Nanya Technology Corp.

Transcription

1 Nanya Technology Corp. This document is an English translation of a report originally issued in Chinese. In the event of a conflict between the English translation and the original Chinese version, the Chinese language report shall prevail.

2 Spokesperson Name : Pei Lin Pai Title: Vice President Tel: E mail:plpai@ntc.com.tw Headquarters Address: No. 669, FuhShing 3RD. KueiShan, TaoYuan, Taiwan, R.O.C. Tel: Deputy Spokesperson Name : Tommy Kuo Title: Director, Finance Div. Tel: E mail:cmkuo@ntc.com.tw Stock Transfer Agent Stock Affair Dept, Nanya Technology Corp. Address: Dunhua N. Rd., Songshan Dist., Taipei City 105, Taiwan Tel: Website: Nil Auditors KPMG Auditors: Wu, Chiu Hwa and Ko, Hui Tzu Address: 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Tel.: Website: Overseas Securities Exchange Luxembourg Stock Exchange Disclosed information can be found at Corporate Website

3 Contents I. Letter to Shareholders..1 II. Company Profile 2.1 Date of Incorporation Company History... 3 III. Corporate Governance Report 3.1 Organization Directors, Supervisors and Management Team Implementation of Corporate Governance Accountant s Information Information about the change of Accountants Please specify employees name, title and the working period in audit CPA firms or its affiliate if those employees acted as chairman, president, and managers in responsible of finance or accounting in recent year Directors, Supervisors, Managers, and Shareholders, with whom holding proportions of common stock is greater than 10%; or information about incurring pledge, increasing or decreasing of shareholdings Information about top 10 shareholders being related entities to each other in accordance of Financial Accounting Guidelines No Information Disclosing the Relationship between any of the Company s Top Ten Shareholders IV. Capital Overview 4.1 Source of Capital Status of Shareholders Shareholding Distribution Status List of Major Shareholders Market Price, Net Worth, Earnings, and Dividends per Share Dividend Policy and Implementation Status Impact of stock dividend on 2008 business performance and EPS Employee Bonus and Directors' and Supervisors' Remuneration Buyback of Treasury Stock Corporate Bond Issuance of Preferred Stock Participation of Issuance of Global Depository Receipts Employees Stock Options Financing Plans and Implementation i

4 V. Operational Highlights 5.1 Business Activities Market and Sales Overview Human Resources Environmental Protection Measures Labor Relations Important Contracts VI. Financial Information 6.1 Five Year Financial Summary Five Year Financial Analysis Supervisors Report in the Most Recent Year Financial Statements for the Years Ended December 31, 2009 and 2008, and Independent Auditors Report Consolidated Financial Statements for the Years Ended December 31, 2009 and 2008, and Independent Auditors Report VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status Analysis of Operation Results Analysis of Cash Flow Major Capital Expenditure Items Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year Analysis of Risk Management Others VIII. Special Disclosure 8.1 Summary of Affiliated Companies Private Placement Securities in the Most Recent Years The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years Other disclosures of necessary supplements If any of the situations listed in Subparagraph 2 of Paragraph 2 of Article 36 of the Securities and Exchange Law, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, such situations shall be listed one by one 78 ii

5 I. Letter to Shareholders First of all, we highly appreciate the greatest support from all shareholders for accompanying with NTC through the severest time since our establishment. Due to the over supply of capacity, the downturn of economy, and the dropped demand of DRAM product over the past two years, all of the DRAM companies suffered huge losses. Other than this cold winter of DRAM market, NTC also had to face the challenge of technology transformation. After over 1 year of hard work, we believe that we had passed through the hardest period and are confident to conquer the challenge in the future. 1. Operating Report of Year 2009 We have achieved the important works, including the process transfer from trench to stack in FAB 3A, the mass production for 50nm 2Gb DDR3 which the output still keeps increasing. The research and development of 40 nm technology reached the satisfied result and the mass production of that will be at the second half of the year In addition to the DRAM product used in PC, we developed the series of 50nm DIMM for high end servers, consumer products and low power communication products at the same time to expand our products line. Our average selling price in 2009 was decreased 11% compared to 2008, but the sales volume was 670 million chips (1Gb equivalent), 39% higher than that of the last year. The revenue was 42.5 billion which was 17% higher than that in 2008, 36.3 billion, and the net loss after taxes was 20.7 billion in Operating Plan of Year 2010 The missions of year 2010 are enhancing the productivity and yield of stack process technology and continuing cost down. We expect the output will be 72% higher and the cost will be 40% lower compared to The average selling price has risen to US$2.5 in the 1 st quarter of According to the forecast of the market research companies, the demand of PC will grow up over 20% than last year. So we optimize to see the prosperity of DRAM in the second half year of We will keep getting more profit in the second half year of 2010 under the production continuing cost down and selling price remaining stable. Besides, 1

6 we ll continuously keep widening the product line, promoting DIMM for high end server, consumer products and communication product with low power, and enhancing the revenue and market share of the specialty products to lower the operating risk. In research and development, NTC and Micron are devoted to research for the next generation technology including 30nm advance technology and DDR4 product. Dedicating to R&D and branding are our consistent management philosophies. We truly believed that the only way to last long in DRAM industry is to be self sufficient in technology and branding. Thanks again for the fully support from all shareholders. We also felt that the responsibility is more significant. We expect to increase profit and enlarge the return of our shareholders by lowering the cost and providing the varieties of new product as process change when DRAM industry s prosperity comes again. 2

7 . Brief Introduction 2 Company Profile 2.1 Date of Incorporation: March 4, Company History 03/1995 Approval to set up NTC granted by the Ministry of Economic Affairs 04/1995 Signed MOU with OKI and Nan Ya Plastics Corp., taking over all rights and obligations of 16M DRAM technology from Nan Ya Plastics Corp. 11/1996 Signed 0.36 µm and 0.32 µm process technology licensing agreement with OKI 07/1997 Set up NTC USA in charge of sales and marketing in America 04/1998 Awarded ISO 9001 certification by Lloyd's Register Quality Assurance 11/1998 Signed the technology licensing agreement with IBM 12/1998 Awarded ISO certification by Lloyd's Register Quality Assurance 12/1998 Set up a product design center in Houston 10/ µm 64M SDRAM mass production started 08/2000 Listed on Taiwan Stock Exchange (TSE) 10/2000 Signed DRAM Co development and technology licensing agreement with IBM 12/2000 FAB II awarded ISO 9001 certification by Lloyd's Register Quality Assurance 01/2001 Mass volume sales of 128M/256M SDRAM/DDR DRAM 06/2001 Mass volume production of 0.175um 128M/256M DRAM 10/2001 Taking the lead in large shipments of DDR products 04/2002 Set up Nanya Technology (HK) Corporation Limited 06/2002 Signed a contract with Dell computer to form a strategic alliance. Nanya become the main supplier to Dell 09/2002 Set up Nanya Technology Japan 11/2002 Infineon and Nanya Technology Corporation signed a contract agreeing to co develop 0.09um and 0.07um manufacturing process technology. 12/2002 Fab I and Fab II awarded ISO certification of environment management system by Lloyd's Register Quality Assurance Fab II awarded ISO certification by Det Norske Veritas Sweden 01/2003 Joint ventured with Infineon to form Inotera Memories, Inc. 03/2003 The 2002 market share of Nanya reached the top 5 all over the world, according to Gartner isupply research 07/2003 Nanya GDRs listed in Luxembourg Stock Exchange 12/2003 Inotera s equipment started to move in 04/2004 Inotera s first 0.11um 300mm wafer output 05/2004 DDR2 product verified by worldwide advanced semiconductor companies 12/ um manufacturing process piloted run 04/ Mb DDR SDRAM (667MHz) qualified by Intel 06/ nm technology basic function verification 3

8 09/2005 Signed a 60nm joint development contract with Infineon 03/2006 Fab 3 (12 inch) ground breaking 10/2006 Set up Nanya Technology (Shang Hai) 03/2007 Inotera s Fab II started to manufacture 05/2007 FAB 3A equipment move in 11/2007 Pilot run successful in FAB 3A, 70nm wafer starts in 3Q 04/2008 Signed Joint Venture Agreement and Joint Development Agreement with Micron 11/2008 Fab 3A 70nm wafer production reached phase 1 full capacity 08/2009 Pilot run successful in FAB 3A, 68nm, Stack technology 09/2009 Pilot run successful in FAB 3A, 50nm, Stack technology 4

9 . Corporate Governance Report 3 Organization 3.1 Organization Chart 5

10 3.1.1 Major Corporate Functions Department Description Wafer Cooperating resource among Fabs, Planning and Operations regarding manufacturing productions, equipments, processes and facility to meet the demand of product quality and delivery date.. DRAM Business Operating DRAM production, new product development and design, product engineering, back end testing & assembly service. Product design New product research and development, support for technology of mass production, estimation for IC package and testing and improvement plan. Foundry/Technology Advanced foundry process technology and module technology research & Development development, foundry market sales promoting; cooperation with others to co develop new technology. Administration Financing and accounting operation, purchasing, material management, Safety & Hygiene and general affairs related supporting. Engineer / Fab expansion, new Fab construction, facility engineering, capacity planning Information and managing. IT management; placement of IT technology, networking Support build up and management, and fire wall precaution and protection. Global Sales Global sales promoting and developing, sales strategy, new products promoting, foundry business, marketing planning and executing. Strategic Planning & Industrial trend and market analysis, business plan, investment plan IBO evaluation, product and operation strategy, worldwide market development, and proceeding international strategic alliance. QRA Div. Quality and reliability management, quality training and verifying, managerial concept improvement. Human Resources Human resources management; personnel systems build up and execution, administrative affairs, and policy. IPR & Legal Dep. Responsible for public information affairs, Corporate legal affairs, contracts, patent affairs, and intellectual property management. Audit Assess the Internal audit and process compliance, evaluate the execution outcome.on each department, and provide improvement suggestion timely to make the operation efficient. 6

11 3.2 Directors, Supervisors and Management Team Disclosure of Directors and Supervisors Title Chairman Director Name Date Elected Date First Elected Term (Years) Shareholding when Elected Current Shareholding Spouse & Minor Shareholding Shareholding by Nominee Arrangement Experience Education Other Position As of April 26, 2010 Executives, Directors or Supervisors who are spouses or within two degrees of kinship Shares (%) Shares (%) Shares (%) Shares (%) Title Name Relation President, Nan Ya President, Nan Ya Plastics Corp. Nan Ya Plastics Co. Plastics Co. Director, Inotera representative ,713,743, ,186,852, B.A., National Memories, Inc. Chia Chau Wu Cheng Chi Director, Mei Ya University Technology Corp. Nan Ya Plastics Co. representative Ming Jen Tzou Same as above Same as above Same as above Same as above AVP, Nan Ya Plastics Co. B.A. National Taipei University of Technology Director Wen Yuan Wong , , ,275, Chairman, Formosa Chemicals & Fibre Co. Master, University of Houston Supervisor, Nan Director Reuy Wang , , Ya Plastics Co. EMBA, National Taiwan University Director, Advanced Micro Director Jih Lien ,196, ,302, , Devices Inc. Ph. D., E. E., University of Missouri P.T. Group A.V.P., ASMI Director Joseph Hsieh ,906, ,134, Ph. D., Physics, Purdue University AVP, Nan Ya Plastics Corp. Director, Nan Ya Plastics Co. President, Nan Ya Photonics Inc. and FPG Fiber Glass Corp. Chairman of Executive Board, Formosa Plastics Group VP, Formosa Plastics Group Administration Center Chairman, Inotera Memories, Inc. Chairman, Mei Ya Technology Corp. Supervisor, Inotera Memories, Inc. Director, Mei Ya Technology Corp. Director Otto Chang Relative in law 7

12 Title Name Date Elected Date First Elected Term (Years) Shareholding when Elected Current Shareholding 8 Spouse & Minor Shareholding Shareholding by Nominee Arrangement Experience Education Other Position Executives, Directors or Supervisors who are spouses or within two degrees of kinship Shares (%) Shares (%) Shares (%) Shares (%) Title Name Relation Director Otto Chang ,962, ,193, , President, Nanya President, Nanya Printed Circuit Board Printed Circuit Corp. Wen Yuan Relative Board Co. Director, Inotera Director Wong in law B.A from Feng Memories, Inc. Chia University Director, Mei Ya Technology Corp. Director Pei Ing Lee ,949, ,545, , Senior Engineer, IBM Ph.D. Chemical Engineering Syracuse University Pei. Jen Co. Supervisor representative Mao Ling Tsai 3 19,869, ,869, Rector, Nan Ya Plastics Co. Supervisor Formosa Taffeta Co. Representative Shih Ming Hsieh President, ,927, ,289, Formosa Taffeta Co. Supervisor Ming Long Huang , , Executive Administration Center of Chang Gung Hospital B.A., Accounting, Feng Chia University note 1 : Director Moor H.M. Chen resigned on July Major shareholders of the institutional shareholders Supervisor, Inotera Memories, Inc. President and Director, Mei Ya Technology Corp. Supervisor, Nanya Printed Circuit Board Co. President, Formosa Advanced Technologies Co. Supervisor, Formosa Chemicals & Fibre Co. As of April 26, 2010 Name of institutional shareholders Major shareholders of the institutional shareholders Nan Ya Plastics Corporation Formosa Plastics Corporation(9.88%), Chang Gung Medical Foundation(8.43%), Y.C. Wang(5.46%), Y.T. Wang(5.41%),Formosa Chemicals & Fibre Corporation(5.21%), Chang Gung University(3.99%), Wan Shun International Investment Corporation(2.39%), Formosa Petrochemical Corporation(2.26%), Qin Shi International Investment Corporation(1.86%), Investment Account of Merrill Lynch Trusteed by HSBC(1.20%) Formosa Taffeta Corporation Formosa Chemicals & Fibre Corporation(37.40%), Min Zhi Lai(3.59%), Chang Gung Medical Foundation(3.16%), Yu Yuang Textile Co., Ltd. (2.71%), Min Xiong Lai(2.58%), Chang Gung University(2.13%), Chang Gung Institute of Technology(2.08%), Ming Chi University of Technology(1.80%), Asia Pacific Investment Corporation(1.43%),

13 Pei. Jen Corporation Yuan Da System Corporation Trusteed by Citi Bank(0.93%) Subsidiary of Nanya Technology Corp. Major shareholders of the major shareholders that are juridical persons As of April 26, 2010 Name of juridical persons Major shareholders of the juridical persons Formosa Chemicals & Fibre Corporation(7.66%), Chang Gung Medical Foundation (7.65%),Investment Account of Merrill Lynch Trusteed by HSBC(6.26%), Nan Ya Plastics Corporation(4.63%), Y.T. Wang(4.43%), Qin Shi Formosa Plastics Corporation International Investment Corporation(4.16%), Wan Shun International Investment Corporation(3.05%), Y.C. Wang(2.91%), Formosa Petrochemical Corporation(2.07%), Ming Chi University of Technology(1.41%) Chang Gung Medical Foundation(18.58%), Y.T. Wang(7.37%), Y.C. Wang(6.75%), Qin Shi International Investment Corporation(6.35%), Wan Shun International Investment Corporation(3.80%), Formosa Plastics Formosa Chemicals & Fibre Corporation(3.39%), Nan Ya Plastics Corporation(2.40%), Union Power Development Corporation(1.63%), Corporation Account of Genesis Capital Group Corporation Trusteed by Standard Chartered (1.18%), Investment Account of Merrill Lynch Trusteed by HSBC(1.14%) Formosa Plastics Corporation(29.31%), Formosa Chemicals & Fibre Corporation(24.90%), Nan Ya Plastics Corporation(23.84%), Chang Gung Medical Foundation(4.68%), Formosa Taffeta Corporation(3.83%), Account of Millennium Venture Capital Corporation Trusteed by Standard Chartered(0.70%), Account of Genesis Capital Formosa Petrochemical Corporation Group Corporation Trusteed by Standard Chartered (0.57%), Account of Bauer Energy Corporation Trusteed by HSBC(0.51%), Account of Asia Pacific Photonics Corporation Trusteed by HSBC(0.48%), Account of Central Capital Management Corporation Trusteed by Standard Chartered(0.47%) A Juridical Person approved to be set by Department of Health, Executive Yuan, R.O.C. (Taiwan). No share is Chang Gung Medical Foundation issued. Chang Gung University A Juridical Person approved to be set by Ministry of Education, R.O.C.. No share is issued. Wan Shun International Investment These corporations didn t go public. The information of major shareholders of these corporations is not Corporation, Qin Shi International available. Investment Corporation, Yu Yuang Textile Co., Ltd. Ming Chi University of Technology A Juridical Person approved to be set by Ministry of Education, R.O.C.. No share is issued. Chang Gung Institute of Technology A Juridical Person approved to be set by Ministry of Education, R.O.C.. No share is issued. 9

14 Professional qualifications and independence analysis of directors and supervisors Criteria Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience An Instructor or Higher Position in a A Judge, Public Prosecutor, Attorney, Certified Have Work Experience in Department of Commerce, Law, Finance, Public Accountant, or Other Professional or the Areas of Commerce, Accounting, or Other Academic Department Technical Specialist Who has Passed a National Law, Finance, or Related to the Business Needs of the Company Examination and been Awarded a Certificate in a Accounting, or Otherwise in a Public or Private Junior College, College or Profession Necessary for the Business of the Necessary for the Business Name University Company of the Company Nanya Plastics Corp. Wen Yuan Wong 10 Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director Reuy Wang Jih Lien Moor, H.M., Chen Joseph Hsieh Pei Ying Lee Formosa Taffeta Corp. Pei. Jen Corp. Ming Long Huang Note: 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural person shareholder who holds shares, together with those held by the person s spouse, minor children, or held by the person under others names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law. Note A : Director Moor H.M. Chen resigned on July

15 3.2.2 Management Team As of April 26, 2010 Title President Executive Vice President Name Jih Lien Date Effective Shareholding Spouse & Minor Shareholding Shareholding by Nominee Arrangement Experience Education Other Position Managers who are Spouses or Within Two Degrees of Kinship Shares (%) Shares (%) Shares (%) Title Name Relation 2,302, , Otto Chang ,193, , Director, Advanced Micro Devices Inc. Ph. D., E. E., University of Missouri President, Nanya Printed Circuit Board Corp. B.A from Feng Chia University Chairman, Inotera Memories, Inc. Chairman, Mei Ya Technology Corp. President, Nanya Printed Circuit Board Corp. Director, Inotera Memories, Inc. Director, Mei Ya Technology Corp. Senior Vice President Senior Vice President Senior Vice President Vice President Vice President Assistant Vice President Assistant Vice President Acting Financial Officer Accounting Supervisor Joseph Hsieh ,134, Pei Ing Lee ,545, , Joe Ting Pei Lin Pai , James Shih , Lin Chin Su ,322, Yau Ming Chen P.T. Group A.V.P., ASMI Ph. D., Physics, Purdue University Senior Engineer, IBM Ph.D. Chemical Engineering Syracuse University Chairman & President, Piecemakers Technology Inc. Master, E.E., Case Western Reserve University President, Ascend Semiconductor Corp. Ph. D., Electrical and Computer Science, University of California at Berkeley Vice President, Inotera Memories, Inc. B.A., Chemical, National Cheng Kung University AVP, Nanya Technology Corp. Ph. D., Materials Science and Engineering, University of Utah AVP, Nanya Technology Corp. B.A., Electrical Engineering, National Taiwan University Tommy Finance Director, Nanya Technology Corp. Kuo 2009/ , , B.A., Statistics, Feng Chia University Ching Yin Lee , Note: 1 Senior Vice President Moor H.M. Chen retired on July 11, Vice President James Shih boarded on September 1, Director, Accounting Division, Nanya Technology Corp. B.A., Department of Accountancy, Tunghai University 11 Supervisor, Inotera Memories, Inc. Director, Mei Ya Technology Corp. Supervisor, Inotera Memories, Inc. Director and President, Mei Ya Technology Corp.

16 3.2.3 Remuneration of Directors, Supervisors, President, and Vice President Remuneration of Directors Title Name Remuneration Base Compensation(A) Severance Pay(B) Bonus to Directors(C) Allowances(D) The company Companies in the consolidated financial statements The company Companies in the consolidated financial statements The company Companies in the consolidated financial statements The company Companies in the consolidated financial statements Ratio of total remuneration (A+B+C+D) to net income(%) The company Companies in the consolidated financial statements Salary, Bonuses, and Allowances (E) The company Relevant remuneration received by directors who are also employees Companies in the consolidated financial statements Severance Pay (F) The company Profit Sharing Employee Bonus (G) Companies in the consolidated financial statements Cash Stock Cash Stock Companies in the The company consolidated financial statements Unit: NT$ thousands As of Dec.31, 2009 Exercisable Employee Stock Options (H) The company Companies in the consolidated financial statements Ratio of total compensation Compensation (A+B+C+D+E+F+G) to paid to net income(%) directors from an invested company The company Companies in the consolidated financial statements other than the company s subsidiary NanYa Plastics Corp. Chairman Representative: Chia Chau Wu NanYa Plastics Director Corp. Representative: Ming Jen Tzou Director Wen Yuan Wong Director Reuy Wang Director Jih Lien ,674 7, Director Moor, H.M. Chen (note 3) ,462 2,462 6,440 6, Director Joseph Hsieh ,183 5, Director Otto Chang Director Pei Ying Lee ,987 4, Note 1; The net income of Nanya in 2009 is net loss. Note 2: Nanya didn t distribute profit in Note 3: Director Moor H.M. Chen resigned on July

17 Remuneration of Supervisors Unit: NT$ thousands As of Dec.31, 2009 Title Name Remuneration Base Compensation(A) Severance Pay(B) Bonus to Directors(C) Allowances(D) Companies in the Companies in the Companies in the Companies in the The company consolidated financial statements The company consolidated financial statements The company consolidated financial statements The company consolidated financial statements Ratio of total remuneration (A+B+C+D) to net income(%) The company Companies in the consolidated financial statements Compensation paid to directors from an invested company other than the company s subsidiary Supervisor Pei. Jen Co. representative Mao Ling Tsai Supervisor Formosa Taffeta Corp. Representative Shih Ming Hsieh Supervisor Ming Long Huang Note 1: The net income of Nanya in 2009 is net loss. Note 2: Nanya didn t distribute profit in

18 Compensation of President and Vice President Title Name The company Salary(A) Companies in the consolidated financial statements Severance Pay (B) The company Companies in the consolidated financial statements Bonuses and Allowances (C) The company Companies in the consolidated financial statements 14 Profit Sharing Employee Bonus (D) Companies in the The company consolidated financial statements Cash Stock Cash Stock Ratio of total compensation (A+B+C+D) to net income(%) The company Companies in the consolidated financial statements Unit: NT$ thousands As of Dec.31, 2009 Exercisable Employee Stock Options The company Companies in the consolidated financial statements Compensation paid to the president and vice president from an invested company other than the company s subsidiary President Jih Lien Executive Vice Otto Chang President Senior Vice Moor H.M. President Chen (note) Senior Vice Joseph President Hsieh 31,285 31,285 6,840 6, Senior Vice Pei Ing Lee President Senior Vice Joe Ting President Vice Pei Lin Pai President Vice James Shih President Note 1: The net income of Nanya in 2009 is net loss. Note 2: Senior Vice President Moor H.M. Chen retired on July 11, Name of President and Vice President Bracket Companies in the consolidated The company financial statements NTD2,000,000 Below Otto Chang James Shih Otto Chang James Shih NTD2,000,000 ~ 5,000,000 Pei Ling Pai Joe Ting Pei Ing Lee Pei Ling Pai Joe Ting Pei Ing Lee NTD5,000,000 ~ 10,000,000 Jih Lien Joseph Hsieh Moor H.M. Chen Jih Lien Joseph Hsieh Moor H.M. Chen NTD10,000,000 ~ 15,000,000 NTD15,000,000 ~ 30,000,000 NTD30,000,000 ~ 50,000,000 NTD50,000,000 ~ 100,000,000 NTD100,000,000 or Above Total 8 8 Note : Nanya didn t distribute profit from in 2010.

19 Management Team s Bonuses for Profit Sharing Unit: NT$ thousands, Dec 31, 2009 Title Name Employee Bonus in Stock (Fair Market Value) Employee Bonus in Cash Total Ratio of Total Amount to Net Income Executive Officers President Executive Vice President Senior Vice President Senior Vice President Senior Vice President Vice President Vice President Assistant Vice President Assistant Vice President Acting Financial Officer Accounting Supervisor Jih Lien Otto Chang Joseph Hsieh Pei Ing Lee Joe Ting Pei Lin Pai James Shih Lin Chin Su Yau Ming Chen Tommy Kuo Ching Yin Lee Note There is no profit sharing in Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents. The remuneration paid by NTC and its affiliates to directors, supervisors and executive officers have no difference. There is also no certain percentage as the total amount of remuneration to net profit. The remuneration distributed or not depends on there is profit earned or not from last year. 15

20 3.3 Implementation of Corporate Governance Board of Directors (A) There are 9(A) meetings from January 1 st, 2009 to April 26 th, The attendance rate of each director is as below: Title Name Attendance in Person(B) By Proxy Attendance rate (%) / Remarks Chairman Nanya Plastics Corp. Representative: Chia Chau Wu Director Nanya Plastics Corp. Representative: Ming Jen Tzou Director Wen Yuan Wong Director Reuy Wang Director Jih Lien Director Moor H.M. Chen Director Joseph Hsieh Director Otto Chang Director Pei Ing Lee Supervisor Pei. Jen Corp. Representative: Mao Ling Tsai Supervisor Formosa Taffeta Corp. Representative Shih Ming Hsieh 8 89 Supervisor Ming Long Huang

21 Other mentionable items: 1.If there are the circumstances referred to in Article 14 3 of Securities and Exchange Act and resolutions of the directors meetings objected to by Independent Directors or subject to qualified opinion and recorded or declared in writing, the dates of meetings, sessions, contents of motions, all independents opinion and the Company s response to independent directors opinion should be specified: None. 2.If there is Directors avoidance of motions in conflict of interest, the Directors names, contents of motions, causes for avoidance and voting should be specified: None. 3.Measures taken to strengthen the functionality of the Board: Nanya has already set up the Regulations of the Board Meeting to lift the efficiency of the board meeting according to the regulations of the authority. Nanya expects to elect independent directors to enhance corporate governance while the capital of the Company meets the requirement of the government regulation. 17

22 3.3.2 Audit Committee Attendance of Supervisors for Board Meeting Audit Committee: There is no Audit Committee in the Company Attendance of Supervisors for Board Meetings: There are 9(A) meetings from January 1st, 2009 to April 26th, The attendance rate of each supervisor is as below: Title Name Attendance in Person(B) Attendance rate (%) / Remarks Supervisor Pei. Jen Co. representative Mao Ling Tsai Supervisor Formosa Taffeta Corp. Representative Shih Ming Hsieh 8 89 Supervisor Ming Long Huang Other mentionable items: 1. Composition and responsibilities of supervisors: According to Company Act, the job responsibility of supervisors is to supervise the company daily operation and audit financial reports. They will execute their job responsibility with honor. Our supervisors are all professionals and supervise the company operation with higher standard by their financial and juridical profession. 1.1 Communications between supervisors and the Company's employees and shareholders: Our supervisors communicate with employees and shareholders by company spokesman. The communication manner works out pretty well. 1.2 Communications between supervisors and the Company's Chief Internal Auditor and CPA: The communication channel with auditor is pretty smooth. 2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of meetings, sessions, contents of motions, resolutions of the directors meetings and the Company s response to supervisor s opinion should be specified: None Corporate Governance Execution Status and Deviations from Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies The difference of practicing corporate governance from the guideline of Item Execution Status Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies 1. Shareholding Structure & Shareholders Rights 1.1 Method of handling shareholder suggestions or complaints 1.1 There is a spokesman to accept shareholders suggestions or to explain doubts. There are also functional organizations in the President s office to support. After Comply with Article 13 of Corporate Governance Best Practice Principles for 18

23 1.2 The Company s possession of a list of major shareholders and a list of ultimate owners of these major shareholders 1.3 Risk management mechanism and firewall between the Company and its affiliates 2. Composition and Responsibilities of the Board of Directors 2.1 Independent Directors 2.2 Regular evaluation of CPAs independence shareholders suggestions and doubts are thoroughly understood and reviewed, oral or written statements will be proposed. 1.2 NTC always notices the shareholding change of shareholders with 5% or more shareholding percentage and Directors and Supervisors at any time. NTC also key in the shareholdings of Directors, Supervisors, and shareholders with more than 10 % shareholding into the website specified by the SFB NTC and its affiliates use the system of profit center. Employees of each company and property management responsibility are divided clearly. There is no abnormal transactions and managers do not hold concurrent position in other companies Financial transactions are according to average practical cost. The amount will be re evaluate every year in accordance with business requirement. There is restriction of range and amount to make endorsement and guarantee to one company For banks, customers, and suppliers, to do integrated risk considerations, to control all companies by computers, and reduce losses by stopping shipping product or paying to the same customer or corporation at the same time Rules are made to monitor transaction management, Making of Endorsements/Guarantees, and Loaning of Funds between Nanya and affiliates. According to Regulations Governing Establishment of Internal Control Systems by Public Companies made by SFB, Rules to Monitor and Manage Subsidiaries are made to make sure the function of management of Subsidiary risks. 2.1 There is no Independent Directors in the Company 2.2 The auditor is trust worthy with sound reputation and not favorable to NTC as an 19 TSEC/GTSM Listed Companies Comply with Article 19 of Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies Comply with Article 14~18 of Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies 2.1 Independent Directors have not been set. The Board of Directors always acts in accordance with the regulations, Articles of Incorporation, and resolutions of shareholders meetings. Except with professional knowledge, skills, and self discipline to execute business, all Directors make the most welfare for shareholders with the disciplines of honesty and watching obligations. These can be identified by the facts of operation results and dividend distribution. It is not necessary to set Independent Directors. 2.2 In order to maintain the

24 independent auditor. independence and justice, the auditing firm always asks its accountants and employees to report Announcement of Independence. 3. Communication channel with stakeholders There are different channels to communicate with stakeholders. There are also spokesman and acting spokesman. There are telephone number and in the website. There are also spokesman s and investor s handled by the specific person. So stakeholders can communicate with Nanya very easily. 4. Information disclosure 4.1 Establishment of a corporate website to disclose information regarding the Company s financials, business and corporate governance status 4.2 Other information disclosure channels (e.g., maintaining an English language website, appointing responsible people to handle information collection and disclosure, appointing spokespersons, webcasting 5.Operations of the Company s Nomination Committee, Compensation Committee, or other committees of the Board of Directors The NTC website has Chinese and English vision. To disclose the financial and management information in time according to the related regulations. Please refer to NTC website We have spokesman and representing spokesman. We also assign employees responsible for information collection and disclosure in the President s Office and provision of solution to spokesman for the problems of people with conflict of interest and Bureau The Social Responsibility Report and Corporate Magazine are disclosed in the website. None Comply with Article 51~52 of Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies Comply with Article 57 of Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies Comply with Article 54~58 of Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies There is no functional committee but supervisors elected by the Shareholders Meeting will monitor the operation of Nanya.. 6. If the Company has established corporate governance principles based on Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies, please describe any discrepancy between the principles and their implementation: There is no Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies for Nanya. Although there is no Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies for Nanya, the essence of Corporate Governance is included in the internal control rules and other management rules executed vey well. 7. Other important information to facilitate better understanding of the Company s corporate governance practices (e.g., employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors and supervisors training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors):all Directors and Supervisors of Nanya attended a lecture course in 2009/11/10. We got high attendant rate on board of meetings. We start buying responsibility insurance for directors, supervisors and material staffs in If the Company has implemented a self corporate governance evaluation or has authorized any other professional organization to conduct such an evaluation, the evaluation results, major deficiencies or suggestions, and improvements are stated as follows: None. 20

25 3.3.4 Composition, Responsibilities and Operations of Compensation Committee None Social Responsibility FPG Group followed the operating concept of the balance the industry development and environmental protection. We advocate aggressively reducing the global warming gas, air pollution, water pollution and production waste. The outcome is satisfied. We will be responsible of being part of the global village. On the other hand, while FPG Group running its own business, we keep putting our effort in medicine, education and each public benefit business. We are responsible to social responsibility as an enterprise Systems and measures of society participation and execution. FPG Group deeply develops in Taiwan. Factories are in all places in Taiwan. We give every effort to become good neighborhood in every place. We set up a team in every place to communicate with neighborhood and provide possible help. To protect the environment is also the responsibility of FPG Group and its all employees. Our employees continuously clean the streets and beaches and dedicate themselves to the public welfare activities. They also help to take care of poor and disadvantaged groups. Our employees and neighborhood become a union. Our employees also make up community associations voluntarily to feedback the neighborhood with FPG Group. Through long term and continuous attention, caring and love will be distributed to every corner in this society and peaceful society will be built up Systems and measures of social distribution, social service, and social public welfare and execution. FPG Group is dedicated in continuous operation based on the aim of what is taken from the society is used in the interests of the society and the spirit of diligence and simple. FPG Group also feedbacks to the society and takes its social responsibility based on the management policy of quality, reputation, service, and environmental protection. FPG Group also released the report of corporation social responsibility in FPG Group always takes care the society and help the weakness. Except the operation of all corporations, FPG Group is also dedicated in medical care, education, and other public welfare activities Medical Care Chang Gung Memorial Hospital was set in Its own responsibility is to upgrade medical standard and create social welfare. Chang Gung Memorial Hospital not only drives the revolution and advancement of the medical industry in Taiwan but also is trusted by the public. There are 7 branches in Taiwan. Chang Gung Memorial Hospital is the largest and the best equipped hospital in Asia Education In 1960 s, all industries developed in Taiwan. Because of the lack of industry talent, FPG Group established Ming Chi University of Technology providing students with bad economic condition opportunities to study and work. FPG Group also established Chang Gung University and Chang Gung Institute of Technology to foster the industry cadres and medical professionals Other Public Welfares Except medical care and education, founder of FPG Group also donated money to establish several foundations and charitable trust public welfare foundations. Through the operation of the foundations and the participation of all companies in FPG Group, public welfare business is still pushed and donated. 21

26 To help the aboriginal teenagers education and job opportunities FPG Group donated NTD 300 million and all employees donated one day income to 921 earthquake refugees To be responsible of the rebuilding of 921 earthquake areas and old school buildings. 42 school buildings were rebuilt by FPG Group To donate 400 sets of Cochlear Implant to help deaf children To donate 635 thousand preparations of Streptococcus pneumonia to help elders who are more than 75 years old to be inoculated free. This will help to enhance elders health and living quality To drive the plan of promotion of the early curing service of disability institution. To upgrade the quality of the early curing service in Taiwan overall and systematically. 51 institutions are provided related curing assistant To help the rainbow plan of Yunlin Second Prison, Kaohsiung Prison, and Taipei Prison and help HIV patients to develop life skills and return to the society To help Taoyuan County Government to handle public welfares To help Taiwan Cancer Foundation to establish Cancer patients Curing and Caring Center To help Catholic Sisters to improve service quality and implement elders community caring To help the Mind Center for Individuals with Mental Disabilities to build curing and training place To help You An correctional institution to fix the curing place damaged by the flood To help Early Intervention for Children with developmental delay Association to establish Nantou Shueishalian Family Development Center Typhoon Morakot caused big damage to Taiwan. FPG Group donated NTD 200 million to government to help refugees. Another NTD 1 billion was donated to help to the building of schools and public construction in the disaster areas. All employees also donated one day income which is NTD 77 million. Chang Gung Memorial Hospital also established public welfare foundation to help patients with long distance to go to hospital. Until the end of 2009, Chang Gung Memorial Hospital has spent NTD 3.66 billion. Chang Gung Memorial Hospital still continue to provide medical assist in the remote areas in Taiwan and in backward countries Corporate Governance Guidelines and Regulations There is The Ethical Rules of Directors, Supervisors, and Management Team. Please see the Meeting Agenda in the 2005 Shareholders Meeting Other Important Information Regarding Corporate Governance None. 22

27 3.3.8 Internal Control System Statement of Internal Control Nanya Technology Corporation Statement of Internal Control March, 25th, 2010 Based on the result of the self assessment of internal control system for the period of January 1st, 2009to December 31st, 2009 conducted by Nanya, Nanya has the following statement: 1. NTC acknowledges that the establishment, execution and maintenance of an internal control system are the responsibilities of the Board of Directors and management personnel. NTC has already established the internal control system. The purpose of the internal control system is to provide a reasonable assurance for achieving the company s aims: (i) effectiveness and efficiency of business operation (including profitability, efficiency and the safeguard of assets), (ii) reliability of financial reports and (iii) compliance with the relevant laws and regulations. 2. The internal control system has an inborn constraint. No matter how impeccable the system is, it can only provide the reasonable assurance of achieving the three aims abovementioned. Besides, the efficiency of the internal control system can probably vary accompanying with any change of the environment and circumstances. Despite that, the internal control system of NTC has a function of self monitoring, enabling the company to remedy once the shortcoming is identified. 3. NTC evaluates the effectiveness in the design and execution of its internal control system according to the items of evaluating effectiveness of an internal control system indicated in the Guidelines for Establishment on Internal Control Systems by Public Companies (the Guidelines ) promulgated by the Securities and Futures Commission of the Ministry of Finance. In order to comply with the management control process, the items for assessing internal control systems indicated in the Guidelines divide internal system into five components: 1. Control Environment; 2. Risk Evaluation; 3. Control Operation; 4. Information and Communication; 5. Supervision. Each component comprises certain factors. For the foresaid factors, please refer to the Guidelines. 4. NTC has evaluated the effectiveness of the design and execution of its internal control system using the aforesaid factors. 5. Based on the results of the evaluation abovementioned, NTC in of the opinion that the design and execution on its internal control system, including the effectiveness and efficiency of business operations, the reliability of financial reports and the compliance with relevant laws and regulations, for the period of January 1st, 2009 to December 31st, 2009 is effective and can provide a reasonable assurance of achieving the abovementioned aims. 6. The statement will be a major part of NTC s annual report and will be released to the public. If the statement herein involves forgery, concealment or any other illegitimacy, NTC shall bear the legal responsibilities in Articles 20, 32, 171 and 174 of the Security Transaction Law. 7. The statement of internal control system has been approved by NTC s board of directors at the meeting of March 25th, All of the 8 directors present at the meeting agreed to the statement. Nanya Technology Corporation Chairman Chia Chau Wu President Jih Lien 23