health, corporate governance and ethical corporate management, developing sustainable supply chains, stakeholder communication and social inclusion, and operational risk and opportunity management.

E Ink PESG results in 2022 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 RE20 goal of using 20% renewable energy by December 2022. Among them, the US sites in Billerica, Fremont, and South Hadley, and offices in Tokyo, Japan, and Seoul, South Korea, have reached the RE100 goal of using 100% renewable energy.

In order to establish product carbon reduction targets, E Ink conducted a carbon footprint inventory of its ePaper modules in 2022. The investigation covered critical materials, raw material manufacturing, acquisition and transportation, and product manufacturing. The carbon footprint of each 6.8-inch e-reader module was found to be 3.30 kg CO2e, while that of each 2.9-inch electronic shelf label was 0.59 kg CO2e, as certified by the ISO 14067:2018 carbon footprint verification standard.

At the same time, E Ink actively participates in global sustainability initiatives and is committed to fulfilling them, including RE 100, EP 100, The Climate Pledge, and the Science Based Targets initiative (SBTi). We also use the TCFD framework to disclose the financial impacts of climate-related risks and opportunities. E Ink’s non-light emitting ePaper display technology is the world’s first to receive the Dark Sky certification from the International Dark-Sky Association. This certification attests that our ePaper causes no light pollution.

E Ink Corporation has been committed to long-term sustainability efforts. In addition to being selected as a component of the Dow Jones Sustainability World Index (DJSI-World) and Dow Jones Sustainability Emerging Markets Index (DJSI-EM) for the first time in 2022, and being included in the 2023 S&P Global Sustainability Yearbook with a top 10% rating and the Best Progress Award, it has also received several prestigious sustainability awards,including:

• Ranked among the Top 50 Corporate Citizen Award for sustainability by CommonWealth Magazine
  
• Recognized by the Taiwan Corporate Sustainability Awards (TCSA) for 6 consecutive years, winning the Most Prestigious Sustainability Award - Top 100 Sustainable Enterprises, a Corporate Sustainability Report Award – Electronic Information Manufacturing Industry - First Group Platinum Award, and a Sustainable Individual Performance Leader Award - Growth Through Innovation Leadership.
  
• Of the Taiwan Sustainability Action Awards (TSAA), the “eRead for the Future” eReader mobile library project received the SDG 4 Quality Education - Gold Award, the Diversified Green Energy Net Zero program received the SDG 7 Affordable and Clean Energy - Silver Award, and ePaper Enabled Sustainable Operations of Retail Businesses received the SDG 12 Responsible Consumption - Bronze Award.
  
•  Awarded the "Overall Performance Award" in the Electronics and Technology sector of the 2023 CommonWealth Magazine ESG Corporate Sustainability Awards.
  

People are gradually equating the E Ink brand to the generic term for ePaper. In 2022, E Ink secured the 24th spot in the list of Taiwan’s most valuable international brands with a brand value of US$78 million for the first time. This recognition affirmed E Ink's global industry leadership image.

Moreover, E Ink has demonstrated outstanding achievements in technology innovation leadership, industry development driving force, and sustainable management. It was awarded the "Outstanding Innovative Enterprise" at the 8th National Industrial Innovation Award by the Ministry of Economic Affairs. This award recognizes E Ink’s distinguished achievements resulting from the long-term investment in developing innovative ePaper technologies, management and development of the ePaper ecosystem, and driving shared prosperity and growth in the ePaper industry.

In terms of corporate governance, E Ink Corporation has stood out among 734 listed companies and ranked among the top 5% in the 9th Corporate Governance Evaluation announced by the Taiwan Stock Exchange. According to the latest credit rating report from China Credit Rating Co., Ltd., E Ink (8069) has been assigned a long-term issuer credit rating of "twA-" with a stable outlook. It is currently the only company in Taiwan's optoelectronic display industry to receive a long-term issuer credit rating of "twA-".

The macroeconomic environment in 2023 will be highly uncertain. Given the ongoing turbulence in international politics and economy, the management team of E Ink will closely monitor market trends and maintain a cautious and steady approach to business operations to ensure steady growth for the company. In response to the challenges and opportunities in the environment and industry, the company will conform to the following guidance in business development, technology research and development, and operational management:

Business Development

•  Consumer Electronics: E Ink Gallery™ 3 full-color ePaper has entered mass production. Many global brand customers will launch eReaders and eNotes that utilize our E Ink Gallery technology in 2023. Large-sized eReader and eNote products will also be released, driving steady growth in the consumer electronics ePaper products business.
  
• The European Union updated its energy labeling regulations in 2022, restricting the sales of 4K and above TVs starting from March 2023. This action shows that low-carbon, sustainable electronics will be mainstream trend in the future ePaper's ultra-power-saving and continuous display with no power consumption characteristics make it the best smart low-carbon display. The potential of ePaper utilization in the traffic and advertising signage markets is massive.
  
• The retail label and signage market will see more colorful products being launched, driving continuous growth in the market. IoT-related businesses will develop toward color and size variations. Large-size color digital signage fits healthcare, smart transportation, and smart factory needs, while small-size electronic labels will explore the demand of smart logistics and smart aviation, accumulating new growth momentum.
  

Technology Development

E Ink will focus on developing key technologies related to ePaper film and materials, color, flexibility, modules, and those needed by the ePaper ecosystem, including wireless power supply technologies, ePaper timing controller chips, and product reference designs, the four key areas. The company aims to establish a comprehensive layout of ePaper-related patented technologies and accelerate the commercialization of these technologies in the end market. 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

In response to E Ink's 2040 Net Zero and 2030 RE 100 net-zero paths, the company will improve ePaper productivity, ensure smooth shipments, improve energy efficiency, reduce greenhouse gas emissions, and protect the environment from production waste to deepen the integration of low-carbon and green goals in the operations and manufacturing. At the same time, E Ink is committed to building a low-carbon supply chain, controlling and reducing sustainable development risks, increasing supply chain flexibility, and strengthening supply chain sustainability to create a value chain for the ePaper industry that can develop sustainably.

Outlook

E Ink will aggressively invest in ePaper technology development and innovation, as well as the business expansion of product applications, and continue to work with its ecosystem partners to enhance and develop the ePaper industry. By promoting the widespread use of ePaper, the world can reduce more carbon emissions, while also promoting the digital transformation and development of enterprises. With “E Ink, We Make Surfaces Smart and Green” as the brand vision, E Ink will seize opportunities in AIoT and sustainable development trends, use environmentally and visually friendly electronic paper, and promote the development of electronic paper in areas such as smart retail, smart transportation, and smart logistics. This will enable the company to continue making steady profits and taking big steps towards sustainable development.