Dear Shareholders,

2024 proved another commercially challenging year, with decelerating growth in the consumer goods market amid a subdued global economy and inflation remaining above pre-pandemic levels. Despite this, HTC manifested good performance over the year, with product launches from all of our business areas that raised the bar of innovation and garnered wide recognition.

HTC continues to nurture the business units into viable companies with exciting growth potential, and our landmark collaboration agreement with Google on XR technology in early 2025 represents the first successful milestone in this strategy. This saw VIVE Systems merged into the VIVE Intelligent Systems business unit; enabling a more streamlined portfolio along with greater operational efficiency. We believe this strategic move will boost the development of the whole XR ecosystem, to the benefit of consumers and all players in this market. Our goal is to realize our vision of VIVE Reality through these open, connected, and intelligent partners.

By embracing cutting-edge technologies such as artificial intelligence and the metaverse, HTC aims to pioneer innovations that adhere to strict ethical standards, ultimately enhancing human life. Indeed, HTC was founded to create products that make people’s lives better. HTC’s numerous partnerships with innovative organizations around the world have sought to align with that purpose, such as enabling immersive education in schools and companies, or improving healthcare. In 2024, our partner Mynd Immersive launched the ‘Great American Elderverse’, an excellent initiative that is set to transform the lives of millions of older adults through the delivery of virtual reality therapeutics to hundreds of underserved senior care communities, powered by HTC VIVE's XR devices. Technology being used for the good of humankind lies at the heart of HTC’s mission.

Business Operations

VIVERSE

VIVERSE introduced several technological innovations and product features in 2024, significantly improving the efficiency of virtual world creation, interaction experiences, and user engagement. These advancements have created a more intelligent and diverse digital ecosystem across various industries. VIVERSE also strengthened connections with other metaverse platforms, such as Cluster and Engage, to foster a more open ecosystem.

VIVERSE launched VIVERSE Create v1.0, the no-code system for creators to build imaginative interactive multiplayer virtual spaces. Accessible directly through a web browser, it offers seamless cross-platform compatibility, allowing virtual spaces to be shared across various devices, including mobile phones, PCs, and XR headsets. The upgraded Avatar Creation Tool 2.0 supports the widely-used VRM standard for higher resolution models with numerous customization options, enabling users to create more personalized avatars with enhanced graphical optimization. These avatars leverage Physically-Based Rendering and optimized Level of Detail to ensure superior visual quality.

VIVERSE Polygon Streaming is a highly optimized rendering method that combines server-side processing with client-side rendering, streaming only the polygon data required to display the visible parts of 3D assets, thereby reducing loading times by up to 8x and shrinking project sizes by up to 81%, enabling users to enjoy immersive 3D worlds regardless of their device's performance.

The VIVERSE for Business (VfB) customized commercial metaverse solution gained more recognition this year, receiving several accolades. Enabling organizations to create branded 3D experiences that are embeddable on any webpage, and up to 10x faster with AI, VfB achieved remarkable milestones in 2024, including serving over 60 schools in Taiwan, making lessons more engaging and effective, enhancing learning efficiency and promoting remote teaching, showcasing the limitless potential of metaverse technology in education.

The VIVEPORT virtual reality content platform continued to enhance the diversity of premium VR experiences, expanding its catalog of games and applications optimized for the platform with many highly anticipated titles, including Metro Awakening, Arizona Sunshine 2, Bootstrap Island, and The Pirate Queen with Lucy Liu. VIVEPORT also made significant strides in fitness and educational applications. Moreover, VIVEPORT has continuously optimized its user and developer interfaces and services, positioning the platform as a central hub connecting creators with users.

VIVE Intelligent Systems

In 2024, HTC introduced the latest addition to its VIVE Focus all-in-one series: the VIVE Focus Vision Extended Reality (XR) headset. Designed to enhance applications in next-generation entertainment, education, and workplace collaboration, the VIVE Focus Vision delivers lossless PC VR high-fidelity visuals, stereoscopic passthrough cameras for realistic Mixed Reality, a revamped cooling system, and a built-in sub-battery for seamless battery swaps.

Two specialized trackers were launched in 2024; the VIVE Ultimate Tracker is a compact, versatile unit with two wide-FOV cameras for exceptional multi-point full-body tracking, as well as compatibility with third-party PCVR headsets that support SteamVR. The VIVE Full Face Tracker is a plug-and-play module that allows facial movements to be represented naturally in XR, capturing up to 38 blend shapes across the lips, teeth, tongue, cheeks, and chin, so even subtle facial expressions are accurately portrayed, and spoken words match facial expressions in real-time.

The VIVE Business+ web-based enterprise-level management software and service solution, designed for efficient batch registration and synchronized management of multiple VIVE all-in-one devices, achieved ISO 27701 and ISO 27001 certifications in 2024, reinforcing our commitment to data security and privacy.

G REIGNS

G REIGNS continues optimizing 5G private networks utilizing the O-RAN architecture to enhance the connection between the real and virtual worlds. The REIGN CORE series of portable 5G private networks enables organizations to deploy 5G private networks within minutes, thus lowering the digital transformation threshold for enterprises by providing the most cost-effective way to conduct field demonstrations. G REIGNS also custom-optimizes software and hardware networks for enterprise, integrating tests with high reliability to achieve scalability of expansion.

Smartphones

The latest U series smartphone, the HTC U24 pro, was launched in 2024. Designed with a 6.8-inch, immersive display with 3D curved glass, and a stereo sound system to match, the HTC U24 pro has a sleek, lightweight metal frame and golden chamfers on both sides, ensuring a comfortable grip and minimizes slip risks. Equipped with the Qualcomm Snapdragon 7 Gen 3 processor, the HTC U24 pro offers an upgraded CPU and GPU for seamless gaming, multitasking, enhanced AI and XR capabilities. Water and dust resistant, the device also features the powerful quad camera system with a 50MP high-resolution main, telephoto, and selfie lens setup, delivering effortless high-quality shots. AI-powered features include AI Group Photo for capturing perfect expressions, AI Gesture GIFs for creative shots, and AI night portrait restoration for improved clarity in low-light conditions.

Users can enter immersive 3D spaces through the VIVERSE APP, integrating AI motion capture technology into a mobile device for the first time, enabling lifelike virtual avatars, enriching social interactions and XR entertainment experiences.

DeepQ

HTC DeepQ Healthcare comprises cross-domain experts and engineers in areas such as computer science, software engineering, medicine, regulations, user experience, design, through digital technology, big data and artificial intelligence technology, all with the goal of developing and providing precision personalized medical products and services to reduce costs and improve the effectiveness of healthcare. In 2024, its Disease Control Butler (DCB) LINE Bot health education system launched a Q&A on numerous infections to enhance public awareness of epidemic prevention in Taiwan. In addition, DCB implemented the epidemic risk information push services for health centers and medical institutions. As of the end of December 2024, the user numbers of DCB had reached over 10 million

DeepQ also integrated the AI health education Q&A function into its LINE Bots for hospitals in Taiwan, which can accurately answer public health education questions in natural language and thus reduce the workload of medical staff.

VIVE Arts

VIVE Arts aims to enhance artistic creation and understanding through the latest technologies, and 2024 was another ambitious year, launching in-depth collaborations with internationally renowned artists and institutions, and unveiling expanded opportunities for immersive content around the world through distribution and licensing. VIVE Arts has not only continued existing long-term partnerships but also expanded to many new and forward-looking collaborations and industry angles. VIVE Arts debuted three prestigious artist commissions with Libby Heaney, Xavier Veilhan and Ryan Gander, and a few major institutional partnerships globally - Sagrada Familia, Château de Versailles, Musée d'Orsay and Musée de l’Orangerie.

VIVE Arts also expanded its location-based experiences (LBE) licensing and distribution activity, bringing major works such as Horizon of Khufu, Eternal Notre-Dame, and Le Bal de Paris de Blanca Li to twelve cities across three continents. The latter, a new sensory experience integrating real-life interaction, multi-person dancing, and 5G and large-area multi-person real-time entertainment tracking technology won the best VR experience at the 2021 Venice Film Festival.

VIVE ORIGINALS

VIVE ORIGINALS is devoted to producing original XR content and developing metaverse platforms with core technologies including volumetric capture, blockchain, and XR. in 2024, its BEATDAY platform ventured into the VTuber industry, creating 6DoF concerts where fans can interact with VTubers through avatars in a game-like format. BEATDAY is committed to becoming a 6DoF open platform for VTubers worldwide, offering comprehensive one-stop business services including full third-party content hosting, commercial ticketing, high-standard 3D 6DoF real-time motion capture streaming, and community interaction systems. It also covers VTuber IP development, new program development, and VR performances. BEATDAY collaborated with Taiwan's most influential VTuber, Annin Miru, to pioneer multiple Live Shows in 2024, and received subsidies from the National Culture and Arts Foundation and the Ministry of Culture, planning to launch the world's first VTuber TV talent show in 2025.

Special Projects

VIVE Mars continued to innovate around the VIVE Mars series of virtual production tools, achieving significant technological upgrades, product development, and global market reach. The software updates introduced new features and optimized performance, significantly enhancing tracking capabilities, user interface experience, and overall system stability, to ensure that virtual production remains efficient, reliable, and user-friendly.

The new VIVE Mars CamTrack Studio Edition is specifically designed to meet professional virtual production needs, enhancing system flexibility and efficiency, and providing creators with more powerful tools, simplifying workflows, and expanding the range of virtual production applications.

Financial Performance

HTC remains in the investment stage for most of its business units, and especially for those driving cutting-edge technologies, so financial performance does not represent the strategic performance of the Company. In 2024, HTC saw revenues of NT$ 3.08 billion, while maintaining a gross margin of 40.7%. An operating loss of NT$4.64 billion reflects the investment stage status, with an operating margin of -150.6%.

HTC’s sustained focus on resource optimization across both the mother company and the business units continues to pay off, with operating expenditure remaining stable and in fact slightly lower than in 2023. Accordingly, earnings per share were only slightly lower than the previous year, at -NT$4.11.

HTC is committed to streamline expenditure and processes as well as external costs, while seeking further cost savings through asset management, internal systems and administration. Moreover, we believe the operational and portfolio changes put in place over the year will position HTC well for the next few years.

Environment, Social and Governance (ESG)

HTC earned continued global recognition of our carbon reduction strategies and the application of appropriate technologies on our path to net-zero by 2050. In 2024, HTC put in place six key carbon reduction strategies on its pathway to net-zero by 2050, and expanded its scope of greenhouse gas inventory and verification to include parent and subsidiary companies. Additionally, the company strengthened its ESG evaluation indicators, and further invested in renewable energy and smart management solutions, such as solar power systems.

For this, it earned a spot on the CDP Supplier Engagement Leaderboard (A grade), and again qualified for the FTSE4Good Index Series and a Silver Medal rating from EcoVadis. HTC became only the fifth Taiwanese high-tech hardware equipment company to pass the Science-Based Targets initiative (SBTi) verification and receive approval for its net-zero target, and was the first company to win the "National Sustainable Development Award" for the last two years. HTC was also included in Taiwan’s Top 100 Sustainable Companies Awards. This is a remarkable achievement in just a few years.

HTC is committed to promoting a low-carbon value chain and creating a broader ecosystem that supports carbon reduction, and will continue to focus on innovation to achieve low-carbon transformation and a sustainable value chain.

Over our 28-year journey, HTC has continually reinvented itself—transitioning from smartphone pioneer to leading in virtual reality and now driving 3D virtual worlds and technologies. We have evolved from a hardware-centric company into a comprehensive metaverse ecosystem company, on the journey towards our vision of VIVE Reality.

HTC wishes to express our appreciation to our shareholders for their continued trust in our vision of shaping the future of technology in a manner that is both groundbreaking and responsible. HTC is committed to our vision with unwavering dedication, and we look forward to setting new benchmarks for excellence in the digital age.

HTC Corporation

Chairwoman and CEO

Cher Wang