6 lolf r q z d uh 3 uh f lv lr q ,q g x v wulh v & r / wg

Scale

Profit

Integration

Leading

Win customers' confidence andcreate the high-tech future together

Siliconware PrecisionIndustries Co.,Ltd.Annual Report 2006

Global Reports LLC

Contents

I. Letter to Shareholders

II. A Brief Introduction to SPIL

1. Company Profile

2. Organization

3. Information Regarding Directors, Supervisors and Executive Officers

III. Capital and Shares

1. History of Capitalization

2. Status of Shareholders

3. Major Shareholders

4. Market Price, Net Worth, EPS and Dividends Per Common Share

5. Dividend Policy and Distribution

6. Employee Profit-Sharing and Compensation to Directors and Supervisors

7. Issuances of Corporate Bonds

8. Issuances of American Depositary Receipts

9. Status of Employees' Stock Option

IV. Operational Highlights

1. Scope of Business

2. Market and Sales Overview

3. Employee Analysis

4. Environmental Awareness

5. Labor and Management Relationship

6. Major Contracts

V. Financial Statements

1. Brief Balance Sheets

2. Brief Income Statements

3. Five Years Financial Analysis

VI. Financial Reports

01

03

04

06

07

12

14

14

15

15

16

16

17

19

20

21

26

30

31

33

34

35

36

37

39

Overview

Financial Highlights

Global Reports LLC

Contents

I. Letter to Shareholders

II. A Brief Introduction to SPIL

1. Company Profile

2. Organization

3. Information Regarding Directors, Supervisors and Executive Officers

III. Capital and Shares

1. History of Capitalization

2. Status of Shareholders

3. Major Shareholders

4. Market Price, Net Worth, EPS and Dividends Per Common Share

5. Dividend Policy and Distribution

6. Employee Profit-Sharing and Compensation to Directors and Supervisors

7. Issuances of Corporate Bonds

8. Issuances of American Depositary Receipts

9. Status of Employees' Stock Option

IV. Operational Highlights

1. Scope of Business

2. Market and Sales Overview

3. Employee Analysis

4. Environmental Awareness

5. Labor and Management Relationship

6. Major Contracts

V. Financial Statements

1. Brief Balance Sheets

2. Brief Income Statements

3. Five Years Financial Analysis

VI. Financial Reports

01

03

04

06

07

12

14

14

15

15

16

16

17

19

20

21

26

30

31

33

34

35

36

37

39

Overview

Financial Highlights

SPIL OverviewEstablished in May 1984, Siliconware Precision Industries Co., Ltd. has become a leading supplier of

the IC packages and testing that power and control the world’s most popular electronic products,

including personal computers, mobile phones, LCD TVs and MP3 players.

We offer a complete range of reliable IC packaging and testing services, focusing on design,

manufacturing and other related technical support. Our dedication to enhancing quality and

developing technical innovations to satisfy customers’ needs has made SPIL a leader in creating high

value-added solutions, to the point where we are now the world’s third largest IC packaging and

testing services provider.

SPIL’s customers include some of world’s leading semiconductor design houses or end users. Their

demand for the most advanced manufacturing technology has compelled us to constantly upgrade

our processes and build a strong reputation for high quality products and services. This has made us

a partner our customers know they can trust.

This passion for quality has also enabled us to maintain sustainable growth and maximize returns for

our shareholders. Listed on the Taiwan Stock Exchange and NASDAQ, SPIL safeguards the interests

of investors by not only compliying with all relevant stock exchange rules, but also placing a high

priority on corporate governance. In 2005, we began implementing Section 404 of the Sarbanes-

Oxley Act of 2002 on management assessment of internal controls, which will only strengthen our

financial reporting procedures and quality.

SPIL2PHILOSOPHY

To achieve the outer performancesby inner operations.

●�The outer circle expresses SPIL’soutward harmony and tolerant ability.

■�The inner square expresses SPIL’simplicit stability and core.

Global Reports LLC

1.06%

10.16%

13.55%

22.19%

25.69%

0.19

1.30

1.93

3.28

4.91

22,299

27,383

35,009

43,078

56,354

425

2,839

4,282

8,244

13,329

FinancialHighlights Revenues

Net Income

Earnings Per Share

Return on Equity

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

In NT$ Million

In NT$ Million

In NTD

%

Company spokesman:Name: Ms. Eva ChenTitle: Chief Financial OfficerTel: 886-4-2534-1525E-mail:[email protected]

Deputy Spokesman: K. Y. ChienTitle: Executive Assistant to PresidentE-mail:[email protected]

IR DepartmentName: Ms. Janet ChenTitle: Director of IR DepartmentTel: 886-2-2702-8898E-mail:[email protected]

Headquarters and Facilities:Headquarters & Da Fong FacilityNo.123, Sec.3, Da Fong Rd., Taichung 427,Taiwan, R.O.CTel:886-4-2534-1525 Fax:886-4-2534-0472

Chung Shan FacilityNo.153, Sec.3, Chung Shan Rd., Taichung 427,Taiwan, R.O.CTel:886-4-2534-1525 Fax:886-4-2534-0472

Hsin Chu Branch & FacilityNo.17, Park Ave.2, Science-Based Industrial Park,Hsin Chu, Taiwan, R.O.CTel:886-3-578-5599 Fax:886-3-579-0462

Institution offering stock transfer service:Company: ChinaTrust Commercial Bank, Transfer AgencyDepartmentAddress:5F., No.83, Sec.1, Chung Ching S. Rd.,Taipei 100, Taiwan, R.O.C.Company Web Site: http://www.chinatrust.com.twTel: 886-2-2361-3033

The Auditing Public Accountants of CertifyingFinancial Statements During Recent Years:Company: PricewaterhouseCoopersAuditor: Wang, Wei-Cheng and Lin, Yu-KuanAddress: Int. Trade Building, 27F., No.333, Sec.1,Keelung Rd., Taipei 110,Taiwan, R.O.C.Company Web Site: http://www.pwc.com/twTel: 886-2-2729-6666

Foreign Securities Trade & ExchangeCorporate Bonds Registered Exchange: LuxembourgADRs Exchange: NasdaqADRs Consulting Web Site: http://www.nasdaq.com

Company Web Site:http://www.spil.com.tw

Global Reports LLC

1.06%

10.16%

13.55%

22.19%

25.69%

0.17

1.17

1.74

3.28

4.91

22,299

27,383

35,009

43,078

56,354

425

2,839

4,282

8,244

13,329

FinancialHighlights Revenues

Net Income

Earnings Per Share

Return on Equity

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

06'

05'

04'

03'

02'

In NT$ Million

In NT$ Million

In NTD

%

Global Reports LLC

Ⅰ

004

39

190

232

206

13

22

19

3.59

19

213

300

269

19

26

24

4.91

005

SPIL has always held its financials sound and safely, has been devoted to its core business of IC

packaging and testing business. This resulted in a very healthy financial structure. The chart

below reflects SPIL’s financial structure, ability to repay debt and profitability picture.

Capital Structure

Liquidity

Profitability

Debt Ratio (%)

Long-Term Fund to Fixed Assets Ratio(%)

Current ratio (%)

Quick ratio (%)

Return on Total Assets (%)

Return on Equity (%)

Net Profit Margin (%)

Earnings Per Share (NT$)

Concentrate on developing high-growth market and customers with strong potential to create

growth in revenues and earnings.

Continue our record of stable revenue growth in 2007.

Expand our global market share in the IC packaging and testing sector and strengthen our

leadership role in the industry.

Our expected sales volume in 2007 is as follows

In the year 2007, SPIL will keep doing its best to maximize shareholders' value.

Sincerely yours,

Letter to Shareholders

Review of 2006, Gartner reported the worldwide semiconductor industry growth to be 10.4%, with

an increase in products of PCs, mobile phones, LCD TVs, game consoles, MP3, and flash storage.

Generally speaking, this growth rate is in line with analysts’ expectation.

SPIL’s performance in year 2006 meets our anticipation. Both the revenues of September and

October breaking NT$ 5.1 billion, hit a record high. Full year revenues of NT$ 56.4 billion, with a

30.8% increase over 2005, outperformed the market growth of worldwide semiconductor industry.

Net profit after tax recorded NT$ 13.3 billion, an increase of 61.7%, representing SPIL’s well

management in facing the market dynamics and corporate governance. Generally speaking, SPIL

management team brings shareholders a wonderful result in 2006.

Business performance

Revenue for 2006 totaled NT$ 56.4 billion. Earnings per share were NT$ 4.91, an increase of

36.7% over 2005.

There is growth in markets of North America, Europe and Asia. And SPIL was successfully

engaged with some Europe & Asia IDM customers.

Capacity expansion of advanced package (BGA, CSP, QFP and FCBGA) resulted in revenue

contribution.

Dear Shareholders:

Financial results and profitability analysis

Status of research and development

In order to meet customers’ requirement and market demand, SPIL has been devoted itself to the

research and development of advanced packages and technologies. R&D expense exceeds two

percent of total revenue, reaching NTD1.19 billion in 2006.

By the end of 2006, SPIL had successfully applied for 262 U.S. patents, which have led to new IC

packaging products and innovative packaging, wafer bumping and testing technologies that meet our

customers' increasingly strict performance, functionality and time-to-revenue requirements.

In the future, SPIL's new products will continue to stress high-level, high-end technologies to satisfy

the market's increasing complex needs.

The year ahead

Look into this year, most analysts believe that worldwide growth in the semiconductor industry will be

8~10%, with the drivers from "4i" related products, which are Microsoft “Vista”, Nintendo ”Wii”, Intel

“Wimax”, and Apple “iPhone”. It is expected that with the promotion of these new generation

products, market demand of the related peripherals such as PCs, handsets, networks, memories,

motherboards, and those multimedia consumer products will go up as well.

SPIL’s operating goals and strategies include:

Operating goals

Item Expected sales volume

Assembly

test

Others

Development strategies

Reinforce sales marketing activities

Develop assembly and test packages that meet market trends

Reduce purchasing cost

Rationalize overall assembly and test capability

Finish Changhua factory construction to expand production space.

Chairman Bough Lin

President C.W. Tsai


Letter to Shareholders Letter to Shareholders

Items 2005 2006

About 4 billion pieces.

About 1.4 billion pieces and 690 thousand strips.

About 510 thousand strips.

Global Reports LLC

Ⅱ

006 007

1984 MayAugust

1988 February

1989 August

1993 JanuaryApril

1995 October

1995 October1995 December

1997 July

1999 January1999 May

2000 June

2000 September2000 December

2001 August

2002 January

2003 February

2003 March2003 August

2004 February2004 December

2005 August

2006 August

1. Date of Incorporation: May 17, 1984

SPIL is incorporated on May 17.Factory begins operations.

Tan Fu Factory is completed.

Applies to go public.

Obtains ISO 9001 certificationSPIL shares begin trading on the Taiwan Stock Exchange.(Exchange number: 2325)

Issues 6 million GDRs (Global Depositary Receipts) on the London Stock Exchange.Offering is priced at US$15.20 per GDR, with each GDR representing 5 SPIL commonshares. The issuance raises US$91.2 million. The GDRs would later (in August 2000) beconverted to American Depositary Receipts.Da Fong factory is completed.Company headquarters is moved to the Da Fong facility.

Issues US$138 million in Euro Convertible Bonds, the company’s first such issuance.

Obtains QS9000 quality management system certification.Obtains ISO14001 environmental management system certification.

Issues 30 million ADRs (American Depositary Receipts) on the NASDAQ.Offering is priced at US$8.49 per ADR, with each ADR representing 5 SPIL commonshares. The issuance raises US$254.7 million. Company symbol: SPIL.Section A of the Chung Shan factory is completed.Merges with Siliconware Corp.

Section B of Chung Shan factory is completed.

Issues US$200 million in Euro Convertible Bonds, the second such issuance.

In February and May issues 40,000 employee stock option certificates. Each certificatecan be used to buy 1,000 common shares.Obtains Sony Green Partner certification.Obtains ISO/TS 16949 quality management system certification.

Issues US$200 million in Euro Convertible Bonds, the third such issuance.Obtains OHSAS 18001 occupational health and safety management system certification.

Section C of Chung Shan factory is completed.

Obtains 12,879 m2 land of Ho Mei, Changhua for future operation need.

A Brief Introduction to SPIL

2.1 Company Profile

2.Company History:


Division Major Services

HsinChu Branch

North America Customer Services Group

Marketing and Sales Group

Manufacturing Group

Finance Division

Operation Supporting Division

Facilities Affairs & ESH Division

Information Technology Division

Human Resources Division

Testing Service

Customer’s Satisfaction Management

Marketing Strategies, Sales Management, Business& Sales Promotion

Manufacturing Management, Production Planning,Engineering& R&D Management

Financial, Accounting, Stock Affairs & Budget Management

Purchasing Management, Supplier Quality Assurance

Facilities Affairs & Environmental Safety Management

Establishment and Maintenance of InformationEnvironment and Application System

Human Resources Management

2.2 Organization

A Brief Introduction to SPIL A Brief Introduction to SPIL

Facility Affairs& ESH Div.

ChairmanSecretariat Office

Vice Chairmain& President (CEO)

PresidentSecretariat Office

Hsinchu BranchNorth America

Customer ServicesGroup

Manufacturing Group

Mfg Div.Customer Services

Divisions

Mfg. Divisions Finance Div.

Engineering Div. OperationSupporting Div.

R & D Div.

QualityAssurance Div.

ProductionPlan Div.

ProductionPlan Div.

R&D Div.

HumanResources Div.

Administration &EnvironmentalESH Div.

InformationTechnology Div.

QualityAssurance Div.

Chairman

Board of Directors

Shareholder’s Meeting

Supervisors

Audit Team

New BusinessDevelopment Div.

Taiwan SalesDivisions

Europe Office& Japan Office

Marketing andSales Group

Global Reports LLC

經濟規模

穩健獲利

價值整合

領先標竿

Scale

Profit

Integration

Leading

Global Reports LLC

快速反應

專業品質

研究創新

團隊學習

Speed

Professional

Innovation

Learning

Global Reports LLC

012 013

0

0

0

0

0

0

0

0

0

0

0

0

0.02

0.31

0.16

0.10

0.02

0

0.02

0

0

0

0.08

0

622,998

9,188,548

4,802,188

2,958,585

450,060

0

725,040

0

2,319

35,663

2,218,138

0

1.50

1.26

1.09

0.43

0.22

0.26

0.47

0

0

0.23

0.26

1.20

Unit : Shares ; Mar. 31, 2007

Principal Business ActivitiesPerformed Outside Our CompanyTitle Name Elected Date Current Shareholding

Spouse &Minor Shareholding Education BackgroundIndirect Shareholding

Chairman

Vice Chairman

Board Director

Board Director

Board Director

Board Director

Board Director

Board Director

Board Director

Supervisor

Supervisor

Supervisor

E.E., National Taipei Institute ofTechnology

National Taichung Institute ofTechnology

Architecture, Feng-Chia University

President of Grand Cathay SecuritiesCorp.Master of Management, Chiao-TungUniversity

Chairman of AU Optronics Corp.Master of Electronics, National Chiao-Tung University

Chairman of APTOS Corp.Director of UMC.National Taiwan Ocean University

V.P. of Corporate Banking Group,ChinaTrust Commercial BankBank & Insurance, Tamkang University

Chief Auditor of SPILElectronics, K.H. Technology School

Board Director ofPhoenix Precision Technology,SPIL’s SubsidiariesEVP of SPIL

President of SPILBoard Director of SPIL’s Subsidiaries

S.V.P of SPIL.Board Director of Phoenix Precision Technology,SPIL’s Subsidiary

None

Chairman of So Dar InvestmentBoard Director of Chi Cheng Enterprise,Li Fu Investment, MPEC

Chairman of Joinwin InvestmentSupervisor of Phoenix Precision TechnologyBoard Director of SPIL’s Subsidiary

Bough Lin

Chi-Wen Tsai

Wen-Lung Lin

Yen-Chun Chang

Wen-Jung Lin

Hsiu-Li Liu

Ing-Dar Liu

Jing-Shan Aur

Wen-Lung Cheng

Fu-Mei Tang

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

2005.6.13

44,181,690

37,018,736

32,030,319

12,528,006

6,400,554

7,625,121

13,695,214

0

142,042

6,909,481

7,783,657

35,176,054

Numbers ofShare Owned

% of ShareOwned

2.3 Information Regarding Directors, Supervisors and Executive Officers


% of ShareOwned

0

0

0

0

0

0

0

0

0

0

0

0

A Brief Introduction to SPILA Brief Introduction to SPIL


% of ShareOwned

Teresa WangRepresentative ofSiliconware InvestmentCompany

Jerome TsaiRepresentative of Pei-Sheng CulturalEducational Foundation

Electronic Physics,National Chiao-Tung University

E.E., Nan-Tai College

Board Director of Sercomm Corp, AME

Board Director of Clientron Corp, Bcom

None

Board Director of Phoenix Precision TechnologyCFO of Phoenix Precision Technology

Assistant V.P. of Siliconware Corp.Accounting, Ming-ChuanCommerce College

Chairman of Ku Ming Investment Co.

Board Director of ChipMOS (Bermuda)Supervisor of Phoenix Precision Technology

International Trade, Ming-ChuanCommerce College

Global Reports LLC

014 015

10

10

10

10

10

10

10

3,150,000

3,150,000

3,150,000

3,150,000

3,150,000

3,150,000

3,150,000

31,500,000

31,500,000

31,500,000

31,500,000

31,500,000

31,500,000

31,500,000

2,328,919

2,596,714

2,681,794

2,773,851

2,776,888

2,887,757

2,942,458

23,289,193

25,967,137

26,817,935

27,738,511

27,768,882

28,877,574

29,424,577

4

2,673,104

0.10%

80

292,923,603

10.56%

206

220,959,792

7.96%

489

1,434,399,802

51.71%

77,810

822,894,751

29.67%

78,589

2,773,851,052

100.00%

3.1 History of Capitalization

Ⅲ Capital and Shares

Mar. 31, 2007

Date Authorized Paid-In Remarks

Non-CashAssets as Payment

for Stocks

2006.03

2006.06

2006.07

2006.08

2006.11

2006.12

2007.03

Not Applicable

Not Applicable

Not Applicable

Not Applicable

Not Applicable

Not Applicable

Not Applicable

August 7, 2006 (Capital Increased Date)

Number ofShareholders

ShareHolding

Ratio

Shares Amount Shares Amount Others

3.2 Status of Shareholders

Type ofShareholders

GovernmentalOrganization

FinancialInstitution

OtherCorporations

ForeignOrganizationand Others

Individual Total

54,735,008

54,472,728

46,749,461

46,034,252

43,821,690

37,108,736

35,176,054

32,030,319

1.97%

1.96%

1.69%

1.66%

1.58%

1.34%

1.27%

1.15%

3.3 Major Shareholders

Name of Shareholders Share holding Ratio

Citibank in custody for American Depositary Receiptsof Siliconware Precision Industries Co., Ltd.

Li Ping Wang

Ku Ming Investment Co., Ltd.

ChungHwa Post Co., Ltd.

Government of Singapore Investment Corp.PFE Ltd.

Bough Lin

Sanford C. Bemstein & Co.Delaware Business Trust-Emerging Market Value Series.

Chi-Wen Tsai

Siliconware Investment Company Ltd.

Wen-Lung Lin

Aug. 7, 2006 (Capital Increased Date)

Capital and Shares


Capital and Shares

(NT$)

3.59

3.28

1.66

0.96

－

－

8.63

18.66

5.36%

－

－

－

－

－

－

－

－

－

4.91

－

－

－

－

－

8.60

－

－

3.4 Market Price, Net Worth, EPS, and Dividends per Common Share

By Mar. 31,2007

Market PricePer Share

Net WorthPer Share

EarningsPer Share

DividendsPer Share

Analysis ofRate ofReturn

Highest

Lowest

Average

Before Distribution

After Distribution

Weighted Average Shares(Unit : 1,000 Shares)

StockDividends

Cumulative Unpaid Dividends

Price/Earnings Ratio

Price/Cash Dividends Ratio

Yield of Cash Dividends

Before Adjustment

After Adjustment

Retained Earnings

Capital Reserve

Year 2005 2006

EarningsPer Share

Cash Dividends

47.55

21.90

30.98

17.53

17.05

2,294,413

52.50

33.00

42.21

21.79

－

2,716,477

64.50

47.90

56.29

－

－

2,886,561

Item

Unit : 1,000 shares ; NT$ Thousand

Par Value/Per share

381,406,646 13.75%

40,562,168 1.46%

Global Reports LLC

016 017

120,797,609

821,415,545

352,035,220

35,203,522

37.50%

4.43

N/A

149,323,771

463,284,215

267,794,330

26,779,433

10%

3.21

None

According to SPIL' Articles of Incorporation, if SPIL shows a profit at the end of a fiscal year,

the Company will first pay taxes, offset its losses from previous years and then appropriate 10

percent of the remaining net profits as a legal capital reserve. The Company will then set aside

1 percent of the remaining balance as compensation for directors and supervisors. Ten percent

to the amount left over will be distributed to the employees. However, whether the funds are

distributed or retained is up to the Board, with its decision to be approved by shareholders.

2.Profit Distribution and Distribution Plan

2006 Distribution Plan 2005 Profit Distribution

Employee Stock Bonus as Percentage of TotalCapitalized Earnings

Earnings Per Share after Profit Distribution toEmployees and Compensation to Directors andSupervisors

Difference with the Profit Distribution Approved bythe Board

3.5 Dividend Policy and Distribution

1.Dividend Policy

SPIL's operations have delivered consistent earnings growth in recent years. We have adopted

a dividend distribution policy that takes into account the company's operation planning,

business development, capital expenditure budget and capital needs.

In principle, the cash dividend will range from between 0-50 percent of the total dividend, with

the balance to be issued in stock. SPIL can adjust these ratios based on a number of factors,

including the economic situation, operation development and cash on hand. The Board is

responsible for determining the profit distribution plan. It also must be approved by SPIL

shareholders at the annual shareholders' meeting before being carried out.

For the current fiscal year, the Board is proposing to distribute a dividend of NT$3.6 per share,

of which NT$0.2 is in stock and NT$3.4 is in cash. The proposal has not been approved by

shareholders.

3.6 Employee Profit-Sharing and Compensation to Directors and Supervisors

1. Policy:

Item

Compensation to Directors and Supervisors

Employees' Cash Bonus

Employees' Stock Bonus

New Shares Created by Employee Stock Bonus

Capital and Shares Capital and Shares

1. Corporate Bonds Outstanding

Other RightsMethod of Conversionand Delivery

The Trustee Institution of the ConvertibleSubjects

N/A

1. Conversion Target: Common Share or ADS2.Conversion Period: Mar. 17, 2004-Jan. 29, 2009

N/A

March 31, 2007

3.7 Issurance of Corporate Bonds

Auditor

Payment Method

The Outstanding Balance of the Bond

Restrictive Clauses

Credit Assessment Organization,Assessment Date, Result of Assessment

Feb. 5, 2004

US$1,000 at Par

Luxembourg

US$1,000 at Par

US$200,000,000

0%

5 Years, Due on Feb. 5, 2009

N/A

Citicorp Trustee Company Limited

UBS AG, Taipei Branch

Lee and Li

PricewaterhouseCoopers

Pay for the Bond at Percent of Their PrincipalAmount at Maturity Date

US$35,756,000

Put option: On Feb. 5, 2008 at a price of 100%percent of its principal account. Final redemption:at 100 percent of their principal amount on Feb.5, 2009.

The Influence to the Exiting Stockholder'sRights and Interests From Release and theTransformation

Issue Date

Par Value

Issuing and Listing Location

Issue Price

Total Issuing Amount

Coupon Rate

Duration

Guarantee Institution

Trustee

Underwriting Institution

Legal Advsior

Type of Bonds

Converted into the CommonShare, ADS or the otherNegotiable Securities Amount

Zero Coupon Convertible Bonds Due 2009

2.

Redemption at the Option of Bondholders

None

US$164,244,000

The maxmun dilution ratio to the exitingshareholders for this issuance 7%.

Global Reports LLC

018

155.19

103.88

120.88

34.42

184.58

142.58

162.66

34.42

019

Excel as a World Class Leading Provider of Assembl

y andTest

Service

s

2. Information on Our Bonds

Type of Bond Zero Coupon Convertible Bonds due 2009

Item Year 2006 As of March 31, 2007

Market Price

Highest (US$)

Lowest (US$)

Average (US$)

Conversion Price(NT$)

Date of Offering and the ConversionPrice in Offering Date(NT$)

Deliver Common Stock within 5 Days, afterBondholders Request for Conversion.

Capital and Shares Capital and Shares

3.8 Issuance of American Depositary Receipts

Date of Offering June 7, 2000

Date of Offering

Issuance & Listing

Symbol

Offering Size

Offering Price

Total Number of ADR Offering

Underlying Securities

Number of Underlying Securities

Rights and Obligations of ADR Holders

Consignor

Trustee Institution

Depositary Bank

Number of Outstanding

Cost of Offering and Expense of Maintenance

Market Price

2006

As of Mar. 31, 2007

Highest (US$)

Lowest (US$)

Average (US$)

Highest (US$)

Lowest (US$)

Average (US$)

March 31, 2007

Item

June 7, 2000

Nasdaq Stock Exchange

SPIL

US$254,700 Thousand

US$8.49

30,000,000 American Depositary Shares

1ADS= 5 SPIL Common Shares

150,000,000 Common Shares

The Same as Ordinary Shareholders

N/A

Citibank N.A.

Citibank N.A. Taipei Branch

Unit: 115,132,443

US$10,200 Thousand

None

7.94

4.74

6.19

10.11

7.45

8.79

The Important Restriction of UnderwritingAgreement and Deposit Agreement

Feb. 5, 2004 at 47.035

Conversion Right

Global Reports LLC

020 021

3.9 Status of Employees' Stock Option

Category of Stock Subscription 1st Time Stock Options Subscribed by Employees

Mar. 31, 2007

Capital and Shares

Assembly:

SO Package

QFP Package

QFN

CSP Package

BGA Package

FCBGA Package

Bumping:

8 " /12" wafer bumping

Test:

8 " /12" wafer sort (including bumping wafer)

Final Test

System Level Test

49,312,355 87.5%

4,974,314 8.8%

2,066,921 3.7%

56,353,590 100%

Ⅳ

Major services

SPIL offers IC package turnkey solutions that range from design consultations, modeling and

simulations, wafer bumping, wafer probe and sort, package assembly, final test, burn-in, to drop ship.

Revenue and sales percentage by services

unit：NT$ thousand

Revenue %

Item 2006

Assembly

Test

Other

Total

Current services

4.1 Scope of Business


Operational Highlights

Operational Highlights

Approved Date by SFB

Date of Issuance

Rate of Issuing Shares Among Total IssuedShares

Duration of Subscription

Method of Performance

Restriction Period and Rate (%)

Obtained Subscribed Share Number

Subscribed Amount (NT$)

Non-Executed Share Number

Purchase Price of Each Share of Non-Executed shares

Non-Executed Share Quantity Among TotalIssued Share

Influence on Shareholders' Equity

Aug. 14, 2002

Feb. 7, 2003/ May 21, 2003

Total Issuance: 40,000 Units(Each unit may exercise 1,000 Common Shares)

5 years

Issuing New Shares

30% Exercisable after 2 Years70% Exercisable after 3 Years100% Exercisable after 4 Years

31,253,300

350,676,030

3,792.8 Units

Feb. 7, 2003:NT$9.2/May 21, 2003:NT$9.7

0.13%

The issuing of new shares did not significantlydilute the equity of Shareholders who alreadyheld SPIL Common Shares.

1.36%

Number of Issuing

Global Reports LLC

022 023

Other:

TCP / COF

Flash Memory Card

CMOS Image Sensor

CMOS Image Sensor Module

1.Current status and future outlook of the industry

Industry overview

Gartner-DQ forecasted year 2006 worldwide semiconductor industry revenue of US$ 259.1 billion,

with annual growth of 10.4%, and forecasted year 2007 worldwide semiconductor industry revenue

of US$ 283 billion, with annual growth of 9.2%.

Gartner-DQ forecasted year 2006 outsourcing semiconductor packaging & testing service industry

revenue of US$ 19.06 billion, with annual growth of 25.7%, and the main reasons of the growth are:

Standards shifting:

Demand increase:

As the sales of PCs, handsets, networks, game devices, memories, and multimedia consumer

products grows, the need for chip packaging will soar as well.

Taiwan’s semiconductor industry supply chain is remarkable. There are 268 IC design houses, 8

wafer material suppliers, 4 photo-mask manufacturers, 13 foundries, 33 assembly manufacturers,

35 testing houses, 15 substrate providers, and 4 leadframe providers in Taiwan. This unrivaled

network enables SPIL to help clients optimize their time-to-revenue at highly competitive prices and

quality levels.

In an era when IC technologies become more complex, vendors are forced to continuously upgrade

their manufacturing processes. SPIL’s existing client base includes IC design houses and IDMs, all

leading players in 3C (consumer electronics, computers and communications) applications. SPIL’s

advanced assembly technologies keep up with market trends and enable fast delivery and stable

yields, all factors in our ability to maintain close partnerships with our customers.

As the unit price of assembly and test for low to middle level packages are moving down, IDMs

consider it an incentive for those packages being outsourced.

IDM outsourcing strategy continued:

As the production percentage of advanced process such as 90nm increases, the rate of chip

multiplied will grow faster than that of revenue growth for foundry service providers.

Wafer fabrication process progressing:

Adoption of substrate packaging for DDR2 is becoming mainstream process.

Flip Chip packaging is becoming mainstream for graphic chips and chip sets as well.

2. Supply chain structure

Operational Highlights Operational Highlights

NB/Graphic 5.0 Gbps PCIe II high speed test

WLAN SOC RF W/S

Memory DDR II test

Future development plan

New manufacturing services being developed in 2007

FCBGA series: Apply on the key components for personal computer, like Graphics, Chipsets etc.

CSP series: Apply on consuming and communication products, like bluetooth earphone, cell

phone, PDA etc.

SIP series: Apply on consuming and communication products, like mini hard disk, memory card,

cell phone etc.

CMOS Image Sensor series: Apply on consuming, communication and car products, like digital

camera, cell phone and car applications, etc.

New technologies being developed in 2007

Assembly:

Advanced wafer thinning technologies: - 1.5/2 mil for 8” & 12” wafer

Flip chip assembly technology for 45 nm Cu/Low k wafer

Wire bonding assembly technology for 45 nm Cu/Low k wafer

Film-on-wire(FOW) 9 dies stacking technology

Through silicon via technology

Wire bonding technology for 4 tiers with 45 um stagger fine pitch

Die to die wire bonding technology for 50 um linear fine pitch

Cu wire bonding technology for 70 um stagger fine pitch

8” & 12” Cu pillar bumping technology

Bumping technology for 130 um area array fine pitch

Bumping technology for 45 nm Cu/Low k wafer

Wafer bumping:

Testing:

Global Reports LLC

IDMOutsource

024 025

Fig. 1:Semiconductor supply chain flow chart

IC design

Wafer fabrication Assembly / Test Substrate / Leadframe

Front end Back end Materials

High-speed operation capability (3D game and multi-media data)

Multiple functions (multimedia and wireless communications capabilities)

Big storage memory (to save game and multimedia data)

Energy-efficient and environmentally friendly products (with low power needs that do not contain

hazardous materials)

Micro-miniaturization; items must be light, small, short, and thin (for portability)

End products with more diversified functions:

3.Product trends and competition status

Priority on System-on-chip development:

As the electronic products getting smaller yet with more functions, it becomes trends of integrating a

number of chips into one system. Chips for DVD players, WLAN, and LCD TVs are all being swept

into SOC development.

Demand increased for high level packaging:

As the IC designs have grown more intricate and the need for higher I/O SOC pin counts, fine

pitches, higher heat sink requirements and stable electrical characteristics have driven the

development of advanced packaging techniques, including:

Wafer bump and flip chip packaging

Integration of flip chip and wire bonding

Stacked die packaging (MCP, PiP, PoP)

Ultra thin wafer grinding and wafer level packaging

65nm and 45nm wafer level packaging

An increasing level of capital investment is continued:

Higher capital investment is needed to provide the development of advanced packaging technologies

that market demands. Capital spending by the top four SATS vendors is expected to continue to

grow.

New manutacturing services:

FCBGA series: applied for PC, such as: graphics, chipset, etc.

Large-size FCGBA

CSP series: applied for electronic consumers and communication products, such as: wireless, cell

phone, PDA, etc.

Large-size wafer

XTLGA (<0.5mm)

SIP series: applied for electronic consumers and communication products, such as: MD/MircoDrive,

SD/flash, cellphone, etc.

LGA

8-dies stacked.

Thin gold 3S-SVTLGA (<1.0mm)

WB-SFCCSP

CMOS Image Sensor series: applied for electronic consumers and communication products, such

as: digital camera, cellphone, automobile, etc.

500CCD ceramic crystal BGA.

Invested NT$1,194 million for R&D expenditures in 2006

As of March 31, 2007, NT$340.8 million has been invested for R&D purpose.

A Commitment to Research and Development

There are many new manutacturing services and technologies presented by SPIL continuously to

meet the demand of our customers with high satisfaction on multi-function and thinner and compact

design.

R&D expenditures invested annually:

Developed successfully the technology and service:

New Technologies:

Assembly:

Extremely thin wafer thinning technology---1.5/2 mil for 8”/12” wafer

Flip chip packaging level/wire bonding technology for 65 um Cu/low k wafer.

Lead-free wafer bumping technology for 90 um Cu/low k wafer.

8-tier CSP packaging technology

55 um 4-tier wire bonding technology

60 um in-line wire bonding technology


FCBGA series: Apply on the key components for personal computer, like Graphics, Chipsets etc.

Large-size molded type Terminator FCBGA

CSP series: Apply on consumeing and communication products, like bluetooth earphone, cell

phone, PDA etc.

Large size WLCSP

Extremely thin CSP- XTLGA

SIP series: Apply on consuming and communication products, like min hard disk, memory card, cell

phone etc.

WB-POP

8S-STFBGA

FOW-3S-MICRO SD

WB-S-FCCSP

CMOS Image Sensor series: Apply on consumeing, communication and car products, like digital

camera, cell phone and car applications, etc.

5 million-pixel CLCC

New technologies:

Assembly:

Advanced wafer thinning technologies: - 1.5/2 mil for 8” & 12” wafer

Flip chip assembly technology for 65 nm Cu/Low k wafer

Wire bonding assembly technology for 65 nm Cu/Low k wafer

Flip chip assembly technology for 90 nm Cu/Low k wafer with lead free (SnAg & SnCu) bump

8 dies stacking technology

Wire bonding technology for 4 tiers with 55 um stagger fine pitch

Die to die wire bonding technology for 60 um linear fine pitch

A Commitment to Research and Development

Research and Development expenditures

Invested NT$ 1,194 million for R&D expenditures in 2006.

The first quarter of 2007, NT$ 340.8 million has been invested for R&D purpose.

Successful Development of Manufacturing services and Technologies

There are many new manufacturing services and technologies presented by SAIL continuously to

meet our customers’ demand of multi-function, thinner and compact design.

New manufacturing services:

Global Reports LLC

026 027

20,500,146 36.4%

33,986,128 60.3%

1,867,316 3.3%

56,353,590 100%

Short-term:

Strive to continue expanding advanced assembly and test capacity

Diversify customer base by tapping the European, Japanese, and Asia markets

Deepen partnerships with existing customers

Long-term:

Short-term and Long-term development strategies

Establish a presence in emerging markets to help accelerate the growth of global market share

Intend to more aggressively position ourselves as a comprehensive one-stop packaging and

testing solutions provider

4.2 Market and Sales Overviews

Sales by geographical area in 2006:

Market analysis

Area Sales Revenue (NT$ B) Percentage %

Taiwan

U.S. and Canada

Others

Total

According to Gartner statistics, SPIL has a 9.2% share of the global packaging market in 2006,

ranking it third among all STAS vendors.

Supply and demand status and growth of future market

Area is defined by headquarters located.

Core competence

Advanced engineering technology and service capabilities

Flexible capacity allocation capabilities that is continuously expanded and upgraded

Outstanding supply-chain integration capability

Stable human resources

Short-term：

Materials supply are easily affected by the fluctuations of oil prices and exchange rates.

Long-term：

A cluster effect is gradually developing in emerging markets that could potentially divide and erode

market demand. The industry is also trending toward an era of more normal growth, which could

put pressure on operating margins.

Advantages

According to the Gartner statistics, it's estimated that worldwide SATS compound annual growth

between 2006 and 2011 averaging 11.70%. More business opportunities for the industry can be

expected.

Harness the high demand foreseen in emerging markets to help grow SPIL global market share.

Engineering strength along with high and stable yields, and manufacturing flexibility will enable us

to take more advanced packaging orders.

Disadvantages

Advantages and disadvantages of future prospects

It’s estimated that around 49.6% of worldwide outsourced IC packaging and testing done by the top

four contractors, with accumulated revenue hit US$ 9.3 billion.

According to the Gartner statistics, we estimate that the output of worldwide SATS suppliers will

reach US$ 20.97 billion, an increase of 10.12% over last year.

Supply side:

Demand side:


Wafer bumping :

Lead free (SnAg, SnCu) wafer bumping

8” / 12” Au wafer bumping technology

Bumping technology for 150 um area array fine pitch

Bumping technology for 65 nm Cu/Low k wafer

8” / 12” Au plating RDL technology

Testing:

SB SATA II 3.0 Gbps high speed test

Micro SD card test

Global Reports LLC

028 029

3,600,039

2,504,624

1,980,339

18%

10%

10%

3,183,614

3,100,909

2,652,077

13%

13%

11%

A

B

4,762,838

4,125,562

11%

10%

A 5,733,910 10%

- - -

Policy of response

Reinforce sales marketing activities, approach customers with high growing potentials

Develop technology and products that meet market demand

Rationalize supply chain management to reduce purchasing cost

Improve product design and material specifications

Level up overall assembly and test capability

Finish Changhua factory construction to expand production space

1.Major products and its application

Major Products Major Application

Turnkey solution for IC

packaging and testing

services

Integrated Circuits, widely applied in PCs,Telecommunications, the

Internet and Consumer Electronics, Including Mobile Phones, DSC,

Cable modems, PDAs,and LCD Monitors.

2. Production process

Suppliers of Major Raw Materials

Type of Raw Materials Supplier Name Internal Overseas Status of Supply

Lead Frame

Gold Wire

Molding Compound

Substrate

SET

LGM

Fu Shung

Sumitomo Metal Mining

Nippon

TANAKA

Sumitomo Bakelite

Hitachi

NITTO

PPT

NANYA

KINSUS

-

-

-

-

-

-

-

-

-

-

-

-

Good

Good

Good

Good

Good

Good

Good

Good

Good

Good

Good

Good

Unit : NT$ Thousand3.Major Suppliers List 2005-2006

Name of Suppliers AmountPercentage ofNet Purchase Name of Suppliers Amount

Percentage ofNet Purchase

PPT

SUMITOMO

KINSUS

SUMITOMO

PPT

KINSUS

4.Major Customers List 2005-2006Unit : NT$ Thousand

Percentageof Net Sales

Name of Customer AmountPercentageof Net Sales

Name of Customer Amount

2005 2006

2005 2006

Application of major products and its production process

Wafer Bump Wafer Sort IC Packaging (Flip Chip) IC Testing

2,434,764

733,787

217

3,168,768

28,463,257

3,665,001

1,166,946

33,295,204

3,113,165

957,775

252

4,071,192

35,463,694

3,840,804

1,367,008

40,671,506

5.Production Quantity & Value Table 2005-2006Unit : 1,000 pcs ; NT$ Thousand

Assembly

Testing

Others

Total

Quantity Value Quantity Value

Item 2005 2006

Remark: At the end of 2006, we have 4,001 wire bonders and 306 testers.


Global Reports LLC

030 031

1,447,538

368,502

52

1,816,092

15,105,531

1,164,453

271,460

16,541,444

988,458

365,258

165

1,353,881

22,850,190

2,648,878

1,037,055

26,536,123

1,819,194

420,333

51

2,239,578

18,465,043

1,547,609

487,494

20,500,146

1,296,846

539,247

201

1,835,494

30,847,312

3,426,705

1,579,427

35,853,444

3,065

1,924

7,327

12,316

30.3

3.35

0.03

1.75

39.91

50.84

7.47

3,376

2,099

7,807

13,282

30.7

3.70

0.04

1.90

41.05

49.51

7.50

Unit : 1,000 pcs ; NT$ Thousand

Packaging

Testing

Others

Total

Item 2005 2006

Quantity Value Quantity Value Quantity Value Quantity Value

Internal Overseas Internal Overseas

4.3 Employee Analysis

As of Mar. 31, 2007

Number ofEmployees

Ph.D.

Master’s Degree

Bachelor’s &Associate Degree

Senior High School

Others

Level ofEducation(%)

Engineers

Management &Administrators

Operators

Total

Average Age

Average Years of Employment

3,336

2,103

7,562

13,001

31.1

3.93

0.04

1.97

41.47

48.83

7.69

Item 2005 2006

6.Sales Quantity & Value Table 2005-2006

Operational HighlightsOperational Highlights

SPIL became fully compliant with the European Union’s “Restriction of Hazardous Substances”

(RoHS) directive in early 2003, well ahead of the July 1, 2006 when the provision takes effect. Lead

free and halogen free products have put into mass production to meet the standard, opening the

way for expanded opportunities in Europe and compliant with the industrial trend.

But SPIL’s interest in environmental sustainability was not merely the result of pressure from the

RoHS directive. Widely recognized for our dedication to ecological awareness, we have long

adhered to local and international environmental guidelines, adopting an environmental

management system in 1998 that monitors the latest standards and trends. SPIL is a leader in the

development of green packaging technologies that helps us comply in a timely manner with the

strictest requirements of customer or investor requirements.

4.4 Environmental Awareness

Win customers' confidence and create the hi

gh-techfuture

together

Global Reports LLC

032 033

Provides free full group insurance coverage for the employees.

Implements the bonus system and accredited certificate of stock subscription.

Provides the strong functional, comfortable, and warm dormitory for the employees.

Having set-up the “Siliconware Ching Chyuan Clinic” with medical professionals from the hospital

providing care to all of our employees.

Establishes “Employee Welfare Committee” to promote self-optional welfare system.

Provides diversified recreational site or resort restaurant for the employees.

Sets up the “Employees Entertainment Activity Center” for the recreation after duty-off.

Establishes multi-directional association and holds artistic seminar, music appreciation, sports

contest, family communication day, friendship party, etc. parental & children activities to let our

employees have a harmony work and interesting life.

4.5 Labor and Management RelationshipIn order to having a sustainable operation, SPIL provides our employees welfare below:

Pursuant to the Implementation Rules of the Labor Pension Act, 6% monthly wages shall be

allocated into the personal account of the labor who chosen the new mechanism system; and under

supervision of the Pension Committee, the monthly pension reserved shall be allocated into the

Central Trust of China for labor who chosen the old mechanism to assure the labor’s living after

retired.

Implements complete educational training for new employees and in-service staffs to design

different training courses subject to different position level and work length with successive stages.

Establishes in-service advanced class for further professional studying.

Employees advanced studying and training

SPIL holds periodically the meeting between labors and management and implements the labors’

satisfaction survey to realize the demand of the labor and provide the satisfactory labor condition for

future prosperity. We obtain many awards below:

Agreement between labor and management

Employees welfare policy

Retirement system and implementation


We were ISO14001 certified in 1999 and were re-certified under the updated ISO14001 standard in

2005, but perhaps the most explicit affirmation of our commitment to environmental protection came

in March 2003, when SPIL was certified as a SONY “Green Partner,” well ahead of others in the

semiconductor packaging and testing industry. The “Green Partner” guidelines are recognized as the

most systematic and rigorous of any that exist in the sector and passing them with a perfect score

underlined the effort SPIL makes to supply environmentally friendly products.

We maintain strict controls and standards for emissions. Relying on both preventive and exhaust

pollution control equipment, our level of volatile organic compounds (VOCs) at 0.2 kgs/hr and

sulfuric acid emissions at 0.012kg/hr fell far below the mandated maximums of 0.6kg/hr for VOCs

and 0.1kg/hr for sulfuric acid.

SPIL efficiently treats wastewater, using dedicated equipment to deal with specific applications. We

set our higher standards for wastewater treatment than those stipulated by law and conduct

systematic internal tests to ensure compliance. SPIL has budgeted NT$70 million for wastewater

and pollution control projects over the next 18 months at two of our factories in Taichuang County

due to production expansion and NT$50 million for environmental protection facilities responding to

the new production factory in Changhua County.

SPIL also puts a high priority on waste management, with process by-products reused or recycled

when possible. Items recycled are waste paper, glass, plastics, metals and resins. Over 54% of the

waste material processed was recycled in 2006.

In order to have a permanent management, SPIL provides our employees with the welfare as below:

Provide free group insurance for all the employees.

Implement the profit sharing and Employee Stock Option Program(ESOP).

Provide the multi-functional and comfortable dormitory for the employees in need.

Establish "SPIL Ching Chyuan Clinic" with professional medical staff.

Establish Employee Welfare Commission to promote self-optional welfare system.

Provide diversified recreational areas and restaurants for all the employees.

Establish the "Employees Entertainment Activity Center" for the relaxation after duty-off.

Establish miscellaneous clubs and hold family activities such as artistic seminar, music

appreciation, sports competitions, family day, and so on to make our employees obtain the

balance between work and life at the same time.

Employees' further study and training

Implement complete educational training for new employees and in-service staff. Design various

training courses based on position level and seniority and practice step by step.

Establish a further education for all the employees to obtain a higher degree.

Retirement system and implementation

Pursuant to the Implementation Rules of the Labor Pension Act, 6% of monthly wage shall be

allocated into the personal account of the labor who choose the new Labor Pension system; for

those who choose old Labor Pension system or those who choose new Labor Pension but retain

their seniority, Pension Committee is the monitoring organization, the monthly pension reserved shall

be allocated into the Central Trust of China to ensure the labor's life upon retiring.

Agreement between labor and management

SPIL holds the meeting between labor and management regularly and implements the labor

satisfaction survey to realize labor's need and to provide the satisfactory working condition in order

to jointly create a prosperous future. Awards we have been granted are shown as below:

Global Reports LLC

034 035

4.6 Major Contracts

Company Name Contract Duration Main ContentsContractClassification

RestrictionTerms

Patent License

Patent License

Patent License

Technological License

Patent License




Construction

Electrical & MechanicalEngineering

Non-Disclosure ofthe Business toThe Third Party

Motorola

ITRI

ITRI

ITRI

Tessera

Flip Chip

LSI Logic

FUJITSU

Mega Bank, etc. 22banks

Lee MingConstruction Co.,

Chung RueyEngineering Co., Ltd.

2003.1-2010.12

2000.11 – PatentDue Date




1999.11-2009.11

2001.8. – PatentDue Date

2002.12 – 2007.12.

2006.5 – 2011.5

2006.12.01 – 2007.09.01

2006.11 – 2007.07

Patent License

Patent License

Patent License

Patent License





Medium & Long-TermLoan

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

None

None

IC packaging &testing processsubcontract service

Changhua FactoryConstruction

Changhua FacotryConstruction

Sustain CertainFinancial Ratio

A, B, C, D……etc.

Subject to theregulations stipulatedin the contract.

The Variety of ICTesting & IC PackagingProcessing Service

11,566,030

8,915,038

23,709,933

1,966,983

46,157,984

5,867,635

5,867,635

14,080,073

31,724

19,979,432

19,979,432

18,851,737

8,087,113

849,690

849,690

-

35,683

-

26,178,552

26,178,552

19,186,997

8,955,822

23,703,576

2,213,047

54,059,442

15,933,507

16,727,400

8,421,641

6,085

24,361,233

25,155,126

18,851,737

8,099,110

3,688,406

789,540

-

3,278

-

29,698,209

28,904,316

20,511,326

9,026,352

26,292,471

2,555,032

58,385,181

8,529,063

10,362,590

16,331,434

31,641

24,892,138

26,725,665

21,050,731

8,305,832

5,071,717

1,361,637

-

(141,053)

-

33,493,043

31,659,516

24,949,443

9,700,714

29,138,827

2,667,987

66,456,971

10,754,796

15,536,962

14,643,600

233,568

25,631,964

30,414,130

23,289,193

8,853,379

9,561,191

2,101,082

(737)

(47,463)

(1,828)

40,825,077

36,042,911

26,877,717

16,143,850

32,238,198

2,595,771

77,855,536

8,946,322

8,946,322

5,696,619

276,382

14,919,323

14,919,323

28,877,574

14,645,653

15,467,451

15,467,451

4,765,148

(22,276)

(1,787)

62,936,213

62,936,213

Financial Statements

5.1 Brief Balance Sheets

2002 2003 2004 2005 2006

Net Loss Not RecognizedAs Pension Cost

Before Distribution

After Distribution

Ⅴ

Item

Brief Balance Sheets for Recent Five Years

Unit : NT$ Thousand

Current Assets

Long-Term Investment

Fixed Assets

Other Assets

Total Assets

CurrentLiabilities

Long-term Liabilities

Other Liabilities

TotalLiabilities

Capital Stock

Additional Paid-in Capital

RetainedEarnings

Cumulative TranslationAdjustments

TotalShareholders'Equity

Before Distribution

After Distribution

Before Distribution

After Distribution

AfterDistribution

BeforeDistribution


Financial StatementsOperational Highlights

Unrealized Gain (Loss) onAvailable for Sale FinancialAssets

Excellent enterprise of Labor and Employer relationship in 1994.

Excellent enterprise of Education and Training in 1995.

Excellent enterprise of Labor Working Condition in 1996.

Excellent enterprise of Safety and Sanitation Auto Inspection in 1997.

Excellent enterprise of Safety and Sanitation in Self-Protection from 1998 to 2003.

Excellent enterprise of Labor Education in Taichung County in 2001.

Successfully passed OHSAS 18001 audit and received certification in 2004.

Excellent Employees Welfare Commission in 2005.

Excellent enterprise of Safety and Sanitation in Self-Protection from 2006 to 2007

As of today, the loss caused by the disputes between labor and management: None.

Present and future possible loss estimation and response measure: None.

Syndication Loan

Mar. 31, 2007

Global Reports LLC

034 035

4.6 Major Contracts

Company Name Contract Duration Main ContentsContractClassification

RestrictionTerms

Patent License

Patent License

Patent License


Patent License




Construction

Electrical & MechanicalEngineering

Non-Disclosure ofthe Business toThe Third Party

Motorola

ITRI

ITRI

ITRI

Tessera

Flip Chip

LSI Logic

FUJITSU

Mega Bank, etc. 22banks

Lee MingConstruction Co.,

Chung RueyEngineering Co., Ltd.

2003.1-2010.12





1999.11-2009.11

2001.8. – PatentDue Date

2002.12 – 2007.12.

2006.5 – 2011.5

2006.12.01 – 2007.09.01

2006.11 – 2007.07

Patent License

Patent License

Patent License

Patent License





Medium & Long-TermLoan

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

Taiwan area only

None

None

IC packaging &testing processsubcontract service

Changhua FactoryConstruction

Changhua FacotryConstruction

Sustain CertainFinancial Ratio

A, B, C, D……etc.

Subject to theregulations stipulatedin the contract.

The Variety of ICTesting & IC PackagingProcessing Service

11,566,030

8,915,038

23,709,933

1,966,983

46,157,984

5,867,635

5,867,635

14,080,073

31,724

19,979,432

19,979,432

18,851,737

8,087,113

849,690

849,690

-

35,683

-

26,178,552

26,178,552

19,186,997

8,955,822

23,703,576

2,213,047

54,059,442

15,933,507

16,727,400

8,421,641

6,085

24,361,233

25,155,126

18,851,737

8,099,110

3,688,406

789,540

-

3,278

-

29,698,209

28,904,316

20,511,326

9,026,352

26,292,471

2,555,032

58,385,181

8,529,063

10,362,590

16,331,434

31,641

24,892,138

26,725,665

21,050,731

8,305,832

5,071,717

1,361,637

-

(141,053)

-

33,493,043

31,659,516

24,949,443

9,700,714

29,138,827

2,667,987

66,456,971

10,754,796

15,536,962

14,643,600

233,568

25,631,964

30,414,130

23,289,193

8,853,379

9,561,191

2,101,082

(737)

(47,463)

(1,828)

40,825,007

36,042,911

26,877,717

16,143,850

32,238,198

2,595,771

77,855,536

8,946,322

8,946,322

5,696,619

276,382

14,919,323

14,919,323

28,877,574

14,645,653

15,467,451

15,467,451

4,765,148

(22,276)

(1,787)

62,936,213

62,936,213


5.1 Brief Balance Sheets

2002 2003 2004 2005 2006

Net Loss Not RecognizedAs Pension Cost

Before Distribution

After Distribution

Ⅴ

Item

Brief Balance Sheets for Recent Five Years

Unit : NT$ Thousand

Current Assets

Long-Term Investment

Fixed Assets

Other Assets

Total Assets

CurrentLiabilities

Long-term Liabilities

Other Liabilities

TotalLiabilities

Capital Stock

Additional Paid-in Capital

RetainedEarnings

Cumulative TranslationAdjustments

TotalShareholders'Equity

Before Distribution

After Distribution

Before Distribution

After Distribution

AfterDistribution

BeforeDistribution


Financial StatementsOperational Highlights

Unrealized Gain (Loss) onAvailable for Sale FinancialAssets

Excellent enterprise of Labor and Employer relationship in 1994.

Excellent enterprise of Education and Training in 1995.

Excellent enterprise of Labor Working Condition in 1996.

Excellent enterprise of Safety and Sanitation Auto Inspection in 1997.

Excellent enterprise of Safety and Sanitation in Self-Protection from 1998 to 2003.

Excellent enterprise of Labor Education in Taichung County in 2001.

Successfully passed OHSAS 18001 audit and received certification in 2004.

Excellent Employees Welfare Commission in 2005.

Excellent enterprise of Safety and Sanitation in Self-Protection from 2006 to 2007

As of today, the loss caused by the disputes between labor and management: None.

Present and future possible loss estimation and response measure: None.

Syndication Loan

Mar. 31, 2007

Global Reports LLC

22,298,530

2,088,595

554,282

510,639

(788,356)

276,565

425,195

-

425,195

0.17

27,382,925

4,149,158

2,578,285

635,511

(1,016,112)

2,197,684

2,838,716

-

2,838,716

1.17

35,009,035

6,452,877

4,431,872

892,650

(1,503,060)

3,821,462

4,282,177

-

4,282,177

1.74

43,077,567

9,604,048

7,354,945

1,116,504

(875,048)

7,596,401

7,593,394

650,508

8,243,902

3.28

56,353,590

15,277,273

12,330,645

2,109,194

(173,143)

14,266,696

13,329,069

-

13,329,069

4.91

037

5.2 Brief Income Statements

Income Statement From 2002 to 2006

Net Income

Earnings Per Share

Operating Revenues

Gross Profit

Operating Income(Loss)

Non-Operating Income

Non-Operating Expenses

Income(Loss) Before Tax

Income(Loss) After Tax

Accumulative Effect ofChanges in AccountingPrinciples

Unit: NT$ Thousand

2002 2003 2004 2005 2006Item

Financial Statements036

43.28

169.80

197.12

172.44

1.46

5.42

67

12.95

14.78

28

0.96

0.50

1.82

1.60

2.94

1.47

1.91

0.17

85.21

55.99

9.19

18.25

16.71

42.63

189.50

240.49

216.93

11.94

6.23

59

14.57

10.94

25

1.40

0.62

8.07

13.55

21.05

18.15

12.23

1.74

102.72

94.82

11.63

3.84

1.08

19.16*

212.89

300.43*

268.85*

122.77*

6.06

60

14.61

9.12

25

1.84

0.78

18.59*

25.69

42.70*

49.40*

23.65*

4.91*

224.96*

119.08

18.45

2.38

1.01

38.57

190.36

231.98

205.94

34.99

5.60

65

13.94

9.46

26

1.55

0.69

13.47

22.19

31.58

35.41

19.14

3.28

121.72

107.55

14.50

2.91

1.03

45.06

160.82

120.42

108.25

6.37

5.61

65

13.40

10.24

27

1.16

0.55

6.22

10.16

13.68

11.66

10.37

1.17

51.00

91.01

14.59

5.00

1.17

5.3 Five Years Financial Analysis

Item (Remark1)

CapitalStructure

LiquidityAnalysis

OperatingPerformanceAnalysis (%)

ProfitabilityAnalysis

Cash Flow

Leverage

Debt Ratio (%)

Long-Term Fund to Fixed Assets Ratio(%)

Current Ratio (%)

Quick Ratio (%)

Times Interest Earned (times)

Average Collection Turnover (times)

Days Sales Outstanding

Average Inventory Turnover (times)

Average Payment Turnover (times)

Average Inventory Turnover Days

Fixed Assets Turnover (times)

Total Assets Turnover (times)

Return on Total Assets (%)

Return on Equity (%)

To Paid-In

Capital (%)Income (Loss)

Before Tax (%)

Net Profit Margin (%)

Earnings(Loss) Per Share (NTD)

Cash Flow Ratio (%)

Cash Flow Adequacy Ratio (%)

Cash Flow Reinvestment Ratio (%)

Operating Leverage

Financial Leverage

Analysis of Deviation over 20% - 2006 vs 2005

1. The Debt Ratio changed was due to the decreased liabilities of convertible bonds.

2. The Current Ratio and Quick Ratio changed was due to the decreased liabilities.

3. The Times Interest Earned changed was due to the increase of earnings and decrease of interest

expense of convertible bonds.

4. The Return on Total Assets Ratio changed was due to the increase of operating income.

5. The Operating Income to Paid-In Capital and Income before Tax to Paid-In Capital changed was

due to good cost control and earnings from investing companies.

6. The Cash Flow Ratio changed was due to the increase of net cash provided by operating activities.

Financial Analysis 2002-2006

Operating

Income (%)


2002 2003 2004 2005 2006

Global Reports LLC

Operating leverage = (Net Sales -�Variable Cost ) / Income from Operations

Financial leverage = Income from Operations / (Income from Operations - Interest Expenses)

3.Operating Performance Analysis

Average collection turnover = Net Sales / Average Trade Receivable

Days sales outstanding = 365 / Average Collection Turnover

Average inventory turnover = Cost of Good Sold / Average Inventory

Average payment turnover = Cost of Good Sold / Average Trade payables

Average inventory turnover days = 365 / Average Inventory Turnover

Fixed assets turnover = Net Sales / Net Fixed Assets

Total assets turnover = Net Sales / Total Assets

4.Profitability Analysis

Return on total assets = (Net Income + Interest Expenses x (1- Effective Tax Rate)) /

Average Total Assets

Return on equity = Net Income / Average Shareholders' Equity

Operating income to paid-in capital ratio = Operating Income / Paid-in Capital

Income before tax to paid-in capital ratio = Income Before Tax / Paid-in Capital

Net margin = Net Income / Net Sales

Earnings per share = (Net Income - Preferred Stock Dividend) / Weighted

Average Number of Shares Outstanding

5.Cash Flow

Cash flow ratio = Net Cash Provided by Operating Activities / Current Liabilities

Cash flow adequacy ratio = Five-years Sum of Cash from Operation / Five-Years Sum of Capital

Expenditures, Inventory Additions, and Cash Dividend

Cash flow reinvestment ratio = (Cash Provided by Operating Activities-Cash Dividend) /

(Gross Fixed Assets + Investments + Other Assets + Working Capital)

6.Leverage:

038 Financial Statements

1.Capital Structure Anylysis

2.Liquidity Anylysis

Debt ratio = Total Liabilities / Total Assets.

Long-term fund to fixed assets ratio = (Shareholders' Equity+Long Term Liabilities) / Net Fixed

Assets

Current ratio = Current Assets / Current Liabilities

Quick ratio = (Current Assets - Inventories - Prepaid Expenses ) / Current Liabilities.

Times interest earned = Earnings Before Interest and Taxes / Interest Expenses

Global Reports LLC

Operating leverage = (Net Sales -�Variable Cost ) / Income from Operations

Financial leverage = Income from Operations / (Income from Operations - Interest Expenses)

3.Operating Performance Analysis

Average collection turnover = Net Sales / Average Trade Receivable

Days sales outstanding = 365 / Average Collection Turnover

Average inventory turnover = Cost of Good Sold / Average Inventory

Average payment turnover = Cost of Good Sold / Average Trade payables

Average inventory turnover days = 365 / Average Inventory Turnover

Fixed assets turnover = Net Sales / Net Fixed Assets

Total assets turnover = Net Sales / Total Assets

4.Profitability Analysis

Return on total assets = (Net Income + Interest Expenses x (1- Effective Tax Rate)) /

Average Total Assets

Return on equity = Net Income / Average Shareholders' Equity

Operating income to paid-in capital ratio = Operating Income / Paid-in Capital

Income before tax to paid-in capital ratio = Income Before Tax / Paid-in Capital

Net margin = Net Income / Net Sales

Earnings per share = (Net Income - Preferred Stock Dividend) / Weighted

Average Number of Shares Outstanding

5.Cash Flow

Cash flow ratio = Net Cash Provided by Operating Activities / Current Liabilities

Cash flow adequacy ratio = Five-years Sum of Cash from Operation / Five-Years Sum of Capital

Expenditures, Inventory Additions, and Cash Dividend

Cash flow reinvestment ratio = (Cash Provided by Operating Activities-Cash Dividend) /

(Gross Fixed Assets + Investments + Other Assets + Working Capital)

6.Leverage:

038 Financial Statements

1.Capital Structure Anylysis

2.Liquidity Anylysis

Debt ratio = Total Liabilities / Total Assets.

Long-term fund to fixed assets ratio = (Shareholders' Equity+Long Term Liabilities) / Net Fixed

Assets

Current ratio = Current Assets / Current Liabilities

Quick ratio = (Current Assets - Inventories - Prepaid Expenses ) / Current Liabilities.

Times interest earned = Earnings Before Interest and Taxes / Interest ExpensesFinancial Report

Financial Statements andReport of Independent Accountants

Siliconware Precision Industries Co.,Ltd.

December 31,2006 and 2005

Global Reports LLC

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Siliconware Precision Industries Co., Ltd.

We have audited the accompanying non-consolidated balance sheets of Siliconware Precision Industries Co., Ltd. as of December 31, 2006 and 2005, and the related non-consolidated statements of income, of changes in stockholders’ equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. As discussed in Note 9, we did not audit the financial statements of ChipMOS Technologies Inc., an investee accounted for under the equity method. Those statements were audited by other auditors whose reports thereon have been furnished to us. Our opinion, insofar as it relates to the investment in ChipMOS Technologies Inc., and related investment income were based on the investee’s financial statements audited by other independent accountants. Long-term investments amounted to $4,998,596 thousand and $3,924,937 thousand as of December 31, 2006 and 2005 were based on the investee’s financial statements as of December 31, 2006 and 2005, respectively. The investment income of $1,124,990 thousand for the year ended December 31, 2006, was based on the investee’s financial statements for the year ended December 31, 2006. The investment income of $1,100,044 thousand for the year ended December 31, 2005, was based on the investee’s financial statements for the years ended December 31, 2005 and 2004.

We conducted our audits in accordance with the “Rules Governing Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the accompanying non-consolidated financial statements referred to above present fairly, in all material respects, the non-consolidated financial position of Siliconware Precision Industries Co., Ltd. as of December 31, 2006 and 2005, and the results of its non-consolidated operations and its non-consolidated cash flows for the years then ended, in conformity with the “Rules Governing the Preparation of Financial Reports by Securities Issuers”, “Business Entity Accounting Law”, “Regulation on Business Entity Accounting Handling” and accounting principles generally accepted in the Republic of China.

Global Reports LLC

041

As discussed in Note 3, commencing from January 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 35, “Accounting for Asset Impairment” and amended Statement of Financial Accounting Standards No. 5, “Accounting for Long-term Equity Investment”, under which the Company ceased to delay in recognition of investment income of investees accounted for under the equity method until the subsequent year, and recognized investment income from all investees accounted for under the equity method based on investees’ audited financial statements for the same period. Commencing from January 1, 2006, the Company adopted amended Statement of Financial Accounting Standards No. 34, “Accounting for Financial Instruments”, and No. 36, “Disclosure and Presentation of Financial Instruments”.

Siliconware Precision Industries Co., Ltd. has prepared the consolidated financial statements for the years ended December 31, 2006 and 2005. We have audited such consolidated financial statements and issued a modified unqualified opinion with explanatory language thereon.

March 21, 2007

--------------------------------------------------------------------------------------------------------------

The accompanying non-consolidated financial statements are not intended to present the

financial position and results of operations and cash flows in accordance with accounting

principles generally accepted in countries and jurisdictions other than the Republic of China.

The standards, procedures and practices in the Republic of China governing the audit of

such financial statements may differ from those generally accepted in countries and

jurisdictions other than the Republic of China. Accordingly, the accompanying

non-consolidated financial statements and report of the independent accountants are not

intended for use by those who are not informed about the accounting principles or auditing

standards generally accepted in the Republic of China, and their applications in practice.

041

Global Reports LLC

042

SILICONWARE PRECISION INDUSTRIES CO., LTD.NON CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

(Continued)

2006 2005ASSETS Current Assets Cash (Note 4) 13,352,934$ 10,569,434$ Notes receivable, net 41,111 156,899 Accounts receivable, net (Notes 5 and 24) 8,858,323 9,368,650 Other financial assets, current (Notes 24 and 25) 665,335 806,680 Inventories (Note 6) 2,765,326 2,763,913 Deferred tax assets, current (Note 21) 724,634 759,226 Other current assets-other 470,054 524,641

26,877,717 24,949,443 Long-term Investments Available for sale financial assets (Note 7) 7,620,907 2,293,064 Financial assets carried at cost (Note 8) 3,891 3,891 Long-term investment under equity method (Note 9) 8,519,052 7,403,759

16,143,850 9,700,714 Property, Plant and Equipment (Note 10) Cost: Land 2,940,997 2,128,476 Buildings 7,454,640 6,767,430 Machinery and equipment 44,347,574 38,978,658 Utility equipment 569,213 534,746 Furniture and fixtures 616,207 589,431 Other equipment 1,857,830 1,550,939

57,786,461 50,549,680 Less:Accumulated depreciation 27,124,284)( 23,636,819)( Construction in progress and prepayments for equipment 1,576,021 2,225,966

32,238,198 29,138,827 Other Assets Refundable deposits 8,214 7,141 Deferred charges 681,029 795,890 Deferred income tax asset, noncurrent (Note 21) 1,641,280 1,709,675 Other assets - other (Note 11) 265,248 155,281

2,595,771 2,667,987

TOTAL ASSETS 77,855,536$ 66,456,971$

December 31,

Global Reports LLC

043

SILICONWARE PRECISION INDUSTRIES CO., LTD.NON CONSOLIDATED BALANCE SHEETS (CONTINUED)


The accompanying notes are an integral part of these non-consolidated financial statements. See report of independent accountants dated March 21, 2007.

2006 2005LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable -$ 5,493$ Accounts payable (Note 24) 3,968,073 5,031,028 Income tax payable (Note 21) 947,382 153,016 Accrued expenses (Note 24) 2,033,569 1,579,683 Other payables (Notes 12 and 24) 1,578,541 2,409,016 Current portion of long-term loans (Notes 13 and 14) 18,687 1,466,700 Other current liabilities 400,070 109,860

8,946,322 10,754,796 Long-term Liabilities Bonds payable (Notes 13 and 29) 2,708,145 11,310,300 Long-term loans (Notes 14 and 29) 2,988,474 3,333,300

5,696,619 14,643,600

Other Liabilities (Note 15) 276,382 233,568 Total Liabilities 14,919,323 25,631,964

Stockholders' Equity (Notes 1 and 16) Capital stock 28,877,574 23,289,193 Capital reserve (Note 17) Additional paid-in capital 12,526,844 6,863,226 Premium arising from merger 1,951,563 1,951,563 Other 167,246 38,590 Retained earnings (Note 18) Legal reserve 2,003,494 1,179,104 Special reserve 50,029 141,053 Unappropriated earnings 13,413,928 8,241,034 Unrealized gain (loss) on available for sale financial assets 4,765,148 737)( Cumulative translation adjustments 22,276)( 47,463)( Net loss not recognized as pension cost 1,787)( 1,828)( Treasury stock (Note 19) 795,550)( 828,728)( Total Stockholders' Equity 62,936,213 40,825,007

Commitments and Contingencies (Note 26)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 77,855,536$ 66,456,971$

December 31,

Global Reports LLC

044

SILICONWARE PRECISION INDUSTRIES CO., LTD.NON CONSOLIDATED STATEMENTS OF INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)


Operating Revenues

Sales (Note 24) Sales allowances

Net operating revenuesCost of Goods Sold (Note 24)

Gross Profit

Operating Expenses (Notes 23 and 24)

Selling expenses

General and administrative expenses Research and development expenses

Operating Income

Non-operating Income and Gain

Interest income (Note 29)

Investment income recognized under the equity method (Note 9 Others (Note 24)

Non-operating Expenses and Losses

Interest expenses (Note 29)

Impairment loss (Notes 3 and 20) Others (Note 24)

Income from Continuing Operations Before Income TaxIncome Tax Expense (Note 21)

Income from Continuing OperationsCumulative Effects of Changes in Accounting Principles (Note 3)

Net Income

Before tax After tax Before tax After tax

Basic Earnings Per Share (in dollars) (Note 22)

Income from continuing operations 5.25$ 4.91$ 3.02$ 3.02$ Cumulative effects of changes in accounting principles - - 0.26 0.26

Net income 5.25$ 4.91$ 3.28$ 3.28$

Diluted Earnings Per Share (in dollars) (Note 22)

Income from continuing operations 4.93$ 4.61$ 2.85$ 2.85$ Cumulative effects of changes in accounting principles - - 0.22 0.22

Net income 4.93$ 4.61$ 3.07$ 3.07$

Pro forma information as if the stock of the Company held by subsidiaries was not treated as treasury stock:Net income 14,320,087$ 13,382,460$ 8,269,151$ 8,266,144$

Basic Earnings Per Share (in dollars) 5.20$ 4.86$ 3.24$ 3.24$

Diluted Earnings Per Share (in dollars) 4.89$ 4.57$ 3.04$ 3.05$

For the years ended December 31,

2006 2005

56,631,705$ 278,115)(

56,353,59041,076,317)(

15,277,273

744,754)(

1,007,696)( 1,194,178)(

2,946,628)(

12,330,645

343,201

1,186,201579,792

2,109,194

937,627)(

13,329,069-

117,161)(

-55,982)(

173,143)(

13,329,069$

43,313,687$ 236,120)(

43,077,56733,473,519)(

9,604,048

593,734)(

797,639)(

14,266,696

857,730)(

2,249,103)(

7,354,945

268,751

380,075467,678

1,116,504

222,352)(

163,650)( 489,046)(

650,5088,243,902$

875,048)(

7,596,4013,007)(

7,593,394

Global Reports LLC

045

SIL

ICO

NW

AR

E P

RE

CIS

ION

IN

DU

STR

IES

CO

., LT

D.

NO

NC

ON

SOL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S IN

ST

OC

KH

OL

DE

RS'

EQ

UIT

Y

FOR

TH

E Y

EA

RS

EN

DE

D D

EC

EM

BE

R 3

1, 2

006

and

2005

(EX

PRE

SSE

D I

N T

HO

USA

ND

S O

F N

EW

TA

IWA

N D

OL

LA

RS)

(Con

tinue

d)

Cap

ital

Sto

ck

Cap

ital

Res

erve

Leg

al

Res

erve

Spe

cial

Res

erve

Una

ppro

pria

ted

Ear

ning

s

Bal

ance

at J

anua

ry 1

, 200

5 $

2

1,05

0,73

1 $

8

,305

,832

$

7

50,8

86 $

-

$

4

,320

,831

-($

1

41,0

53)

$

-

($

794

,184

) $

3

3,49

3,04

3A

ppro

pria

tion

for

lega

l res

erve

--

42

8,21

8-

428,

218)

(

--

--

-A

ppro

pria

tion

for

spe

cial

res

erve

--

-

141,

053

141,

053)

(

--

--

-R

emun

erat

ion

to d

irec

tors

and

sup

ervi

sors

--

--

74,2

58)

(

-

--

-

74

,258

)(

E

mpl

oyee

s' c

ash

bonu

s-

--

-

17

5,92

7)(

-

--

-

17

5,92

7)(

Em

ploy

ees'

sto

ck b

onus

187,

655

--

-

18

7,65

5)(

-

--

--

Cas

h di

vide

nds

--

--

1,58

3,34

2)(

--

--

1,58

3,34

2)(

S

tock

div

iden

ds1,

688,

898

--

-

1,

688,

898)

(

-

--

--

Unr

eali

zed

loss

on

avai

labl

e-fo

r-sa

le s

ecur

itie

s -

--

-

-

737)

(

-

--

737)

(

C

onve

rsio

n of

Eur

o co

nver

tibl

e bo

nds

269,

342

494,

719

--

--

--

-

76

4,06

1E

mpl

oyee

sto

ck o

ptio

n ex

erci

sed

92,5

6728

,890

--

--

--

-

12

1,45

7

Lon

g-te

rm in

vest

men

t adj

ustm

ent f

or

inve

stee

com

pany

's a

ddit

iona

l pai

d-in

cap

ital

-

1,

696

--

41,7

05)

(

-

--

-

40

,009

)(

Lon

g-te

rm in

vest

men

t adj

ustm

ent f

or in

vest

ee

com

pany

's c

umul

ativ

e tr

ansl

atio

n ad

just

men

t-

--

-

2,

643)

(

-

93

,590

--

90,9

47

Lon

g-te

rm in

vest

men

t adj

ustm

ent f

or

inve

stee

com

pany

's u

nrec

ogni

zed

pens

ion

cost

--

--

--

-

1,

828)

(

-

1,

828)

(

Lon

g-te

rm in

vest

men

t adj

ustm

ent f

or

inve

stee

com

pany

's tr

easu

ry s

tock

var

ianc

es-

--

-

-

--

-

34

,544

)(

34

,544

)(

Cas

h di

vide

nds

from

trea

sury

sto

ck h

eld

b

y su

bsid

iari

es-

22,2

42-

-

-

--

--

22,2

42

Net

inco

me

- -

- -

8,24

3,90

2

- -

- -

8,24

3,90

2

Bal

ance

at D

ecem

ber

31, 2

005

$

23,

289,

193

$

8,8

53,3

79 $

1

,179

,104

$

141

,053

$

8

,241

,034

($

7

37)

($

47

,463

)($

1,82

8)($

8

28,7

28)

$

40,

825,

007

Ret

aine

d E

arni

ngs

Tre

asur

y

Sto

ck T

otal

Unr

eali

zed

Los

s on

Ava

ilab

le f

or

Sal

e F

inan

cial

Ass

ets

Cum

ulat

ive

Tra

nsla

tion

Adj

ustm

ents

Net

Los

s N

ot

Rec

ogni

zed

as

Pen

sion

Cos

t

Global Reports LLC

046

SIL

ICO

NW

AR

E P

RE

CIS

ION

IN

DU

STR

IES

CO

., LT

D.

NO

NC

ON

SOL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S IN

ST

OC

KH

OL

DE

RS'

EQ

UIT

Y (

CO

NT

INU

ED

)

FOR

TH

E Y

EA

RS

EN

DE

D D

EC

EM

BE

R 3

1, 2

006

and

2005

(EX

PRE

SSE

D I

N T

HO

USA

ND

S O

F N

EW

TA

IWA

N D

OL

LA

RS)

The

acc

ompa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

ese

cons

olid

ated

fin

anci

al s

tate

men

ts

See

repo

rt o

f in

depe

nden

t acc

ount

ants

dat

ed M

arch

21,

200

7.

Cap

ital S

tock

Cap

ital

Res

erve

Lega

l

Res

erve

Spec

ial

Res

erve

Una

ppro

pria

ted

Earn

ings

Bal

ance

at J

anua

ry 1

, 200

6 $

2

3,28

9,19

3 $

8,85

3,37

9 $

1

,179

,104

$

141

,053

$

8,

241,

034

($

73

7)($

47,4

63)

($

1

,828

)($

8

28,7

28)

$

40,

825,

007

App

ropr

iatio

n fo

r leg

al re

serv

e-

-

82

4,39

0-

824,

390)

(

--

--

-A

ppro

pria

tion

for s

peci

al re

serv

e-

--

91

,024

)(

91

,024

--

--

-R

emun

erat

ion

to d

irect

ors

and

supe

rvis

ors

--

-

-

14

9,32

4)(

-

--

-

14

9,32

4)(

Em

ploy

ees'

cash

bon

us-

--

-

463,

284)

(

--

--

463,

284)

(

Empl

oyee

s' st

ock

bonu

s26

7,79

4-

-

-

26

7,79

4)(

-

--

--

Cas

h di

vide

nds

--

-

-

4,

169,

558)

(

--

--

4,16

9,55

8)(

St

ock

divi

dend

s2,

410,

149

--

-

2,41

0,14

9)(

-

--

--

Con

vers

ion

of E

uro

conv

ertib

le b

onds

2,77

8,69

75,

692,

509

-

--

--

--

8,47

1,20

6Em

ploy

ee s

tock

opt

ion

exer

cise

d13

1,74

115

,729

-

--

--

--

147,

470

Long

-term

inve

stm

ent a

djus

tmen

t for

in

vest

ee c

ompa

ny's

addi

tiona

l pai

d-in

cap

ital

-

30

,645

-

-

37

,300

--

--

67,9

45U

nrea

lized

gai

n on

ava

ilabl

e-fo

r-sa

le fi

nanc

ial a

sset

s-

--

-

-

4,

765,

885

--

-

4,

765,

885

Long

-term

inve

stm

ent a

djus

tmen

t for

inve

stee

c

ompa

ny's

cum

ulat

ive

trans

latio

n ad

just

men

t-

--

-

--

25

,187

--

25,1

87Lo

ng-te

rm in

vest

men

t adj

ustm

ent f

or in

vest

ee

com

pany

's un

reco

gniz

ed p

ensi

on c

ost

--

-

--

--

41-

41Lo

ng-te

rm in

vest

men

t adj

ustm

ent f

or in

vest

ee

com

pany

's tre

asur

y st

ock

varia

nces

--

-

--

--

-

33

,178

33,1

78C

ash

divi

dend

s fr

om tr

easu

ry s

tock

hel

d

by

subs

idia

ries

-

53

,391

-

--

--

--

53,3

91N

et in

com

e-

- -

- 13

,329

,069

-

- -

- 13

,329

,069

Bal

ance

at D

ecem

ber 3

1, 2

006

$

28,

877,

574

$

14,

645,

653

$

2,0

03,4

94 $

50,0

29 $

1

3,41

3,92

8 $

4,

765,

148

($

22

,276

)($

1,7

87)

($

795

,550

) $

6

2,93

6,21

3

Tre

asur

y

Stoc

k T

otal

Ret

aine

d E

arni

ngs

Unr

ealiz

ed G

ain

(Los

s)

On

Ava

ilabl

e fo

r

Sale

Fin

anci

al

Ass

ets

Cum

ulat

ive

Tran

slat

ion

Adj

ustm

ents

Net

Los

s N

ot

Rec

ogni

zed

As

Pens

ion

Cos

t

Global Reports LLC

047

SILICONWARE PRECISION INDUSTRIES CO., LTD.NON CONSOLIDATED STATEMENTS OF CASH FLOWS


(Continued)

2006 2005

Cash flows from operating activitiesNet income 13,329,069$ 8,243,902$Adjustments to reconcile net income to net cash

provided by operating activities:Depreciation 6,575,895 5,924,735Amortization 535,406 515,040Bad debts expense 11,624 2,911Reversal of provision for reserve for sales allowance 11,705)( 25,457)( Gain on disposal of investments - 14,827)( (Reversal of) provision for loss on obsolescence and decline in

market value of inventory 4,500)( 3,897Long-term investment income under the equity method 1,186,201)( 1,030,583)( Cash dividends received from long-term investment

under the equity method 175,742 198,805Impairment loss on long-term investment - 163,650Gain on disposal of property, plant and equipment 45,266)( 26,795)( Provision for loss on idle assets 27,627 68,766Amortization of discount on long-term notes 6,537 1,712Compensation interest on bonds payable 30,810 137,367Foreign currency exchange (gain) loss on bonds payable 113,157)( 408,777(Increase) decrease in assets:

Notes receivable 115,788 84,816)( Accounts receivable 510,408 3,746,274)( Other financial assets, current 132,145 435,260)( Inventories 3,087 824,435)( Deferred income tax assets 102,987 159,586)( Other current assets 54,587 14,317)(

Increase (decrease) in liabilities:Notes payable 5,493)( 4,509Accounts payable 1,062,955)( 2,990,702Income tax payable 794,366 116,664Accrued expenses 453,886 568,283Other payables 392,369)( 43,134Other current liabilities 90,210 58,374Accrued pension liabilities 3,268)( 1,900

Net cash provided by operating activities 20,125,260 13,090,778


Global Reports LLC

048

SILICONWARE PRECISION INDUSTRIES CO., LTD.NON CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)



2006 2005Cash flows from investing activities

Purchase of financial assets at fair value through profit or loss - current -$ 4,774,000)($Proceeds from disposal of financial assets at fair value through profit or loss - current - 6,730,250Refund of security deposits 9,200 34,295Purchase of long-term investments under equity method 487,050)( 157,050)(Proceeds from disposal of long-term investments - 192,060Acquisition of property, plant and equipment 10,458,172)( 7,970,018)(Proceeds from disposal of property, plant and equipment 268,733 58,021Payment for deferred charges 466,721)( 499,084)((Payment for) refund of refundable deposits

Net cash used in investing activities 11,135,083)( 6,381,274)(

Cash flows from financing activitiesProceeds form long-term loans 2,981,937 -Repayment of long-term loans 4,800,000)( 3,156,000)(Redemption of bonds payable - 800,000)(Receipt of deposit-in 246,082 200,027Proceeds from the execution of employee stock option 147,470 121,457Remuneration to directors and supervisors 149,324)( 74,258)(Payment of stockholders' dividends and employees' bonuses 4,632,842)( 1,759,232)(

Net cash used in financing activities 6,206,677)( 5,468,006)(

Net increase in cash 2,783,500 1,241,498Cash at the beginning of the year 10,569,434 9,327,936Cash at the end of the year 13,352,934$ 10,569,434$

Supplemental disclosures of cash flow information:Cash paid for interest (excluding capitalized interest) 123,107$ 162,849$Cash paid for income tax 40,275$ 1,006$

Supplemental disclosures of partial cash paid for investing activities:Acquisition of property, plant and equipment 10,020,066$ 8,903,349$Add : Payable at the beginning of the year 1,565,412 632,081Less : Payable at the end of the year 1,127,306)( 1,565,412)(Cash paid 10,458,172$ 7,970,018$


Global Reports LLC

049

SILICONWARE PRECISION INDUSTRIES CO., LTD.NOTES TO NON CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT EARNINGS AND PAR VALUE PER SHARE)

1. HISTORY AND ORGANIZATION

Siliconware Precision Industries Co., Ltd. (the “Company”) was incorporated as a company

limited by shares under the Company Law of the Republic of China (ROC) in May 1984 and was

listed on the Taiwan Stock Exchange in April 1993. As of December 31, 2006, issued common

stock was $28,877,574. The Company is mainly engaged in the assembly, testing and turnkey

services of integrated circuits. As of December 31, 2006, the Company has 13,282 employees.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial Statements are prepared in conformity with the “Rules Governing the Preparation

of Financial Reports by Securities Issuers”, “Business Entity Accounting Law”, “Regulation on

Business Entity Accounting Handling” and generally accepted accounting principles in the

Republic of China. Significant accounting policies are summarized as follows:

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and the disclosures of contingencies at the date of the financial

statements and the reported amounts of revenues, costs of revenue and expenses during the

reporting period. Actual results may differ from those estimates.

Foreign Currency Transactions

The Company maintains its accounts in New Taiwan dollars. Transactions denominated in

foreign currencies are translated into New Taiwan dollars at the exchange rates prevailing on the

transaction dates. Receivables, other monetary assets and liabilities denominated in foreign

currencies are translated into New Taiwan dollars at the exchange rates prevailing at the balance

sheet date. Exchange gains or losses arising from the aforementioned translations are

recognized in the current year's results.

Classification of current and non-current assets/liabilities

A. Assets that meet one of the following criteria are classified as current assets; otherwise they

are classified as non-current assets:

(1) Assets arising from operating activities that are expected to be realized or consumed, or

are intended to be sold within the normal operation cycle;

(2) Assets held mainly for trading purposes;

(3) Assets that are expected to be realized within twelve months from the balance sheet

date;

Global Reports LLC

050

(4) Cash or cash equivalents, excluding restricted cash and cash equivalents and those that

are to be exchanged or used to pay off liabilities more than twelve months after the

balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise

they are classified as non-current liabilities.

(1) Liabilities arising from operating activities that are expected to be paid off within the

normal operating cycle;

(2) Liabilities arising mainly from trading activities;

(3) Liabilities that are to be paid off within twelve months from the balance sheet date;

(4) Liabilities for which the repayment date cannot be extended unconditionally to more

than twelve months after the balance sheet date.

Financial Assets at Fair Value Through Profit or Loss

Investments in equity securities are recorded at the transaction date, rather than settlement date.

Financial assets at fair value through profit or loss are measured at their market values at balance

sheet date with gain or loss recognized in the current year’s results. The market value of

open-end funds is determined by the net asset value at the balance sheet date. (Accounting

treatment before December 31, 2005 is discussed in Note 3)

Accounts Receivable

Accounts receivable expected to be collected over one year are recorded at present value by

using predetermined interest rate whereas those expected to be collected within one year are not

reported at present value due to the fact that the difference between the maturity value and the

fair value discounted by implicit interest rate is immaterial and the frequency of transactions is

high.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is estimated based on the evaluation of collectability and

aging analysis of notes receivables, accounts receivable and other receivables.

Allowance for Sales Discounts

The allowance for sales discounts is provided based on the estimated allowance to be incurred

and is recorded as deduction of accounts receivable.

Inventories

Inventories are recorded at cost when acquired under a perpetual inventory system and are stated

at the lower of aggregate cost, determined by the weighted-average method, or market value at

the balance sheet date. The market values of raw materials and supplies are determined on the

basis of replacement cost, while market values of finished goods and work in process are

determined on the basis of net realizable value. The allowance for loss on obsolescence and

decline in market value is provided based on management’s analysis on inventory aging and

obsolescence, when necessary.

Global Reports LLC

051

Available-for-sale financial assets


Available-for-sale securities are measured at fair value at balance sheet date with changes in fair

value recorded as adjustments to the shareholders’ equity. The accumulated adjustments of

unrealized gain or loss are realized in earnings in the period when the financial assets are

disposed. Fair values of listed securities are measured at their closing price at balance sheet date.

The Company recognizes impairment loss whenever there is objective evidence of impairment.

Such impairment loss shall not be reversed when the fair value of the asset subsequently

increases. Accounting treatment before December 31, 2005 is discussed in Note 3.

Financial assets carried at cost

Equity securities measured at fair value along with transaction costs are recorded at the

transaction date. Equity securities without quoted market values are recorded at cost. The

Company recognizes impairment loss whenever there is evidence of impairment. Such

impairment loss shall not be reversed when the fair value of the asset subsequently increases.

Accounting treatment before December 31, 2005 is discussed in Note 3.

Long-term Investments accounted for under the equity method

A. Long-term equity investments in which the Company owns at least 20% of the voting rights

of the investee companies are accounted for under the equity method, unless the Company

cannot exercise significant influence over the investee company. The excess of the

acquisition cost over the investee’s fair value of the identifiable net assets acquired is

capitalized as goodwill and tested for impairment annually. No prior period adjustment is

required for the amortization in previous years. Long-term equity investments in which the

Company has controlling interests over the investee companies are included in the annual

and semi-annual consolidated financial statements.

B. Unrealized gains and losses from transactions between the Company and investee companies

accounted for under the equity method are deferred. Profit (loss) from sales of depreciable

assets between the investee and the Company is amortized to income over the assets’

economic service lives. Unrealized gain from other types of intercompany transactions is

reported as deferred credits classified as current or non-current liabilities.

C. When the Company’s proportional interest in an equity investee changes after the equity

investee issues new shares, the effect of change in the Company’s holding ratio on long-term

investment is adjusted to capital reserve. If capital reserve account is insufficient, the effect

is then charged to retained earnings.

D. The Company’s proportionate share of the foreign investee’s cumulative translation

adjustments related to the translation of the foreign investee’s financial statements into New

Taiwan dollars is recognized as “Cumulative Translation Adjustments” in the stockholders’

equity.

Global Reports LLC

052

Property, Plant and Equipment

A. Property, plant and equipment are stated at historical cost. Interest incurred relating to the

construction of property, plant and equipment is capitalized and depreciated accordingly.

B. Depreciation is provided on the straight-line method over the assets' estimated economic

service lives, plus an additional year as the salvage value. Salvage values of fixed assets

which are still in use after reaching their estimated economic service lives are depreciated

over their new estimated remaining service lives. The service lives of fixed assets are 3 to 15

years, except for buildings, which are 35 to 55 years.

C. Maintenance and repairs are expensed as incurred. Significant renewals and improvements

are capitalized and depreciated accordingly. When fixed assets are disposed, their original

cost and accumulated depreciation are removed from the corresponding accounts, with gain

or loss recorded as non-operating income or loss.

D. Idled assets are stated at the lower of book value or net realizable value and are reclassified to

other assets. Differences between book value and net realizable value are reported as losses

in current earnings.

Deferred Charges

The costs of computer software system purchased externally and tooling costs are recognized as

deferred charges and amortized on the straight-line basis over the useful lives of 2 to 5 years.

Convertible bond issuance costs are amortized over the period of the bonds.

Bonds Payable

According to Interpretation letter ref. (95) 078, "Compound financial Instrument with Multiple Embedded Derivatives Issue", issued by R.O.C. Accounting Research and Development Foundation (ARDF), the Company’s accounting policies of its convertible bonds issued on or prior to December 31, 2005 are as follows: A. The excess of the stated redemption price over the par value is recognized as interest

expense and compensation interest payable using the effective interest method during the period from the issuance date to the last day of the redemption period.

B. When a bondholder exercises his/her conversion rights, the book value of bonds is credited to common stock at an amount equal to the par value of the stock and the excess to capital reserve; no gain or loss is recognized on bond conversion.

C. The related issuance costs of convertible bonds are recorded as deferred charges and amortized over the lives of the bonds.

D. For convertible bonds with redemption options, the right of redemption becomes invalid if the bondholder fails to exercise his/her redemption right upon expiration. The balance of the compensation interest payable is amortized over the period from the date following the expiration date to the maturity date using the effective interest method. However, if the fair value of common stocks, which would have been converted on the expiration date of the redemption right, is higher than the redemption price, compensation interest should be reclassified from the liability to additional paid-in capital.

Global Reports LLC

053

E. The convertible bonds with redemption options are classified as current or non-current

liabilities based on the date of redemption.

Pension Cost

From July 1, 2005, the employees of the Company have to choose their individual pension

accounts funded under either a defined benefit plan or a defined contribution plan. Under defined

benefit plan, the net pension cost is computed based on an actuarial valuation. The unrecognized

net asset or net obligation at transition is amortized over 15 years on a straight-line basis. Under

defined contribution plan, the Company shall make monthly contribution to employees’

individual pension accounts. These contributions are recorded as pension costs in the current

period.

Income Tax

A. In accordance with ROC SFAS No. 22, “Accounting for Income Taxes”, the income tax

effect resulting from temporary differences and investment tax credits is recorded as income

tax assets or liabilities using the asset and liability method. Deferred tax assets or liabilities

are further classified into current or noncurrent and carried at net balance. Valuation

allowance on deferred tax assets is provided to the extent that it is more likely than not that

the tax benefit will not be realized.

B. The Company adopted ROC SFAS No. 12, “Accounting for Investment Tax Credits” in

determining the investment tax credits. The investment tax credits relating to the acquisition

cost of qualifying machinery and technology, qualifying research and development

expenditure, qualifying personnel training expenditure and qualifying investments in

significant technology companies are recognized as income tax adjustments in the period the

tax credits arise.

C. Over or under provisions of prior years’ income tax liabilities are included in the current

period’s income tax expense.

D. The Taiwan imputation tax system requires that any undistributed earnings be subject to an

additional 10% corporate income tax, which is recognized as expense at the time the

stockholders resolve to retain the earnings.

Revenue Recognition

Revenues are recognized when services are provided based on transaction terms and when

collectibility is reasonably assured.

Research and Development

Research and development costs are expensed as incurred.

Global Reports LLC

054

Employee Stock Option Plan

According to Interpretation letter ref. (92) 072 "Accounting for Employee Stock Option Plans"

issued by ARDF, the Company adopts intrinsic value method for the recording of compensation

expenses.

Treasury Stock

A. The Company records treasury stock purchases under the cost method whereby the entire

cost of the acquired stock is recorded as treasury stock and as a reduction of shareholders’

equity.

B. Upon subsequent disposal of the treasury stock, the excess of the proceeds from disposal

over the book value, determined by the weighted-average method, is credited to capital

reserve. However, if the book value of the treasury stock exceeds the proceeds from disposal,

the excess is first charged against capital reserve arising from treasury stock and the

remainder, if any, is charged against retained earnings.

C. Stocks of the Company held by the subsidiaries are treated as treasury stock. Subsidiaries’

gain on disposal of the Company’s stocks and the cash dividend income received from the

Company are recorded as additional paid-in capital – treasury stock.

Earnings Per Share

A. Basic earnings per share is calculated by dividing net income by the weighted average

number of shares outstanding during the period. Diluted earnings per share is calculated by

taking into consideration additional common shares that would have been outstanding if the

equivalent diluted shares had been issued.

B. The Company’s dilutive potential common shares are employee stock options and

convertible bonds. In computing the dilutive effects of the employee stock options and

convertible bonds, the Company applies the treasury stock method and if-converted method,

respectively.

Impairment loss of non-financial assets

A. The Company recognizes impairment loss whenever event occurs or evidence indicates the

carrying amount of an asset exceeds its recoverable amount. Recoverable amount is

measured as the higher of net selling price or value in use. Net selling price is the amount

obtainable from the sale of an asset in an arm's-length transaction between knowledgeable,

willing parties, after deducting any direct incremental disposal costs. The value in use is

the present value of estimated future cash flows expected to arise from continuing use of an

asset and from its disposal at the end of its useful life.

B. An impairment loss recognized in prior years is reversed if the impairment loss caused by a

specific external event of an exceptional nature is not expected to recur. However, the

restored amount is limited to the amount of impairment loss previously recognized.

Impairment loss for goodwill cannot be reversed.

Global Reports LLC

055

3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES

A. Effective January 1, 2005, the Company adopted Statement of Financial Accounting

Standards No. 35, “Accounting for Assets Impairment” in the Republic of China. As a

result of the adoption of SFAS No. 35, total assets and shareholders’ equity decreased by

$163,650 as of December 31, 2005 and net income decreased by $163,650 for the year

ended December 31, 2005. As a result of recognition of impairment loss, basic earnings

per share decreased by $0.07 for the year ended December 31, 2005.

B. Effective January 1, 2005, the Company ceased to delay in recognizing investment income

(loss) from certain equity-method investees in accordance with the amended Statement of

Financial Accounting Standards No. 5, “Accounting for Long-term Equity Investment” in

the Republic of China. The cumulative effect attributable to this change in accounting

principle for the year ended December 31, 2005 was $650,508, which was based on the

investees’ financial statements for the year ended December 31, 2004.

C. Effective January 1, 2006, the Company adopted the amended SFAS No. 1 “Conceptual

Framework for Financial Accounting and Preparation of Financial Statements”, SFAS No. 5,

“Accounting for Long-term Equity Investment”, SFAS No. 7, “Consolidated Financial

Statements”, SFAS No. 25, “Business Combinations - Accounting Treatment under

Purchase Method”, and SFAS No. 35, “Accounting for Assets Impairment”, which

discontinued amortization of goodwill. This change of accounting principle had no effect on

the financial statements as of and for the year ended December 31, 2006.

D. Effective January 1, 2006, the Company adopted the newly released SFAS No. 34,

“Accounting for Financial Instruments” and No. 36, “Disclosure and Presentation of

Financial Instruments”. The Company has properly reclassified certain accounts on

December 31, 2005 based on its holding purpose and abilities in accordance with such

standard and the “Rules Governing the Preparation of Financial Reports by Securities

Issuers”. Accounting policies through December 31, 2005 are summarized as follows:

(1) Short-term investments

Short-term investments are recorded at cost when acquired and are stated at the lower of

aggregate cost or market value at the balance sheet date. The market values of listed

stocks and close-end mutual funds are determined by the average closing price of the last

month of the accounting period. The market value of open-end funds is determined by

the net asset value at the balance sheet date. The excess of aggregate cost over market

value is recorded as a loss in the current year.

(2) Long-term investments in equity securities – under the cost method

Long-term equity investments in which the Company owns less than 20% of the voting

rights and has no significant influence over the investee companies are accounted for (a)

at cost, if the investee company is not listed or (b) at the lower of cost or market value, if

the investee company is listed. Valuation allowance for the unrealized loss under this

Global Reports LLC

056

method is shown in the stockholders’ equity. When it becomes evident that there has

been a permanent impairment in value and the chance of recovery is minimal, loss is

recognized in the current year. However, if there is evidence that the Company has

significant influence over the investee company, the investment is accounted for under

the equity method.

(3) As a result of the adoption of SFAS No. 34 and No. 36, total assets and total

shareholders’ equity increased by $8,912,555 as of December 31, 2006 with no material

impact on net income and earnings per share for the year ended December 31, 2006.

4. CASH

As of December 31, 2006 and 2005, the interest rates for time deposits ranged from 1.25 % to

5.34 % and from 0.85% to 4.36%, respectively.

5. ACCOUNTS RECEIVABLE, NET

6. INVENTORIES

2006 2005

Accounts receivable 8,937,702$ 9,448,110$Less :

Allowance for sales discounts 55,475)( 67,180)( Allowance for doubtful accounts 23,904)( 12,280)(

8,858,323$ 9,368,650$

2006 2005

Cash on hand 1,770$ 1,657$Savings accounts and checking accounts 595,955 2,702,614Time deposits 12,755,209 7,865,163

13,352,934$ 10,569,434$

December 31,

2006 2005

Raw materials and supplies 2,443,579$ 2,380,716$Work in process 301,371 331,774Finished goods 65,222 100,769

2,810,172 2,813,259Less : Allowance for loss on obsolescence

and decline in market value of inventory 44,846)( 49,346)(2,765,326$ 2,763,913$

December 31,

Global Reports LLC

057

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS – NON-CURRENT

8. FINANCIAL ASSETS CARRIED AT COST - NON-CURRENT

There are no reliable quoted prices for unlisted securities, and therefore these investments are

carried at cost.

9. LONG-TERM INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

A. Details of long-term investments in stocks are summarized as follows:

B. The recognition of investment income (loss) for ChipMOS Technologies Inc. (“ChipMOS”)

and Double Win Enterprise Co., Ltd. (“Double Win”), investees accounted for under the equity

method, were delayed until the subsequent year before 2005. Therefore, the Company

recognized investment income of $650,508 for the year ended December 31, 2005, based on

ChipMOS’s and Double Win’s audited financial statements for the year ended December 31,

2004.

Percentage Percentage

Investee company Amount of ownership Amount of ownership

Equity method :

Siliconware Investment Company Ltd. 1,272,557$ 100.00% 960,363$ 100.00%Sigurd Microelectronics Corp. - - 724,140 23.92%Double Win Enterprise Co., Ltd. 84,450 24.14% 84,450 24.14%ChipMOS Technologies Inc. 4,998,596 28.76% 3,924,937 28.75%SPIL (B.V.I.) Holding Limited 2,247,899 100.00% 1,794,319 100.00%

8,603,502 7,488,209Less : Accumulated impairment loss 84,450)( 84,450)(

8,519,052$ 7,403,759$

December 31, 2006 2005

2 0 0 6 2 0 0 5

U n liste d se c u ritie s 3 ,8 9 1$ 3 ,8 9 1$

D e ce m b e r 3 1 ,

2006 2005

Cost of listed securities 3,022,843$ 2,293,064$

Valuation adjustment 4,598,064 -

7,620,907$ 2,293,064$

December 31,

Global Reports LLC

058

C. At March 1, 2005, Universal Communication Technology Inc. (“Universal”) merged with

Sigurd Microelectronics Corp. (“Sigurd”). Universal was dissolved as a result of this

transaction and the Company obtained 6,595 thousand shares of Sigurd’s common shares. The

investment loss of $9,775 was recognized based on Universal’s unaudited financial statements

for the two months ended February 28, 2005.

D. For the years ended December 31, 2006 and 2005, the Company recognized investment income

of $1,186,201 and $385,931, respectively, for all investees accounted for under the equity

method based on investees’ audited financial statements for the same periods by

weighted-average percentage of stock ownership.

E. Due to the merger of Sigurd, one of the Company’s investees originally accounted for under

the equity method, with the other company on June 12, 2006, the Company is not able to

exercise significant influence on Sigurd and its percentage of ownership has been reduced to

below 20%. The Company reclassified the investment in Sigurd as available-for-sale financial

asset - non-current and recorded unrealized gain on available-for-sale financial asset of

$123,950.

F. For the years ended December 31, 2006 and 2005, the Company prepares the consolidated

financial statements, which consolidated its 100% owned subsidiaries, Siliconware Investment

Company Ltd. and SPIL (B.V.I.) Holding Limited.

Global Reports LLC

059

10. PROPERTY, PLANT AND EQUIPMENT

For the year ended December 31, 2006, the Company has no interest that was capitalized as

property, plant and equipment. For the year ended December 31, 2005, total interest expenses

amounted to $242,026, of which $19,674 was capitalized as property, plant and equipment.

The interest rates used to calculate the capitalized interest was 1.22 %.

11. OTHER ASSETS OTHER

The Company designated one of its officers to purchase the parcel of land, Da-Pu-Chu No. 123-2,

and registered the title of the land under the officer’s personal name. As of December 31, 2006,

the land purchase has been completed and payments been made in full. The Company has

entered into a trust contract with the designated officer, which provides the Company with land

use right for nil consideration. The trust contract prohibits the title owner from transferring the

land and/or land use right under any circumstances.

Accum ulatedCost depreciation Book value

Land 2,940,997$ -$ $2,940,997Buildings 7,454,640 2,083,995)( 5,370,645M achinery and equipm ent 44,347,574 23,394,836)( 20,952,738Utility equipm ent 569,213 344,855)( 224,358Furniture and fixtures 616,207 333,651)( 282,556Other equipm ent 1,857,830 966,947)( 890,883Construction in progress and prepaym ents for equipm ent 1,576,021 - 1,576,021

59,362,482$ 27,124,284)($ 32,238,198$

Accum ulatedCost depreciation Book value

Land 2,128,476$ -$ $2,128,476Buildings 6,767,430 1,701,831)( 5,065,599M achinery and equipm ent 38,978,658 20,497,212)( 18,481,446Utility equipm ent 534,746 320,540)( 214,206Furniture and fixtures 589,431 302,518)( 286,913Other equipm ent 1,550,939 814,718)( 736,221Construction in progress

and prepaym ents for equipm ent 2,225,966 - 2,225,96652,775,646$ 23,636,819)($ 29,138,827$

Decem ber 31, 2006

Decem ber 31, 2005

2006 2005

Land 108,087$ 108,087$Others 157,161 47,194

265,248$ 155,281$

December 31,

Global Reports LLC

060

12 OTHER PAYABLES

The accrued value-added tax payable due to certain revenues previously applied zero percent of

value-added tax was deemed taxable by the Tax Authority. The case has been closed, and the full

amount has been paid.

13. BONDS PAYABLE

A. On January 28, 2002, the Company issued five-year (from January 28, 2002 to January 28,

2007) zero coupon Euro convertible bonds amounting to US$200,000 (in thousands) listed on

the Luxembourg Stock Exchange. Major terms of the issue are as follows:

(1) The Company may redeem the bonds at any time on or after July 29, 2004 and prior to

December 29, 2006 at their principal amount together with accrued interest, if (i) the

market price of the shares of the Company for 20 out of 30 consecutive trading days is at

least 130% of the conversion price, or (ii) at least 90% in principal amount of the bonds

has already been redeemed, repurchased and cancelled or converted.

(2) Redemption at the option of the bondholders:

The Company will, at the option of the bondholders, redeem such bonds on July 28, 2004

at 105.9185% of its principal amount, or on January 28, 2007 at 111.837% of its principal

amount.

(3) Conversion period:

At any time between April 16, 2002 and December 29, 2006.

(4) Conversion price and adjustment:

The conversion price was established on the issuance date at NT$32.9 (in dollars) per

share. The conversion price is subject to adjustment for bonus issues, right issues,

distributions of cash and stock dividends and other dilutions. As of December 31, 2006,

the conversion price was NT$24.01 (in dollars) per share.

2006 2005

Payables for equipment 1,127,306$ 1,565,412$Accrued value-added tax payable - 232,307Other payables 451,235 611,297

1,578,541$ 2,409,016$

December 31,

2006 2005

Euro convertible bonds payable 2,724,455$ 10,819,494$Add : Compensation interest payable 2,377 490,806

2,726,832 11,310,300Less : Current portion of long-term bonds payable 18,687)( -

2,708,145$ 11,310,300$

December 31,

Global Reports LLC

061

(5) As of December 31, 2006, the convertible bonds with the principal amount of

US$158,515 (in thousands) have been converted into 202,691 thousand shares of the

Company’s common stock, which resulted in an increase of capital reserve of $3,707,790.

Also, as of December 31, 2006, the Company repurchased and cancelled the bonds with

the principal amount of US$40,985 (in thousands) from the open market.

(6) The principal amount of the unconverted bonds aforementioned of US$500 (in thousands)

was redeemed on January 28, 2007.

B. On February 5, 2004, the Company issued five-year (from February 5, 2004 to February 5,



(1) The Company may redeem the bonds at any time on or after February 5, 2006 and prior to

January 29, 2009 at their principal amount, if (i) the market price of the shares of the

Company for 20 out of 30 consecutive trading days is at least 120% of the conversion

price or (ii) at least 90% in principal amount of the bonds has already been redeemed,

repurchased and cancelled or converted.


The Company will, at the option of the bondholders, redeem such bonds on February 5,

2008 at the principal amount.


At any time between March 17, 2004 and January 29, 2009.



share. The conversion price will be subject to adjustment for bonus issues, right issues,



(5) As of December 31, 2006, the convertible bonds with the principal amount of

US$116,979 (in thousands) have been converted into 111,515 thousand shares of the

company’s common stock, which resulted in an increase of capital reserve of $2,692,576.

Also, as of December 31, 2006, the Company did not repurchase any of the bonds from

the open market.

Global Reports LLC

062

C. According to Interpretation letter ref. (95) 078 "Compound Financial Instrument with

Multiple Embedded Derivatives Issue" issued by ARDF, the company decides not to

bifurcate the embedded derivatives from their host contacts issued on or prior to December

31, 2005.

14. LONG-TERM LOANS

The loan agreements require, among other things, the maintenance of certain specific financial

ratios and consent obtained from the majority banks on certain covenants.

15. PENSION PLAN AND NET PENSION COST

A. In accordance with the Labor Standards Act, the Company has a funded defined benefit

pension plan covering all eligible employees prior to the enforcement of the Labor Pension

Act (“the Act”), effective on July 1, 2005 and employees choosing to continue to be subject

to the pension mechanism under the Labor Standards Law after the enforcement of the Act.

Under the funding policy of the plan, the Company contributes monthly an amount equal to

2% (5% before July 2005) of the employees' monthly salaries and wages to the pension fund

deposited with the Central Trust of China, the custodian. Pension benefits are generally

based on service years (two units earned per year for the first 15 years of service and one

unit earned for each additional year of service with a maximum of 45 units). One unit

represents six-month average wages and salaries before retirement of the employees.

B. The following tables set forth the actuarial assumptions, funded status and amounts

recognized for the Company’s defined benefit pension plan:

2006 2005Nature of loans Repayment period

Credit loans Repayable in 3 semi-annual installments -$ 4,800,000$from July 2006

Commercial paper Repayable in 4 semi-annual installments from November 2009 3,000,000 -

3,000,000 4,800,000Less : Current portion of long-term loans - 1,466,700)( Discount on commercial paper 11,526)( -

2,988,474$ 3,333,300$

Interest rates 2.093% 1.83%~2.10%

December 31,

Global Reports LLC

063

(1) Assumptions used in actuarial calculations as of December 31, 2006 and 2005:

(2) Changes in benefit obligation during the years ended December 31, 2006 and 2005:

(3) Changes in plan assets during the years ended December 31, 2006 and 2005:

(4) Funded status at December 31, 2006 and 2005:

2006 2005

Discount rate 3.25% 3.00%

Long-term rate of compensation increase 2.00% 2.00%

Expected rate of return on plan assets 3.25% 3.00%

Vested benefit 40,207)($ 19,968)($

Vested benefit obligation 39,145)($ 19,444)($

Accumulated benefit obligation 974,226)($ 903,265)($

2006 2005

Fair value of plan assets at the beginning of the year 905,531$ 808,825$ Actual return on plan assets 23,270 12,298 Employer contributions 56,125 97,036 Benefits paid 3,677)( 12,628)( Fair value of plan assets at the end of the year 981,249$ 905,531$

2006 2005

Projected benefit obligation at the beginning of the year 1,193,899)($ 1,041,495)($ Service cost 37,095)( 85,852)( Interest cost 38,802)( 32,987)( Loss on projected benefit obligation 80,790)( 46,193)( Benefit paid 3,677 12,628 Projected benefit obligation at the end of the year 1,346,909)($ 1,193,899)($

2006 2005

Fair value of plan assets 981,249$ 905,531$

Projected benefit obligation 1,346,909)( 1,193,899)(

Funded status 365,660)( 288,368)(

Unrecognized transition assets 3,651)( 4,564)(

Unrecognized net actuarial loss 339,675 260,133Accured pension liabilities 29,636)($ 32,799)($

Global Reports LLC

064

(5) Components of net periodic pension cost for the years ended December 31, 2006 and

2005:

A. In accordance with the Labor Pension Act, effective July 1, 2005, the Company has a

defined contribution pension plan covering employees (excluding foreign employees) who

chose to be subject to the pension mechanism under this Act. The Company makes monthly

contributions to the employees’ individual pension accounts on a basis no less than 6% of

each employee’s monthly salary or wage. The principal and accrued dividends from an

employee’s personal pension account are claimed monthly or in full at one time. Under this

pension plan, net pension costs amounting to $245,742 and $101,629 was recognized for the

year ended December 31, 2006 and 2005, respectively.

16. CAPITAL STOCK

A. As of December 31, 2006, the authorized capital of the Company was $31,500,000,

represented by 3,150,000,000 common shares with par value of NT$10 (in dollars) per share.

As of December 31, 2006, issued common stock was $28,877,574, represented by

2,887,757,400 shares.

B. On June 12, 2006, the stockholders of the Company resolved to capitalize the unappropriated

earnings of $2,410,149 and the employee bonus of $267,794 by issuing 267,794 thousand

new shares. Registration for the capitalization has been completed.

C. The Company issued $1,500,000 thousand American Depositary Shares (“ADSs”),

represented by 30,000,000 units of ADSs, in June 2000. Each ADS represents five shares of

common stock of the Company with an offering price of US$8.49 per ADS. As of

December 31, 2006, the outstanding ADSs amounted to 102,369,388 units. Major terms

and conditions of the ADSs are summarized as follows:

(1) Voting Rights:

ADS holders will have no rights to vote directly in shareholders’ meetings with respect to

the Deposited Shares. The Depositary shall provide voting instruction to the Chairman of

the Company and vote on behalf of the Deposited shares evidenced by ADSs. If the

Depositary receives voting instructions from holders of at least 51% of the outstanding

ADSs to vote in the same direction on a resolution, the Depositary will vote in the

manner as instructed.

2006 2005

Service cost 37,095$ 85,852$

Interest cost 38,802 32,987

Expected return on plan assets 29,430)( 25,150)(

Amortization of unrecognized net transition assets 913)( 913)(

Amortization of unrecognized loss 7,408 6,160Net periodic pension cost 52,962$ 98,936$

Global Reports LLC

065

(2) Distribution of Dividends:

ADS holders are deemed to have the same rights as holders of common shares with

respect to the distribution of dividends.

D. In July 2002, the Board of directors of the Company resolved to issue up to 40,000 units of

employee stock option. Each unit of employee stock option is entitled to subscribe 1,000

shares of the Company’s common stock. The Company has to issue additional 40,000,000

shares of common stock if all of the employee stock options are exercised. The exercise

price of the employee stock option is subject to adjustment for distribution of cash dividend

or changes in capital stock in accordance with certain formula. The granted employee stock

options will expire in five years and will be graded vested after two years of service in

accordance with the employee stock option plan.

(1) For the years ended December 31, 2006 and 2005, details of the employee stock option

granted, exercised and canceled and exercise price of the employee stock option are as

follows:

(2) As of December 31, 2006, the details of the outstanding employee stock option are as

follows:

Weighted Weighted Number average Number average

of options exercise price of options exercise price (in dollars) (in dollars)

Outstanding option at the beginning of the year 26,348 $11.95 35,828 $13.76

Number of option exercised 13,174)( 11.23 9,257)( 13.12Number of option forfeited 543)( 11.07 223)( 15.10Outstanding option

at the end of the year 12,631 9.25 26,348 11.95Vested option at the end of the year 2,113 9.27 1,425 11.97Authorized option available for future

grant at the end of the year - -

2006 2005For the years ended December 31,

Weighted average Weighted Weighted Units remaining average Unit average

Exercise price of option contractual life exercise price of option exercise price(in dollars) (in dollars) (in dollars)$9.2~$9.7 12,631 1.14 Years 9.25$ 2,113 9.27$

Options Vested Outstanding employee stock option

Global Reports LLC

066

17. CAPITAL RESERVE

A. According to the Company Law of the ROC, the capital reserve arising from paid-in capital

in excess of par on the issuance of stocks, from merger, from the conversion of convertible

bonds and from donation shall be exclusively used to cover accumulated deficits or

transferred to capital. Other capital reserve shall be exclusively used to cover accumulated

deficits. The amount of capital reserve used to increase capital is limited to 10% of the

common stock each year when the Company has no accumulated deficits. The capital

reserve can only be used to cover accumulated deficits when the legal reserve is insufficient

to cover the deficits.

B. According to the Company Law of the ROC, the capital reserve is allowed to be transferred

to capital one year after the registration of capitalization is approved.

18. RETAINED EARNINGS

A. According to the Company's Articles of Incorporation, current year’s earnings before tax, if

any, shall be distributed in the following order:

(1) Pay all taxes and duties;

(2) Offset prior years' operating losses, if any;

(3) Set aside 10% of the remaining amount after deducting (1) and (2) as legal reserve;

(4) Set aside no more than 1% of the remaining amount after deducting items (1), (2), and

(3) as directors’ and supervisors’ remunerations.

(5) After items (1), (2), (3), and (4) were deducted, 10% of the remaining amount may be

allocated as employee bonus and 90% as stockholders' dividend. The distributed

amount is subject to the resolution adopted by the Board of Directors and approved at

the stockholders' meeting.

B. The Company currently maintains modified business growth. The Company will adopt

surplus dividend payout policy according to its operation plans, business development,

capital expenditure, and capital demand. Among the total dividends distributed, 0% ~ 50%

of which is distributed as cash dividend and the rest is stock dividend. However, the

Company reserves the right to adjust the payout ratios of cash dividends and stock dividends

in correspondence to the actual economic environment, business operation, and cash holding

position. The new payout policy will be implemented after resolved by the board and

approved by shareholders.

C. As of March 21, 2006, the board of directors of the Company has not resolved the

distribution of the year 2006 earnings. Therefore, any information in relation to the year

2006 earnings will be posted to the website of the Taiwan Stock Exchanges after the Board’s

resolution and the shareholders’ approval is obtained.

Global Reports LLC

067

D. Legal reserve can only be used to offset deficits or increase capital. The legal reserve can

be used to increase capital when and only when the reserve balance exceeds 50% of the

capital stock, and the amount capitalized should be limited to 50% of the legal reserve.

E. In accordance with the ROC SFB regulation, in addition to legal reserve and prior to

distribution of earnings, the Company should set aside a special reserve in an amount equal

to the net change in the reduction of prior year’s stockholders’ equity, resulting from

adjustments such as cumulative foreign currency translation adjustment and unrealized gain

(loss) on available-for-sale financial assets. Such special reserve is not available for

dividend distribution. In the subsequent year(s), if the year-end balances of the cumulative

foreign currency translation adjustment and unrealized losses on available-for-sale financial

assets no longer result in a net reduction in the stockholders’ equity, the special reserve

previously set aside will then be available for distribution.

F. The Taiwan imputation tax system requires that any undistributed current earnings of a

company derived on or after January 1, 1998 be subject to an additional 10% corporate

income tax if the earnings are not distributed in the following year. As of December 31,

2006, the undistributed earnings derived on or after January 1, 1998 was $ 13,413,928

thousands.

G. As of December 31, 2006, the balance of stockholders’ imputation tax credit account of the

Company was $37,339. The rate of stockholders’ imputation tax credit to undistributed

earnings accumulated in 1998 and thereafter was approximately 0.28%. However, the rate

is subject to changes based on the balance of stockholders’ imputation tax credit account, the

undistributed earnings, and other tax credit amount in accordance with the ROC tax law at

the dividend allocation date. The rate of stockholders’ imputation tax credit to undistributed

earnings for the earnings distributed in the current year is 1.08%.

H. On June 12, 2006, the stockholders of the Company resolved to distribute stock dividends of $2,410,149 and cash dividends of $4,169,558, respectively. The total amount of dividends per share, including stock dividends of $0.96 (in dollars) per share and cash dividends of $1.66 (in dollars) per share, was $2.62 (in dollars).

I. On June 13, 2005, the stockholders of the Company resolved to distribute stock dividends of $1,688,898 and cash dividends of $1,583,342, respectively. The total amount of dividends per share, including stock dividends of $0.8 (in dollars) per share and cash dividends of $0.75 (in dollars) per share, was $1.55 (in dollars).

Global Reports LLC

068

J. The company’s earnings of distribution 2005 for employee bonuses and directors’ and

supervisors’ remunerations were as follow:

19. TREASURY STOCKAs of December 31, 2006, Siliconware Investment Company Ltd., the subsidiary of the Company, holds 35,176 thousand shares of the Company’s stock, with book value of $22.58 (in dollars) per share. None of treasury stock held by the subsidiary was sold in 2006. The closing price of the Company’s stock was $51.2 (in dollars) per share on December 31, 2006.

20. IMPAIRMENT OF ASSETS

Effective January 1, 2005, the Company adopted ROC Statement of Financial Accounting

Standards No. 35 “Accounting for Assets Impairment”. There is no asset impairment loss for the

years ended December 31, 2006. For the year ended December 31, 2005, the Company

recognized impairment loss of $163,650 as follows:

A. Impairment loss of $79,200 recognized for the year ended December 31, 2005 for long-term

investment in Universal, which was triggered by the merger with Sigurd and the

investment’s carrying amount exceeded the recoverable amount.

B. Impairment loss of $84,450 was recognized for the year ended December 31, 2005 for

long-term investment in Double Win. The management believed the impairment loss was

triggered by the downturn of the overall market and industry where Double Win operated, as

well as the fact that Double Win withdrew from public trading in 2005.

Income fromcontinuing operations Shareholders' equity

Impairment loss on long-term investment 163,650$ -$

For the year ended December 31, 2005

The amount of the actualearnings distributions

approved bythe shareholders in 2006

(a) The amount of the retained earnings distributed 1.Employees' cash bonuses 463,284$ 2.Employees' stock bonuses (i) Shares (in thousands of shares) 26,780 (ii) Amounts 267,794$ (iii) As a percentage of outstanding common shares 1.17% 3.Directors' and supervisors' remunerations 149,324$ (b) Informations regarding earnings per common share (in dollors) 1.Original earnings per common share (Note 1) 3.59$ 2.Adjusted earnings per common share (Note 2) 3.21$

Note 1: Not retroactively adjusted by the common shares issued on capitalization of earnings in 2006.Note 2: Adjusted earnings per share = (Net income-Employees' bonus-Remunerations to directors and supervisors)/Weighted average oustanding common shares.

Global Reports LLC

069

21. INCOME TAX

A. For the years ended December 31, 2006 and 2005, significant portion of the permanent

differences are derived from the income tax exemption of capital gain resulted from the

security transactions, long-term investment income accounted for under the equity method,

and the revenue from assembly of certain integrated circuit products exempted from income

tax.

B. As of December 31, 2006 and 2005, deferred tax assets and liabilities are as follows:

2006 2005

Incom e tax expense calculated at the statutory tax rate 3,566,664$ 2,061,717$ Perm anent differences 1,506,043)( 779,263)( Investm ent tax credits 1,147,432)( 834,025)( Tax on interest incom e separately taxed - 1,006Changes in allowance for deferred tax assets 5,460)( 570,959)(Prior year's under provision 29,898 112,57010% additional tax on unappropriated earnings - 11,961

Incom e tax expense 937,627 3,007Adjustm ent:

Net changes of deferred tax assets 102,987)( 272,156Decrease (increase) in incom e tax payables 129,522 112,570)( Tax on interest incom e separately taxed - 1,006)( Prepaid and withholding taxes 33,385)( 25,176)(

Incom e tax payable 930,777$ 136,411$

Incom e tax payable carried over from prior year 16,605$ 16,605$

Decem ber 31,For the years ended

2006 2005

Deferred tax assets - current 724,775$ $759,226Allowance for deferred tax assets 141)( -Deferred tax assets - current 724,634$ 759,226$

Deferred tax assets - noncurrent 1,938,744$ $2,158,936Deferred tax liabilities - noncurrent 172,909)( 219,101)(

1,765,835 1,939,835Allowance for deferred tax assets 124,555)( 230,160)(

1,641,280$ 1,709,675$

December 31,

Global Reports LLC

070

C. The details of deferred tax assets and liabilities as of December 31, 2006 and 2005 were as

follows:

Valuation allowance for deferred tax assets relates primarily to unrealized loss in long-term investments and allowance for investment tax credits.

D. The Company’s income tax returns have been assessed and approved by the Tax Authority

through 2003.

E. As of December 31, 2006, the Company’s unused portion of investment tax credits, under the

“Statue for Upgrading Industries”, were as follows:

Deductible Unused ExpirationNature of Investment Tax Credits Amount Amount YearsAcquisition costs of

qualifying machinery and equipment 2,752,167$ 1,924,947$ 2008 to 2010Qualifying research

and development expenditure 755,763 622,646 2008 to 2010Qualifying investments

in significant technology companies 22,175 18,350 20083,530,105$ 2,565,943$

Amount Tax Effect Amount Tax Effect

Current:Temporary differences:

Unrealized loss on obsolescence and decline in market value of inventories 56,715$ 14,179$ 55,803$ 13,951$ Compensation interest on bonds payable 2,377 594 - -Unrealized sales allowance 55,475 13,869 67,180 16,795Unrealized foreign exchange (gain) loss 7,370)( 1,843)( 155,641 38,910Allowance for doubtful accounts 23,904 5,976 12,280 3,070

Investment tax credits 692,000 686,500724,775 759,226

Allowance for deferred tax assets 141)( -724,634$ 759,226$

Noncurrent : Temporary differences:

Unrealized loss on long-term investments -$ -$ 400,015$ 100,004$ Depreciation expense 639,742)( 159,936)( 669,724)( 167,431)( Unrealized foreign currency exchange gain arising from bonds payable 51,892)( 12,973)( 206,678)( 51,670)( Compensation interest on bonds payable - - 490,806 122,702Unrealized loss on idle assets 259,203 64,801 322,543 80,636

Investment tax credits 1,873,943 1,855,594


1,641,280$ 1,709,675$

December 31, 2006 December 31, 2005

Global Reports LLC

071

F. The Company has met the requirement of Statute for Upgrading Industries and is exempted

from income tax for revenues arising from the assembly and testing of certain integrated

circuit products for a five-year period from January 2004 and from January 2006. The

5-years income tax exemption will expire in December 2008 and 2010, respectively. Also,

in order to get 5-year income tax exemption, the Company filed registration of capitalization

plan in 2005 for its expansion of assembly and testing of integrated circuited business to the

Industrial Development Bureau of Ministry of Economic Affairs and has received the

approval in 2006.

22. EARNINGS PER SHARE

The basic and diluted earnings per share of the years ended December 31, 2006 and 2005 were

retroactively adjusted for 2005 stock dividends and employees’ stock bonus distributed in 2006.

Weighted average outstanding

Before tax After tax common stock Before tax After tax

(in thousands)Basic EPS:Net income 14,266,696 13,329,069 2,716,477 5.25$ 4.91$

Dilutive effect of employee stock option - - 12,650 Dilutive effect of 3rd Euro convertible bonds 22,562 33,421 168,743Diluted EPS 14,289,258 13,362,490 2,897,870 4.93$ 4.61$



(in thousands)Basic EPS:Income from continuing operations 7,596,401$ 7,593,394$ 3.02$ 3.02$Cumulative effects of changes in accounting principles 650,508 650,508 0.26 0.26

Net income 8,246,909 8,243,902 2,516,506 3.28$ 3.28$

Dilutive effect of employee stock option - - 20,271

2nd Euro convertible bonds 396,552 424,053 206,027 3rd Euro convertible bonds 368,262 349,696 189,068Diluted EPS 9,011,723 9,017,651 2,931,872 3.07$ 3.07$

For the year ended December 31, 2006Income Earnings per share

(in dollars)


(in dollars)

Income Earnings per share

Global Reports LLC

072

23. PERSONNEL COSTS, DEPRECIATION AND AMORTIZATION

Operating cost Operating expense Total

Personnel CostPayroll 5,201,666$ 1,012,104$ 6,213,770$Labor and health insurance 414,906 71,053 485,959Pension expense 245,299 53,299 298,598Other 580,961 100,890 681,851

6,442,832$ 1,237,346$ 7,680,178$Depreciation 6,414,545$ 161,350$ 6,575,895$Amortization 356,582$ 166,057$ 522,639$


Personnel CostPayroll 4,042,558$ 827,076$ 4,869,634$Labor and health insurance 289,956 58,456 348,412Pension expense 160,601 39,964 200,565Other 481,588 71,016 552,604

4,974,703$ 996,512$ 5,971,215$Depreciation 5,783,000$ 141,735$ 5,924,735$Amortization 342,091$ 138,055$ 480,146$



Global Reports LLC

073

24. RELATED PARTY TRANSACTIONS

A. Name and Relationship with Related Parties:

B. Significant Transactions with Related Parties:

(1) Sales

The sales prices and payment terms provided to related parties were generally comparable to those provided to non-related parties. The average collection period is approximately three months from the date of sales.

(2) Purchases

The purchase prices and payment term provided by the related parties were generally comparable to those provided by non-related parties. The average payment period is approximately three months from the date of purchase.

Name of Related Parties Relationship with the Company

ChipMOS Technologies Inc. Investee company accounted forunder the equity method

Sigurd Microelectronics Corporation The Company holds directorshipPhoenix Precision Technology Corporation The Company holds directorshipSiliconware Investment Company Ltd. Subsidiary of the CompanySPIL (B.V.I.) Holding Limited Subsidiary of the CompanySPIL (Cayman) Holding Limited Indirect subsidiary of the CompanySiliconware USA, Inc. Indirect subsidiary of the CompanySiliconware Technology (Suzhou) Limited Indirect subsidiary of the CompanyHai-Feng Fundation Same chairman of the board of the directors

% of % of Amount net sales Amount net sales

Sigurd Microelectronics Corporation 5,217$ - 31,218$ -

For the years ended December 31, 2006 2005

% of net % of netAmount purchase Amount purchase

Phoenix PrecisionTechnology Corporation 3,100,909$ 13 3,600,039$ 18

Others 83 - - -3,100,992$ 13 3,600,039$ 18


Global Reports LLC

074

(3) Accounts Receivable

(4) Accounts Payable

(5) Commission Expense / Prepaid Expense (Accrued Expense)

The Company paid service fees, based on the service agreement, to Siliconware USA, Inc. for the services rendered in relation to promotion and marketing in the North America.

(Note 1) Shown in other current assets – other.

(6) Other Income / Other Receivables

(7) Other Expenses / Other Payables

% of accounts % of accountsAmount receivable Amount receivable

Sigurd Microelectronics Corporation -$ - 9,695$ -


% of accounts % of accountsAmount payable Amount payable

Phoenix PrecisionTechnology Corporation 345,745$ 9 694,261$ 14


Commission Prepaid expense Commission Accruedexpense (Note 1) expense Expense

Siliconware USA, Inc. 478,608$ 4,865$ 417,408$ 63,003)($


Other Other Other Other Expenses Payables Expenses Payables

Others 12,153$ 4,807$ 11,505$ 7,741$


Other Other Other Other Income Receivables Income Receivables

Others 12,614$ 11,288$ 2,021$ 79$


Global Reports LLC

075

25. ASSETS PLEDGED AS COLLATERALS

As of December 31, 2006 and 2005, the following assets have been pledged as collaterals against certain obligations of the Company:

26. COMMITMENTS AND CONTINGENCIES

A. As of December 31, 2006, the Company’s issued but unused letters of credit for imported

machinery and equipment was approximate $389,027.

B. For its future expansion, the Company entered into several contracts with a total payment of

$1,544,321, of which a total amount of $645,766 has not been paid as of December 31,

2006.

C. The Company entered into contracts with five foreign companies for the use of certain

technologies and patents related to packaging system of integrated circuit products. The

Company agreed to pay royalty fees based on the total number of certain products sold.

Four contracts are valid through December 2007, November 2009, December 2010 and

January 2011, respectively. For the other two contracts, one is valid through when all

patents included in the contract expire; the other is valid until both parties agree to terminate

the contract.

D. On March 1, 2006, the Company was informed of a civil lawsuit brought by Tessera Inc., a

U.S. corporation, against the Company and its subsidiary, Siliconware USA, Inc. in the

United States. The Company has authorized a U.S. law firm for the litigation support and

been in process of gathering evidence. Currently, the Company is unable to assess the

potential liabilities arising out of this claim due to the fact that insufficient information

provided in the scope of the infringement of patent rights caused by its services is specified

in the bill of complaint. As such, no losses or expenses are recognized with respect to the

lawsuit.

Assets 2006 2005 Subject of collaterals

Time deposits(shown in other financial assets, current) 206,705$ 215,905$

Guarantees for custom duties and income tax liabilities

December 31,

Global Reports LLC

076

27. SIGNIFICANT DISASTER LOSS

None.

28. SIGNIFICANT SUBSEQUENT EVENT

1. On December 21, 3006, the board of the Company resolved to sell its Taipei office with an

amount of $185,009 suggested by China Credit Information Service, Ltd. The passage of

title was completed on February 26, 2007 with a disposal loss of $32,276.

2. On February 13, 2007, the board of the Company resolved to sell its common stock

ownership in ChipMOS Technologies Inc. for US$191,147 thousands and acquire the

common stock ownership in ChipMOS Technologies (Bermuda) Ltd., the parent company of

ChipMOS Technologies Inc., through private stock offering for US$76,459 thousands. As of

March 21, the passage of title was not completed. Therefore, the reasonable amount of gain

(loss) on disposal of investment cannot be reasonably estimated.

29. OTHERS

A. Financial Statement Reclassification

Certain accounts stated in the December 31, 2005 financial statements have been reclassified in conformity with the presentation of December 31, 2006 financial statements.

B. Fair Values of Financial Instruments:

Methods and assumptions used to estimate the fair values of financial instruments are as

follows:

i. Financial assets and liabilities with book value proxies to fair value are cash, notes

Non-derivative financial instruments Book Value

Quotation in

an active

market

Esimated

using a

valuation Book Value

Quotation in

an active

market

Esimated

using a

valuation

Financial AssetsFinancial assets with book value equal

to fair value 22,925,917$ -$ 22,925,917$ 20,908,804$ -$ 20,908,804$Available-for-sale financial assets -noncurrent 7,620,907 7,620,907 - 2,293,064 9,074,691 -Financial assets carried at cost-noncurrent 3,891 - - 3,891 - -

30,550,715$ 7,620,907$ 22,925,917$ 23,205,759$ 9,074,691$ 20,908,804$

Financial LiabilitiesFinancial liabilities with

book value equal to fair value 9,043,982$ -$ 9,043,982$ 10,945,433$ -$ 10,945,433$Bonds payable (including current portion) 2,726,832 4,122,897 - 11,310,300 15,528,396 -Long-term loans 2,988,474 - 3,023,857 3,333,300 - 3,333,300

14,759,288$ 4,122,897$ 12,067,839$ 25,589,033$ 15,528,396$ 14,278,733$

December 31, 2005Fair Value Fair Value

December 31, 2006

Global Reports LLC

077

receivable, accounts receivable, other current financial assets, refundable deposits, notes

payable, accounts payable, income tax payable, accrued expenses, other payables, current

portion of long-term debts, other current liabilities and other liabilities because of their

short maturities.

ii. Available-for-sale financial assets – non-current are recorded at quoted market prices as

their fair values due to the availability of the quoted price in an active market.

iii. Financial assets carried at cost are recorded at costs due to the lack of quoted market prices

derived from the active market and the reasonable measurement for the fair value.

iv. The fair value of long-term loans is estimated by the discounted future cash flows. The

discount rate, 1.875%, is based on the interest rate of the similar long-term loan, which the

Company would have acquired.

v. The fair value of bonds payable and current portion of bonds payable is based on its

quoted market price.

C. Financial assets and liabilities with the risk of interest rate fluctuation:

As of December 31, 2006, the Company’s financial assets and liabilities with fair value risk

of interest rate fluctuation were $12,961,914 and $5,715,306, respectively.

D. Financial assets and liabilities whose changes in fair value are not recognized in earnings:

The Company’s interest income and interest expense from financial assets and liabilities

whose changes in fair value were not recognized in earnings were $343,201 and $117,161,

respectively, for the year ended December 31, 2006. Available-for-sale financial assets are

measured at fair value at balance sheet date. Changes in fair value recorded as the

adjustment of the shareholders’ equity for the year ended December 2006 was $4,598,064.

E. Financial risk control:

The Company has implemented appropriate risk management and control processes to

identify, measure, and control the risks associated with the market, credit, liquidity, and cash

flows.

F. Financial risk information:

1. Financial Assets: investments in equity instruments

(1) Market risk:

The Company’s investments in equity instruments are exposed to the market price

risk. However, the Company performs risk management controls to minimize the

potential loss to an acceptable level. The Company believes that the probability of

significant market risk is low.

December 31, 2006

Available-for-sale financial assets 7,620,907$Financial assets carried at cost 3,891

7,624,798$

Global Reports LLC

078

(2) Credit risk:

The Company’s investments in available-for-sale financial assets are through

creditable financial institutions. The expected credit exposure to such financial

institutions is low. For equity investments carried at cost, the Company has

evaluated counter parties’ credit condition each time when the Company entered

the investment transaction. Thus the credit risk is low.

(3) Liquidity risk:

The Company’s available-for-sale financial assets are traded in active markets,

which can be sold at the prices not significantly different from their market value.

The Company is exposed to a greater liquidity risk for equity instruments

measured at cost due to the fact that no active market exists for these instruments.

(4) Cash flow risk of interest rate:

The Company’s investments in equity financial assets are non-interest related, so

the cash flows from equity instruments are independent of changes in market

interest rate.

2. Financial liabilities: debt instruments

(1) Market risk:

Debt instruments include zero-coupon convertible bonds embedded with call and put

options, fixed interest-bearing bonds, and long-term loans. The fair value changes of

our USD denominated convertible bonds are affected by the stock price. However, we

can minimize the market price risk by exercising the call option and reduce the foreign

exchange rate exposure by maintaining equivalent amounts of assets denominated in

USD. Our long-term loans are not exposed to fair value risks because the borrowings

were issued at variable rates.

(2) Credit risk:

Debt instruments issued by the Company do not have significant credit risk.

(3) Liquidity risk:

The Company maintains sufficient working capital to meet its cash requirements. We

believe that there is no significant liquidity risk.


Our zero-coupon bonds, fixed interest rate bearing bonds, and fixed interest rate borrowings are not exposed to cash flow interest rate risk.

December 31, 2006

Bonds payable 2,726,832$Long-term loans 2,988,474

5,715,306$

Global Reports LLC

079

30.

SPE

CIA

L D

ISC

LO

SUR

E I

TE

MS

A. S

igni

fica

nt T

rans

actio

n In

form

atio

n

(1)

Loa

ns to

thir

d pa

rtie

s at

trib

uted

to f

inan

cial

act

iviti

es:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

(2)

End

orse

men

t and

gua

rant

ee p

rovi

ded

to th

ird

part

ies:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

(3)

The

end

ing

bala

nce

of s

ecur

ities

are

sum

mar

ized

as

follo

ws:

As

of D

ecem

ber

31, 2

006:

Not

e 1:

The

mar

ket v

alue

is n

ot a

vaila

ble.

The

refo

re, t

he n

et e

quity

per

sha

re a

s of

Dec

embe

r 31

, 200

6 w

as u

sed.

Not

e 2:

The

mar

ket v

alue

is n

ot a

vaila

ble.

The

refo

re, t

he n

et e

quity

per

sha

re a

s of

Dec

embe

r 31

, 200

5 w

as u

sed.

Th

e re

lati

on

ship

Nu

mb

erP

erce

nta

ge

Mar

ket

val

ue

Ty

pe

of

o

f th

e is

suer

sG

ener

al l

edg

er

of

shar

eso

f p

er s

har

e In

vest

or

se

curi

ties

Nam

e o

f se

curi

ties

w

ith

th

e C

om

pan

yac

cou

nts

(

in t

ho

usa

nd

s) B

oo

k v

alu

e o

wn

ersh

ip(i

n d

oll

ars)

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckS

ilic

on

war

e In

vest

men

t

C

om

pan

y L

td.

Inve

stee

acc

ou

nte

d f

or

un

der

th

e eq

uit

ym

eth

od

Lo

ng

-ter

min

vest

men

tsac

cou

nte

d f

or

un

der

the

equ

ity

met

ho

d1

77

,00

01

,27

2,5

57

$1

00

.00

%1

7.3

6(N

ote

1)

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckD

ou

ble

Win

En

terp

rise

Co

., L

td.

Inve

stee

acc

ou

nte

d f

or

un

der

th

e eq

uit

ym

eth

od

Lo

ng

-ter

min

vest

men

tsac

cou

nte

d f

or

un

der

the

equ

ity

met

ho

d6

,76

0-

24

.14

%8

.23

(No

te 2

)

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckC

hip

MO

S T

ech

no

log

ies

Inc.

Inve

stee

acc

ou

nte

d f

or

un

der

th

e eq

uit

ym

eth

od

Lo

ng

-ter

min

vest

men

tsac

cou

nte

d f

or

un

der

the

equ

ity

met

ho

d2

54

,86

34

,99

8,5

96

28

.76

%1

9.9

5(N

ote

1)

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckS

PIL

(B

.V.I

.)

H

old

ing

Lim

ited

Inve

stee

acc

ou

nte

d f

or

un

der

th

e eq

uit

ym

eth

od

Lo

ng

-ter

min

vest

men

tsac

cou

nte

d f

or

un

der

the

equ

ity

met

ho

d7

7,8

00

2,2

47

,89

91

00

.00

%2

8.8

9(N

ote

1)

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckP

ho

enix

Pre

cisi

on

Tec

hn

olo

gy

Co

rpo

rati

on

Th

e C

om

pan

y h

old

s

d

irec

tors

hip

Ava

ilab

le-f

or-

sale

fin

anci

al a

sset

s1

09

,85

44

,28

4,2

95

16

.41

%3

9.0

0

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckK

ing

Yu

an E

lect

ron

ics

Co

., L

td.

-A

vail

able

-fo

r-sa

lefi

nan

cial

ass

ets

85

,69

82

,33

0,9

77

7.8

6%

27

.20

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckS

igu

ard

Mic

roel

ectr

on

ics

Co

rp.

Th

e C

om

pan

y h

old

s

d

irec

tors

hip

Ava

ilab

le-f

or-

sale

fin

anci

al a

sset

s4

6,2

36

1,0

05

,63

51

7.9

1%

21

.75

Sil

ico

nw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td.

Sto

ckN

PL

-F

inan

cial

ass

ets

carr

ied

at

cost

13

03

,89

1-

-

Global Reports LLC

080

(4)

Secu

ritie

s fo

r w

hich

tota

l buy

ing

or s

ellin

g ex

ceed

s th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l sto

ck:

or th

e ye

ar e

nded

Dec

embe

r 31

, 200

6:

Not

e 1:

The

end

ing

bala

nce

incl

udes

the

inve

stm

ent g

ain

and

loss

und

er th

e eq

uity

met

hod.

(5) A

cqui

sitio

n of

rea

l est

ate

with

an

amou

nt e

xcee

ding

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

For

the

year

end

ed D

ecem

ber

31, 2

006:

The

N

ame

rela

tions

hip

ofof

the

Gai

n G

ener

al

the

is

suer

s N

umbe

rN

umbe

rN

umbe

r(lo

ss)

Num

ber

Nam

e of

le

dger

coun

ter

with

the

of

shar

es/u

nit

of

shar

es/u

nit

of

shar

es/u

nit

from

o

f sh

ares

/uni

tA

mou

ntIn

vest

or

th

e se

curit

y

acco

unts

pa

rty

Com

pany

(in

thou

sand

s)A

mou

nt

(in

thou

sand

s)A

mou

nt

(in

thou

sand

s)Sa

le p

rice

Boo

k va

lue

disp

osal

(

in th

ousa

nds)

(Not

e 1)

Silic

onw

are

Prec

isio

nIn

dust

ries

Co.

, Ltd

.

SPIL

(B

.V.I.

)H

oldi

ng L

imite

d(s

tock

)

Lon

g-te

rmin

vest

men

tac

coun

ted

for

unde

r eq

uity

met

hod

62,8

00$1

,794

,319

15,0

00$4

87,0

5077

,800

$2,2

47,8

99

B

egin

ning

bal

ance

A

dditi

on

End

ing

bala

nce

D

ispo

sal

Nam

e of

the

prop

ertie

sD

ate

oftra

nsac

tion

Tran

sact

ion

amou

ntSt

atus

of

paym

ent

Cou

nter

par

ty

Rel

atio

n-sh

ip w

ithth

eC

ompa

ny

Orig

inal

owne

r whi

chso

ld th

epr

oper

ty to

the

coun

ter p

arty

The

rela

tions

hip

ofth

e or

igin

alow

ner w

ithth

e C

ompa

ny

Dat

e of

the

orig

inal

trans

actio

nA

mou

nt

The

base

s or

refe

renc

e us

edin

dec

idin

g th

epr

ice

Purp

ose

and

stat

us o

f the

acqu

isiti

onO

ther

com

mitm

ent

Build

ing

Nob

embe

r 200

516

9,00

0$

169,

000

$

Sh

eng-

Hui

Con

stru

ctio

n-

--

--

$

As s

peci

fied

inFo

r ope

ratin

gPa

ymen

t mad

e ac

cord

ing

Cor

pora

tion

Ltd.

cont

ract

use

to c

onst

ruct

ion

prog

ress

Build

ing

Dec

embe

r 200

5

125,

000

12

5,00

0C

hung

-Rui

Con

stru

ctio

n-

--

--

As s

peci

fied

inFo

r ope

ratin

gPa

ymen

t mad

e ac

cord

ing

Cor

pora

tion

Ltd.

cont

ract

use

to c

onst

ruct

ion

prog

ress

Build

ing

Febr

uary

200

6

180,

000

18

0,00

0C

Net

Con

stru

ctio

n-

--

--

As s

peci

fied

inFo

r ope

ratin

g-

Cor

pora

tion

Ltd.

cont

ract

use

Land

Aug

ust 2

006

Jou

Mu

Text

ile-

--

--

As s

peci

fied

inFo

r ope

ratin

g-

cont

ract

use

Build

ing

Nov

embe

r 200

6Jo

hnny

Ko

(c) &

--

--

-

A

s spe

cifie

d in

For o

pera

ting

Paym

ent m

ade

acco

rdin

gco

ntra

ctus

eto

con

stru

ctio

n pr

ogre

ssBu

ildin

gN

ovem

ber 2

006

-C

hung

-Rui

Con

stru

ctio

n-

--

--

As s

peci

fied

inFo

r ope

ratin

gPa

ymen

t mad

e ac

cord

ing

Cor

pora

tion

Ltd.

cont

ract

use

to c

onst

ruct

ion

prog

ress

Rel

ated

par

ty a

s cou

nter

par

ty

Global Reports LLC

081

(6)

Dis

posa

l of

real

est

ate

with

an

amou

nt e

xcee

ding

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

(7)

Rel

ated

par

ty tr

ansa

ctio

ns w

ith p

urch

ases

and

sal

es a

mou

nts

exce

edin

g th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l sto

ck:

For

the

year

end

ed D

ecem

ber

31, 2

006:

(8)

Rec

eiva

bles

fro

m r

elat

ed p

artie

s ex

ceed

ing

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

As

of D

ecem

ber

31, 2

006:

Non

e.

(9)

Tra

nsac

tion

of d

eriv

ativ

e fi

nanc

ial i

nstr

umen

ts:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

Per

cen

tag

e P

erce

nta

ge

of

Rel

atio

nsh

ip

of n

et

not

es o

r ac

cou

nts

Pu

rch

ase

/ sa

les

Nam

e of

w

ith

th

e P

urc

has

esp

urc

has

esC

red

it

Un

it

Cre

dit

re

ceiv

able

/

com

pan

yth

e co

un

ter

par

ties

co

un

ter

par

ties

/

sale

s

Am

oun

t

/ s

ales

term

s

pri

ce

term

s

A

mou

nt

pay

able

Sil

icon

war

eP

reci

sion

Ind

ust

ries

Co.

, L

td.

Ph

oen

ix P

reci

sion

T

ech

nol

ogy

C

orp

orat

ion

Th

e C

omp

any

hol

ds

dir

ecto

rsh

ipP

urc

has

e$

3,1

00

,90

91

3%

Th

ree

mon

ths

Acc

oun

tsp

ayab

le $

34

5,7

45

9%

rece

ivab

le /

pay

able

Des

crip

tion

of

and

rea

son

s fo

r

Not

es o

r ac

cou

nts

Des

crip

tion

of

the

tran

sact

ion

dif

fere

nce

in

tra

nsa

ctio

n t

erm

s

com

par

ed t

o

par

ty t

ran

sact

ion

s

non

-rel

ated

Global Reports LLC

082

B.

Rel

ated

Inf

orm

atio

n on

Inv

este

e C

ompa

nies

(1)

Bas

ic in

form

atio

n on

inve

stee

com

pani

es:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Not

e 1:

The

Com

pany

’s in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod.

N

ote

2: T

he C

ompa

ny’s

100

% o

wne

d su

bsid

iary

. N

ote

3: A

n in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod

of S

PIL

(B

.V.I

.) H

oldi

ng L

imite

d, a

100

% o

wne

d su

bsid

iary

of

the

Com

pany

. N

ote

4: A

n in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod

of S

PIL

(C

aym

an)

Hol

ding

Lim

ited,

a 1

00%

ow

ned

subs

idia

ry o

f SP

IL (

B.V

.I)

Hol

ding

Lim

ited.

N

ote

5: T

he c

ontr

ibut

ed c

apita

l was

US$

50,0

00 th

ousa

nd d

olla

rs.

Not

e 6:

The

Com

pany

’s lo

ng-t

erm

inve

stm

ents

acc

ount

ed f

or u

nder

the

equi

ty m

etho

d w

as r

ecla

ssif

ied

as a

vaila

ble-

for-

sale

fin

anci

al a

sset

s (n

on-c

urre

nt)

for

the

ye

ar e

nded

Dec

embe

r 31

, 200

6.

Not

e 7:

Cas

h di

vide

nd p

aid

by th

e C

ompa

ny a

nd tr

ansf

erre

d to

cap

ital r

eser

ve h

as b

een

dedu

cted

fro

m th

e in

vest

men

t inc

ome

reco

gniz

ed.

Cur

rent

Pri

or

peri

odpe

riod

Shar

esN

et in

com

eIn

com

e (l

oss)

endi

ngen

ding

( in

O

wne

rshi

pB

ook

(los

s) o

fre

cogn

ized

by

Inve

stor

N

ame

of I

nves

tee

Loc

atio

n

M

ain

activ

ities

ba

lanc

eba

lanc

eth

ousa

nds

)P

erce

ntag

eva

lue

inve

stee

th

e C

ompa

ny

N

ote

Silic

onw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.T

aipe

iIn

vest

men

t act

iviti

es$1

,770

,000

$1,7

70,0

0017

7,00

010

0.00

%$1

,272

,557

$144

,941

$91,

550

(Not

es 1

, 2, 7

)

Silic

onw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.D

oubl

e W

inE

nter

pris

e C

o., L

td.

Pin

g-ch

en C

ity,

T

aoyu

anSM

T p

roce

ss

and

hand

inse

rt15

2,10

015

2,10

06,

760

24.1

4%-

--

(N

ote

1)

Silic

onw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.C

hipM

OS

Tec

hnol

ogie

s In

c.

Scie

nce-

base

d

Indu

stri

al P

ark,

H

sin-

Chu

Tes

ting

and

asse

mbl

y

of in

tegr

ated

cir

cuits

2,33

2,76

82,

332,

768

254,

863

28.7

6%4,

998,

596

4,13

8,27

01,

124,

990

(Not

e 1)

Silic

onw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.Si

gurd

Mic

roel

ectr

onic

s C

orp.

Chu

-tun

g,

Hsi

n-C

huT

estin

g an

d as

sem

bly

of

inte

grat

ed c

ircu

its45

9,27

445

9,27

4-

-

-

-

28,6

40(N

ote

6)

Silic

onw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.SP

IL (

B.V

.I.)

Hol

ding

Lim

ited

Bri

tish

Vir

gin

Isla

nds

Inve

stm

ent a

ctiv

ities

2,62

0,86

92,

133,

819

77,8

0010

0.00

%2,

247,

899

(58,

980)

(58,

980)

(Not

es 1

, 2)

SPIL

(B

.V.I

.)H

oldi

ng L

imite

dSi

licon

war

e U

SA, I

nc.

San

Jose

, CA

, USA

Pro

vidi

ng p

rom

otio

nan

d m

arke

ting

serv

ices

68,4

6468

,464

1,25

010

0.00

%89

,072

23,7

4423

,744

(Not

e 3)

SPIL

(B

.V.I

.)H

oldi

ng L

imite

dSP

IL (

Cay

man

)H

oldi

ng L

imite

dC

aym

an I

slan

ds,

B

ritis

h W

est I

ndia

Inve

stm

ent a

ctiv

ities

1,64

4,62

51,

157,

575

50,1

0010

0.00

%1,

229,

451

(117

,552

)(1

17,5

52)

(Not

e 3)

SPIL

(C

aym

an)

Hol

ding

Lim

ited

Silic

onw

are

Tec

hnol

ogy

(Suz

hou)

Lim

ited

Suzh

ou J

iang

su,

Chi

na

Man

ufac

turi

ng o

fm

emor

y st

ick,

DR

AM

mod

ule,

tran

sist

or a

ndel

ectr

onic

com

pone

nt1,

641,

380

1,15

4,33

0(N

ote

5)10

0.00

%1,

228,

638

(116

,740

)(1

16,7

40)

(Not

e 4)

Cur

rent

per

iod

The

Com

pany

/ m

ajor

ityO

rigi

nal i

nves

tmen

ts o

wne

d su

bsid

iary

ow

ns

Global Reports LLC

083

(2)

The

end

ing

bala

nce

of s

ecur

ities

hel

d by

inve

stee

com

pani

es:

As

of D

ecem

ber

31, 2

006:

(1)

Com

bine

d am

ount

for

indi

vidu

al s

ecur

ity le

ss th

an $

100,

000.

(2)

The

mar

ket v

alue

is n

ot a

vaila

ble.

The

refo

re, t

he n

et e

quity

per

sha

re a

s of

Dec

embe

r 31

, 200

6 w

as u

sed.

(3)

The

con

trib

uted

cap

ital w

as U

S$50

,000

thou

sand

dol

lars

.

(4)

The

con

trib

uted

cap

ital w

as U

S$6,

000

thou

sand

dol

lars

.

The

rela

tions

hip

Gen

eral

Num

ber o

fPe

rcen

tage

Mar

ket v

alue

Type

of

Nam

e of

of th

e is

suer

s w

ithle

dger

shar

es B

ook

valu

e o

fpe

r sha

reIn

vest

or

secu

ritie

s

secu

ritie

s

the

Com

pany

acco

unts

(in

thou

sand

s)

(Not

e 2)

ow

ners

hip

(in d

olla

r)

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Silic

onw

are

Prec

isio

n

Indu

strie

s C

o., L

td.

The

Com

pany

Ava

ilabl

e-fo

r-sa

le

finan

cial

ass

ets

(non

-

curr

ent)

35,1

76$1

,801

,014

1.22

%$5

1.20

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Hsi

eh Y

ong

Cap

ital C

o.,

Ltd

.Fi

nanc

ial a

sset

s ca

rrie

d at

co

st50

,000

500,

000

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Phoe

nix

Prec

isio

n

Tech

nolo

gy

Cor

pora

tion

The

com

pany

hol

dsdi

rect

orsh

ip

Ava

ilabl

e-fo

r-sa

le

finan

cial

ass

ets

(non

-

curr

ent)

5,59

321

8,11

10.

84%

39.0

0

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.M

ega

Mis

sion

Lim

ited

P

artn

ersh

ipFi

nanc

ial a

sset

s ca

rrie

d at

co

st(N

ote

4)19

5,52

34.

00%

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Oth

ers

(Not

e 1)

Ava

ilabl

e-fo

r-sa

le

fina

ncia

l ass

ets

(non

-

curr

ent)

and

finan

cial

as

sets

car

ried

at c

ost

170,

111

SPIL

(B.V

.I.)

Hol

ding

Lim

ited

Stoc

kSi

licon

war

e U

SA, I

nc.

Indi

rect

sub

sidi

ary

of t

he C

ompa

ny

Long

-term

inve

stm

ents

ac

coun

ted

for u

nder

th

e eq

uity

met

hod

1,25

0

89

,072

100%

71.2

6

(Not

e 2)

SPIL

(B.V

.I.)

Hol

ding

Lim

ited

Stoc

kSP

IL (C

aym

an)

H

oldi

ng L

imite

dIn

dire

ct s

ubsi

diar

y o

f the

Com

pany

Long

-term

inve

stm

ents

ac

coun

ted

for u

nder

th

e eq

uity

met

hod

50,1

00

1,22

9,45

110

0%24

.54

(N

ote

2)

SPIL

(Cay

man

) H

oldi

ng L

imite

dSt

ock

Silic

onw

are

Tech

nolo

gy(S

uzho

u) L

imite

dIn

dire

ct s

ubsi

diar

y o

f the

Com

pany

Long

-term

inve

stm

ents

ac

coun

ted

for u

nder

th

e eq

uity

met

hod

(Not

e 3)

1,22

8,63

810

0%

Global Reports LLC

084

(3)

Secu

ritie

s fo

r w

hich

tota

l buy

ing

or s

ellin

g am

ount

exc

eed

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

For

the

year

s en

ded

Dec

embe

r 31

, 200

6:

Not

e 1:

The

con

trib

uted

cap

ital w

as U

S$35

,000

thou

sand

dol

lars

. N

ote

2: T

he c

ontr

ibut

ed c

apita

l was

US$

15,0

00 th

ousa

nd d

olla

rs.

Not

e 3:

The

con

trib

uted

cap

ital w

as U

S$50

,000

thou

sand

dol

lars

. N

ote

4: T

he e

ndin

g ba

lanc

e in

clud

es th

e in

vest

men

t gai

n an

d lo

ss u

nder

the

equi

ty m

etho

d.

Not

e 5:

The

con

trib

uted

cap

ital w

as U

S$6,

000

thou

sand

dol

lars

.

The

Nam

e of

rela

tions

hip

Gai

n

Gen

eral

the

of th

eN

umbe

r of

Num

ber o

fN

umbe

r of

(loss

)N

umbe

r of

ledg

erco

unte

ris

suer

s w

ithsh

ares

shar

essh

ares

Sale

Boo

kfr

omsh

ares

Am

ount

In

vest

or

N

ame

of th

e se

curit

y ac

coun

tspa

rty

th

e C

ompa

ny

(in th

ousa

nds)

Am

ount

(in

thou

sand

s)A

mou

nt

(in

thou

sand

s) p

rice

v

alue

di

spos

al

(in th

ousa

nds)

(Not

e 5)

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.H

sieh

Yon

g C

apita

lC

o., L

td.

Fina

ncia

l ass

ets

ca

rrie

d at

cos

ts50

,000

$5

00,0

0050

,000

$500

,000

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.M

ega

Mis

sion

Lim

ited

Part

ners

hip

Fina

ncia

l ass

ets

ca

rrie

d at

cos

ts(N

ote

5)19

5,52

3(N

ote

5)19

5,52

3

SPIL

(B

.V.I.

) H

oldi

ng L

imite

dSP

IL (

Cay

man

) H

oldi

ng L

imite

d

Lon

g-te

rm in

vest

men

t

acco

unte

d fo

r und

er

the

equi

ty m

etho

dC

ash

capi

taliz

atio

n35

,100

826,

252

15

,000

48

6,30

050

,100

1,22

9,45

1

(Not

e 4)

SPIL

(C

aym

an)

Hol

ding

Lim

ited

Silic

onw

are

Tech

nolo

gy (

Suzh

ou) L

imite

d

Lon

g-te

rm in

vest

men

t

acco

unte

d fo

r und

er

the

equi

ty m

etho

dC

ash

capi

taliz

atio

n(N

ote

1)82

4,61

7

(Not

e 2)

487,

050

(Not

e 3)

1,22

8,63

8

(Not

e 4)

Beg

inni

ng b

alan

ceA

dditi

onD

ispo

sal

Endi

ng b

alan

ce

Global Reports LLC

085

(4) A

cqui

sitio

n of

rea

l est

ate

with

an

amou

nt e

xcee

ding

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

or th

e ye

ar e

nded

Dec

embe

r 31

, 200

6:

Inve

stor

Nam

e of

the

prop

ertie

sD

ate

oftra

nsac

tion

Tran

sact

ion

amou

ntSt

atus

of

paym

ent

Cou

nter

par

ty

Rel

atio

n-sh

ipw

ith th

eC

ompa

ny

Ori g

inal

ow

ner

whi

ch s

old

the

prop

erty

to th

eco

unte

r par

ty

The

rela

tions

hip

o fth

e or

igin

alow

ner w

ith th

eC

ompa

ny

Dat

e of

the

orig

inal

trans

actio

nA

mou

nt

The

base

s or

refe

renc

e us

edin

dec

idin

g th

epr

ice

Purp

ose

and

stat

us o

f the

acqu

isiti

onO

ther

com

mitm

ent

Silic

onw

are

Bui

ldin

gJu

ly 2

006

135,

363

$

10

4,77

1$

N

anto

ng Y

ingx

iong

--

--

-$

As

spec

ified

inFo

r ope

ratin

g

Tech

nolo

gy

Con

stru

ctio

nco

ntra

ctus

e

(Su

zhou

) C

orpo

ratio

n Lt

d.

Lim

ited

Rel

ated

par

ty a

s co

unte

r par

ty

Paym

ent m

ade

acco

rdin

g to

cons

truct

ion

prog

ress

Global Reports LLC

086

C. I

nfor

mat

ion

of in

vest

men

t in

Mai

nlan

d C

hina

:

(1)

Info

rmat

ion

of in

vest

men

t in

Mai

nlan

d C

hina

:

Not

e 1:

The

Com

pany

set

up

a su

bsid

iary

in C

aym

an I

slan

d to

inve

st in

Mai

nlan

d C

hina

. N

ote

2: T

rans

actio

ns d

enom

inat

ed in

for

eign

cur

renc

ies

are

tran

slat

ed in

to N

ew T

aiw

an d

olla

rs a

t the

exc

hang

e ra

te p

reva

iling

on

the

bala

nce

shee

t dat

e.

(2)

Mat

eria

l tra

nsac

tions

occ

urre

d di

rect

ly b

etw

een

the

Com

pany

and

its

Mai

nlan

d C

hina

inve

stee

com

pani

es a

nd m

ater

ial t

rans

actio

nsoc

curr

ed in

dire

ctly

bet

wee

n th

e C

ompa

ny a

nd it

s M

ainl

and

Chi

na in

vest

ee c

ompa

nies

via

ent

erpr

ises

in o

ther

are

as: N

one.

Nam

e of

in

vest

ee

in M

ain

lan

d C

hin

a

Mai

n a

ctiv

itie

s

of

inve

stee

C

apit

al

Inve

stm

ent

met

hod

Acc

um

ula

ted

rem

itta

nce

as

of

Dec

emb

er 3

1,

20

05

Rem

itte

d o

r

(col

lect

ed)

this

per

iod

Acc

um

ula

ted

rem

itta

nce

as

of

Dec

emb

er 3

1,

20

06

Ow

ner

ship

hel

d b

y

the

Com

pan

y

(Dir

ect

and

in

dir

ect)

Sil

icon

war

e

Tec

hn

olog

y

(Su

zhou

) L

imit

ed

Man

ufa

ctu

rin

g of

mem

ory

stic

k,

DR

AM

mod

ule

, tr

ansi

stor

an

del

ectr

onic

com

pon

ent

$1

,62

0,5

00

(Not

e 1

)$

1,1

34

,35

0$

48

6,1

50

$1

,62

0,5

00

10

0%

(Not

e 2

)(N

ote

2)

(Not

e 2

)(N

ote

2)

Inve

stm

ent

inco

me

(loss

)

reco

gniz

ed b

y

the

Com

pany

durin

g th

e pe

riod

Endi

ng b

alan

ce

of in

vest

men

t

The

inve

stm

ent

inco

me

(loss

)

rem

itted

bac

k as

of

Dec

embe

r 31,

200

6

Acc

umul

ated

rem

ittan

ce

from

Tai

wan

to

Mai

nlan

d C

hina

The

inve

stm

ent b

alan

ce

appr

oved

by

Inve

stm

ent C

omm

issi

ons,

Min

istry

of E

cono

mic

Affa

irs

The

ceili

ng o

f inv

estm

ent

in M

ainl

and

Chi

na a

ccor

ding

to

Inve

stm

ent C

omm

issi

ons,

Min

istry

of E

cono

mic

Affa

irs

($11

6,74

0)$1

,228

,638

-$1

,620

,500

$14,

087,

242

(Not

e 2)

(Not

e 2)

Global Reports LLC

087

31. SEGMENT INFORMATION

A. Operation in Different Industries:

The Company principally operates in one industry. The Company’s operation involves

assembly, testing and turnkey services of integrated circuits.

B. Operations in Different Geographic Areas:

The Company has no significant foreign operations. Therefore, ROC FAS No. 20,

“Segmental Information Disclosure” is not applicable.

C. Export Sales:

D. Major Customers:

Revenues from individual customer that represents over 10% of net revenues of the

Company for the years ended December 31, 2006 and 2005 are set forth below:

Geographic areas 2006 2005

U.S. and Canada 33,986,128$ 24,349,085$ Others 1,867,316 2,187,038

35,853,444$ 26,536,123$

Customers Amount

% of

net sale Amount

% of

net sale

Customer A 5,733,910$ 10 4,762,838$ 11Customer B 4,540,738 8 4,125,562 10

########## 18 8,888,400$ 21

2005 2006

Global Reports LLC

Global Reports LLC

Financial Report

Consolidated Financial Statements andReport of Independent Accountants

Siliconware Precision Industries Co.,Ltd.And Subsidiaries

December 31,2006 and 2005

Global Reports LLC

090

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Siliconware Precision Industries Co., Ltd.

We have audited the accompanying consolidated balance sheets of Siliconware Precision Industries Co., Ltd. and its subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income, of changes in stockholders’ equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. As discussed in Note 9, we did not audit the financial statements of ChipMOS Technologies Inc., an investee accounted for under the equity method. Those statements were audited by other auditors whose reports thereon have been furnished to us. Our opinion, insofar as it relates to the investment in ChipMOS Technologies Inc., and related investment income were based on the investee’s financial statements audited by other independent accountants. Long-term investments amounted to $4,998,596 thousand and $3,924,937 thousand as of December 31, 2006 and 2005 were based on the investee’s financial statements as of December 31, 2006 and 2005, respectively. The investment income of $1,124,990 thousand for the year ended December 31, 2006, was based on the investee’s financial statements for the year ended December 31, 2006. The investment income of $1,100,044 thousand for the year ended December 31, 2005, was based on the investee’s financial statements for the years ended December 31, 2005 and 2004.

We conducted our audits in accordance with the “Rules Governing Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the accompanying consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Siliconware Precision Industries Co., Ltd. and its subsidiaries as of December 31, 2006 and 2005, and the results of their consolidated operations and their consolidated cash flows for the years then ended, in conformity with the “Rules Governing the Preparation of Financial Reports by Securities Issuers”, “Business Entity Accounting Law”, “Regulation on Business Entity Accounting Handling” and accounting principles generally accepted in the Republic of China.

Global Reports LLC

091

As discussed in Note 3, commencing from January 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 35, “Accounting for Asset Impairment” and amended Statement of Financial Accounting Standards No. 5, “Accounting for Long-term Equity Investment”, under which the Company ceased to delay in recognition of investment income of investees accounted for under the equity method until the subsequent year, and recognized investment income from all investees accounted for under the equity method based on investees’ audited financial statements for the same period. Commencing from January 1, 2006, the Company adopted amended Statement of Financial Accounting Standards No. 34, “Accounting for Financial Instruments”, and No. 36, “Disclosure and Presentation of Financial Instruments”.

March 21, 2007

-------------------------------------------------------------------------------------------------------------------

The accompanying consolidated financial statements are not intended to present the financial

position and results of operations and cash flows in accordance with accounting principles

generally accepted in countries and jurisdictions other than the Republic of China. The

standards, procedures and practices in the Republic of China governing the audit of such

financial statements may differ from those generally accepted in countries and jurisdictions

other than the Republic of China. Accordingly, the accompanying consolidated financial

statements and report of the independent accountants are not intended for use by those who are

not informed about the accounting principles or auditing standards generally accepted in the

Republic of China, and their applications in practice.

Global Reports LLC

092

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS


(Continued)

2006 2005ASSETS Current Assets Cash (Note 4) 14,731,488$ 12,340,833$ Notes receivable, net 41,111 156,899 Accounts receivable, net (Notes 5 and 24) 9,182,701 9,516,426 Other financial assets, current (Note 25) 677,241 823,295 Inventories (Note 6) 2,838,810 2,805,287 Deferred tax assets, current (Note 21) 726,822 759,226 Other current assets-other 504,996 540,185

28,703,169 26,942,151 Long-term Investments Available for sale financial assets (Note 7) 7,883,601 2,379,209 Financial assets carried at cost (Note 8) 824,942 168,331 Long-term investments under the equity method (Note 9) 4,998,596 4,653,136

13,707,139 7,200,676 Property, Plant and Equipment (Note 10) Cost: Land 2,940,997 2,128,476 Buildings 7,922,133 7,158,668 Machinery and equipment 45,294,231 39,596,050 Utility equipment 845,050 785,110 Furniture and fixtures 663,820 638,432 Other equipment 1,876,598 1,562,453

59,542,829 51,869,189 Less:Accumulated depreciation 27,537,920)( 23,894,328)( Construction in progress and prepayments for equipment 1,844,789 2,277,389

33,849,698 30,252,250

Other Assets Refundable deposits 11,122 10,112 Deferred charges 690,805 804,700 Deferred income tax asset, noncurrent (Note 21) 1,644,254 1,709,675 Other assets - other (Note 11) 385,191 255,649

2,731,372 2,780,136

TOTAL ASSETS 78,991,378$ 67,175,213$

December 31,

Global Reports LLC

093

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (CONTINUED)


The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 21, 2007.

2006 2005LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term loans 427,206$ 93,768$ Notes payable - 5,493 Accounts payable (Note 24) 4,116,616 5,124,110 Income tax payable (Note 21) 947,382 153,016 Accrued expenses (Note 24) 2,223,225 1,657,575 Other payables (Notes 12 and 24) 1,829,129 2,532,728 Current portion of long-term loans (Notes 13 and 14) 18,687 1,790,895 Other current liabilities 400,285 109,860

9,962,530 11,467,445

Long-term Liabilities Bonds payable (Notes 13 and 29) 2,708,145 11,310,300 Long-term loans (Notes 14 and 29) 3,092,609 3,333,300

5,800,754 14,643,600

Other Liabilities (Note 15) 291,881 239,161

Total Liabilities 16,055,165 26,350,206

Stockholders' Equity (Notes 1 and 16) Capital stock 28,877,574 23,289,193 Capital reserve (Note 17) Additional paid-in capital 12,526,844 6,863,226 Premium arising from merger 1,951,563 1,951,563 Other 167,246 38,590 Retained earnings (Note 18) Legal reserve 2,003,494 1,179,104 Special reserve 50,029 141,053 Unappropriated earnings 13,413,928 8,241,034 Unrealized gain (loss) on available for sale financial assets 4,765,148 737)( Cumulative translation adjustments 22,276)( 47,463)( Net loss not recognized as pension cost 1,787)( 1,828)( Treasury stock (Note 19) 795,550)( 828,728)(

Total Stockholders' Equity 62,936,213 40,825,007

Commitments and Contingencies (Note 26)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 78,991,378$ 67,175,213$

December 31,

Global Reports LLC

094

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)


Operating Revenues Sales (Note 24) Sales allowances

Net operating revenuesCost of Goods Sold (Note 24)Gross Profit

Operating Expenses (Notes 23 and 24) Selling expenses General and administrative expenses Research and development expenses

Operating Income

Non-operating Income and Gain Interest income (Note 29) Investment income recognized under the equity method (Note 9) Others (Note 24)

Non-operating Expenses and Losses Interest expenses (Note 29) Impairment loss (Notes 3 and 20) Others (Note 24)

Income from Continuing Operations Before Income TaxIncome Tax Expense (Note 21)

Income from Continuing OperationsCumulative Effects of Changes in Accounting Principles (Note 3)Net Income

Before tax After tax Before tax After tax

Basic Earnings Per Share (in dollars) (Note 22) Income from continuing operations 5.26$ 4.91$ 3.02$ 3.02$ Cumulative effects of changes in accounting principles - - 0.26 0.26 Net income 5.26$ 4.91$ 3.28$ 3.28$

Diluted Earnings Per Share (in dollars) (Note 22) Income from continuing operations 4.93$ 4.61$ 2.86$ 2.85$ Cumulative effects of changes in accounting principles - - 0.22 0.22 Net income 4.93$ 4.61$ 3.08$ 3.07$

For the years ended December 31,2006 2005

57,404,035$278,115)(

57,125,92041,893,872)(15,232,048

717,065)( 1,078,217)( 1,194,178)(2,989,460)(

12,242,588

396,4611,153,630

703,4272,253,518

948,574)(

13,329,069-

130,443)( 27,013)( 61,007)(

218,463)(

13,329,069$

43,723,997$236,120)(

43,487,87733,959,940)(

9,527,937

565,765)( 855,917)(

14,277,643

857,730)(2,279,412)(7,248,525

304,237447,950548,813

1,301,000

241,578)( 202,650)( 496,386)(

650,5088,243,902$

940,614)(

7,608,91115,517)(

7,593,394

Global Reports LLC

095

SIL

ICO

NW

AR

E P

RE

CIS

ION

IN

DU

STR

IES

CO

., LT

D, A

ND

SU

BSI

DIA

RIE

S C

ON

SOL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S IN

ST

OC

KH

OL

DE

RS'

EQ

UIT

YFO

R T

HE

YE

AR

S E

ND

ED

DE

CE

MB

ER

31,

200

6 an

d 20

05(E

XPR

ESS

ED

IN

TH

OU

SAN

DS

OF

NE

W T

AIW

AN

DO

LL

AR

S)

(Con

tinue

d)

Cap

ital S

tock

Cap

ital

Res

erve

Lega

l

Res

erve

Spec

ial

Res

erve

Una

ppro

pria

ted

Earn

ings

Bal

ance

at J

anua

ry 1

, 200

5 $

2

1,05

0,73

1 $

8

,305

,832

$

7

50,8

86 $

-

$

4

,320

,831

$

-

($

1

41,0

53)

$

-

($

7

94,1

84)

$

33,

493,

043

App

ropr

iatio

n fo

r leg

al re

serv

e-

-

428,

218

-

42

8,21

8)(

-

--

--

App

ropr

iatio

n fo

r spe

cial

rese

rve

--

-

14

1,05

314

1,05

3)(

-

--

--

Rem

uner

atio

n to

dire

ctor

s an

d su

perv

isor

s-

-

-

-

74

,258

)(

-

--

-

74

,258

)(

Empl

oyee

s' ca

sh b

onus

--

-

-

175,

927)

(

--

--

175,

927)

(Em

ploy

ees'

stoc

k bo

nus

187,

655

-

-

-

18

7,65

5)(

-

--

--

Cas

h di

vide

nds

--

-

-

1,58

3,34

2)(

-

--

-

1,

583,

342)

(

St

ock

divi

dend

s1,

688,

898

--

-

1,68

8,89

8)(

-

--

--

Unr

ealiz

ed lo

ss o

n av

aila

ble

for s

ale

finan

cial

ass

ets

--

-

-

-73

7)(

-

--

737)

(C

onve

rsio

n of

Eur

o co

nver

tible

bon

ds26

9,34

249

4,71

9-

-

--

--

-

76

4,06

1Em

ploy

ee s

tock

opt

ion

exer

cise

d92

,567

28,8

90-

-

--

--

-

12

1,45

7Lo

ng-te

rm in

vest

men

t adj

ustm

ent f

or

inve

stee

com

pany

's ad

ditio

nal p

aid-

in c

apita

l-

1,69

6

-

-

41

,705

)(

-

--

-

40

,009

)(

Long

-term

inve

stm

ent a

djus

tmen

t for

inve

stee

c

ompa

ny's

cum

ulat

ive

trans

latio

n ad

just

men

t-

-

-

-

2,

643)

(

-

93,5

90-

-

90

,947

Long

-term

inve

stm

ent a

djus

tmen

t for

inve

stee

c

ompa

ny's

unre

cogn

ized

pen

sion

cos

t-

-

-

-

-

--

1,82

8)(

-

1,82

8)(

Long

-term

inve

stm

ent a

djus

tmen

t for

inve

stee

c

ompa

ny's

treas

ury

stoc

k va

rianc

es-

-

-

-

-

--

-

34

,544

)(

34

,544

)(

Cas

h di

vide

nds

from

trea

sury

sto

ck h

eld

b

y su

bsid

iarie

s-

22,2

42-

-

--

--

-

22

,242

Net

inco

me

- -

- -

8,24

3,90

2

- -

- -

8,24

3,90

2

Bal

ance

at D

ecem

ber 3

1, 2

005

$

23,

289,

193

$

8,8

53,3

79 $

1

,179

,104

$

141

,053

$

8

,241

,034

($

7

37)

($

47,4

63)

($

1,

828)

($

8

28,7

28)

$

40,

825,

007

Ret

aine

d E

arni

ngs

Tre

asur

y

Stoc

k T

otal

Unr

ealiz

ed L

oss

on A

vaila

ble

for

Sale

Fin

anci

al

Ass

ets

Cum

ulat

ive

Tran

slat

ion

Adj

ustm

ents

Net

Los

s N

ot

Rec

ogni

zed

As

Pens

ion

Cos

t

Global Reports LLC

096

SIL

ICO

NW

AR

E P

RE

CIS

ION

IN

DU

STR

IES

CO

., LT

D, A

ND

SU

BSI

DIA

RIE

S C

ON

SOL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S IN

ST

OC

KH

OL

DE

RS'

EQ

UIT

Y (

CO

NT

INU

ED

)FO

R T

HE

YE

AR

S E

ND

ED

DE

CE

MB

ER

31,

200

6 an

d 20

05(E

XPR

ESS

ED

IN

TH

OU

SAN

DS

OF

NE

W T

AIW

AN

DO

LL

AR

S)

The

acc

ompa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

ese

cons

olid

ated

fin

anci

al s

tate

men

ts

See

repo

rt o

f in

depe

nden

t acc

ount

ants

dat

ed M

arch

21,

200

7.

Cap

ital S

tock

Cap

ital

Res

erve

Lega

l

Res

erve

Spec

ial

Res

erve

Una

ppro

pria

ted

Earn

ings

Bal

ance

at J

anua

ry 1

, 200

6 $

2

3,28

9,19

3 $

8,85

3,37

9 $

1

,179

,104

$

141

,053

$

8

,241

,034

($

737

)($

47,4

63)

($

1,8

28)

($

82

8,72

8) $

4

0,82

5,00

7A

ppro

pria

tion

for l

egal

rese

rve

--

824,

390

-

82

4,39

0)(

-

-

--

-A

ppro

pria

tion

for s

peci

al re

serv

e-

--

91

,024

)(

91,0

24-

-

--

-R

emun

erat

ion

to d

irect

ors

and

supe

rvis

ors

--

-

-

14

9,32

4)(

-

-

--

14

9,32

4)(

Empl

oyee

s' ca

sh b

onus

--

-

-

46

3,28

4)(

-

-

--

46

3,28

4)(

Empl

oyee

s' st

ock

bonu

s26

7,79

4-

-

-

26

7,79

4)(

-

-

--

-C

ash

divi

dend

s-

--

-

4,16

9,55

8)(

-

-

--

4,

169,

558)

(

St

ock

divi

dend

s2,

410,

149

--

-

2,41

0,14

9)(

-

-

--

-U

nrea

lized

gai

n on

ava

ilabl

e fo

r sal

e fin

anci

al a

sset

s-

--

-

-

4,

765,

885

--

-

4,76

5,88

5C

onve

rsio

n of

Eur

o co

nver

tible

bon

ds2,

778,

697

5,69

2,50

9-

-

--

-

--

8,

471,

206

Empl

oyee

sto

ck o

ptio

n ex

erci

sed

131,

741

15,7

29-

-

--

-

--

14

7,47

0Lo

ng-te

rm in

vest

men

t adj

ustm

ent f

or in

vest

ee

com

pany

's ad

ditio

nal p

aid-

in c

apita

l-

30,6

45-

-

37,3

00-

-

--

67

,945

Long

-term

inve

stm

ent a

djus

tmen

t for

inve

stee

c

ompa

ny's

cum

ulat

ive

trans

latio

n ad

just

men

t-

--

-

--

25,1

87-

-

25,1

87Lo

ng-te

rm in

vest

men

t adj

ustm

ent f

or

inve

stee

com

pany

's un

reco

gniz

ed p

ensi

on c

ost

--

-

--

--

41

-41

Long

-term

inve

stm

ent a

djus

tmen

t for

in

vest

ee c

ompa

ny's

treas

ury

stoc

k va

rianc

es-

--

-

--

-

-

33,1

7833

,178

Cas

h di

vide

nds

from

trea

sury

sto

ck h

eld

b

y su

bsid

iarie

s-

53,3

91-

-

--

-

--

53

,391

Net

inco

me

- -

- -

13,3

29,0

69

- -

- -

13,3

29,0

69

Bal

ance

at D

ecem

ber 3

1, 2

006

$

28,

877,

574

$

14,

645,

653

$

2,0

03,4

94 $

50,0

29 $

13,4

13,9

28 $

4,7

65,1

48($

22,

276)

($

1,7

87)

($

79

5,55

0) $

6

2,93

6,21

3

Tre

asur

y

Stoc

k T

otal

Ret

aine

d E

arni

ngs

Unr

ealiz

ed G

ain

(Los

s)

on A

vaila

ble

for

Sale

Fin

anci

al

Ass

ets

Cum

ulat

ive

Tran

slat

ion

Adj

ustm

ents

Net

Los

s N

ot

Rec

ogni

zed

As

Pens

ion

Cos

t

Global Reports LLC

097

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS


(Continued)

2006 2005

Cash flows from operating activitiesNet income 13,329,069$ 8,243,902$ Adjustments to reconcile net income to net cash

provided by operating activities:Depreciation 6,752,711 6,053,840Amortization 541,718 518,024Bad debt expense 11,982 2,911Reversal of reserve for sales allowance 11,705)( 25,457)( Gain on disposal of investments 82,908)( 37,173)( Provision for ( recovery of ) loss on obsolescence and decline in

market value of inventory 2,329)( 5,603Long-term investment income under the equity method 1,153,630)( 1,098,458)( Cash dividends received from long-term investment

under the equity method 175,742 198,805 Impairment Loss 27,013 202,650

Gain on disposal of property, plant and equipment 45,268)( 26,792)( Provision for loss on idle assets 27,672 68,766Amortization of discount on long-term notes 6,537 1,712Compensation interest on bonds payable 30,810 137,367Foreign currency exchange (gain) loss on bonds payable 113,157)( 408,777(Increase) decrease in assets:

Notes receivable 115,788 84,816)( Accounts receivable 336,037 3,767,018)( Other financial assets, current 131,029 435,260)( Inventories 30,214)( 831,822)( Deferred income tax assets 97,824 159,586)( Other current assets 41,987 20,433)(

Increase (decrease) in liabilities:Notes payable 5,493)( 4,509Accounts payable 1,009,711)( 3,020,326Income tax payable 794,366 116,664Accrued expenses 561,278 593,046Other payables 368,631)( 61,747Other current liabilities 94,763 60,690Other liabilities - 193Accrued pension liabilities 3,268)( 1,900

Net cash provided by operating activities 20,250,012 13,214,617


Global Reports LLC

098

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)



2006 2005

Cash flows from investing activitiesPurchase of financial assets at fair value through profit or loss, current -$ 4,774,000)($Proceeds from disposal of financial assets at fair value through profit or loss, current - 6,730,250Refund of security deposits 9,200 34,295Purchase of financial assets carried at cost 695,523)( -Purchase of long-term investments under equity method - 6,334)(Proceeds from capital reduction of equity investee 7,683 -Proceeds from disposal of long-term investments 91,386 303,477Acquisition of property, plant and equipment 11,038,964)( 8,244,928)(Proceeds from disposal of property, plant and equipment 268,735 58,090Payment for deferred charges 468,465)( 502,050)(Payment for refundable deposits 1,191)( 1,151)(Refund of refundable deposits - 5,394

Net cash used in investing activities 11,827,139)( 6,396,957)(

Cash flows from financing activitiesProceeds from short-term loans 331,107 93,768Proceeds from long-term loans 3,086,072 -Repayment of long-term loans 5,132,256)( 3,216,965)(Redemption of bonds payable - 800,000)(Proceeds from deposit-in 256,495 200,990Repayment of deposit-in 42)( 1,045)(Proceeds from the exercise of employee stock option 147,470 121,457Remuneration to directors and supervisors 149,324)( 74,258)(Payment for stockholders' dividends and employees' bonuses 4,579,452)( 1,759,232)(

Net cash used in financing activities 6,039,930)( 5,435,285)(

Effect on foreign currency exchange 7,712 36,065

Net increase in cash 2,390,655 1,418,440Cash at the beginning of the year 12,340,833 10,922,393

Cash at the end of the year 14,731,488$ 12,340,833$

Supplemental disclosures of cash flow information:Cash paid for interest (excluding capitalized interest) 134,525$ 162,849$

Cash paid for income tax 51,222$ 14,978$

Supplemental disclosures of partial cash paid for investing activities:Acquisition of property, plant and equipment 10,703,697$ 9,200,968$ Add : Payable at the beginning of the year 1,662,379 706,339Less : Payable at the end of the year 1,327,112)( 1,662,379)(

Cash paid 11,038,964$ 8,244,928$


Global Reports LLC

099

SILICONWARE PRECISION INDUSTRIES CO., LTD, AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT EARNINGS AND PAR VALUE PER SHARE)

1. HISTORY AND ORGANIZATION

(1) Siliconware Precision Industries Co., Ltd. (the “Company”) was incorporated as a company

limited by shares under the Company Law of the Republic of China (ROC) in May 1984 and

was listed on the Taiwan Stock Exchange in April 1993. As of December 31, 2006, issued

common stock was $28,877,574. The Company is mainly engaged in the assembly,

testing and turnkey services of integrated circuits. As of December 31, 2006, the Company

and its subsidiaries have 14,300 employees.

(2) Consolidated subsidiaries

(3) Non-consolidated subsidiaries

None.

(4) Adjustments for subsidiaries with different accounting periods

Not applicable

(5) Extraordinary risks from foreign subsidiaries

Not applicable

(6) Material limitations for capital transfer from the subsidiaries to the parent company

Not applicable

2006 2005

The Company Siliconware InvestmentCompany Ltd.

Investment activities 100% 100%

The Company SPIL (B.V.I.)Holding Limited


SPIL (B.V.I.)Holding Limited

Siliconware USA, Inc. Unsolicitedcommunication withcustomers in the NorthAmerica

100% 100%

SPIL (B.V.I.)Holding Limited

SPIL (Cayman)Holding Limited


SPIL (Cayman)Holding Limited

Siliconware Technology(Suzhou) Limited

Manufacturing ofmemory stick, DRAMmodule, transistor andelectronic component

100% 100%

Name of investor Name of subsidiaries Main operating activities

% of ownership held by theCompany as of December 31,

Global Reports LLC

100

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial Statements are prepared in conformity with the “Rules

Governing the Preparation of Financial Reports by Securities Issuers”, “Business Entity

Accounting Law”, “Regulation on Business Entity Accounting Handling” and generally accepted

accounting principles in the Republic of China. Significant accounting policies are summarized as

follows:

Consolidation

Effective January 1, 2005, the Company adopted the amended Statement of Accounting Standards

No. 7, “Consolidated Financial Statements”, which requires an entity to consolidate all of the

subsidiaries which it owns, directly or indirectly, more than 50% of the voting rights and which it

owns, directly or indirectly, less than 50% of the voting rights but has effective control.

Retrospective adoption is not required. Significant inter-company transactions and balances

between the Company and its subsidiaries are eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and the disclosures of contingencies at the date of the financial

statements and the reported amounts of revenues, costs of revenue and expenses during the

reporting period. Actual results may differ from those estimates.

Translation of Foreign Currency Transactions on Subsidiaries’ Financial Statements

The financial statements of foreign subsidiaries are translated into New Taiwan dollars using the

spot rate as of each financial statement date for asset and liability accounts, average exchange rate

for profit and loss accounts, spot rate for dividend and historical exchange rates for equity

accounts. The cumulative translation effects for subsidiaries using functional currencies other

than the New Taiwan dollar are included in the cumulative translation adjustment in stockholders’

equity.

Foreign Currency TransactionsThe Company maintains its accounts in New Taiwan dollars. Transactions denominated in

foreign currencies are translated into New Taiwan dollars at the exchange rates prevailing on the

transaction dates. Receivables, other monetary assets and liabilities denominated in foreign

currencies are translated into New Taiwan dollars at the exchange rates prevailing at the balance

sheet date. Exchange gains or losses arising from the aforementioned translations are

recognized in the current year's results.

Classification of Current and Non-current Assets/liabilities

A. Assets that meet one of the following criteria are classified as current assets; otherwise they

are classified as non-current assets:

Global Reports LLC

101

(1) Assets arising from operating activities that are expected to be realized or consumed, or

are intended to be sold within the normal operation cycle;

(2) Assets held mainly for trading purposes;

(3) Assets that are expected to be realized within twelve months from the balance sheet

date;

(4) Cash or cash equivalents, excluding restricted cash and cash equivalents and those that

are to be exchanged or used to pay off liabilities more than twelve months after the

balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise

they are classified as non-current liabilities.

(1) Liabilities arising from operating activities that are expected to be paid off within the

normal operating cycle;

(2) Liabilities arising mainly from trading activities;

(3) Liabilities that are to be paid off within twelve months from the balance sheet date;

(4) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date.

Financial Assets at Fair Value through Profit or LossInvestments in equity securities are recorded at the transaction date, rather than settlement date.

Financial assets at fair value through profit or loss are measured at their market values at balance

sheet date with gain or loss recognized in the current year’s results. The market value of open-end

funds is determined by the net asset value at the balance sheet date. (Accounting treatment before

December 31, 2005 is discussed in Note 3)

Accounts Receivable

Accounts receivable expected to be collected over one year are recorded at present value by using

predetermined interest rate whereas those expected to be collected within one year are not

reported at present value due to the fact that the difference between the maturity value and the fair

value discounted by implicit interest rate is immaterial and the frequency of transactions is high.

Allowance for Doubtful AccountsThe allowance for doubtful accounts is estimated based on the evaluation of collectability and

aging analysis of notes receivables, accounts receivable and other receivables.

Allowance for Sales DiscountsThe allowance for sales discounts is provided based on the estimated allowance to be incurred

and is recorded as deduction of accounts receivable.

Global Reports LLC

102

InventoriesInventories are recorded at cost when acquired under a perpetual inventory system and are stated

at the lower of aggregate cost, determined by the weighted-average method, or market value at

the balance sheet date. The market values of raw materials and supplies are determined on the

basis of replacement cost, while market values of finished goods and work in process are

determined on the basis of net realizable value. The allowance for loss on obsolescence and

decline in market value is provided based on management’s analysis on inventory aging and

obsolescence, when necessary.

Available-for-sale Securities


Available-for-sale securities are measured at fair value at balance sheet date with changes in fair

value recorded as adjustments to the shareholders’ equity. The accumulated adjustments of

unrealized gain or loss are realized in earnings in the period when the financial assets are

disposed. Fair values of listed securities are measured at their closing price at balance sheet date.

The Company recognizes impairment loss whenever there is evidence of impairment. Impairment

loss recognized previously for equity securities is not restored. Accounting treatment before

December 31, 2005 is discussed in Note 3.

Financial Assets Carried at Cost

Equity securities measured at fair value along with transaction costs are recorded at the

transaction date. Equity securities without quoted market values are recorded at cost. The

Company recognizes impairment loss whenever there is evidence of impairment. Such

impairment loss shall not be reversed when the fair value of the asset subsequently increases.

Accounting treatment before December 31, 2005 is discussed in Note 3.

Long-term Investments Accounted for under Equity Method

A. Long-term equity investments in which the Company owns at least 20% of the voting rights

of the investee companies are accounted for under the equity method, unless the Company

cannot exercise significant influence over the investee company. The excess of the

acquisition cost over the investee’s fair value of the identifiable net assets acquired is

capitalized as goodwill and tested for impairment annually. No prior period adjustment is

required for the amortization in previous years. Long-term equity investments in which the

Company has controlling interests over the investee companies are included in the annual

and semi-annual consolidated financial statements.

B. Unrealized gains and losses from transactions between the Company and investee companies

accounted for under the equity method are deferred. Profit (loss) from sales of depreciable

assets between the investee and the Company is amortized to income over the assets’

economic service lives. Unrealized gain from other types of intercompany transactions is

reported as deferred credits classified as current or non-current liabilities.

Global Reports LLC

103

C. When the Company’s proportional interest in an equity investee changes after the equity

investee issues new shares, the effect of change in the Company’s holding ratio on long-term

investment is adjusted to capital reserve. If capital reserve account is insufficient, the effect

is then charged to retained earnings.

D. The Company’s proportionate share of the foreign investee’s cumulative translation

adjustments related to the translation of the foreign investee’s financial statements into New

Taiwan dollars is recognized as “Cumulative Translation Adjustments” in the stockholders’

equity.

Property, Plant and Equipment

A. Property, plant and equipment are stated at historical cost. Interest incurred relating to the

construction of property, plant and equipment is capitalized and depreciated accordingly.

B. Depreciation is provided on the straight-line method over the assets' estimated economic

service lives, plus an additional year as the salvage value. Salvage values of fixed assets

which are still in use after reaching their estimated economic service lives are depreciated

over their new estimated remaining service lives. The service lives of fixed assets are 3 to 15

years, except for buildings, which are 20 to 55 years.

C. Maintenance and repairs are expensed as incurred. Significant renewals and improvements

are capitalized and depreciated accordingly. When fixed assets are disposed, their original

cost and accumulated depreciation are removed from the corresponding accounts, with gain or

loss recorded as non-operating income or loss.

D. Idled assets are stated at the lower of book value or net realizable value and are reclassified to

other assets. Differences between book value and net realizable value are reported as losses in

current earnings.

Deferred ChargesThe costs of computer software system purchased externally and tooling costs are recognized as

deferred charges and amortized on the straight-line basis over the useful lives of 2 to 10 years.

Convertible bond issuance costs are amortized over the period of the bonds.

Land Use Right

The rental cost for Siliconware Technology Suzhou Limited to lease the land from the local

government is recognized as land use right and amortized on the straight-line method over the

contract period of 50 to 70 years.

Bonds Payable

According to Interpretation letter ref. (95) 078, "Compound financial Instrument with Multiple

Embedded Derivatives Issue", issued by R.O.C. Accounting Research and Development

Foundation (ARDF), the Company’s accounting policies of its convertible bonds issued on or

Global Reports LLC

104

prior to December 31, 2005 are as follows:

A. The excess of the stated redemption price over the par value is recognized as interest expense

and compensation interest payable using the effective interest method during the period from

the issuance date to the last day of the redemption period.

B. When a bondholder exercises his/her conversion rights, the book value of bonds is credited to

common stock at an amount equal to the par value of the stock and the excess to capital

reserve; no gain or loss is recognized on bond conversion.

C. The related issuance costs of convertible bonds are recorded as deferred charges and

amortized over the lives of the bonds.

D. For convertible bonds with redemption options, the right of redemption becomes invalid if

the bondholder fails to exercise his/her redemption right upon expiration. The balance of

the compensation interest payable is amortized over the period from the date following the

expiration date to the maturity date using the effective interest method.

E. The convertible bonds with redemption options are classified as current or non-current

liabilities based on the date of redemption.

Pension CostFrom July 1, 2005, the employees of the Company can make mutually exclusive choices of either

a defined benefit plan funded in conformity with the Labor Standards Act or a defined

contribution plan funded in conformity with the Labor Pension Act. Under defined benefit plan,

the net pension cost is computed based on an actuarial valuation. The unrecognized net asset or

net obligation at transition is amortized over 15 years on a straight-line basis. Under defined

contribution plan, the Company shall make monthly contribution to employees’ individual

pension accounts. These contributions are recorded as pension costs in the current period.

Income Tax

A. In accordance with ROC SFAS No. 22, “Accounting for Income Taxes”, the income tax

effect resulting from temporary differences and investment tax credits is recorded as income

tax assets or liabilities using the asset and liability method. Deferred tax assets or liabilities

are further classified into current or noncurrent and carried at net balance. Valuation

allowance on deferred tax assets is provided to the extent that it is more likely than not that

the tax benefit will not be realized.

B. The Company adopted ROC SFAS No. 12, “Accounting for Investment Tax Credits” in

determining the investment tax credits. The investment tax credits relating to the acquisition

cost of qualifying machinery and technology, qualifying research and development

expenditure, qualifying personnel training expenditure and qualifying investments in

significant technology companies are recognized as income tax adjustments in the period the

tax credits arise.

C. Over or under provisions of prior years’ income tax liabilities are included in the current

period’s income tax expense.

Global Reports LLC

105

D. The Taiwan imputation tax system requires that any undistributed earnings be subject to an

additional 10% corporate income tax, which is recognized as expense at the time the

stockholders resolve to retain the earnings.

Revenue Recognition

Revenues are recognized when services are provided based on transaction terms and when

collectibility is reasonably assured.

Research and Development

Research and development costs are expensed as incurred.

Employee Stock Option Plan

According to Interpretation letter ref. (92) 072, "Accounting for Employee Stock Option Plans",

issued by ARDF, the Company adopts intrinsic value method for the recording of compensation

expenses.

Treasury StockA. The Company records treasury stock purchases under the cost method whereby the entire

cost of the acquired stock is recorded as treasury stock and as a reduction of shareholders’

equity.

B. Upon subsequent disposal of the treasury stock, the excess of the proceeds from disposal

over the book value, determined by the weighted-average method, is credited to capital

reserve. However, if the book value of the treasury stock exceeds the proceeds from disposal,

the excess is first charged against capital reserve arising from treasury stock and the

remainder, if any, is charged against retained earnings.

C. Stocks of the Company held by the subsidiaries are treated as treasury stock. Subsidiaries’

gain on disposal of the Company’s stocks and the cash dividend income received from the

Company are recorded as additional paid-in capital – treasury stock.

Earnings Per ShareA. Basic earnings per share is calculated by dividing net income by the weighted average

number of shares outstanding during the period. Diluted earnings per share is calculated by

taking into consideration additional common shares that would have been outstanding if the

equivalent diluted shares had been issued.

B. The Company’s dilutive potential common shares are employee stock options and

convertible bonds. In computing the dilutive effects of the employee stock options and

convertible bonds, the Company applies the treasury stock method and if-converted method,

respectively.

Impairment loss

A. The Company recognizes impairment loss whenever event occurs or evidence indicates the

carrying amount of an asset exceeds its recoverable amount. Recoverable amount is

Global Reports LLC

106

measured as the higher of net selling price or value in use. Net selling price is the amount

obtainable from the sale of an asset in an arm's-length transaction between knowledgeable,

willing parties, after deducting any direct incremental disposal costs. The value in use is

the present value of estimated future cash flows expected to arise from continuing use of an

asset and from its disposal at the end of its useful life.

B. An impairment loss recognized in prior years is reversed if the impairment loss caused by a

specific external event of an exceptional nature that is not expected to recur. However, the

restored amount is limited to the amount of impairment loss previously recognized.

Impairment loss for goodwill cannot be reversed.

3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES

A. Effective January 1, 2005, the Company adopted Statement of Financial Accounting

Standards No. 35, “Accounting for Assets Impairment” in the Republic of China. As a

result of the adoption of SFAS No. 35, total assets and shareholders’ equity decreased by

$163,650 as of December 31, 2005 and net income decreased by$163,650 for the year

ended December 31, 2005. As a result of recognition of impairment loss, basic earnings

per share decreased by $0.07 for the year ended December 31, 2005.

B. Effective January 1, 2005, the Company ceased to delay in recognizing investment income

(loss) from certain equity-method investees in accordance with the amended Statement of

Financial Accounting Standards No. 5, “Accounting for Long-term Equity Investment” in

the Republic of China. The cumulative effect attributable to this change in accounting

principle for the year ended December 31, 2005 was $650,508, which was based on the

investees’ financial statements for the year ended December 31, 2004.

C. Effective January 1, 2006, the Company adopted the amended SFAS No. 1 “Conceptual

Framework for Financial Accounting and Preparation of Financial Statements”, SFAS No. 5

“Accounting for Long-term Equity Investment”, SFAS No. 7, “ Consolidated Financial

Statements”, SFAS No. 25, “Business Combinations - Accounting Treatment under Purchase

Method”, and SFAS No. 35, “Accounting for Assets Impairment”, which discontinued

amortization of goodwill. This change of accounting principle had no effect on the financial

statements as of and for the year ended December 31, 2006.

D. Effective January 1, 2006, the Company adopted the newly released SFAS No. 34,

“Accounting for Financial Instruments” and No. 36, “Disclosure and Presentation of

Financial Instruments”. The Company has properly reclassified certain accounts on

December 31, 2005 based on its holding purpose and abilities in accordance with such

standard and the “Rules Governing the Preparation of Financial Reports by Securities

Issuers”. Accounting policies through December 31, 2005 are summarized as follows:

Global Reports LLC

107

(1) Short-term investments

Short-term investments are recorded at cost when acquired and are stated at the lower of

aggregate cost or market value at the balance sheet date. The market values of listed

stocks and close-end mutual funds are determined by the average closing price of the last

month of the accounting period. The market value of open-end funds is determined by

the net asset value at the balance sheet date. The excess of aggregate cost over market

value is recorded as a loss in the current year.

(2) Long-term investments in equity securities – under the cost method

Long-term equity investments in which the Company owns less than 20% of the voting

rights and has no significant influence over the investee companies are accounted for (a)

at cost, if the investee company is not listed or (b) at the lower of cost or market value, if

the investee company is listed. Valuation allowance for the unrealized loss under this

method is shown in the stockholders’ equity. When it becomes evident that there has been

a permanent impairment in value and the chance of recovery is minimal, loss is

recognized in the current year. However, if there is evidence that the Company has

significant influence over the investee company, the investment is accounted for under

the equity method.

(3) As a result of the adoption of SFAS No. 34 and No. 36, total assets and total

shareholders’ equity increased by $9,277,206 as of December 31, 2006 with no material

impact on net income and earnings per share for the year ended December 31, 2006.

4. CASH

As of December 31, 2006 and 2005, the interest rates for time deposits ranged from 1.16% to 5.34% and from 0.85% to 4.36%, respectively.

5. ACCOUNTS RECEIVABLE, NET

2006 2005

Accounts receivable 9,262,446$ 9,595,886$Less :

Allowance for sales discounts 55,475)( 67,180)( Allowance for doubtful accounts 24,270)( 12,280)(

9,182,701$ 9,516,426$

December 31,

2006 2005

Cash on hand 1,967$ 1,809$ Savings accounts and checking accounts 900,744 3,074,661Time deposits 13,828,777 9,264,363

14,731,488$ 12,340,833$

December 31,

Global Reports LLC

108

6. INVENTORIES

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS – NON-CURRENT

8. FINANCIAL ASSETS CARRIED AT COST - NON-CURRENT

There are no reliable quoted prices for unlisted securities, and therefore these investments are carried at cost.

9. LONG-TERM INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

A. Details of long-term investments in stocks are summarized as follows:

2006 2005Cost of listed securities 3,118,283$ 2,379,209$Valuation adjustment 4,765,318 -

7,883,601$ 2,379,209$

December 31,

2006 2005

Unlisted securities 824,942$ 168,331$

December 31,

2006 2005

Raw materials and supplies 2,495,977$ 2,418,288$Work in process 305,710 336,923Finished goods 84,910 100,769

2,886,597 2,855,980Less : Allowance for loss on obsolescence

and decline in market value of inventory 47,787)( 50,693)(2,838,810$ 2,805,287$

December 31,

Percentage PercentageInvestee company Amount of ownership Amount of ownershipEquity method :

ChipMOS Technologies Inc. 4,998,596$ 28.76% 3,924,937$ 28.75%Sigurd Microelectronics Corp. - - 728,199 24.03%Double Win Enterprise Co., Ltd. 84,450 24.14% 84,450 24.14%

5,083,046 4,737,586Less : Accumulated impairment loss 84,450)( 84,450)(

4,998,596$ 4,653,136$

December 31, 2006 2005

Global Reports LLC

109

B. The recognition of investment income (loss) for ChipMOS Technologies Inc. (“ChipMOS”)

and Double Win Enterprise Co., Ltd. (“Double Win”), investees accounted for under the

equity method, were delayed until the subsequent year before 2005. Therefore, the Company

recognized investment income of $650,508 for the year ended December 31, 2005, based on

ChipMOS’s and Double Win’s audited financial statements for the year ended December 31,

2004.

C. At March 1, 2005, Universal Communication Technology Inc. (“Universal”) merged with

Sigurd Microelectronics Corp. (“Sigurd”). Universal was dissolved as a result of this

transaction and the Company obtained 6,595 thousand shares of Sigurd’s common shares.

For the year ended December 31, 2005, the investment loss of $9,775 was recognized based

on Universal’s unaudited financial statements for two months ended February 28, 2005.

D. For the years ended December 31, 2006 and 2005, the Company recognized investment

income of $1,153,630 and $485,503, respectively, for all investees accounted for under the

equity method based on investees’ audited financial statements for the years ended

December 31, 2006 and 2005, by weighted-average percentage of stock ownership.

E. Due to the merger of Sigurd, one of the Company’s investees originally accounted for under

the equity method, with the other company on June 12, 2006, the Company is not able to

exercise significant influence on Sigurd and its percentage of ownership has been reduced to

below 20%. The Company reclassified the investment in Sigurd as available-for-sale

financial asset – non-current and recorded unrealized gain on available-for-sale financial

asset of $123,950.

Global Reports LLC

110

10. PROPERTY, PLANT AND EQUIPMENT

For the years ended December 31, 2006 and 2005, total interest expenses amounted to $131,404

and $261,252, respectively, of which $961 and $19,674 was capitalized as property, plant and

equipment. The interest rates used to calculate the capitalized interest were 6.156% and 1.22 %,

respectively.

11. OTHER ASSETS OTHER

The Company designated one of its officers to purchase the parcel of land, Da-Pu-Chu No. 123-2,

and registered the title of the land under the officer’s personal name. As of December 31, 2006,

AccumulatedCost depreciation Book value

Land 2,940,997$ -$ $2,940,997Buildings 7,922,133 2,139,091)( 5,783,042Machinery and equipment 45,294,231 23,649,108)( 21,645,123Utility equipment 845,050 413,059)( 431,991Furniture and fixtures 663,820 363,940)( 299,880Other equipment 1,876,598 972,722)( 903,876Construction in progress

and prepayments for equipment 1,844,789 - 1,844,789########## 27,537,920)($ 33,849,698$

AccumulatedCost depreciation Book value

Land 2,128,476$ -$ $2,128,476Buildings 7,158,668 1,735,422)( 5,423,246Machinery and equipment 39,596,050 20,639,321)( 18,956,729Utility equipment 785,110 362,988)( 422,122Furniture and fixtures 638,432 338,418)( 300,014Other equipment 1,562,453 818,179)( 744,274Construction in progress

and prepayments for equipment 2,277,389 - 2,277,389########## 23,894,328)($ 30,252,250$

December 31, 2006

December 31, 2005

2006 2005

Land 108,087$ 108,087$ Others 277,104 147,562

385,191$ 255,649$

December 31,

Global Reports LLC

111

the land purchase has been completed and payments been made in full. The Company has

entered into a trust contract with the designated officer, which provides the Company with land

use right for nil consideration. The trust contract prohibits the title owner from transferring the

land and/or land use right under any circumstances.

12. OTHER PAYABLES

The accrued value-added tax payable due to certain revenues previously applied zero percent of

value-added tax was deemed taxable by the Tax Authority. The case has been closed, and the full

amount has been paid.

13. BONDS PAYABLE

A. On January 28, 2002, the Company issued five-year (from January 28, 2002 to January 28,



(1) The Company may redeem the bonds at any time on or after July 29, 2004 and prior to

December 29, 2006 at their principal amount together with accrued interest, if (i) the

market price of the shares of the Company for 20 out of 30 consecutive trading days is at

least 130% of the conversion price, or (ii) at least 90% in principal amount of the bonds

has already been redeemed, repurchased and cancelled or converted.


The Company will, at the option of the bondholders, redeem such bonds on July 28, 2004

at 105.9185% of its principal amount, or on January 28, 2007 at 111.837% of its principal

amount.

2006 2005

Euro convertible bonds payable 2,724,455$ 10,819,494$Add : Compensation interest payable 2,377 490,806

2,726,832 11,310,300Less : Current portion of long-term bonds payable 18,687)( -

2,708,145$ 11,310,300$

December 31,

2006 2005

Payables for equipment 1,326,811$ 1,662,380$Accrued value-added tax payable - 232,307Other payables 502,318 638,041

1,829,129$ 2,532,728$

December 31,

Global Reports LLC

112


At any time between April 16, 2002 and December 29, 2006.



share. The conversion price is subject to adjustment for bonus issues, right issues,



(5) As of December 31, 2006, the convertible bonds with the principal amount of US$158,515

(in thousands) has been converted into 202,691 thousand shares, which resulted in an

increase of capital reserve of $3,707,790. Also, as of December 31, 2006, the Company

repurchased and cancelled the bonds with the principal amount of US$40,985 (in

thousands) from the open market.

(6) The principal amount of the unconverted bonds aforementioned of US$500 (in thousands)

was redeemed on January 28, 2007.

B. On February 5, 2004, the Company issued five-year (from February 5, 2004 to February 5,



(1) The Company may redeem the bonds at any time on or after February 5, 2006 and prior to

January 29, 2009 at their principal amount, if (i) the market price of the shares of the

Company for 20 out of 30 consecutive trading days is at least 120% of the conversion

price or (ii) at least 90% in principal amount of the bonds has already been redeemed,

repurchased and cancelled or converted.


The Company will, at the option of the bondholders, redeem such bonds on February 5,

2008 at the principal amount.


At any time between March 17, 2004 and January 29, 2009.



share. The conversion price will be subject to adjustment for bonus issues, right issues,



(5) As of December 31, 2006, the convertible bonds with the principal amount of US$116,979

(in thousands) have been converted into 111,515 thousand shares of the Company’s

common stock, which resulted in an increase of capital reserve of $2,692,576. Also, as

Global Reports LLC

113

of December 31, 2006, the Company did not repurchase any of the bonds from the open

market.

C. According to Interpretation letter ref. (95) 078, "Compound Financial Instrument with

Multiple Embedded Derivatives Issue", issued by ARDF, the Company decides not to

bifurcate the embedded derivatives from their host contacts issued on or prior to December

31, 2005.

14. LONG-TERM LOANS

The loan agreements require, among other things, the maintenance of certain specific financial

ratios and consent obtained from the majority banks on certain covenants.

15. PENSION PLAN AND NET PENSION COST

A. In accordance with the Labor Standards Act, the Company has a funded defined benefit

pension plan covering all eligible employees prior to the enforcement of the Labor Pension

Act (“the Act”), effective on July 1, 2005 and employees choosing to continue to be subject

to the pension mechanism under the Labor Standards Law after the enforcement of the Act.

Under the funding policy of the plan, the Company contributes monthly an amount equal to

2% (5% before July 2005) of the employees' monthly salaries and wages to the pension fund

deposited with the Central Trust of China, the custodian. Pension benefits are generally

based on service years (two units earned per year for the first 15 years of service and one unit

earned for each additional year of service with a maximum of 45 units). One unit represents

six-month average wages and salaries before retirement of the employees.

B. In accordance with the Labor Pension Act, effective July 1, 2005, the Company has a defined

contribution pension plan covering employees (excluding foreign employees) who chose to

be subject to the pension mechanism under this Act. The Company makes monthly

Nature of loans Repayment period 2006 2005

Credit loans Repayable in 3 semi-annual installments -$ 4,800,000$from July 2006

Credit loans Repayable in July 2006 - 324,195Commerical paper Repayable in 4 semi-annual installments 3,000,000 -

from November 2009Secured loans Repayable in August 2011 104,135 -

3,104,135 5,124,195Less : Current portion of long-term loans - 1,790,895)( Discount on commercial paper 11,526)( -

3,092,609$ 3,333,300$

Interest rates 2.093%~6.156% 2.06%~5.18%

December 31,

Global Reports LLC

114

contributions to the employees’ individual pension accounts on a basis no less than 6% of

each employee’s monthly salary or wage. The principal and accrued dividends from an

employee’s personal pension account are claimed monthly or in full at one time. Under this

pension plan, net pension costs amounting to $245,742 and $101,629 was recognized for the

years ended December 31, 2006 and 2005, respectively.

C. SUI has established a defined contribution pension plan covering substantially all employees.

The plan provides for up to 15% of voluntary salary reduction contributions by eligible

participants as well as discretionary matching contributions from SUI to its employees’

individual pension accounts. The contribution from SUI is recorded as pension costs in the

current period.

D. Siliconware Technology Suzhou Limited has a funded defined contribution plan covering

certain employees who are qualified as permanent residents of Suzhou. According to the

retirement plan, Siliconware Technology Suzhou Limited contributes monthly an amount

equal to certain percentage of employees’ monthly salaries and wages to the Bureau of Social

Insurance and recognizes as pension expense.

E. The following tables set forth the actuarial assumptions, funded status and amounts

recognized for the Company’s defined benefit pension plan:

(1) Assumptions used in actuarial calculations as of December 31, 2006 and 2005:

2006 2005

Discount rate 3.25% 3.00%

Long-term rate of compensation increase 2.00% 2.00%

Expected rate of return on plan assets 3.25% 3.00%

Vested benefit 40,207)($ 19,968)($

Vested benefit obligation 39,145)($ 19,444)($

Accumulated benefit obligation 974,226)($ 903,265)($

Global Reports LLC

115

(2) Changes in benefit obligation during the years ended December 31, 2006 and 2005:

(3) Changes in plan assets during the years ended December 31, 2006 and 2005:

(4) Funded status at December 31, 2006 and 2005:

(5) Components of net periodic pension cost for the years ended December 31, 2006

and 2005:

2006 2005

Projected benefit obligation at the beginning of the year 1,193,899)($ 1,041,495)($ Service cost 37,095)( 85,852)( Interest cost 38,802)( 32,987)( Loss on projected benefit obligation 80,790)( 46,193)( Benefit paid 3,677 12,628 Projected benefit obligation at the end of the year 1,346,909)($ 1,193,899)($

2006 2005

Fair value of plan assets at the beginning of the year 905,531$ 808,825$ Actual return on plan assets 23,270 12,298 Employer contributions 56,125 97,036 Benefits paid 3,677)( 12,628)( Fair value of plan assets at the end of the year 981,249$ 905,531$

2006 2005

Fair value of plan assets 981,249$ 905,531$

Projected benefit obligation 1,346,909)( 1,193,899)(

Funded status 365,660)( 288,368)(

Unrecognized transition assets 3,651)( 4,564)(

Unrecognized net actuarial loss 339,675 260,133Accured pension liabilities 29,636)($ 32,799)($

2006 2005

Service cost 37,095$ 85,852$

Interest cost 38,802 32,987

Expected return on plan assets 29,430)( 25,150)(

Amortization of unrecognized net transition assets 913)( 913)(

Amortization of unrecognized loss 7,408 6,160Net periodic pension cost 52,962$ 98,936$

Global Reports LLC

116

16. CAPITAL STOCK

A. As of December 31, 2006, the authorized capital of the Company was $31,500,000,

represented by 3,150,000,000 common shares with par value of NT$10 (in dollars) per share.

As of December 31, 2006, issued common stock was $28,877,574, represented by

2,887,757,400 shares.

B. On June 12, 2006, the stockholders of the Company resolved to capitalize the unappropriated

earnings of $2,410,149 and the employee bonus of $267,794 by issuing 267,794 thousand

new shares. Registration for the capitalization has been completed.

C. The Company issued $1,500,000 thousand American Depositary Shares (“ADSs”),

represented by 30,000,000 units of ADSs, in June 2000. Each ADS represents five shares of

common stock of the Company with an offering price of US$8.49 per ADS. As of

December 31, 2006, the outstanding ADSs amounted to 102,369,388 units. Major terms and

conditions of the ADSs are summarized as follows:

(1) Voting Rights:

ADS holders will have no rights to vote directly in shareholders’ meetings with respect to

the Deposited Shares. The Depositary shall provide voting instruction to the Chairman of

the Company and vote on behalf of the Deposited shares evidenced by ADSs. If the

Depositary receives voting instructions from holders of at least 51% of the outstanding

ADSs to vote in the same direction on a resolution, the Depositary will vote in the manner

as instructed.

(2) Distribution of Dividends:

ADS holders are deemed to have the same rights as holders of common shares with

respect to the distribution of dividends.

D. In July 2002, the Board of directors of the Company resolved to issue employee stock option.

The exercise price of the employee stock option is subject to adjustment for distribution of

cash dividend or changes in capital stock in accordance with certain formula. The granted

employee stock options will expire in five years and will be graded vested after two years of

service in accordance with the employee stock option plan.

Global Reports LLC

117

(1) For the years ended December 31, 2006 and 2005, details of the employee stock option

granted, exercised and canceled and exercise price of the employee stock option are as

follows:

(2) As of December 31, 2006, the details of the outstanding employee stock option are as

follows:

17. CAPITAL RESERVE

A. According to the Company Law of the ROC, the capital reserve arising from paid-in capital

in excess of par on the issuance of stocks, from merger, from the conversion of convertible

bonds and from donation shall be exclusively used to cover accumulated deficits or

transferred to capital. Other capital reserve shall be exclusively used to cover accumulated

deficits. The amount of capital reserve used to increase capital is limited to 10% of the

common stock each year when the Company has no accumulated deficits. The capital

reserve can only be used to cover accumulated deficits when the legal reserve is insufficient

to cover the deficits.

Weighted Weighted Number average Number average

of options exercise price of options exercise price (in dollars) (in dollars)

Outstanding option 26,348 $11.95 35,828 $13.76at the beginning of the year

Number of option exercised 13,174)( 11.23 9,257)( 13.12Number of option forfeited 543)( 11.07 223)( 15.10

Outstanding option at the end of the year 12,631 9.25 26,348 11.95

Vested option at the end of the year 2,113 9.27 1,425 11.97

Authorized option available for future grant at the end of the year - -

2006 2005For the years ended December 31,

Weighted average Weighted Weighted Units remaining average Unit average

Exercise price of option contractual life exercise price of option exercise price(in dollars) (in dollars) (in dollars)$9.2~$9.7 12,631 1.14 Years 9.25$ 2,113 9.27$

Options Vested Outstanding employee stock option

Global Reports LLC

118

B. According to the Company Law of the ROC, the capital reserve is allowed to be transferred

to capital one year after the registration of capitalization is approved.

18. RETAINED EARNINGS

A. According to the Company's Articles of Incorporation, current year’s earnings before tax, if any, shall be distributed in the following order:

(1) Pay all taxes and duties;

(2) Offset prior years' operating losses, if any;

(3) Set aside 10% of the remaining amount after deducting (1) and (2) as legal reserve;

(4) Set aside no more than 1% of the remaining amount after deducting items (1), (2), and (3) as directors’ and supervisors’ remunerations.

(5) After items (1), (2), (3), and (4) were deducted, 10% of the remaining amount may be allocated as employee bonus and 90% as stockholders' dividend. The distributed amount is subject to the resolution adopted by the Board of Directors and approved at the stockholders' meeting.

B. The Company currently maintains modified business growth. The Company will adopt

surplus dividend payout policy according to its operation plans, business development,

capital expenditure, and capital demand. Among the total dividends distributed, cash

dividend payout ratio is 0% ~ 50% and the rest is stock dividend. However, the Company

reserves the right to adjust the payout ratios of cash dividends and stock dividends in

correspondence to the actual economic environment, business operation, and cash holding

position. The new payout policy will be implemented after resolved by the board and

approved by shareholders.

C. As of March 21, 2006, the board of directors of the Company has not resolved the

distribution of the year 2006 earnings. Therefore, any information in relation to the year

2006 earnings will be posted to the website of the Taiwan Stock Exchanges after the board’s

resolution and the shareholders’ approval is obtained.

D. Legal reserve can only be used to offset deficits or increase capital. The legal reserve can

be used to increase capital when and only when the reserve balance exceeds 50% of the

capital stock, and the amount capitalized should be limited to 50% of the legal reserve.

E. In accordance with the ROC SFB regulation, in addition to legal reserve and prior to

distribution of earnings, the Company should set aside a special reserve in an amount equal

to the net change in the reduction of prior year’s stockholders’ equity, resulting from

adjustments such as cumulative foreign currency translation adjustment and unrealized loss

on available-for-sale financial assets. Such special reserve is not available for dividend

distribution. In the subsequent year(s), if the year-end balances of the cumulative foreign

Global Reports LLC

119

currency translation adjustment and unrealized losses on available-for-sale financial assets no

longer result in a net reduction in the stockholders’ equity, the special reserve previously set

aside will then be available for distribution.

F. The Taiwan imputation tax system requires that any undistributed current earnings of a

company derived on or after January 1, 1998 be subject to an additional 10% corporate

income tax if the earnings are not distributed in the following year. As of December 31, 2006,

the undistributed earnings derived on or after January 1, 1998 was $ 13,413,928.

G. As of December 31, 2006, the balance of stockholders’ imputation tax credit account of the

Company was $37,339. The rate of stockholders’ imputation tax credit to undistributed

earnings is approximately 0.28%. However, the actual stockholders’ imputation rate is

subject to change since the actual stockholders’ tax credit rate is based on the rate on the

dividend allocation day. In 2006, the stockholders’ imputation rate on the distributed earnings

is 1.08%.

H. On June 12, 2006, the stockholders of the Company resolved to distribute stock dividends of $2,410,149 and cash dividends of $4,169,558, respectively. The total amount of dividends per share, including stock dividends of $0.96 (in dollars) per share and cash dividends of $1.66 (in dollars) per share, was $2.62 (in dollars).

I. On June 13, 2005, the stockholders of the Company resolved to distribute stock dividends of

$1,688,898 and cash dividends of $1,583,342, respectively. The total amount of dividends

per share, including stock dividends of $0.8 (in dollars) per share and cash dividends of

$0.75 (in dollars) per share, was $1.55 (in dollars).

J. The Company’s earnings distribution of 2005 for employee bonuses and directors’ and

supervisors’ remunerations were as follow:

The amount of the actual

earnings distributions

approved by

the shareholders in 2006

(a) The amount of the retained earnings distributed

1.Employees' cash bonuses 463,284$

2.Employees' stock bonuses

(i) Shares (in thousands of shares) 26,780

(ii) Amounts 267,794$

(iii)As a percentage of outstanding common shares 1.17%

3.Directors' and supervisors' remunerations 149,324$

(b) Informations regarding earnings per common share (in dollars)

1.Original earnings per common share (note 1) 3.59$

2.Adjusted earnings per common share (note 2) 3.21$

Note 1: Not retroactively adjusted by the common shares issued on capitalization of earnings in 2006.

Note 2: Adjusted earnings per share = (Net income-Employees' bonus-Remunerations to directors and

supervisors)/Weighted average oustanding common shares for 2006.

Global Reports LLC

120

19. TREASURY STOCKAs of December 31, 2006, Siliconware Investment Company Ltd., the subsidiary of the Company, holds 35,176 thousand shares of the Company’s stock, with book value of $22.58 (in dollars) per share. None of the treasury stock held by the subsidiary was sold in 2006. The closing price of the Company’s stock was $51.2 (in dollars) per share on December 31, 2006.

20. IMPAIRMENT OF ASSETS

Effective January 1, 2005, the Company adopted ROC Statement of Financial Accounting

Standards No. 35, “Accounting for Impairment of Assets”. For the years ended December 31,

2006 and 2005, the Company recognized asset impairment losses of $27,013 and $163,650

respectively, as follows:

A. For the year ended December 31, 2006, Siliconware Investment Company Ltd. and SPIL

(B.V.I) Holding Limited, subsidiaries of the Company, recognized impairment loss in the

amount of $27,013.

B. Impairment loss of $79,200 was recognized for the year ended December 31, 2005 for

long-term investment in Universal, which was triggered by the merger with Sigurd and the

investment’s carrying amount exceeded the recoverable amount.

C. Impairment loss of $84,450 was recognized for the year ended December 31, 2005 for

long-term investment in Double Win. The management believed the impairment loss was

triggered by the downturn of the overall market and industry where Double Win operated, as

well as the fact that Double Win withdrew from public trading in 2005.

2006 2005R ecorded in incom e statem ent 27,013$ 163,650$ R ecorded in equity -$ -$

Im pairm ent loss on long-term investm entFor the years ended D ecem ber 31,

Global Reports LLC

121

21. INCOME TAX

A. For the years ended December 31, 2006 and 2005, significant portion of the permanent

differences are derived from the income tax exemption of capital gain resulted from the

security transactions, long-term investment income accounted for under the equity method,

and the revenue from assembly of certain integrated circuit products exempted from income

tax.

As of December 31, 2006 and 2005, deferred tax assets and liabilities are as follows:

2006 2005

Income tax expense calculated at the statutory tax rate 3,613,846$ 2,083,671$Permanent differences 1,518,940)( 780,039)( Investment tax credits 1,147,432)( 834,025)( Tax on interest income separately taxed - 1,006

Prior year's under provision 29,898 112,570Changes in allowance for deferred tax assets 28,798)( 579,627)(

Income tax expense for current year 948,574 3,556Additional 10% tax on undistributed earnings - 11,961

Income tax expense 948,574 15,517Adjustment:

Net changes of deferred tax assets 102,987)( 272,156Decrease (increase) in income tax payable 127,778 112,570)( Tax on interest income separately taxed - 1,006)( Prepaid and withholding tax 49,487)( 25,176)( Subsidiary's tax payable (refund receivable) 6,899 12,510)(

Income tax payable 930,777$ 136,411$

Income tax payable carried over from prior year 16,605$ 16,605$


Allowance for deferred tax assets Deferred tax assets, current 726,963$ 759,226$ Allowance for deferred tax assets - current 141)( -

726,822$ 759,226$

Deferred tax assets, noncurrent 1,991,506$ 2,232,063$ Deferred tax liabilities, noncurrent 172,909)( 219,101)(

1,818,597 2,012,962Allowance for deferred tax assets - non-current 174,343)( 303,287)(

1,644,254$ 1,709,675$

December 31,

Global Reports LLC

122

C. The details of deferred tax assets and liabilities as of December 31, 2006 and 2005 were as follows:

Valuation allowance for deferred tax assets relates primarily to unrealized loss on long-term investments and allowance for investment tax credits.

D. The Company’s income tax returns have been assessed and approved by the Tax Authority

through 2003.

E. The income tax returns of Siliconware Investment Company Limited have been assessed and

approved by the Tax Authority through 2004.

F. According to the Income Tax Law of the Peoples Republic of China for enterprises with

Foreign Investment and Foreign Enterprises , Siliconware Technology Suzhou Limited is

entitled to two years’ exemption from income taxes followed by three years of a 50% tax

reduction , i.e., the tax rate of 7.5%, commencing from the first cumulative profit-making

year net of losses carried forward. In addition, any foreign investor of an enterprise with

foreign investment which reinvests its share of profit obtained from the enterprise directly

Amount Tax Effect Amount Tax Effect

Current:Temporary differences:

Unrealized loss on obsolescence and decline in market value of inventories 56,715$ 14,179$ 55,803$ 13,951$

Compensation interest on bonds payable 2,377 594 - -Unrealized sales allowance 55,475 13,868 67,180 16,795Unrealized foreign exchange (gain) loss 7,370)( 1,842)( 155,641 38,910Allowance for doubtful accounts 23,904 5,976 12,280 3,070Others 8,752 2,188 - -

Investment tax credits 692,000 686,500

726,963 759,226Allowance for deferred tax assets 141)( -

726,822$ 759,226$

Noncurrent : Temporary differences:

Unrealized loss on long-term investments 78,303$ 19,576$ 667,009$ 166,753$Depreciation expense 639,742)( 159,936)( 669,724)( 167,431)( Unrealized foreign currency exchange gain arising from bonds payable 51,892)( 12,973)( 206,678)( 51,670)( Compensation interest on bonds payable - - 490,806 122,702Unrealized loss on idle assets 259,203 64,801 322,543 80,636Others 11,895 2,974 - -Loss carryforwards 120,850 30,212 25,513 6,378

Investment tax credits 1,873,943 1,855,594


1,644,254$ 1,709,675$


Global Reports LLC

123

into that enterprise by increasing its registered capital, or uses the profit as capital investment

to establish other enterprises with foreign investment to operate for a period of not less than

five years shall, upon approval by the tax authorities of an application filed by the investor, be

refunded 40% of the income tax already paid in relation to the reinvested amount.

G. As of December 31, 2006, the Company’s unused portion of investment tax credits, under the

“Statue for Upgrading Industries”, were as follows:

H. The Company has met the requirement of Statute for Upgrading Industries and is exempted

from income tax for revenues arising from the assembly and testing of certain integrated

circuit products for a five-year period from January 2004 and from January 2006. The 5-years

income tax exemption will expire in December 2008 and 2010, respectively. Also, in order

to get 5-year income tax exemption, the Company filed registration of capitalization plan in

2005 for its expansion of assembly and testing of integrated circuited business to the

Industrial Development Bureau of Ministry of Economic Affairs and has received the

approval in 2006.

Deductible Unused ExpirationNature of Investment Tax Credits Amount Amount YearsAcquisition costs of qualifying machinery

and equipment 2,752,167$ 1,924,947$ 2008 to 2010Qualifying research and development expenditu 755,763 622,646 2008 to 2010Qualifying investments in significant 22,175 18,350 2008

technology companies 3,530,105$ 2,565,943$

Global Reports LLC

124

22. EARNINGS PER SHARE

The basic and diluted earnings per share for the years ended December 31, 2006 and 2005 were

retroactively adjusted for 2005 stock dividends and employees’ stock bonus distributed in 2006.



(in thousands)Basic EPS:Net income 14,277,643$ 13,329,069$ 2,716,477 5.26$ 4.91$ Dilutive effect of - Employee stock option - - 12,650

- 3rd Euro convertible bonds 22,562 33,421 168,743Diluted EPS 14,300,205$ 13,362,490$ 2,897,870 4.93$ 4.61$



(in thousands)Basic EPS:Income from continuing operations 7,608,911$ 7,593,394$ 3.02$ 3.02$ Cumulative effects of changes in accounting principles 650,508 650,508 0.26 0.26

Net income 8,259,419 8,243,902 2,516,506 3.28$ 3.28$

Dilutive effect of - Employee stock option - - 20,271

- 2nd Euro convertible bonds 396,552 424,053 206,027 - 3rd Euro convertible bonds 368,262 349,696 189,068Diluted EPS 9,024,233$ 9,017,651$ 2,931,872 3.08$ 3.07$

For the year ended December 31, 2006Income Earnings per share

(in dollars)


(in dollars)

Income Earnings per share

Global Reports LLC

125

23. PERSONNEL COSTS, DEPRECIATION AND AMORTIZATION

24. RELATED PARTY TRANSACTIONS

A. Name and Relationship with Related Parties:









Name of Related Parties Relationship with the Company

ChipMOS Technologies Inc. Investee company accounted forunder the equity method

Sigurd Microelectronics Corporation The Company holds directorshipPhoenix Precision Technology Corporation The Company holds directorshipHai-Feng Fundation Same chairman of the board of the directiors

Global Reports LLC

126

B. Significant Transactions with Related Parties:

(1) Sales

The selling prices and collection terms offered to the related parties were generally

comparable to those offered to non-related parties. The collection period is

approximately three months from the date of sale.

(2) Purchases

The purchase prices and payment terms provided by the related parties were generally

comparable to those provided by non-related parties. The average payment period is

approximately three months from the date of purchase.

(3) Accounts Receivable

(4) Accounts Payable

% of % of Amount net sales Amount net sales

Sigurd Microelectronics Corporation 5,217$ - 31,218$ -


% of net % of netAmount purchase Amount purchase

Phoenix PrecisionTechnology 3,100,909$ 13 3,600,039$ 18 Others 83 - - -

3,100,992$ 13 3,600,039$ 18


% of accounts % of accountsAmount receivable Amount receivable

Sigurd Microelectronics Corporation -$ - 9,695$ -


% of accounts % of accountsAmount payable Amount payable

Phoenix PrecisionTechnology Corporation 345,745$ 8 694,261$ 14


Global Reports LLC

127

(5) Other Expenses / Other Payables

(6) Other Income/ Other Receivables

25. ASSETS PLEDGED AS COLLATERALS

As of December 31, 2006 and 2005, the following assets have been pledged as collaterals against certain obligations of the Company and its subsidiaries:

26. COMMITMENTS AND CONTINGENCIES

A. As of December 31, 2006, the Company’s issued but unused letters of credit for imported

machinery and equipment were approximate $392,396.

B. For its future expansion, the Company entered into several contracts with a total purchasing

price of $1,748,822, of which a total amount of $723,113 has not been paid as of December

31, 2006.

C. The Company entered into contracts with five foreign companies for the use of certain

technologies and patents related to packaging system of integrated circuit products. The

Company agreed to pay royalty fees based on the total number of certain products sold.

Four contracts are valid through December 2007, November 2009, December 2010 and

January 2011, respectively. For the other two contracts, one is valid through when all

Other Other Other Other Income Receivables Income Receivables

Others 12,614$ 11,288$ 2,021$ 79$


Other Other Other Other Expenses Payables Expenses Payables

Others 12,153$ 4,807$ 11,505$ 7,741$


Assets 2006 2005 Subject of collaterals

Buildings 284,633$ -$ Long-term loansLand use rights 38,465 - Long-term loansMachinery and other equipment - 92,208 Long-term loans(shown as other financial assets,current) 206,705 215,905

Guarantees for custom duties and income tax liabilities

529,803$ 308,113$

December 31,

Global Reports LLC

128

patents included in the contract expire; the other is valid until both parties agree to terminate

the contract.

D. On March 1, 2006, the Company was informed of a civil lawsuit brought by Tessera Inc., a

U.S. corporation, against the Company and its subsidiary, Siliconware USA, Inc. in the

United States. The Company has authorized a U.S. law firm for the litigation support and

been in process of gathering evidence. Currently, the Company is unable to assess the

potential liabilities arising out of this claim due to the fact that insufficient information

provided in the scope of the infringement of patent rights caused by its services is specified

in the bill of complaint. As such, no losses or expenses are recognized with respect to the

lawsuit.

27. SIGNIFICANT DISASTER LOSS

None

28. SIGNIFICANT SUBSEQUENT EVENT

1. On December 21, 3006, the board of the Company resolved to sell its Taipei office with an

amount of $185,009 suggested by China Credit Information Service, Ltd. The passage of title

was completed on February 26, 2007 with a disposal loss of $32,276.

2. On February 13, 2007, the board of the Company resolved to sell its common stock

ownership in ChipMOS Technologies Inc. for US$191,147 thousands and acquire the

common stock ownership in ChipMOS Technologies (Bermuda) Ltd., the parent company of

ChipMOS Technologies Inc., through private stock offering for US$76,459 thousands. As of

March 21, the passage of title was not completed. Therefore, the gain (loss) on disposal of

investment cannot be reasonably estimated.

Global Reports LLC

129

29. OTHER

A. Financial Statement Reclassification

Certain accounts stated in the December 31, 2005 financial statements have been reclassified to conform to the presentation of December 31, 2006 financial statements.

B. Fair Values of Financial Instruments:

Methods and assumptions used to estimate the fair values of financial instruments are as

follows:

i Financial assets and liabilities with book value proxies to fair value are cash, notes

receivable, accounts receivable, other current financial assets, refundable deposits, notes

payable, accounts payable, income tax payable, accrued expenses, other payables, current

portion of long-term debts, other current liabilities and other liabilities because of their

short maturities.

ii Available-for-sale financial assets – non-current are recorded at quoted market prices as

their fair values due to the availability of the quoted price in an active market.

iii Financial assets carried at cost are recorded at costs due to the lack of quoted market

prices derived from the active market and the reasonable measurement for the fair value.

iv The fair value of long-term loans with fixed interest rates is estimated by the discounted

future cash flows. The discount rate, 1.875%, is based on the interest rate of the similar

long-term loan, which the Company would have acquired. The fair value of long-term

loans with floating interest rates is based on book values.

Non-derivative financial instruments Book Value

Quotation in

an active

market

Estimated

using a

valuation Book Value

Quotation in

an active

market

Estimated

using a

valuation

Financial AssetsFinancial assets with book value equal

to fair value 24,643,663$ -$ 24,643,663$ 22,847,565$ -$ 22,847,565$Available-for-sale financial assets - noncurrent 7,883,601 7,883,601 - 2,379,209 11,669,769 -Financial assets carried at cost - noncurrent 824,942 - - 168,331 - -

33,352,206$ 7,883,601$ 24,643,663$ 25,395,105$ 11,669,769$ 22,847,565$

Financial LiabilitiesFinancial liabilities with

book value equal to fair value 9,449,061$ -$ 9,449,061$ 11,675,727$ -$ 11,675,727$Bonds payable (including current portion) 2,726,832 4,122,897 - 11,310,300 15,528,396 -Long-term loans 3,092,609 - 3,127,992 3,333,300 - 3,333,300

15,268,502$ 4,122,897$ 12,577,053$ 26,319,327$ 15,528,396$ 15,009,027$

December 30, 2006 December 31, 2005Fair Value Fair Value

Global Reports LLC

130

v The fair value of bonds payable and current portion of bonds payable is based on its

quoted market price.

C. Financial assets and liabilities with the risk of interest rate fluctuation:

As of December 31, 2006, the Company’s financial assets and liabilities with fair value risk

of interest rate fluctuation were $14,535,482 and $5,715,306, respectively. The financial

liabilities with cash flow risk of interest rate fluctuation were $104,135.

D. Financial assets and liabilities whose changes in fair value are not recognized in earnings:

The Company’s interest income and interest expense from financial assets and liabilities

whose changes in fair value were not recognized in earnings were $396,461 and $130,443,

respectively, for the year ended December 31, 2006. Available-for-sale financial assets are

measured at fair value at balance sheet date. Changes in fair value recorded as the

adjustment of the shareholders’ equity in 2006 were $4,765,318.

E. Financial risk control:

The Company has implemented appropriate risk management and control processes to

identify, measure, and control the risks associated with the market, credit, liquidity, and cash

flows.

F. Financial risk information:

1. Financial Assets: investments in equity instruments

(1) Market risk:

The Company’s investments in equity instruments are exposed to the market price

risk. However, the Company performs risk management controls to minimize the

potential loss to an acceptable level. The Company believes that the probability of

significant market risk is low.

(2) Credit risk:

The Company’s investments in available-for-sale financial assets are throughcreditable financial institutions. The expected credit exposure to such financial institutions is low. For equity investments carried at cost, the Company has evaluated counter parties’ credit condition each time when the Company entered the investment transaction. Thus the credit risk is low.

(3) Liquidity risk:

The Company’s available-for-sale financial assets are traded in active markets, which

can be sold at the prices not significantly different from their market value. The

Company is exposed to a greater liquidity risk for equity instruments measured at

cost due to the fact that no active market exists for these instruments.

December 31, 2006

Available-for-sale financial assets 7,883,601$Financial assets carried at cost 824,942

8,708,543$

Global Reports LLC

131


The Company’s investments in equity financial assets are non-interest related, so the

cash flows from equity instruments are independent of change on market interest

rates.

2. Financial liabilities: debt instruments

(1) Market risk:

Debt instruments include zero-coupon convertible bonds embedded with call and put

options, fixed interest-bearing bonds, and long-term loans. The fair value changes of our

USD denominated convertible bonds are affected by the stock price. However, we can

minimize the market price risk by exercising the call option and reduce the foreign

exchange rate exposure by maintaining equivalent amounts of assets denominated in

USD. Our long-term loans are not exposed to fair value risks because the borrowings

were issued at variable rates.

(2) Credit risk:

Debt instruments issued by the Company do not have significant credit risk.

(3) Liquidity risk:

The Company maintains sufficient working capital to meet its cash requirements. We

believe that there is no significant liquidity risk.


Our zero-coupon bonds, fixed interest rate bearing bonds, and fixed interest rate

borrowings are not exposed to cash flow interest rate risk. Our floating interesting rate

borrowings which effective interest rate moves together with the market interest rate

exposed the Company to the future cash flow risk. However, we believe there is no

significant cash flow risk.

December 31, 2006

Bonds payable 2,726,832$Long-term loans 3,092,609

5,819,441$

Global Reports LLC

132

G. E

limin

ated

tran

sact

ions

bet

wee

n pa

rent

com

pany

and

sub

sidi

arie

s

Tra

nsac

tio

ns

Sili

conw

are

Pre

cisi

on

Ind

ust

ries

Co

., L

td

Sili

conw

are

Inve

stm

ent

Co

mp

any

Ltd

.S

PIL

(B

.V.I

.)H

old

ing

Lim

ited

Sili

conw

are

US

AIn

c.

Fo

r th

e ye

ar e

nded

Dec

embe

r 3

1,

20

06

Elim

inat

e lo

ng-t

erm

inv

estm

ent

and

sto

ckho

lder

s'eq

uit

y($

5

,32

1,4

70

) $

3,0

73

,57

1 $

2

,24

7,8

99

$

-

Elim

inat

e su

bsid

iary

's l

ong

-ter

m i

nves

tmen

t o

n p

aren

t co

mp

any

1

,80

1,0

14

(

1

,80

1,0

14

)

-

-

Elim

inat

e (p

rep

aid

exp

ense

) an

d u

near

ned

rev

enu

e(

4

,86

5)

-

-

4

,86

5

Elim

inat

e co

mm

issi

on

exp

ense

and

rev

enu

e(

4

78

,60

8)

-

-

4

78

,60

8

Fo

r th

e ye

ar e

nded

Dec

embe

r 3

1,

20

05

Elim

inat

e lo

ng-t

erm

inv

estm

ent

and

sto

ckho

lder

s'eq

uit

y($

3

,54

8,8

66

) $

1,7

54

,54

7 $

1

,79

4,3

19

$

-

Elim

inat

e su

bsid

iary

's l

ong

-ter

m i

nves

tmen

t o

n p

aren

t co

mp

any

7

94

,18

4(

7

94

,18

4)

-

-

Elim

inat

e ac

cru

ed e

xpen

se a

nd a

cco

unt

s re

ceiv

able

63

,00

3

-

-

(

6

3,0

03

)

Elim

inat

e co

mm

issi

on

exp

ense

and

rev

enu

e(

4

17

,41

8)

-

-

4

17

,41

8

Nam

e o

f th

e co

unt

er p

arty

and

am

ou

nt

Global Reports LLC

133

30.

SPE

CIA

L D

ISC

LO

SUR

E I

TE

MS

A. S

igni

fica

nt T

rans

actio

n In

form

atio

n

(1)

Loa

ns to

thir

d pa

rtie

s at

trib

uted

to f

inan

cial

act

iviti

es:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

(2)

End

orse

men

t and

gua

rant

ee p

rovi

ded

to th

ird

part

ies:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

(3)

The

end

ing

bala

nce

of s

ecur

ities

are

sum

mar

ized

as

follo

ws:

As

of D

ecem

ber

31, 2

006:

Not

e 1:

The

mar

ket v

alue

is n

ot a

vaila

ble.

The

refo

re, t

he n

et e

quity

per

sha

re a

s of

Dec

embe

r 31

, 200

6 w

as u

sed.

Not

e 2:

The

mar

ket v

alue

is n

ot a

vaila

ble.

The

refo

re, t

he n

et e

quity

per

sha

re a

s of

Dec

embe

r 31

, 200

5 w

as u

sed.

Not

e 3:

Elim

inat

ed u

nder

con

solid

atio

n.

The

rel

atio

nshi

pN

umbe

rP

erce

ntag

eM

arke

t va

lue

Typ

e of

of

the

issu

ers

Gen

eral

ledg

er

of

shar

esof

pe

r sh

are

Inve

stor

se

curi

ties

N

ame

of s

ecur

itie

s

w

ith

the

Com

pany

acco

unts

(

in t

hous

ands

) B

ook

valu

e ow

ners

hip

(in

dolla

rs)

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Sili

conw

are

Inve

stm

ent

C

ompa

ny L

td.

Inve

stee

acc

ount

ed f

or

und

er t

he e

quit

ym

etho

d

Lon

g-te

rmin

vest

men

tsac

coun

ted

for

unde

rth

e eq

uity

met

hod

(Not

es 1

, 3 )

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Dou

ble

Win

Ent

erpr

ise

Co.

, Ltd

.Inve

stee

acc

ount

ed f

or

und

er t

he e

quit

ym

etho

d

Lon

g-te

rmin

vest

men

tsac

coun

ted

for

unde

rth

e eq

uity

met

hod

8.23

(Not

e 2)

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Chi

pMO

S T

echn

olog

ies

Inc.

Inve

stee

acc

ount

ed f

or

und

er t

he e

quit

ym

etho

d

Lon

g-te

rmin

vest

men

tsac

coun

ted

for

unde

rth

e eq

uity

met

hod

19.9

5(N

ote

1)

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

SP

IL (

B.V

.I.)

H

oldi

ng L

imit

ed

Inve

stee

acc

ount

ed f

or

und

er t

he e

quit

ym

etho

d

Lon

g-te

rmin

vest

men

tsac

coun

ted

for

unde

rth

e eq

uity

met

hod

28.8

9(N

otes

1, 3

)

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Pho

enix

Pre

cisi

on

Tec

hnol

ogy

Cor

pora

tion

The

Com

pany

hol

ds

dir

ecto

rshi

pA

vaila

ble-

for-

sale

fina

ncia

l ass

ets

39.0

0

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Kin

g Y

uan

Ele

ctro

nics

Co.

, Ltd

.-

Ava

ilabl

e-fo

r-sa

lefi

nanc

ial a

sset

s27

.20

Sili

conw

are

Pre

cisi

on

Ind

ustr

ies

Co.

, Ltd

.S

tock

Sig

uard

Mic

roel

ectr

onic

s C

orp.

The

Com

pany

hol

ds

dir

ecto

rshi

pA

vaila

ble-

for-

sale

fina

ncia

l ass

ets

21.7

5S

ilico

nwar

e P

reci

sion

I

ndus

trie

s C

o., L

td.

Sto

ckN

PL

-F

inan

cial

ass

ets

carr

ied

at c

ost

Global Reports LLC

134

(4)

Secu

ritie

s fo

r w

hich

tota

l buy

ing

or s

ellin

g ex

ceed

s th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l sto

ck:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Not

e 1:

The

end

ing

bala

nce

incl

udes

the

inve

stm

ent g

ain

and

loss

und

er th

e eq

uity

met

hod.

The

Nam

ere

latio

nshi

p

ofof

the

Gai

n

Gen

eral

th

e

issue

rs

Num

ber

Num

ber

Num

ber

(loss

)N

umbe

r

Nam

e of

le

dger

coun

ter

with

the

of s

hare

s/un

it o

f sha

res/

unit

of s

hare

s/un

itfr

om

of s

hare

s/un

it A

mou

nt

Inve

stor

the

secu

rity

ac

coun

ts

party

Com

pany

(in

thou

sand

s)A

mou

nt

(in

thou

sand

s)A

mou

nt

(in

thou

sand

s)Sa

le p

rice

Boo

k va

lue

disp

osal

(i

n th

ousa

nds)

(Not

e 1)

Silic

onw

are

Prec

ision

Indu

strie

s C

o., L

td.

SPIL

(B.V

.I.)

Hol

din g

Lim

ited

stoc

k

Long

-term

inve

stm

ent

acco

unte

d fo

run

der e

quity

met

hod

62,8

00$1

,794

,319

15,0

00$4

87,0

5077

,800

$2,2

47,8

99

B

egin

ning

bal

ance

A

dditi

on

Endi

ng b

alan

ce

D

ispos

al

Global Reports LLC

135

(5)

Acq

uisi

tion

of r

eal e

stat

e w

ith a

n am

ount

exc

eedi

ng th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l sto

ck:

For

the

year

end

ed D

ecem

ber

31, 2

006:

(6)

Dis

posa

l of

real

est

ate

with

an

amou

nt e

xcee

ding

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

Nam

e of

the

prop

ertie

sD

ate

oftra

nsac

tion

Tran

sact

ion

amou

ntSt

atus

of

paym

ent

Cou

nter

par

ty

Rel

atio

n-sh

ip w

ithth

eC

ompa

ny

Orig

inal

owne

r whi

chso

ld th

epr

oper

ty to

the

coun

ter p

arty

The

rela

tions

hip

ofth

e or

igin

alow

ner w

ithth

e C

ompa

ny

Dat

e of

the

orig

inal

trans

actio

nA

mou

nt

The

base

s or

refe

renc

e us

edin

dec

idin

g th

epr

ice

Purp

ose

and

stat

us o

f the

acqu

isiti

onO

ther

com

mitm

ent

Bui

ldin

gN

obem

ber 2

005

169,

000

$16

9,00

0$

Shen

g-H

ui C

onst

ruct

ion

--

--

-$

A

s sp

ecifi

ed in

For o

pera

ting

Paym

ent m

ade

acco

rdin

gC

orpo

ratio

n Lt

d.co

ntra

ctus

eto

con

stru

ctio

n pr

ogre

ssB

uild

ing

Dec

embe

r 200

5

348,

800

12

5,00

0C

hung

-Rui

Con

stru

ctio

n-

--

--

As

spec

ified

inFo

r ope

ratin

gPa

ymen

t mad

e ac

cord

ing

Cor

pora

tion

Ltd.

cont

ract

use

to c

onst

ruct

ion

prog

ress

Bui

ldin

gFe

brua

ry 2

006

18

0,00

0

180,

000

CN

et C

onst

ruct

ion

--

--

-

A

s sp

ecifi

ed in

For o

pera

ting

-C

orpo

ratio

n Lt

d.co

ntra

ctus

eLa

ndA

ugus

t 200

6Jo

u M

u Te

xtile

--

--

-

A

s sp

ecifi

ed in

For o

pera

ting

-co

ntra

ctus

eB

uild

ing

Nov

embe

r 200

6Jo

hnny

Ko

(c) &

--

--

-

A

s sp

ecifi

ed in

For o

pera

ting

Paym

ent m

ade

acco

rdin

gco

ntra

ctus

eto

con

stru

ctio

n pr

ogre

ss

Bui

ldin

gN

ovem

ber 2

006

-C

hung

-Rui

Con

stru

ctio

n-

--

--

As

spec

ified

inFo

r ope

ratin

gPa

ymen

t mad

e ac

cord

ing

Cor

pora

tion

Ltd.

cont

ract

use

to c

onst

ruct

ion

prog

ress

Rel

ated

par

ty a

s co

unte

r par

ty

Global Reports LLC

136

(7)

Rel

ated

par

ty t

rans

actio

ns w

ith p

urch

ases

and

sal

es a

mou

nts

exce

edin

g th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l

stoc

k:

For

the

year

end

ed D

ecem

ber

31, 2

006:

(8)

Rec

eiva

bles

fro

m r

elat

ed p

artie

s ex

ceed

ing

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

As

of D

ecem

ber

31, 2

006:

Non

e.

(9)

Tra

nsac

tion

of d

eriv

ativ

e fi

nanc

ial i

nstr

umen

ts:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Non

e.

Perc

enta

ge

Perc

enta

ge o

f

Rel

atio

nshi

p of

net

no

tes

or a

ccou

nts

Purc

hase

/ sa

les

Nam

e of

w

ith th

e Pu

rcha

ses

purc

hase

sC

redi

t U

nit

Cre

dit

rece

ivab

le /

com

pany

the

coun

ter p

artie

s c

ount

er p

artie

s

/ s

ales

A

mou

nt

/ sal

es

term

s

pric

e te

rms

Am

ount

paya

ble

Silic

onw

are

Prec

isio

nIn

dust

ries

Co.

,

Phoe

nix

Prec

isio

n

Tec

hnol

ogy

C

orpo

ratio

n

The

Com

pany

h

olds

dire

ctor

ship

Purc

hase

3,10

0,90

9$

13%

Thr

eem

onth

s-

$-

Acc

ount

spa

yabl

e $

345,

745

8%

Des

crip

tion

of th

e tr

ansa

ctio

n

Not

es o

r acc

ount

s re

ceiv

able

/

paya

ble

Des

crip

tion

of a

nd re

ason

s fo

r

diff

eren

ce in

tra

nsac

tion

term

s

com

pare

d to

non

-rel

ated

par

ty

tran

sact

ions

Global Reports LLC

137

B.

Rel

ated

Inf

orm

atio

n on

Inv

este

e C

ompa

nies

(1)

Bas

ic in

form

atio

n on

inve

stee

com

pani

es:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Not

e 1:

The

Com

pany

’s in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod.

N

ote

2: T

he C

ompa

ny’s

100

% o

wne

d su

bsid

iary

. N

ote

3: A

n in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod

of S

PIL

(B

.V.I

.) H

oldi

ng L

imite

d, a

100

% o

wne

d su

bsid

iary

of

the

Com

pany

. N

ote

4: A

n in

vest

ee a

ccou

nted

for

und

er th

e eq

uity

met

hod

of S

PIL

(C

aym

an)

Hol

ding

Lim

ited,

a 1

00%

ow

ned

subs

idia

ry o

f SP

IL (

B.V

.I)

Hol

ding

Lim

ited.

N

ote

5: T

he c

ontr

ibut

ed c

apita

l was

US$

50,0

00 th

ousa

nd d

olla

rs.

Not

e 6:

Elim

inat

ed u

nder

con

solid

atio

n.

Not

e 7:

The

Com

pany

’s lo

ng-t

erm

inve

stm

ents

acc

ount

ed f

or u

nder

the

equi

ty m

etho

d w

as r

ecla

ssif

ied

as a

vaila

ble-

for-

sale

fin

anci

al a

sset

s (n

on-c

urre

nt)

for

th

e ye

ar e

nded

Dec

embe

r 31

, 200

6.

Cur

rent

Pri

or

per

iod

per

iod

Sha

res

Net

inco

me

Inco

me

(los

s)

endi

ngen

ding

( in

O

wne

rshi

pB

ook

(los

s) o

fre

cogn

ized

by

Inve

stor

N

ame

of I

nves

tee

Loc

atio

n

M

ain

acti

viti

es

bala

nce

bala

nce

thou

sand

s )

Per

cent

age

valu

e in

vest

ee

the

Com

pany

Not

e

Sili

conw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.

Sili

conw

are

Inve

stm

ent

Com

pany

Ltd

.T

aipe

iIn

vest

men

t ac

tivi

ties

$1,7

70,0

00$1

,770

,000

177,

000

100.

00%

$1,2

72,5

57$1

44,9

41$9

1,55

0(N

otes

1, 2

, 6 )

Sili

conw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.D

oubl

e W

inE

nter

pris

e C

o., L

td.

Pin

g-ch

en C

ity,

T

aoyu

anS

MT

pro

cess

an

d ha

nd in

sert

152,

100

152,

100

6,76

024

.14%

--

-

(Not

e 1

)

Sili

conw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.C

hipM

OS

Tec

hnol

ogie

s In

c.

Sci

ence

-bas

ed

Indu

stri

al P

ark,

H

sin-

Chu

Tes

ting

and

ass

embl

y

of in

tegr

ated

cir

cuit

s2,

332,

768

2,33

2,76

825

4,86

328

.76%

4,99

8,59

64,

138,

270

1,12

4,99

0(N

ote

1 )

Sili

conw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.S

igur

dM

icro

elec

tron

ics

Cor

p.C

hu-t

ung,

H

sin-

Chu

Tes

ting

and

ass

embl

y

of in

tegr

ated

cir

cuit

s45

9,27

445

9,27

4-

--

-

28

,640

(N

ote

7 )

Sili

conw

are

Pre

cisi

onIn

dust

ries

Co.

, Ltd

.S

PIL

(B

.V.I

.)H

oldi

ng L

imit

edB

riti

sh V

irgi

n Is

land

sIn

vest

men

t ac

tivi

ties

2,62

0,86

92,

133,

819

77,8

0010

0.00

%2,

247,

899

(58,

980)

(58,

980)

(Not

es 1

, 2, 6

)

SP

IL (

B.V

.I.)

Hol

ding

Lim

ited

Sili

conw

are

US

A, I

nc.

San

Jos

e, C

A, U

SA

Pro

vidi

ng p

rom

otio

nan

d m

arke

ting

ser

vice

s68

,464

68,4

641,

250

100.

00%

89,0

7223

,744

23,7

44(N

otes

3, 6

)

SP

IL (

B.V

.I.)

Hol

ding

Lim

ited

SP

IL (

Cay

man

)H

oldi

ng L

imit

edC

aym

an I

slan

ds,

B

riti

sh W

est

Indi

aIn

vest

men

t ac

tivi

ties

1,64

4,62

51,

157,

575

50,1

0010

0.00

%1,

229,

451

(117

,552

)(1

17,5

52)

(Not

es 3

, 6 )

SP

IL (

Cay

man

)H

oldi

ng L

imit

ed

Sili

conw

are

Tec

hnol

ogy

(Suz

hou)

Lim

ited

Suz

hou

Jian

gsu,

Chi

na

Man

ufac

turi

ng o

fm

emor

y st

ick

, DR

AM

mod

ule,

tra

nsis

tor

and

elec

tron

ic c

ompo

nent

1,64

1,38

01,

154,

330

(Not

e 5)

100.

00%

1,22

8,63

8(1

16,7

40)

(116

,740

)(N

ote

4 )

Cur

rent

per

iod

The

Com

pany

/ m

ajor

ity

Ori

gina

l inv

estm

ents

ow

ned

subs

idia

ry o

wns

Global Reports LLC

138

(2)

The

end

ing

bala

nce

of s

ecur

ities

hel

d by

inve

stee

com

pani

es:

As

of D

ecem

ber

31, 2

006:

(1)

Com

bine

d am

ount

for

indi

vidu

al s

ecur

ity le

ss th

an $

100,

000.

(2)

The

mar

ket v

alue

is n

ot a

vaila

ble,

ther

efor

e, th

e ne

t equ

ity p

er s

hare

as

of D

ecem

ber

31, 2

006

was

use

d.

(3)

The

con

trib

uted

cap

ital w

as U

S$50

,000

thou

sand

dol

lars

.

(4)

The

con

trib

uted

cap

ital w

as U

S$6,

000

thou

sand

dol

lars

.

(5)

Elim

inat

ed u

nder

con

solid

atio

n.

The

rel

atio

nshi

pG

ener

alN

umbe

r of

perc

enta

geM

arke

t val

ueT

ype

ofN

ame

ofof

the

issu

ers

with

ledg

ersh

ares

Boo

k va

lue

ofpe

r sh

are

Inve

stor

se

curi

ties

se

curi

ties

th

e C

ompa

ny

ac

coun

ts

(in

thou

sand

s)

(Not

e 2)

O

wne

rshi

p

(in

dolla

r)

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Silic

onw

are

Prec

isio

n

Indu

stri

es C

o., L

td.

The

Com

pany

Ava

ilabl

e-fo

r-sa

le

fina

ncia

l ass

ets

(non

-

curr

ent)

35,1

76$1

,801

,014

1.22

%$5

1.20

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Hsi

eh Y

ong

Cap

ital C

o.,

Ltd

.Fi

nanc

ial a

sset

s ca

rrie

d at

co

st50

,000

500,

000

7.58

%-

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Phoe

nix

Prec

isio

n

Tec

hnol

ogy

C

orpo

ratio

nT

he c

ompa

ny h

olds

dire

ctor

ship

Ava

ilabl

e-fo

r-sa

le

fina

ncia

l ass

ets

(non

-

curr

ent)

5,59

321

8,11

10.

84%

39.0

0

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.M

ega

Mis

sion

Lim

ited

P

artn

ersh

ipFi

nanc

ial a

sset

s ca

rrie

d at

co

st(N

ote

4)19

5,52

34.

00%

-

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.St

ock

Oth

ers

(Not

e 1)

Ava

ilabl

e-fo

r-sa

le

fina

ncia

l ass

ets

(non

-

curr

ent)

and

fina

ncia

l

asse

ts c

arri

ed a

t cos

ts-

170,

111

--

SPIL

(B

.V.I

.) H

oldi

ng L

imite

dSt

ock

Silic

onw

are

USA

, Inc

.In

dire

ct s

ubsi

diar

y o

f the

Com

pany

Lon

g-te

rm in

vest

men

ts

acco

unte

d fo

r un

der

th

e eq

uity

met

hod

1,25

089

,072

100.

00%

71.2

6(N

otes

2, 5

)

SPIL

(B

.V.I

.) H

oldi

ng L

imite

dSt

ock

SPIL

(C

aym

an)

H

oldi

ng L

imite

dIn

dire

ct s

ubsi

diar

y o

f the

Com

pany

Lon

g-te

rm in

vest

men

ts

acco

unte

d fo

r un

der

th

e eq

uity

met

hod

50,1

001,

229,

451

10

0.00

%24

.54

(N

otes

2, 5

)

SPIL

(C

aym

an)

Hol

ding

Lim

ited

Stoc

kSi

licon

war

e T

echn

olog

y(S

uzho

u) L

imite

dIn

dire

ct s

ubsi

diar

y o

f the

Com

pany

Lon

g-te

rm in

vest

men

ts

acco

unte

d fo

r un

der

th

e eq

uity

met

hod

(Not

e 3)

1,22

8,63

810

0.00

%-

Global Reports LLC

139

(3)

Secu

ritie

s fo

r w

hich

tota

l buy

ing

or s

ellin

g am

ount

exc

eed

the

low

er o

f N

T$1

00,0

00 o

r 20

per

cent

of

the

capi

tal s

tock

:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Not

e 1:

The

con

trib

uted

cap

ital w

as U

S$35

,000

thou

sand

dol

lars

.

Not

e 2:

The

con

trib

uted

cap

ital w

as U

S$15

,000

thou

sand

dol

lars

.

Not

e 3:

The

con

trib

uted

cap

ital w

as U

S$50

,000

thou

sand

dol

lars

.

Not

e 4 :

The

end

ing

bala

nce

incl

udes

the

inve

stm

ent g

ain

and

loss

und

er th

e eq

uity

met

hod.

Not

e 5:

The

con

trib

uted

cap

ital w

as U

S$6,

000

thou

sand

dol

lars

.

Not

e 6:

Elim

inat

ed u

nder

con

solid

atio

n.

The

Nam

e of

rela

tions

hip

Gai

n

Gen

eral

the

of th

eN

umbe

r of

Num

ber o

fN

umbe

r of

(loss

)N

umbe

r of

ledg

erco

unte

ris

suer

s w

ithsh

ares

shar

essh

ares

Sale

Boo

kfr

omsh

ares

Inve

stor

Nam

e of

the

secu

rity

acco

unts

party

th

e C

ompa

ny

(in th

ousa

nds)

Am

ount

(in

thou

sand

s)A

mou

nt

(in th

ousa

nds)

pric

e v

alue

dis

posa

l (in

thou

sand

s)A

mou

nt

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.H

sieh

Yon

g C

apita

lC

o., L

td.

Fina

ncia

l ass

ets

ca

rrie

d at

cos

ts50

,000

50

0,00

0$

50,0

00

50

0,00

0$

Silic

onw

are

Inve

stm

ent

Com

pany

Ltd

.M

ega

Mis

sion

Lim

ited

Partn

ersh

ipFi

nanc

ial a

sset

s

carr

ied

at c

osts

(Not

e 5)

195,

523

(Not

e 5)

195,

523

SPIL

(B.V

.I.)

Hol

ding

Lim

ited

SPIL

(Cay

man

) H

oldi

ng L

imite

d

Long

-term

inve

stm

ent

ac

coun

ted

for u

nder

th

e eq

uity

met

hod

Cas

h ca

pita

lizat

ion

35,1

00

82

6,25

2

15,0

00

486,

300

50,1

00

1,

229,

451

(Not

es 4

, 6 )

SPIL

(Cay

man

) H

oldi

ng L

imite

dSi

licon

war

e Te

chno

logy

(Su

zhou

) Lim

ited

Long

-term

inve

stm

ent

ac

coun

ted

for u

nder

th

e eq

uity

met

hod

Cas

h ca

pita

lizat

ion

(Not

e 1)

824,

617

(Not

e 2)

487,

050

(Not

e 3)

1,22

8,63

8(N

otes

4, 6

)

Beg

inni

ng b

alan

ceA

dditi

onD

ispo

sal

Endi

ng b

alan

ce

Global Reports LLC

140

(4)

Acq

uisi

tion

of r

eal e

stat

e w

ith a

n am

ount

exc

eedi

ng th

e lo

wer

of

NT

$100

,000

or

20 p

erce

nt o

f th

e ca

pita

l sto

ck:

For

the

year

end

ed D

ecem

ber

31, 2

006:

Inve

stor

Nam

e of

the

prop

ertie

sD

ate

oftr

ansa

ctio

nTr

ansa

ctio

nam

ount

Stat

us o

fpa

ymen

tC

ount

er p

arty

Rel

atio

nshi

pw

ith th

eC

ompa

ny

Ori

gina

low

ner w

hich

sold

the

prop

erty

to th

eco

unte

r par

ty

The

rela

tions

hip

o fth

e or

igin

alow

ner w

ith th

eC

ompa

ny

Dat

e of

the

orig

inal

tran

sact

ion

Am

ount

The

base

s or

refe

renc

e us

edin

dec

idin

g th

epr

ice

Purp

ose

and

stat

us o

f the

acqu

isiti

onO

ther

com

mitm

ent

Silic

onw

are

Bui

ldin

gJu

ly 2

006

135,

363

$10

4,77

1$

N

anto

ng Y

ingx

iong

N/A

--

--

$

As

spec

ifie

d in

For o

pera

ting

co

ntra

ct

use

C

orpo

ratio

n Lt

d.

Rel

ated

par

ty a

s co

unte

r par

ty

Paym

ent m

ade

acco

rdin

g to

cons

truc

tion

prog

ress

Global Reports LLC

141

C. I

nfor

mat

ion

of in

vest

men

t in

Mai

nlan

d C

hina

:

(1)

Info

rmat

ion

of in

vest

men

t in

Mai

nlan

d C

hina

:

Not

e 1:

The

Com

pany

set

up

a su

bsid

iary

in C

aym

an I

slan

d to

inve

st in

Mai

nlan

d C

hina

.

Not

e 2:

Tra

nsac

tions

den

omin

ated

in f

orei

gn c

urre

ncie

s ar

e tr

ansl

ated

into

New

Tai

wan

dol

lars

at t

he e

xcha

nge

rate

pre

vaili

ng o

n th

e ba

lanc

e sh

eet d

ate.

Not

e 3:

Elim

inat

ed u

nder

con

solid

atio

n.

(

2) M

ater

ial t

rans

actio

ns o

ccur

red

dire

ctly

bet

wee

n th

e C

ompa

ny a

nd it

s M

ainl

and

Chi

na in

vest

ee c

ompa

nies

and

mat

eria

l tra

nsac

tions

occ

urre

d

indi

rect

ly b

etw

een

the

Com

pany

and

its

Mai

nlan

d C

hina

inve

stee

com

pani

es v

ia e

nter

pris

es in

oth

er a

reas

: Non

e.

Nam

e of

inve

stee

in M

ainl

and

Chi

na

Mai

n ac

tiviti

es

of i

nves

tee

C

apita

l

Inve

stm

ent

met

hod

Acc

umul

ated

rem

ittan

ce a

s of

Dec

embe

r 31

,200

5

Rem

itted

or

(col

lect

ed)

this

per

iod

Acc

umul

ated

rem

ittan

ce a

s of

Dec

embe

r 30

, 200

6

Ow

ners

hip

held

by

the

Com

pany

(Dir

ect a

nd in

dire

ct)

Silic

onw

are

Tec

hnol

ogy

(Su

zhou

) L

imite

d

Man

ufac

turi

ng o

fm

emor

y st

ick,

DR

AM

mod

ule,

tran

sist

or a

ndel

ectr

onic

com

pone

nt$1

,620

,500

(Not

e 1)

$1,1

34,3

50$4

86,1

501,

620,

500

$

10

0%(N

ote

2)(N

ote

2)(N

ote

2)(N

ote

2)

Inve

stm

ent

inco

me

(los

s)

reco

gniz

ed b

y

the

Com

pany

duri

ng th

e pe

riod

End

ing

bala

nce

of in

vest

men

t

The

inve

stm

ent

inco

me

(los

s)

rem

itted

bac

k as

of

Dec

embe

r 31,

200

6

Acc

umul

ated

rem

ittan

ce

from

Tai

wan

to

Mai

nlan

d C

hina

The

inve

stm

ent b

alan

ce

appr

oved

by

Inve

stm

ent C

omm

issi

ons,

Min

istr

y of

Eco

nom

ic A

ffai

rs

The

cei

ling

of in

vest

men

t

in M

ainl

and

Chi

na a

ccor

ding

to

Inve

stm

ent C

omm

issi

ons,

Min

istr

y of

Eco

nom

ic A

ffai

rs

116,

740)

($

$1

,228

,638

-$1

,620

,500

$1,6

20,5

00$1

4,08

7,24

2(N

ote

3)(N

ote

2)

Global Reports LLC

142

D. T

he b

usin

ess

rela

tions

hips

and

the

sign

ific

ant t

rans

actio

ns a

s w

ell a

s am

ount

s be

twee

n th

e pa

rent

com

pany

and

the

subs

idia

ry.

Nam

e of

N

ame

of th

e C

ompa

nyR

elat

ions

hip

with

%

of c

onso

lidat

ed r

even

ues

No.

Rel

ated

Par

ties

Tra

nsac

tions

R

elat

ed P

artie

sA

ccou

ntA

mou

ntT

erm

or to

tal a

sset

s

0

Silic

onw

are

Prec

isio

nIn

dust

ries

Co.

,Si

licon

war

e U

SA, I

nc.

Indi

rect

ow

ned

subs

idia

ryO

pera

ting

expe

nse

478,

608

$

as

spe

cifie

din

con

trac

t0.

84%

RE

LA

TE

D P

AR

TY

TR

AN

SAC

TIO

NS

Global Reports LLC

143

30. SEGMENT INFORMATION

A. Operation in Different Industries:

The Company principally operates in one industry. The Company’s operation involves

assembly, testing and turnkey services of integrated circuits.

B. Operations in Different Geographic Areas:

The Company has no significant foreign operations. Therefore, ROC FAS No. 20,

“Segmental Information Disclosure” is not applicable.

C. Export Sales:

D. Major Customers:

Revenues from individual customer that represents over 10% of net revenues of the Company

for the years ended December 31, 2006 and 2005 are set forth below:

Geographic areas 2006 2005

U.S. and Canada 34,045,256$ 24,349,085$Others 2,580,518 2,603,610

36,625,774$ 26,952,695$

Customers Amount

% of

net sale Amount

% of

net sale

Customer A 5,733,910$ 10 4,762,838$ 11Customer B 4,540,738 8 4,125,562 10

########## 18 8,888,400$ 21

2005 2006

Global Reports LLC

Global Reports LLC

No.123, Sec.3, Da Fong Rd., Taichung 427, Taiwan, R.O.C Tel 04-2534-1525

http://www.spil.com.tw

Global Reports LLC

6 lolf r q z d uh 3 uh f lv lr q ,q g x v wulh v & r / wg

Documents