ArcSoft Technology Co., Ltd

2025 action plan of "improving quality, efficiency and return".

ArcSoft Technology Co., Ltd. (hereinafter referred to as the Company, ArcSoft and ArcSoft Technology) is based on the company's future development prospects in order to practice the development concept of "investor-oriented" listed companies and safeguard the interests of all shareholders

Confidence, recognition of the company's values and earnest fulfillment of social responsibilities, the company disclosed on April 19, 2024

"2024 Action Plan for Improving Quality and Efficiency and Refocusing on Returns". Since the release of the action plan, the company has actively promoted and implemented relevant work, and has achieved good results in improving operating efficiency, strengthening market competitiveness, protecting the rights and interests of investors, stabilizing stock prices and establishing a good image of the capital market.

In order to better continue the good results in the above aspects in 2025, the company has formulated the 2025 annual "Provision".

quality and efficiency and return on the action plan, and on April 11, 2025, the third meeting of the third board of directors of the company

Adopted by the meeting. The progress and evaluation of the implementation of the 2024 Action Plan and the main measures for 2025 are reported as follows:

1. Focus on the main business operation and continue to improve the ability to create value

In 2024, the company's mobile intelligent terminal vision solutions and intelligent driving and other IoT intelligent devices

Revenue from Vision Solutions both increased. The company achieved a total operating income of 815.1735 million yuan, a year-on-year increase of 21.62%; The net profit attributable to shareholders of the listed company was 176.6858 million yuan, a year-on-year increase of 99.67%.

In the field of mobile intelligent terminals, the company has further consolidated and expanded its technology and market advantages. In 2024, the mobile intelligent terminal vision solution achieved an operating income of 675.2611 million yuan, a year-on-year increase of 16.17%, setting a record for the highest revenue in the history of the business, demonstrating the industry's leading long-term value creation capabilities.

In the field of smart cars, with the successive mass production and shipment of the company's fixed-point projects, the revenue of the smart car business has ushered in a substantial growth. In 2024, the vision solutions for intelligent driving and other IoT smart devices will achieve operating income of 127.188 million yuan, a year-on-year increase of 71.20%.

In 2025, the company will continue to take technological innovation to empower the industry as its mission, by strengthening the core foundation of vision AI,

Innovative technologies and products, market expansion, optimization of operation and management, etc., continue to play a leading advantage in the field of visual AI, achieve high-quality and sustainable development of the company, and continue to repay investors with excellent results. The company will focus on the following aspects:

1. Continue to invest in innovation and accelerate the cultivation of new quality productivity

The company deeply implements the innovation-driven development strategy. Since its establishment, the company has actively embraced technological change and led the development of computer vision technology, from shallow pattern recognition to deep learning to large model-driven

The multi-stage evolution of intelligent computing. At different stages of development of computer vision technology, the company has always stood at the forefront of technology, continuously improved its R&D technical strength, built a solid technical moat, and continued to provide support for business development.

In 2024, the company maintained a high level of R&D investment, with R&D expenses of 397.851 million yuan, a year-on-year increase

9.69%, accounting for 48.81% of operating income. By the end of 2024, the company has 586 R&D personnel.

It accounts for 62.47% of the total number of employees. The company's R&D investment intensity has reached more than 30% for nine consecutive years, providing a strong guarantee for the company to build a future-oriented core competitiveness.

In 2025, the company will continue to adhere to scientific and technological innovation, take core technology as the engine, and continue to make efforts in cultivating new quality productivity. On the one hand, the company will focus on strengthening and upgrading the core foundation of visual AI, accelerating its deep integration with core industries such as consumer electronics and smart cars, and giving birth to new growth poles. On the other hand, the company will implement the goal of "consolidating the core track, breaking through emerging fields, and leading the scene revolution", forward-looking layout of cutting-edge technologies, and iteration of key technologies. Based on accurate industry trend research and judgment, we can efficiently promote the transformation of achievements and create new competitive advantages.

2. Strengthen the leading position in the market and continue to lead the innovation of mobile imaging technology and experience

In 2024, the penetration rate of the company's intelligent Turbo Fusion technology for all models will continue to increase, further consolidating the company's leading position in the field of mobile imaging. The company's Turbo Fusion technology has completed the full penetration from flagship models to high-end and mainstream models, and the core imaging solutions have been commercialized in multiple customer models. Through optimized algorithms and hardware adaptation, Turbo Fusion has also achieved large-scale implementation in the low-end model market. In addition, Turbo Fusion technology has expanded from still images to dynamic video, and related video solutions have now been successfully implemented.

In 2025, the company will continue to iterate on technology and products in the Turbo Fusion series product line

Upgrade. In terms of device-side AI computing capabilities, the company will further integrate generative AI capabilities based on a large model architecture to improve the intelligence level of image and video processing. Through generative AI technology, Turbo Fusion will enable more advanced image semantic understanding, dynamic noise reduction, and scene segmentation to provide users with more natural, higher-quality images and videos. In terms of system optimization, the company will conduct in-depth optimization for diversified hardware platforms in the market, reduce the overall system power consumption, reserve computing resources for function expansion, and further enhance the performance of Turbo Fusion in real-time image and video processing to meet higher requirements of application scenarios. In terms of marketing, the company will accelerate the penetration of Turbo Fusion technology in the full-model market, and will develop customized products for customers based on core hardware features such as sensors and SoCs in the industry.

3. Deepen the strategic layout of the smart car business and achieve a steady increase in market share

(1) Intelligent cockpit: Consolidate market position and strengthen intelligent cockpit fist products

After years of continuous investment, the company's intelligent cockpit products have built a differentiated competitive advantage in the industry. In 2024, the company will continue to iterate the core algorithm engine, optimize the layout of the full-scenario product matrix, and increase the coverage of models and the market share of core products.

In 2025, the company will continue to increase R&D investment and further strengthen its technological advantages. Especially in key areas such as DMS and OMS, the company will focus on promoting the compliance certification and global promotion of these products to meet the strict regulatory requirements for intelligent cockpits at home and abroad. At the same time, the company will also focus on promoting the landing and promotion of innovative intelligent cockpit products such as SmartFit and health monitoring, optimize the adaptability of products to different models, promote penetration in the market, popularize to popular models, and bring intelligent and personalized cockpit experience to more consumers.

(2) Extravehicular products: Promote the large-scale implementation of products and optimize the full-scene intelligent driving experience

In 2024, the company will focus on launching an integrated cabin and parking solution based on intelligent SoCs, which is currently available

Successfully secured a client's POC project opportunity. In 2025, the company will accelerate the technical verification of new products before mass production, and strive to achieve mass production introduction within the year.

The company's strategic layout in the field of autonomous driving continues to deepen. In order to meet the changes in domestic and international regulations and market demand, the company will launch SouthLake, an intelligent driving front view all-in-one solution, in 2025. At the same time, we will continue to work on WestLake product features, performance optimization, upgrades, and go-to-market efforts.

(3) Overseas markets: Strengthen localization and adaptation, and expand global business territory

In 2025, the company will deepen localization adaptation in overseas markets and further expand its global business footprint. At the product level, we will continue to promote the international layout of core products such as VisDrive, Tahoe, SouthLake, and MonoLake, and update the product development plan in a timely manner in accordance with the requirements of EU ENCAP 2026, so as to make products meet global market standards and meet the needs of customers in different regions. In terms of market expansion, we actively build a wide range of diversified cooperation channels, innovate cooperation models, and develop more overseas projects.

4. Actively lay out the cutting-edge track and expand the emerging business space

With the leap in AI computing power and the rapid development of large models, smart devices are moving towards higher-level autonomous perception, real-time interaction, and personalized content generation. The company continues to pay attention to new technologies and new markets in the field of artificial intelligence, and actively explores the application possibilities of ArcSoft Vision AI technology in a wider range of smart devices and scenarios.

In 2023, the company will launch an AIGC-based intelligent commercial photography solution for the commercial auction field, which has been completed

Chengtaobao Qianniu, 1688, Douyin Doudian, TikTok, Jingjingmai, Pinduoduo and Shein have settled in, becoming the first service provider in China to complete the full coverage of mainstream e-commerce platforms, serving hundreds of thousands of merchants in total.

In 2024, in the process of deep integration of AI-XR technology, smart terminals represented by AI glasses will be designed

Beizheng opens a new paradigm of human-computer interaction. The company quickly responded to market demand, actively deployed AI glasses image algorithms, established in-depth cooperative relations with a number of well-known AI glasses brands, and customized and developed image algorithm solutions for brands according to their product positioning and market demand. In January 2025, ArcSoft successfully helped Thunderbird V3 complete the sale of the first AI glasses in China.

In 2025, the company will combine its own advantages and industry application needs, improve its customization and industrialization capabilities, and create more benchmark products and applications in key areas such as AI glasses, XR headsets, robots, and AIGC intelligent commercial photography.

2. Share the fruits of development and continue to reward investors

1. Continue to pay cash dividends and optimize the dividend mechanism

The company's initial public offering in July 2019 raised a net amount of 125,485.92 million yuan, which has been the first since its listing

The cumulative cash dividend amount in the interim of 2024 is 424.285 million yuan, accounting for 33.81% of the net funds raised by the listing; From listing to mid-2024, the cumulative cash dividends and repurchase payments totaled 648.8812 million yuan, accounting for 51.71% of the net funds raised from listing.

In 2024, the company implemented and completed the 2023 annual equity distribution, with a cash dividend of 2.20 for every 10 shares

Yuan (tax included), with a total cash dividend of RMB 88,160,908.00 (tax included), accounting for 99.63% of the company's net profit attributable to shareholders of listed companies in 2023. In 2023, the cash dividend per share increased by 76.00% year-on-year compared to 2022. In 2024, the company actively responded to the spirit of the new "National Nine Articles" policy and completed its implementation

In 2024, the semi-annual equity distribution will be distributed with a cash dividend of RMB 1.50 (tax included) for every 10 shares, with a total cash distribution

The dividend is 60,109,710.00 yuan (tax included), accounting for 97.80% of the company's net profit attributable to shareholders of listed companies in the first half of 2024, which further enhances investors' sense of gain.

In 2025, the board of directors of the company will comprehensively consider the company's actual operating conditions, future development plans and other factors

On this basis, the company has formulated an annual profit distribution plan for 2024, and intends to distribute a cash dividend of 2.50 yuan for every 10 shares

(tax included), cash dividend of RMB 100,182,850.00 (tax included) is expected. In 2024, the company's cash dividends (including the interim distributed cash dividend of 60,109,710.00 yuan) totaled 160,292,560.00 yuan, accounting for 90.72% of the net profit attributable to shareholders of listed companies in 2024. In 2024, the expected cash dividend per share (including interim distributed cash dividends) will increase by 81.82% year-on-year compared to 2023. 2025

The board of directors has proposed to the general meeting of shareholders to authorize the board of directors to decide on the interim profit distribution in 2025, and to carry out interim cash dividends in 2025 under the condition that the current profit, the accumulated undistributed profit is positive, and the cash flow can meet the needs of normal operation and sustainable development, and the amount of interim cash dividend shall not exceed 100% of the net profit attributable to shareholders of the listed company in the corresponding period.

2. Take the initiative to carry out share cancellation and actively implement the repurchase plan

Following the successful launch of the first phase of the share repurchase program in March 2021, the company continued its launch in February 2024

The second phase of the share repurchase program was completed in May of the same year. Since its listing, the company has repurchased a total of 5,268,600 shares of the company through centralized bidding transactions, and paid a total of 224,535,900 yuan (excluding stamp duty, transaction commissions and other transaction costs), demonstrating the company's confidence in the future development prospects and recognition of the company's value.

In 2024, in order to stabilize market expectations and enhance investor confidence, the company launched the first tranche in April

The cancellation of the share purchase will adjust the use of the 4,829,600 shares (accounting for 1.19% of the company's total share capital before the cancellation) that have been repurchased in the 2021 repurchase plan, and all of them will be "used for employee stock ownership plans or equity incentives".

Changed to "for cancellation and corresponding reduction of registered capital". The Company completed the foregoing on June 27, 2024

Share cancellation work.

In 2025, the company will continue to coordinate the dynamic balance of the company's development, performance growth and shareholder returns, actively explore ways and means, and take into account the immediate and long-term interests of shareholders under the premise of complying with relevant laws and regulations and the profit distribution policy of the Articles of Association, so as to achieve a "sustainable, stable and scientific" shareholder return mechanism and enhance the sense of gain of investors. At the same time, the company will establish a more scientific and reasonable market value management mechanism according to the company's "market value management system" that has been formulated, continuously improve the ability of value creation and value realization, and enhance the value recognition of the capital market.

3. Optimize operation and management and improve the quality and efficiency of operation

1. Optimize the quality of operation and promote the synergy between industry and finance

In 2024, in terms of financial and enterprise collaboration, the company will further promote the integration of industry and finance to promote efficient synergy between business and finance. Focusing on customer credit management, we continue to optimize the review process and strengthen accounts receivable management, so as to help optimize the business structure and promote the diversified development of customers. For mature businesses, we dynamically monitor customer signing, business contribution, revenue and cash flow quality, and continuously improve customer dimensional analysis to provide strong support for business decision-making. For new businesses, improve the management and control mechanism, optimize customer credit review with the help of third-party credit data, strengthen credit risk management, and promote the optimization of payment conditions for sales contracts. In terms of new business, the risk control link will be moved forward, so that the management team can participate in the pre-project review and control risks from the source.

In 2025, the company will continue the hierarchical and classified account period management strategy, further improve the level of financial management refinement, and help the company develop steadily.

2. Strengthen cash management to achieve a balance between capital security and income

For a long time, the company has been closely focusing on visual artificial intelligence technology and continues to invest resources, and is committed to maintaining a leading position in the industry. Over the years, the company has paid special attention to maintaining abundant cash reserves, providing solid financial support for technology research and development, and guarding against uncertainties in operations. As of the end of 2024, the company's capital stock reached RMB204,050.36 million. Through the combination model of "stepped deposit + low-risk wealth management", the company has realized the structuring of capital allocation and improved the comprehensive rate of return of cash management.

In 2025, the company will continue to implement a global overall strategy, and more comprehensively consider the combination of overseas funds and domestic funds in structured products and currencies to balance the safety and appreciation of funds.

Fourth, continue to improve corporate governance and consolidate the cornerstone of high-quality development

1. Keep up with policy trends to ensure that the governance system is compliant and efficient

The company keeps up with the latest developments in laws and regulations, continuously improves the corporate governance and internal control system, and continuously improves the company's standardized operation level. In 2024, the Company revised 21 governance systems, including the Articles of Association, the Working System for Independent Directors, and the Rules of Procedure of the Board of Directors, formulated two governance systems, including the Working System for Special Meetings of Independent Directors and the System for the Selection and Appointment of Accounting Firms, and established a working mechanism for responding to public opinion.

In April 2025, the company's board of directors formulated the "Market Value Management System" to further regulate the company's market capitalization

Manage behaviors. The company will continue to pay attention to policy changes, revise and improve the articles of association and various governance systems in accordance with the new company law, guidelines for the articles of association of listed companies and other policies and regulations, and further improve the level of standardized and scientific operation and management.

2. Standardize the operation of the "three committees" and continue to improve the governance structure

In 2024, the Company actively responded to the requirements of the reform of the independent director system of the China Securities Regulatory Commission (CSRC) and completed the revision of the Working System for Independent Directors and the rules of procedure of various special committees of the Board of Directors. The composition of the Audit Committee has been adjusted to further strengthen the supervision and management role of the Audit Committee; The Company has established mechanisms such as special meetings of independent directors and on-site work of independent directors, and the Company has designated special departments and specialized personnel such as the office of the board of directors and the secretary of the board of directors to assist independent directors in performing their duties, so as to provide necessary working conditions and personnel support for independent directors to perform their duties.

In December 2024, the Company successfully completed the re-election of the Board of Directors and the Board of Supervisors, and elected the third Board of Directors, the Board of Supervisors, the Audit Committee, the Strategy Committee, the Remuneration and Assessment Committee, and the Nomination Committee. The number and composition of the personnel of the "three committees and one floor" are in line with the requirements of relevant laws, regulations and normative documents.

In 2025, in accordance with the new Company Law and the Guidelines for the Articles of Association of Listed Companies, the company will introduce employee directors. At the same time, the company will optimize the support system for independent directors to perform their duties, and strengthen the interaction and collaboration between independent directors and the company's internal team by organizing special surveys and regular or irregular face-to-face communication, so that independent directors can integrate cutting-edge ideas and innovative thinking. The company's decision-making process, for the company's development? New live?.

5. Pay attention to the quality of information disclosure and strengthen communication with investors

1. Continue to improve the quality of information disclosure

The company has always attached great importance to information disclosure, and has been rated A for two consecutive years since the information disclosure evaluation was carried out. In 2024, the Company will conscientiously fulfill its information disclosure obligations in strict accordance with relevant laws and regulations and the relevant systems of the Company's information disclosure management, and disclose material information such as the Company's periodic reports and temporary announcements in a true, accurate, complete, timely and fair manner, so as to protect investors' right to know. Guided by the needs of investors, the company voluntarily released an action plan for improving quality, increasing efficiency and focusing on returns while meeting the mandatory information disclosure requirements. On this basis, in order to enhance the readability and effectiveness of the content, the company's previous periodic reports have been interpreted in the form of performance briefings, graphics or videos and other visual forms to help investors better understand the company's operating results, financial status and development strategy.

In 2025, the Company will continue to improve the quality of information disclosure and strengthen the effectiveness of disclosure content while strictly adhering to the bottom line of disclosure, so that the disclosed information can effectively meet the needs of investors and market demand, and provide strong support for the decision-making of all parties.

2. Strengthen communication with investors

In order to better strengthen the communication with investors and potential investors, the company has set up an investor relations position, and full-time personnel are responsible for investor relations management. In 2024, the company held 3 performance briefings, 1 investor reception day, 2 shareholders' meetings, and organized and participated in 14 investor surveys (including conference calls, offline surveys, strategy meetings, etc.). At the same time, in order to better respond to the actual demands of investors, the company has improved the investor consultation and feedback mechanism, through online communication platforms, investor hotlines and other channels, to gain an in-depth understanding of the actual demands of investors, and timely feedback to the company's management, respond in regular reports and relevant temporary announcements, and show investors the company's operating results, the current situation of the industry, research and development and technological progress in a more targeted manner.

In 2025, the company will further optimize the work content of investor relations management, enrich publicity channels and communication forms, explore the construction of diversified two-way communication channels, and plan to actively hold regular report performance briefings, investor reception days, offline roadshows and investor research, participate in strategy meetings, online and offline analyst meetings and other communication channels through the "SSE e-Interaction" network platform, investor mailbox, investor hotline, etc.

Immediate and detailed answers to questions raised by the Investor Hotline; It is planned to carry out no less than 3 performance briefings and 1 investor reception day, and according to the actual situation, the chairman and general manager of the company will lead the team to participate in face-to-face communication with investors; A total of no less than 14 activities such as conference calls, offline research, and participation in strategy meetings were conducted. By going out + inviting in, online + offline multiple measures to deepen exchanges with investors, respond to investors' concerns in a timely manner, listen to investors' opinions and suggestions, narrow the distance with investors, actively convey the company's true value, and maintain a good image of the market.

6. Strengthen the responsibility of the "key minority".

1. Strengthen the sharing of interests between management and shareholders

In 2024, the executive compensation policy implemented by the company is linked to the company's operating conditions, distinguishes different job responsibilities, and evaluates senior executives according to annual business objectives and the completion of major company-level projects (such as major business development, major R&D progress, etc.). All directors, supervisors, senior executives and core technical personnel of the company abide by the "Company Law", "Securities Law" and relevant laws, administrative regulations, departmental rules, normative documents and restrictive provisions on share transfer in the business rules of the stock exchange, and there are no violations such as short-term trading, insider trading, and window trading of the company's stocks.

In 2025, with the goal of high-quality development, the company will continue to improve the management level and business ability of the company's senior executives, optimize the salary incentive and restraint mechanism, further study the benefit sharing mechanism between the management and shareholders, and explore a long-term incentive mechanism in accordance with laws and regulations to achieve interest binding. The Remuneration and Appraisal Committee of the Board of Directors is responsible for studying and supervising the implementation of incentives and appraisals for senior management, and integrating the performance appraisal and remuneration of senior management with the long-term development of the Company and the interests of shareholders, so as to ensure the long-term stable development of the Company and enhance investor confidence.

2. Strengthen the awareness of the "key minority" in standardized operation and the ability to perform their duties

The "key minority" plays a vital role in promoting the high-quality development of the company. In 2024, the Company will maintain close communication with the "key minority" such as the actual controller, directors, supervisors, senior executives, and major shareholders, track the performance of relevant parties' commitments, and continuously strengthen the sense of responsibility and self-restraint of relevant parties. In terms of information transmission, the Company pays close attention to the latest regulatory developments in the capital market, and collects, analyzes and transmits to the Company's "key minority" 12 times throughout the year to ensure that relevant entities are aware of the latest laws and regulations. In the field of professional training, the company actively organizes the "key minority" of directors, supervisors and senior executives to participate in professional training activities organized by the China Securities Regulatory Commission, the Shanghai Stock Exchange, the Association of Listed Companies and other institutions. At the same time, in order to further deepen the understanding of directors, supervisors and senior executives on the knowledge of compliance operations, the company continued its tradition and continued to invite continuous supervision institutions to give keynote speeches. In 2024, each of the company's directors, supervisors and senior executives will participate in the training more than twice.

In 2025, the Company will continue to organize the "key minority" of directors, supervisors and senior executives to participate in relevant training to improve their awareness of norms and ability to perform their duties, ensure that each person participates in the training more than twice, promote their continuous learning of relevant laws and regulations, continuously strengthen their awareness of self-discipline and compliance management, and improve their ability to perform their duties in compliance.

7. Continue to evaluate and improve the action plan

In the new year, the company will actively promote and implement the 2025 action plan of "improving quality and efficiency and emphasizing returns", and evaluate the implementation of the action plan every six years, and further clarify specific and feasible improvement measures on the basis of fully listening to investors' opinions and suggestions on improving the action plan, and earnestly fulfill the responsibilities and obligations of listed companies through good performance, standardized corporate governance, and stable investor returns, give back the trust of investors, and maintain the company's market image. Contribute to the construction of a new capital market ecology of sharing and sharing.

The company's planning and development strategy involved in this plan are forward-looking statements that are not fait accompli, and do not constitute the company's substantive commitment to investors.

Board of Directors of ArcSoft Technology Co., Ltd

April 11, 2025