I. Name, title, and phone of the spokesman

I. Name, title, and phone of the spokesman:

¡¾Spokesman¡¿Name: Jill Su

Title: Manager

Tel.: (02)2792-7818

E-mail: Jill.C.Su@.tw

II. Headquarters, Branches, and Plant address and phone:

¡¾Headquarters¡¿Address: No. 1, Alley 20, Lane 26, Rueiguang Road, Neihu District,

¡¾Factory¡¿

Taipei City

Tel.: (02)2792-7818

Donghu LCD Computer Factory

Address: 5F, No. 1, Lane 169, Corning Street, Sijhih City

Tel.: (02)2692-6076 (Representative No.)

Donghu Industrial Computer Factory

Address: 6F, No. 1, Lane 169, Corning Street, Sijhih City

Tel.: (02)2692-6076 (Representative No.)

Linkou Industrial Park

Address: No. 27, Wende Road, Guishan District, Taoyuan City

Tel.: (02)2792-7818 (Representative No.)

III. Name, address, and phone of the Stock Agency

Name: KGI Securities Co., Ltd. ¨C Stock Agency Department

Address: 5F, No. 2, Chongqing S. Road, Sec. 1, Taipei City

Website: .tw

Tel.: (02)2389-2999

IV. Name, Firm, address, and phone of the acting independent auditors:

CPAs: Meng Chieh Chiu and Jr-Shian Ke

CPA Firm: Deloitte Taiwan

Address: 12F, No. 156, Min-Sheng E. Road, Taipei City

Website: .tw

Tel.: (02)2545-9988

V. Foreign securities exchange corporation listing: None

VI. Website: http£º//.tw

Table of Contents

I.

II.

Letter to Shareholders

Company profiles

1. Date of Incorporation

2. Company History

III.

Corporate Governance Report

1. Organization

2. Directors and Management Team

3. Implementation of Corporate Governance

4. Information Regarding the Company¡¯s Audit Fee and Independence

5. Changes in the shares held and pledged by directors, supervisors,

managers, and major shareholders holding over 10% of outstanding

shares in the most recent year and up to the publication of the annual

report

IV.

01

03

03

03

09

09

12

26

59

60

6.

The Top-10 shareholders who are the spouses or relatives within

second-degree to each other

61

7.

The shares of the invested company held by the Company, the

Company¡¯s directors, supervisors, managers, and companies controlled

directly or indirectly, and the aggregated overall shareholding ratio

62

Capital Overview

1. Capital and Shares

2. Corporate bond

3. Preferred Stock issued

64

64

70

70

4.

70

73

73

90

94

94

101

108

109

109

113

117

118

118

118

Global depositary receipts issued

V.

Operational Highlights

1. Business Activities

2. Main Applications of major products and their manufacturing processes

3. Employee information

4. Expenditures on Environment Pollution Control

5. Labor-Employer Relation

6. Important Contracts

VI.

Financial Information

1. Five-Year Financial Summary

2. Five-Year Financial Analysis

3. Audit Committee¡¯s Report in the most recent year

4.

5.

6.

Financial Statements in the most recent year

Consolidated financial statements in the most recent year

Financial difficulties, if any, encountered by the Company and its

affiliated companies in the most recent year and up to the publication of

the annual report, and its impact on the Company¡¯s financial status

VII.

VIII.

IX.

Financial Status, Operating Results, and Risk Management

1. Financial Conditions

2. Analysis of Financial Status

3. Analysis of Cash Flow

4. Major Capital Expenditure

5. Investment Policy in Last Year,Main Causes for Profits or

Losses,Imporvement Plans and the Investment Plans for Coming Year

6. Analysis of Risk Management

Special Disclosure

1. Affiliated Enterprises

2. Private Placement Securities in the Most Recent Years

3. The Shares of the Company Held or Disposed of by the Subsidiaries in

the Most Recent Years

4. Other supplementary information or explanations

Significant issues in the most recent year and up to the publication of the

annual reportwhich might affect shareholders¡¯ equity or price of shares

pursuant to Item 2,Paragraph 3, Article 36 of the Securities Exchange Law

119

119

120

121

122

122

123

127

127

136

136

136

136

Letter to Shareholders

Dear Shareholders,

2017 Summary of Results

In 2017, Advantech reported consolidated revenues of NT$ 44.4 billion, an increase of ten

percent over the NT$42 billion of 2016. Net income was NT$6.15 billion and earnings per share

were NT$8.84. Gross profit margin was 39.2 percent, compared with 40.8 percent in 2016, and

operating profit margin was 15.3 percent compared with 15.8 percent a year earlier. Net profit

margin was 13.86 percent, an increase of 0.32 percentage points from the previous year¡¯s

13.54 percent.

Our Development for IoT

Since 2016, Advantech has gradually experienced rising demand in industry 4.0 and smart

factory applications. In 2017, Advantech experienced a strong growth demand from the

industrial IoT business segment. However, due to a strong NT$ value appreciation, Advantech

only delivered single digit top line growth in 2017. Looking forward, Advantech maintains a

positive view on the outlook for industrial IoT application markets. In addition to the more

comprehensive internet infrastructure development, the support and acceleration from

industrial companies like GE, Schneider, Honeywell, Siemens, and service providers like

Microsoft, Amazon, and Google, are essential catalysts for growth in the IoT industry.

Key Strategies in the Three Waves of Growth for the IoT Industry

?

The 1st Wave of IoT Growth: Embedded Platforms.

The first wave kicked off in 2010 and will gradually mature in 2020. The major beneficiaries

are IoT device providers and IoT embedded system providers like Advantech. Advantech¡¯s

strong position in embedded platforms will accelerate the deployment of ¡°Machine to

Machine¡± and ¡°Intelligent Equipment¡± application markets. In addition, Advantech views

that a sharing economy is vital for future success and would like to share our accumulated

IP database with alliance partners and through our technology service unit (TSU) and allied

DMS collaboration.

?

The 2nd Wave of IoT Growth (year 2015~2025): WISE-PaaS and Solution Ready

Packages (SRP).

The second wave started from 2016 and will accelerate the growth catalysts in 2018~2020.

The second wave will mature in 2025 and merge into the third wave of IoT growth.

Advantech foresees that companies with the capability to provide hardware and software

integration services will be the major beneficiaries in the second wave of IoT growth.

Advantech¡¯s WISE-PaaS software platform is designed with industrial IoT users in mind.

Based on Advantech¡¯s niche in edge computing, WISE-PaaS will assist third party partners

1

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