ESG, which stands for Environmental, Social, and Governance, is a corporate management and investment concept formally proposed by the United Nations in 2004. It serves not only as a standard for measuring the long-term value of enterprises but also as a guiding framework for promoting the coordinated development of the economy, society, and environment. At Torch Electron, we place ESG at the heart of our strategy, aligning responsibility with innovation to build a more resilient future.   1. We Drive Green Development Through Technological Innovation:         Phase I of our photovoltaic power generation system has a total installed capacity of 561.2 KW, with an energy storage capacity of 1,440 KW/2,700 KWh, enabling highly efficient energy utilization. We implement full life-cycle carbon footprint management for our flagship product—multilayer ceramic chip capacitors—contributing to the ”Dual Carbon” goals.           Torch Electron and four subsidiaries have obtained ISO 14001 Environmental Management System Certification. Subsidiaries Liya Advanced Materials and Liya Chemical have been certified as National Green Factories.Our environmental protection investments exceed 6.2 million RMB, achieving 100% compliance in waste, emissions, and noise control, with zero environmental penalties.   2. We Believe Talent is the Foundation of Sustainable Development:           By the end of 2024, we had 2,174 employees; conducted 765 training sessions covering 19,000 participants, with 74 promotions.         Our parent company was awarded the title of "Quanzhou Municipal Healthy Enterprise" and obtained the Third-Level Work Safety Standardization Certificate, with 6.95 million RMB invested in occupational health, achieving zero occupational diseases and 100% health checkup coverage.           Donated 3.426 million RMB to support education revitalization and community development. Implemented full life-cycle quality control and established a pre-sales, in-sales, and after-sales service system to enhance customer satisfaction.Strengthened supply chain management, collaborating with partners to drive industry progress.   3. Technology and Compliance Governance Underpin High-Quality Growth:678 patents solidify our technological leadership.           Achievements in smart manufacturing include: The project "Knowledge Graph Construction of Ceramic Capacitor Microstructure and Macro-Performance Based on Big Data and AI" was selected as a 2024 Fujian Provincial AI Application Benchmark Case.           "Torch Electron Smart Manufacturing Factory" was recognized as a 2024 Fujian Provincial Smart Manufacturing Demonstration Factory and listed in the "2024 National 5G Factory Directory."         Established a triple-layer cybersecurity protection system, ensuring zero data breaches and safeguarding customer trust. Built a three-tier governance structure (Board of Directors, Board Strategy & ESG Committee, ESG Execution Team) to ensure scientific and transparent decision-making.           ESG is not the destination—it’s the beginning, and our promise for the future. Let’s join hands to empower innovation with responsibility and illuminate a sustainable future with technology.           We firmly believe that business success must go hand in hand with responsibility.

        In the automotive electronics industry, quality and reliability are critical for safety, performance, and long-term durability. Manufacturers and suppliers of essential components such as automotive MLCCs (Multilayer Ceramic Capacitors), tantalum capacitors, and super capacitors must meet stringent international standards. Among the most recognized are IATF 16949 and AEC-Q, which define how products are made and how they are qualified for use in vehicles.   What is IATF 16949?         IATF 16949 is a global automotive quality management system standard developed by the International Automotive Task Force (IATF) in collaboration with ISO. It combines the general ISO 9001 requirements with additional, automotive-specific quality measures.         For suppliers of automotive-grade electronic components — from automotive MLCCs in engine control units to Tantalum Capacitors in infotainment systems — IATF 16949 certification demonstrates a consistent ability to meet customer requirements, prevent defects, and minimize manufacturing variations. It ensures that production processes for capacitors and other components are controlled, efficient, and reliable.   What is AEC-Q?         AEC-Q standards, created by the Automotive Electronics Council (AEC), define reliability test requirements for automotive electronic components. Unlike IATF 16949, which focuses on manufacturing processes, AEC-Q focuses on component-level qualification.         For example:         AEC-Q200 applies to passive components such as automotive MLCCs, tantalum capacitors, and super capacitors, verifying their ability to endure temperature cycling, humidity, vibration, and electrical stress.         AEC-Q100 applies to semiconductors, ensuring they perform reliably under demanding automotive environments.           When a component meets AEC-Q requirements, it has been tested to withstand the harsh realities of the automotive environment — from extreme temperatures in an engine bay to the high electrical loads in an electric vehicle powertrain.   The Difference Between IATF 16949 and AEC-Q           While both are critical for the automotive electronics supply chain, they serve different purposes:         IATF 16949 is a process-based certification that ensures a company can consistently manufacture high-quality capacitors and other components.         AEC-Q is a product-level qualification that ensures those capacitors and components can survive real-world automotive conditions.           In simple terms, IATF 16949 makes sure your factory can produce excellent automotive MLCCs, tantalum capacitors, and super capacitors every time, while AEC-Q makes sure those components can perform reliably in actual vehicles.   Core Objective of IATF 16949 and AEC-Q           The ultimate goal of both standards is to ensure automotive components are safe, reliable, and meet customer expectations.         IATF 16949 focuses on continuous improvement in manufacturing processes, defect prevention, and efficiency in the global automotive supply chain.         AEC-Q ensures every qualified automotive MLCC, tantalum capacitor, or super capacitor can operate reliably for the full service life of the vehicle, even under extreme environmental and electrical conditions.           For global automotive electronics suppliers like Torch Electron, compliance with IATF 16949 and AEC-Q is not just a certification — it’s a commitment to delivering dependable automotive MLCCs, tantalum capacitors, and super capacitors that meet the highest automotive standards worldwide.

(Film capacitors enabling stable operation in wind power systems) Film capacitors play a critical role in modern electronic and power systems, supporting stable and efficient operation across new energy, industrial automation, energy storage, and automotive electronics. Their electrical stability, long service life, and environmental resilience make them indispensable in high-reliability applications.   As global electrification and energy transformation accelerate, demand for high-performance film capacitors continues to grow. At the same time, supply chain localization and vertical integration are becoming increasingly important, particularly for core electronic components with high technical barriers. (Torch Electron manufacturing campus) Torch Electron has identified film capacitors as a strategic focus within its broader components portfolio. By investing in materials science, reliability engineering, and advanced manufacturing, the company is building a more resilient and scalable foundation to support long-term growth. (High-reliability film capacitor solutions) The integration of Zhongxing Electronics further strengthens this strategy. With nearly three decades of specialized experience and in-house metallized film capabilities, Zhongxing Electronics enhances Torch Electron’s ability to innovate faster, ensure supply stability, and respond to customer-specific requirements across global markets. (Torch Electron & Zhongxing Electronics – strategic integration) Looking ahead, Torch Electron believes that sustained investment in core components such as film capacitors will be a key driver of competitiveness, value creation, and long-term growth.

The rapid development of wireless communication, radar systems, and advanced electronic equipment is driving increasing demand for high-performance RF and microwave components. In high-frequency applications, electronic components need to provide stable performance, reliability, and efficient signal transmission to support increasingly complex system requirements.无线通信、雷达系统和先进电子设备的快速发展推动了对高性能射频和微波组件需求的不断增长。在高频应用中，电子元件需要提供稳定的性能、可靠性和高效的信号传输，以支持日益复杂的系统需求。     Microwave Ceramic Chip Capacitors play an important role in modern high-frequency circuits. With excellent microwave characteristics and reliable electrical performance, these components are widely used in microwave integrated circuits (MICs), RF systems, and other applications requiring high-frequency stability.微波陶瓷芯片电容在现代高频电路中扮演着重要角色。凭借优异的微波特性和可靠的电气性能，这些元件广泛应用于微波集成电路（MIC）、射频系统及其他需要高频稳定性的应用。 As electronic systems continue to evolve toward higher integration and smaller form factors, the importance of reliable high-frequency passive components continues to grow. Microwave ceramic chip capacitors support critical circuit functions such as DC blocking, RF bypass, source bypass, and impedance matching, helping engineers achieve stable and efficient circuit designs.随着电子系统不断向更高集成度和更小的形态设计发展，可靠的高频无源元件的重要性也在不断提升。微波陶瓷芯片电容支持直流阻断、射频旁路、源旁路和阻抗匹配等关键电路功能，帮助工程师实现稳定高效的电路设计。   With advantages including compact structure, reliable performance, and suitability for advanced electronic assembly, microwave ceramic chip capacitors from Aurora Technologies support applications across microwave integrated circuits, RF systems, and other high-frequency electronic fields.凭借结构紧凑、性能可靠及适合先进电子组装等优势，Aurora Technologies的微波陶瓷芯片电容支持微波集成电路、射频系统及其他高频电子领域的应用。   As communication technologies, intelligent systems, and advanced electronic applications continue to develop, the demand for reliable microwave components will continue to increase. Looking ahead, Torch Electron believes that continued investment in core electronic components such as microwave ceramic chip capacitors will be an important driver of technological innovation, competitiveness, and long-term growth.随着通信技术、智能系统和先进电子应用的不断发展，对可靠微波元件的需求将持续增长。展望未来，Torch Electron认为，持续投资于微波陶瓷芯片电容器等核心电子元件将成为技术创新、竞争力和长期增长的重要驱动力。     Through continuous development in electronic component technologies, Torch Electron remains committed to providing high-performance solutions and supporting customers in the evolving global electronics market.通过电子元件技术的持续发展，Torch Electron始终致力于提供高性能解决方案，支持不断发展的全球电子市场中的客户。    

Multilayer ceramic capacitors (MLCCs) are core passive components widely used in electronic circuits for filtering, voltage stabilization, energy storage, and decoupling. They are often referred to as the “industrial rice” of the electronics industry because of their broad and essential use.   Since the second half of 2025, major passive components including MLCCs, resistors, and inductors have entered a new round of price adjustments, with increases generally ranging from 5% to 30%.   In 2026, this trend expanded further. According to publicly available market information, Samsung Electro-Mechanics raised shipment prices across certain product lines by around 30%; Murata Manufacturing saw cumulative increases of approximately 15% to 40% on selected products; Yageo raised official quotations by around 50%; and other major manufacturers such as Taiyo Yuden also followed with price adjustments.   In addition to price changes, lead times for some high-end, high-capacitance MLCCs have also extended significantly. What was previously a typical lead time of around eight weeks has, for some specifications, stretched to 20 weeks or even more than half a year.   Rising prices, longer lead times, and tighter high-end capacity all point to a more structural shift in MLCC supply and demand.   AI Infrastructure Is Becoming a Major Driver of MLCC Demand   One of the key factors behind this change is the rapid expansion of AI infrastructure and computing demand.   Compared with conventional general-purpose servers, AI servers and high-density computing racks operate at much higher power and computing densities, while also facing greater transient current fluctuations and electromagnetic interference.   GPUs, high-bandwidth memory (HBM), and high-speed communication chips need to operate continuously under low-voltage, high-current conditions. This requires a large number of high-performance MLCCs with characteristics such as high capacitance, high-temperature capability, and low equivalent series resistance (ESR) to be placed close to the chips.   In other words, rising computing density is increasing not only the number of MLCCs required, but also the performance requirements placed on them.   A conventional general-purpose server typically uses around 2,200 to 4,000 MLCCs, while an AI server may use more than three times that number.   At the rack level, the increase is even more significant.   For example, NVIDIA’s GB300 NVL72 rack is estimated to use around 440,000 MLCCs, significantly increasing the MLCC value per rack.   Future Rubin NVL72 platforms are expected to require even more, with MLCC usage potentially reaching around 570,000 units per rack and the corresponding MLCC value increasing by approximately 166%.   A similar trend can be seen at the accelerator board level.   For AMD’s MI450 platform, the number of certain MLCC specifications used on a single board reportedly increased from around 1,440 units in the previous generation to 10,544 units, representing an increase of approximately 632%.   These figures show that as AI computing platforms continue to move toward higher computing density, MLCCs are becoming one of the passive component categories seeing particularly strong demand growth.   Demand for High-Capacitance MLCCs Is Also Expanding Rapidly   The impact of AI servers is not limited to higher MLCC unit counts.   As GPU and computing-chip power consumption continues to increase, systems must handle more severe transient load changes, which is driving stronger demand for high-capacitance MLCCs.   In particular, more high-capacitance, low-ESR MLCCs need to be placed close to chips and power nodes to improve power stability and transient response.   At the specification level, demand for MLCCs rated at 47μF and above in cloud AI applications is expected to rise from around 4 billion units in 2025 to more than 40 billion units in 2027.   This means future AI-related MLCC demand will continue to move toward: High capacitance | Smaller size | Higher temperature capability | Lower ESR | Higher performance   The Global MLCC Market Is Expected to Continue Expanding   As investment in AI servers, data centers, and high-performance computing infrastructure continues, the global MLCC market is expected to enter a new stage of growth.   Industry forecasts suggest that global MLCC shipment value could increase from approximately USD 14.67 billion in 2025 to around USD 44.45 billion by 2031, representing a compound annual growth rate (CAGR) of approximately 20.3%.   At the same time, the high-end AI MLCC market remains highly concentrated.   According to relevant market data, Murata Manufacturing and Samsung Electro-Mechanics together account for around 85% of the global high-end AI MLCC market.   As AI server orders continue to grow, leading overseas manufacturers may prioritize more production capacity for higher-margin, higher-value AI-related products.   This shift in capacity allocation could also affect other application markets.   As more manufacturing resources move toward high-end AI MLCCs, some general-purpose and mid-to-high-end products used in consumer electronics, industrial control, and other sectors may face a certain degree of capacity crowding-out.   Therefore, the current price increases and lead-time extensions in the passive component market reflect more than simple short-term fluctuations. They also involve the reallocation of production capacity toward high-end products, changes in product mix, and shifts in the global supply structure.   For domestic component manufacturers, these structural changes may also create new market opportunities, including the ability to absorb part of the overflow demand and accelerate the localization of higher-end products.   Torch Electron Continues to Accelerate Production-Line Development and Capacity Expansion   As demand for MLCCs and other electronic components continues to grow and product requirements continue to evolve, Torch Electron is also accelerating production-line development and capacity expansion to further strengthen its manufacturing and supply capabilities.   Since 1989, Torch Electron has remained focused on the electronic component industry and has continued to expand its product portfolio while strengthening production capability in preparation for future market growth.   Beyond MLCCs, Torch Electron and its related businesses have developed a product portfolio covering multiple categories of electronic components.     Our main product categories currently include:   MLCC MLCC is one of Torch Electron’s core product categories. We provide ceramic capacitor products for different voltage, capacitance, size, and application requirements.   Tantalum Capacitors Torch Electron offers a range of tantalum capacitor products to support different voltage, capacitance, and structural requirements.   Supercapacitors Our supercapacitor portfolio mainly includes supercapacitor cells and supercapacitor modules, which can be used in energy storage, rapid charge and discharge, power compensation, and other related applications.   Resistors & Temperature Compensated Attenuators Torch Electron also offers chip resistors and temperature compensated attenuators for resistance control, signal attenuation, and temperature compensation in different electronic systems.   Microwave & EMI Solutions In high-frequency and electromagnetic compatibility applications, Torch Electron provides microwave and EMI-related products and solutions for communications, high-frequency electronics, power systems, and other applications.   Power Devices Our product portfolio also includes power devices, further extending our offering from passive components to power electronics.   Preparing for the Next Stage of Electronic Component Demand   The development of AI infrastructure is driving MLCC demand from simple volume growth toward simultaneous growth in quantity, specifications, and performance requirements.   At the same time, industrial control, power electronics, new energy, communications, transportation, and other electronic applications continue to drive demand for tantalum capacitors, supercapacitors, resistors, temperature compensated attenuators, microwave and EMI products, and power devices.   In response to these market changes, Torch Electron will continue to accelerate production-line development and capacity expansion while further strengthening its product portfolio and manufacturing capabilities to support the evolving needs of the global electronics industry.