Chairman's Statement

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Dear Shareholders,


Major shifts in the international political situation occurred in the blink of an eye in 2016. The UK voted to leave the EU and America has adopted protectionist policies. As for Taiwan, the most important development is the freeze in cross-strait relations. With regard to the economy, the global outlook still looks turbulent. Exchange rate fluctuation risks have increased. The prices of raw materials and crude oil appear to have bottomed out. In society, a new age of individualism is arising. Changes in labor laws are placing additional pressure on companies. Other factors including technology, resources, policy and population are rapidly shifting about along with overall environment, all of which have the potential to threaten the existence and development capabilities of a company. Fortunately, with the continued dedication of our employees and support from upstream and downstream companies, we have been able overcome these challenges and can say without compunction to our shareholders that we are ready to meet the next challenge arising from the business environment.


With regard to 2016 operating performation, TXC’s consolidated revenue totaled NT$9.637 billion, an increase of 4.0% over the NT$9.266 billion recorded in the previous year which reached 99.8% of our forecast target. Net income in 2016 was NT$1.016 billion, an increase of 8.3% over the previous year’s NT$938 million which exceeded our forecast target. Basic EPS was NT$3.28, an increase of 8.3% over the previous year’s basic EPS of NT$3.03. Looking towards 2017, spreading our corporate spirit of ‘compete or perish, work hard or drop out’ will inject the company with the willpower to accomplish our goals. As TXC rolls out the new products which were developed to meet the forecast growth in network communications and automotive markets, we will take a prudent and cautious approach towards the future, moving forward one step at a time. Our 2016 operation results and 2017 business plan summary are as follows:


1.Combined revenue and after-tax profit : Unit: NT$1,000
  2016 2015 Growth amount Growth rate
Net revenue 9,637,101 9,265,656 371,445 4.01
Gross Profit 2,554,069 2,235,175 318,894 14.27
After-tax profit(loss) 1,016,164 938,203 77, 961 8.31

Combined statement of income and Profitability:

  Year 2016 2015
Financial structure (%) Debt/assets ratio 32.83% 31.07%
Long-term capital/fixed asset ratio 273.17% 265.53%
Debt-paying ability (%) Current Ratio 279.40% 248.91%
Quick ratio 227.49% 201.84%
Profitability (%) Return on assets 6.82% 6.67%
Return on equity 9.79% 9.56%
Earnings per share(NT$) 3.28 3.03

1.Budget Execution:

In 2016, we set up internal budgeted target only without make public of the financial estimates. The overall turnover and profit were affected by changes in industries and product mix, and then resulted to achieving the operation target of more than 99%.

2.Research and Development:

In R & D, the company lauched Vehicle Mounted Temperature Compensating Control Quartz Oscillator (ACAP TCXO)、Vehicle Mounted Temperature Sensing Quartz Crystal (ACAP TSX)、New Generation Micro 3-in-1 Light Sensor (Sensor)、Miniature Constant Temperature Control Quartz Crystal Oscillator (OCXO), Miniature Vehicle Mounted Quartz Crystal (ACAP CXO)、Miniature Mobile Device Crystal(Crystal) …etc. In addition, we follow the RD schedule continuously to lauch variety of products to meet different customer’s demand.

3.Results of execution of other Projects:

(1) Green Enterprise: In addition to ongoing promotion of green enterprise certification and other activities including the Greenhouse Gas Inventory (ISO14064-1) and routine Carbon Footprint (PAS2050) checks, TXC was given the EPA’s Product Carbon Footprint Emission Factor Database Establishment Award and earned six low carbon marks. TXC has also been promoting kitchen waste and plastic bag use reduction activities. The company hands out environmentally-friendly bags to further reduce the use of environmentally hazardous plastic bags. The chairman also led company employees in joining the Zhuwei Fishing Harbor beach cleaning activity held by the Taoyuan City Government in order to do our part in keeping the environment clean.
(2) Occupation Safety and Health TXC has continued to promote OHSAS18001 Occupational Health and Safety Assessment Series certification and passed CNS15506 Occupational Safety and Health Management System certification to uphold labor safety under the guidance of the Occupational Safety & Health Committee and Labor-Management Conference. A number of health promotion activities such as Getting to Know Metabolic Syndrome health lecture, pap smear testing, HPV virus awareness lecture, CPR and Heimlick maneuver instruction, workplace quit smoking activity, oral cancer screening activity, individual weight reduction activity, stress relief activity, blood pressure monitoring activity and flu vaccine inoculation activity were held by TXC to help employees take positive steps towards a healthy lifestyle. The company has also received the Healthy Workplace - Health Promotion Badge from the Health Promotion Administration, Ministry of Health and Welfare. In order to create a communication-friendly environment and reduce miscommunication and conflict, a lifeline instructor was invited to teach a soft communication course to improve observation and interpersonal skills. Timely assistance and care is also provided for persons involved in traffic accidents which occur outside the company. TXC will continue on working to create of a safe work environment to provide maximum safety to our employees.
(3) System Certification: With regard to the maintenance of various operating systems, TXC has received the following certifications in 2016: Quality Management System (ISO9001), Automotive Industry Quality Management System (ISO/TS16949), Environmental Management System (ISO14001), Taiwan Occupational Safety and Health Management System (CNS15506), Information Safety Management System (ISO/IEC27001), Hazardous Substance Process Management System (IECQ QC 080000:2012), Occupational Safety and Health Management System (OHSAS 18001:2007) as well as ISO 14064-1:2006 Greenhouse Gas Inventory, Product Carbon Footprint Verification (PAS 2050:2011) and Material Flow Cost Accounting Verification (ISO 14051:2011) and renewed SONY GP partner certication. TXC will continue to update its management systems to satisfy and surpass customer requirements
(4) Corporate Governance and Enterprise Responsibility: TXC’s 2nd corporate governance rating ranked among the top 5% of publicly listed companies and the company will continue to strive forward by embracing the spirit of open mindedness, dedication, honesty and happiness. Due to the long-term services provided by our company to neighboring disadvantaged families and orphanages, TXC was given the Bureau of Industrial Development’s Corporate Volunteering Award. In addition, the company participation in a number of volunteer activities to show concern for local neighborhoods was included the CSR report for AA1000/GRI G4 verification to demonstrate our results in the field of CSR.

1、 Business direction and major policy:

(1) Continued upgrading to industry 4.0: In response to the low birth rate and rising pressing from stricter labor conditions, upgrading to industry 4.0 automation and informatization is definitely a major business strategy of TXC. Therefore, while continuing to invest in automated production equipment, our company will also continue to enter into cooperation with various companies. By upgrading to industry 4.0, TXC will further increase productivity and reduce the difficulties caused by manpower supply shortage
(2) Boosting R&D results: Simultaneously upgrading R&D capacity and product competitiveness is the key to ensuring sustainable operations. Therefore, our R&D department will focus on new product development in 2017 to swiftly enter the market, earn customer trust and opportunities for cooperation. Product R&D is focusing on the following:
UHF Low Jitter PLL XO, HF Automotive XO, communication base station ultra high stability TCXO, SMT miniaturized OCXO, miniaturized TF crystal, high stability SC-cut crystal, ultra-miniaturized 1210 crystal, 5G communication terminal thermistor crystal, integrated proximity sensing miniaturized multifunction sensor, PM2.5 sensing element.
(3) Continued capacity expansion: As market demand increases, TXC will continue to expand capacity at our three plants. Total production capacity is forecast to be increased by 20% or more to satisfy customer demand for TXC products. As a result, company sales will see a certain level of growth
(4) Corporate governance: In order to allow further execution of board functions, each of the company’s newly appointed independent directors have their own dedicated area of expertise which will strengthem board operations in the future and maintain our excellent corporate governance rating. A philothranpic foundation has also been established to help fulfill our CSR commitments.

2、Expected Sales and Basis:

TXC will be taking a cautious and conservative approach in 2017. In addition to the support provided by the existing customer orders, TXC is planning to expand production capacity for new products and raise product process optimization. As our company steadily wins customer certification and approval for automotive industry products and high-end precision products, TXC expects that these new automotive and high-end precision products will make up an increasingly higher percentage of sales. Our efforts to develop miniaturization, high frequency, low power consumption precision products are steadily bearing fruit and our product quality is widely trusted by domestic and international customers. By effectively managing customer relations and offering a diverse range of products, total consolidated sales in 2017 are forecast to exceed 3 billion units. Our global market share should also remain above 10% ranking within the top 5 manufacturers in the global quartz element industry.


In the Tale of Two Cities, Dickens wrote “it was the best of times; it was the worst of times. Looking forward, we have everything but nothing at all.’’ In this time of government chaos and economic turmoil, there are certainly excellent opportunities out there but it is the worst of times for companies who are unable to adapt. Faced with the explosion of information from the Internet of Things, we have nothing to cling to as we go forward. Directionless companies will receive nothing when trying to navigate through these shadowy times. The dazzling year of 2016 has passed and the tough times of 2017 lie ahead. TXC needs to face the future with an attitude of ‘good can be even better’ and ‘facing challenges, welcoming challenges’ and our managers need to embrace a leadership spirit of ‘digging down deep to burn bright, lead and sacrifice’ and must-win determination when faced with this uncertain future. Only those who can compete will not be eliminated. Constant striving will bring victory in this race! Going forward to face our customers is our common path. Looking back to review ourselves is a indispensable way of thinking for self-criticism. Let’s work together to create a common future for all of our stakeholders.


Yours Sincerely,


Chairman's Statement  
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