FST — Interim / Quarterly Report 2016

Nov 17, 2016

Formosa Sumco Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2016 and 2015 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders Formosa Sumco Technology Corporation

We have reviewed the accompanying consolidated balance sheets of Formosa Sumco Technology Corporation (the “Company”) and subsidiaries as of March 31, 2016 and 2015 and the related consolidated statements of comprehensive income, the consolidated statements of changes in equity and cash flows for the three months ended March 31, 2016 and 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

We conducted our reviews in accordance with Statement on Auditing Standards No. 36, “Review of Financial Statements,” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting,” endorsed by the Financial Supervisory Commission (FSC) of the Republic of China.

May 6, 2016

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Debt investments with no active market - current (Notes 4 and 7) Accounts receivable, net (Notes 4 and 8) Accounts receivables from related parties, net (Notes 4, 8 and 22) Other receivables (Notes 4, 8 and 22) Inventories (Notes 4, 5 and 9) Prepayments (Notes 4 and 13) Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Note 4) Property, plant and equipment (Notes 4, 5, 11, 22, 23 and 24) Intangible assets (Notes 4, 5, 12 and 22) Deferred tax assets (Notes 4, 5 and 19) Prepayment for equipment (Notes 4 and 24) Refundable deposits (Note 4) Other non-current assets (Notes 4 and 13) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Trade payables (Note 4) Trade payables to related parties (Notes 4 and 22) Other payables (Notes 4, 14, 18 and 22) Current tax liabilities (Notes 4 and 19) Current portion of long-term borrowings (Notes 4, 15, 22 and 23) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4, 15, 22 and 23) Deferred tax liabilities (Notes 4 and 19) Net defined benefit liabilities - non-current (Notes 3, 4, 5 and 16) Guarantee deposits (Note 4) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY (Notes 4, 17 and 19) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		March 31, 2016 (Reviewed) Amount % $ 2,615,992 12 300,000 1 1,339,553 6 120,720 1 19,599 - 2,420,918 11 180,128 1 6,996,910 32 300 - 14,590,817 67 - - 248,049 1 64,574 - 205 - 56,325 - 14,960,270 68 $ 21,957,180 100 $ 416,575 2 197,107 1 501,784 2 214,372 1 - - 15,844 - 1,345,682 6 - - - - 308,016 2 951 - 25,635 - 334,602 2 1,680,284 8 7,756,966 35 5,739,080 26 1,097,493 5 5,646,606 26 6,744,099 31 36,751 - 20,276,896 92 $ 21,957,180 100		December 31, 2015 (Audited) Amount % $ 2,787,512 13 300,000 1 1,302,423 6 119,977 1 22,609 - 2,286,752 10 174,338 1 6,993,611 32 256 - 14,797,376 67 - - 251,515 1 57,354 - 217 - 57,703 - 15,164,421 68 $ 22,158,032 100 $ 367,918 2 265,886 1 865,142 4 189,693 1 - - 6,703 - 1,695,342 8 - - 876 - 306,237 1 534 - 25,634 - 333,281 1 2,028,623 9 7,756,966 35 5,739,080 26 1,097,493 5 5,511,113 25 6,608,606 30 24,757 - 20,129,409 91 $ 22,158,032 100		March 31, 2015 (Reviewed)
						Amount % $ 3,008,748 14 - - 1,588,742 7 104,469 - 17,716 - 1,752,098 8 174,000 1 6,645,773 30 222 - 15,044,711 68 25,305 - 288,452 1 197,223 1 207 - 91,159 - 15,647,279 70 $ 22,293,052 100 $ 358,471 2 308,313 1 396,342 2 214,097 1 345,458 1 10,143 - 1,632,824 7 345,458 2 - - 264,993 1 900 - 18,770 - 630,121 3 2,262,945 10 7,756,966 35 5,739,080 26 988,813 4 5,545,064 25 6,533,877 29 184 - 20,030,107 90 $ 22,293,052 100

The accompanying notes are an integral part of the consolidated financial statements.

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

NET REVENUE (Notes 4, 22 and 27) COST OF REVENUE (Notes 9, 12, 16, 18 and 22) GROSS PROFIT OPERATING EXPENSES (Notes 16, 18 and 22) Marketing Administrative Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 11, 18 and 22) Other income Other gains and losses Finance costs Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4, 5 and 19) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4 and 17) Items that may be reclassified subsequently to profit or loss: Exchange difference on translating foreign operations Unrealized gain (loss) on available-for-sale financial assets Other comprehensive income for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		For the Three Months	For the Three Months	Ended March 31
		2016 Amount % $ 2,535,917 100 (2,256,361) (89) 279,556 11 (49,761) (2) (48,309) (2) (98,070) (4) 181,486 7 5,325 - (21,905) (1) (431) - (17,011) (1) 164,475 6 (28,982) (1) 135,493 5 11,950 1 44 - 11,994 1 $ 147,487 6		2015
				Amount % $ 2,912,896 100 (2,329,752) (80) 583,144 20 (59,721) (2) (43,410) (1) (103,131) (3) 480,013 17 7,779 - (10,169) - (2,939) - (5,329) - 474,684 17 (80,876) (3) 393,808 14 - - (1) - (1) - $ 393,807 14

(Continued)

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

EARNINGS PER SHARE, NEW TAIWAN DOLLARS (Note 20) Basic Diluted	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 Amount % $ 0.17 $ 0.17	2015
		Amount % $ 0.51 $ 0.51

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

Share Capital Capital Surplus BALANCE AT JANUARY 1, 2015 $ 7,756,966 $ 5,739,080 Net profit for the three months ended March 31, 2015 - - Other comprehensive income for the three months ended March 31, 2015 - - Total comprehensive income for the three months ended March 31, 2015 - - BALANCE AT MARCH 31, 2015 $ 7,756,966 $ 5,739,080 BALANCE AT JANUARY 1, 2016 $ 7,756,966 $ 5,739,080 Net profit for the three months ended March 31, 2016 - - Other comprehensive income for the three months ended March 31, 2016 - - Total comprehensive income for the three months ended March 31, 2016 - - BALANCE AT MARCH 31, 2016 $ 7,756,966 $ 5,739,080	Retained Earnings	Total $ 6,140,069 393,808 - 393,808 $ 6,533,877 $ 6,608,606 135,493 - 135,493 $ 6,744,099		Others	Total $ 185 - (1) (1) $ 184 $ 24,757 - 11,994 11,994 $ 36,751	Total Equity $ 19,636,300 393,808 (1) 393,807 $ 20,030,107 $ 20,129,409 135,493 11,994 147,487 $ 20,276,896
				Exchange Unrealized Difference on Gain (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ - $ 185 - - - (1) - (1) $ - $ 184 $ 24,539 $ 218 - - 11,950 44 11,950 44 $ 36,489 $ 262
	Unappropriated Legal Reserve Earnings $ 988,813 $ 5,151,256 - 393,808 - - - 393,808 $ 988,813 $ 5,545,064 $ 1,097,493 $ 5,511,113 - 135,493 - - - 135,493 $ 1,097,493 $ 5,646,606

The accompanying notes are an integral part of the consolidated financial statements.

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Interest expense Interest income Write-down of inventory Reversal of write-down of inventories Loss on foreign exchange, net Other items Changes in operating assets and liabilities Increase in trade receivables (Increase) decrease in other receivables (Increase) decrease in inventories Increase in prepayments Increase (decrease) in trade payables Decrease in other payables Increase in other current liabilities Increase in net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property, plant and equipment Increase in prepayment for equipment Decrease in refundable deposits Increase in other investing activities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from guarantee deposits received Refund of guarantee deposits received Increase in other non-current liabilities Net cash generated from (used in) financing activities		For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 164,475 518,851 9,381 431 (3,431) 20,897 - 13,630 9 (75,425) 3,010 (155,063) (5,562) 1,147 (210,200) 9,141 1,779 293,070 3,431 (194) (1,863) 294,444 (416,331) (19,221) 12 (8,000) (443,540) 417 - - 417	2015 $ 474,684 509,139 18,002 2,939 (3,901) - (9,899) 3,098 - (64,442) (7,860) 1,635 (20,593) (18,688) (95,427) 3,704 1,940 794,331 3,901 (3,117) (550) 794,565 (20,633) (6,798) 58 - (27,373) - (712) 14 (698) (Continued)

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ (22,841) (171,520) 2,787,512 $ 2,615,992	2015 $ (2,813) 763,681 2,245,067 $ 3,008,748

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Formosa Komatsu Silicon Corporation (the “Company”) was established by Formosa Plastics Corporation, Asia Pacific Investment Corporation and Komatsu Electronic Metals Co., Ltd. in November 1995. The Company mainly manufactures and sells electronic materials made from silicon wafer.

On October 18, 2006, Sumco Corporation acquired 51% equity in Komatsu Electronic Metals Co., Ltd. As the result, the Company’s name was changed to Formosa Sumco Technology Corporation in accordance with the resolution passed at the general shareholders’ meeting on December 29, 2006, and this name change was registered with the Ministry of Economic Affairs, Republic of China.

The Company went public on September 12, 2006. The Company’s shares began to be traded on the Emerging Stock Market of the Taiwan GreTai Securities Market on November 23, 2006 and became listed on the Taiwan Stock Exchange on December 10, 2007.

The Company’s parent is Sumco Techxiv Corporation, which held 48.85% of ordinary shares of the Company as of March 31, 2016 and 2015. The Company’s ultimate parent is Sumco Corporation.

The consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on May 6, 2016.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERNATIONALS

The International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) in Issue But Not Yet Endorsed by the FSC

The Group have not applied the following IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) issued by the International Accounting Standards Board (IASB) but not yet endorsed by the FSC.

On March 10, 2016, the FSC announced the scope of IFRSs to be endorsed and will take effect from January 1, 2017. The scope includes all IFRSs that were issued by the IASB before January 1, 2016 and have effective dates on or before January 1, 2017, which means the scope excludes those that are not yet effective as of January 1, 2017 such as IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from Contracts with Customers” and those with undetermined effective date. In addition, the FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new, amended and revised standards and interpretations.

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New, Amended or Revised Standards and Interpretations Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” IFRS 15 “Revenue from Contracts with Customers” Amendment to IFRS 15 “Clarifications to IFRS 15” IFRS 16 “Leases” Amendment to IAS 1 “Disclosure Initiative” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”

Effective Date Announced by IASB (Note 1)

July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 3) January 1, 2018 January 1, 2018 To be determined by IASB January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2016 January 1, 2017 January 1, 2017 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

• Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

Except for the following items, the Group believes that the adoption of aforementioned standards or interpretations will not have a significant effect on the Group’s accounting policies.

Amendments to IAS 36, “Recoverable Amount Disclosures for Non-financial Assets”

The amendment clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is fair value less costs of disposal, the Group is required to disclose the fair value

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hierarchy. If the fair value measurements are categorized within Level 2/Level 3, the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using present value technique.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

• b. Basis of consolidation

The detail information of subsidiaries including the percentage of ownership and main business, please see Note 10 and Table 6.

• c. Other significant accounting policies

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2015.

• 1) Defined benefit retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

• 2) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Company’s financial statements for the year ended December 31, 2015.

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6. CASH AND CASH EQUIVALENTS

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Cash on hand	$	5	$	-	$	-
Checking deposits		872		738		1,268
Demand deposits		803		803		801
Foreign currency deposits		635,725		221,313		176,548
Cash equivalent (investments with original
maturities less than three months)
Commercial papers		256,779		291,851		811,369
Repurchase agreements collateralized by bonds		971,808		1,522,807		1,418,762
Time deposits		750,000		750,000		600,000
	$	2,615,992	$	2,787,512	$	3,008,748

The market rate intervals of cash in bank, commercial papers and repurchase agreement collateralized by bonds at the end of the reporting period were as follows:

		December 31,
	March 31, 2016	2015	March 31,		2015
Demand deposits	0.11%	0.13%		0.17%
Foreign currency deposits	0.01%	0.01%		0.01%
Commercial papers	0.39%-0.43%	0.45%-0.46%	0.64%-0.68%
Repurchase agreement collateralized by bonds	0.39%-0.45%	0.45%-0.48%	0.63%-0.65%
Time deposits	0.55%-0.74%	0.65%-0.81%	0.33%-0.87%
DEBT INVESTMENTS WITH NO ACTIVE MARKET
		December 31,
	March 31, 2016	2015	March 31,		2015
Current
Time deposits with original maturity more than 3
months	$ 300,000	$ 300,000	$		-
Interest rates	0.18%-0.85%	0.37%-1.02%		-
TRADE RECEIVABLES AND OTHER RECEIVABLES
		December 31,
	March 31, 2016	2015	March 31,		2015
Trade receivables
Trade receivables	$ 1,460,273	$ 1,422,400	$	1,693,211
Less: Allowance for impairment loss	-	-			-
	$ 1,460,273	$ 1,422,400	$	1,693,211
				(Continued)

7. DEBT INVESTMENTS WITH NO ACTIVE MARKET

8. TRADE RECEIVABLES AND OTHER RECEIVABLES

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			December 31,	December 31,
	March	31, 2016		2015	March 31, 2015
Other receivables
Tax receivables	$	13,768	$	18,109	$	7,802
Others		5,831		4,500		9,914
	$	19,599	$	22,609	$	17,716
						(Concluded)

Trade Receivables

The average credit period on sales of goods was 30-90 days. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. The Group recognized an allowance for impairment loss of 100% against all receivables over 180 days because historical experience had been that receivables that are past due beyond 180 days were not recoverable. Allowance for impairment loss were recognized against trade receivables between 1 days and 180 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

The aging of trade receivables was as follows:

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
0-30 days	$	790,639	$	729,953	$	995,262
31-60 days		523,003		514,237		518,816
61-90 days		126,278		148,168		147,869
91-120 days		20,353		30,042		31,264
	$	1,460,273	$	1,422,400	$	1,693,211

The above aging schedule was based on the invoice date.

There are no receivables that were past due but not impaired as of March 31, 2016, December 31, 2015 and March 31, 2015.

9. INVENTORIES

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Raw materials	$	447,736	$	374,589	$	265,366
Supplies		713,165		717,575		665,238
Semi-finished goods		420,266		329,069		245,576
Finished goods		852,890		831,308		554,688
Merchandise inventories		38,045		64,498		37,402
Less: Allowance for inventory devaluation		(51,184)		(30,287)		(16,172)
	$	2,420,918	$	2,286,752	$	1,752,098

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The cost of inventories recognized as cost of goods sold for the three months ended March 31, 2016, included inventory write-downs of $20,897 thousand, unamortized fixed manufacturing overhead of $9,391 thousand and selling silicon waste income of $10,183 thousand.

The cost of inventories recognized as cost of goods sold for the three months ended March 31, 2015, included reversal of inventory write-downs of $9,899 thousand, and selling silicon waste income of $16,326 thousand. Previous write downs were reversed as a result of increased selling prices and reduced cost of inventory.

10. SUBSIDIARIES

Subsidiary Included in the Consolidated Financial Statements

Investor Investee Nature of Activities The Company Japan Formosa Sumco Technology Corporation Manufacturing, selling and other related business of high quality ingot	Proportion of Ownership
	March 31, 2016 December 31, 2015 March 31, 2015 100% (Note) 100% (Note) -

Note: The Company established subsidiary (Japan Formosa Sumco Technology Corporation) in June 2015 and incorporated in the consolidated financial statements from the date of the establishment.

The investment amount of above subsidiary included in the consolidated financial statements, was calculated and disclosed on the basis of reviewed financial statements as of and for the same reporting periods as the Company.

11. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Cost Balance at January 1, 2016 $ 120,906 Additions - Reclassified - Disposals - Effect of foreign currency exchange differences - Balance at March 31, 2016 $ 120,906 Accumulated depreciation and impairment Balance at January 1, 2016 $ - Disposals - Impairment losses recognized in profit or loss - Depreciation expense - Effect of foreign currency exchange differences - Balance at March 31, 2016 $ - Carrying amounts at January 1, 2016 $ 120,906 Carrying amounts at March 31, 2016 $ 120,906	Buildings Machinery and Equipment $ 3,896,948 $ 29,457,950 - 9,965 3,888 458,109 - (21 ) - 19,931 $ 3,900,836 $ 29,945,934 $ 1,023,022 $ 18,168,069 - (21 ) - - 27,446 486,423 - 298 $ 1,050,468 $ 18,654,769 $ 2,873,926 $ 11,289,881 $ 2,850,368 $ 11,291,165	Other Equipment Equipment Under Installation and Construction in Progress Total $ 713,825 $ 432,180 $ 34,621,809 8,461 255,470 273,896 9,108 (471,189 ) (84 ) (284 ) - (305 ) 369 18,498 38,798 $ 731,479 $ 234,959 $ 34,934,114 $ 633,342 $ - $ 19,824,433 (284 ) - (305 ) 11 - 11 4,982 - 518,851 9 - 307 $ 638,060 $ - $ 20,343,297 $ 80,483 $ 432,180 $ 14,797,376 $ 93,419 $ 234,959 $ 14,590,817 (Continued)

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Freehold Land Cost Balance at January 1, 2015 $ 120,906 Additions - Disposals - Balance at March 31, 2015 $ 120,906 Accumulated depreciation and impairment Balance at January 1, 2015 $ - Disposals - Depreciation expense - Balance at March 31, 2015 $ - Carrying amounts at March 31, 2015 $ 120,906	Buildings Machinery and Equipment $ 3,876,154 $ 28,602,295 989 60,361 - (70) $ 3,877,143 $ 28,662,586 $ 912,914 $ 16,273,114 - (70 ) 27,843 477,738 $ 940,757 $ 16,750,782 $ 2,936,386 $ 11,911,804	Other Equipment Equipment Under Installation and Construction in Progress Total $ 676,873 $ 13,878 $ 33,290,106 5,671 4,925 71,946 (2,593) - (2,663) $ 679,951 $ 18,803 $ 33,359,389 $ 622,174 $ - $ 17,808,202 (2,593 ) - (2,663 ) 3,558 - 509,139 $ 623,139 $ - $ 18,314,678 $ 56,812 $ 18,803 $ 15,044,711 (Concluded)

The above items of property, plant and equipment were depreciated on a straight-line basis over the estimated useful life of the asset:

Building
Real estate, dormitory, warehouse, and readiness room	23-35 years
Wastewater treatment area and strain tank	15-35 years
Machinery and equipment	5-12 years
Other equipment	3-12 years

• a. The accumulated impairment losses due to unusable machineries were $18,008 thousand, $18,000 thousand and $12,785 thousand as of March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The impairment losses recognized for $11 thousand and $0 thousand for the three months ended March 31, 2016 and 2015, respectively, and had been included in profit or loss in the statement of comprehensive income.

• b. Please refer to Note 23 for those provided as collateral or security on March 31, 2016.

12. INTANGIBLE ASSETS

				December	December	31,
	March	31,	2016		2015		March 31, 2015
Technical cooperation fee	$		-	$		-	$ 25,305

In February 2005, the Group signed a contract with Komatsu Electronic Metals Co., Ltd. (KEMC, now known as Sumco Techxiv Corporation) and cost US$10,000 thousand. Under this contract, KEMC will provide the Company with technology and assistance. On March 24, 2005, the Company paid 306,475 thousand for technology licensing, which was recognized as intangible assets, and amortized in 109 months in total. The amortized amounts recognized as manufacturing expenses were $0 thousand and $8,434 thousand for the three months ended March 31, 2016 and 2015, respectively.

• 14 -

Except for recognizing amortization expenses, the Group did not recognize any additions, disposals and impairment loss of intangible assets for the three months ended March 31, 2016 and 2015.

13. OTHER ASSETS

		December 31,
	March 31, 2016	2015	March 31, 2015
Prepayments (including current and non-current)	$ 180,128	$ 174,338	$ 190,406
Others (including test fee and electricity
subsidies)	56,325	57,703	74,753
	$ 236,453	$ 232,041	$ 265,159
Current	$ 180,128	$ 174,338	$ 174,000
Non-current	56,325	57,703	91,159
	$ 236,453	$ 232,041	$ 265,159

14. OTHER LIABILITIES

		December 31,
	March 31, 2016	2015	March 31, 2015
Other payables-current
Payable for purchase of equipment	$ 133,291	$ 286,686	$	31,957
Payable for salary and bonus	136,875	327,669		166,265
Payable for insurance	18,978	23,076		28,148
Payable for utilities	47,003	50,233		52,118
Payable for royalties - related parties	8,832	96,623		35,850
Others (Note)	156,805	80,855		82,004
	$ 501,784	$ 865,142	$	396,342

Note: The others of other payables - current are mainly payable for project fee, pension cost, employee benefits and taxation.

15. LONG-TERM BORROWINGS

				December	31,
	March	31,	2016	2015		March 31, 2015
Secured borrowings
Bank loans	$		-	$	-	$ 690,916
Less: Current portion			-		-	(345,458)
Long-term borrowings	$		-	$	-	$ 345,458
Interest rate		-		-		1.712%

• 15 -

Above bank loan is the contract of long-term syndicated borrowings with Mega International Commercial Bank secured by the Group’s building and machinery (see Note 23). The number of syndicated bank is totally 24. The amount of such loan was $1,900,000 thousand. Its term was from December 21, 2009 to December 21, 2016. The first repayment is paid at least two years of the borrowing date, and afterwards the repayments are paid semi-annually, with total 11 repayments to principal, the interest was paid monthly. The interest is 90-day commercial paper fixing rate in the secondary market plus 0.75% floating interest.

The Group has repaid the entire long-term borrowings on June 16, 2015.

16. RETIREMENT BENEFIT PLANS

Pension costs in respect of defined benefit plans are calculated by the actuarially determined pension cost rate at the end of the prior financial year and are recognized in each period respectively as follow:

Operating cost Operating expenses	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 2,563 647 $ 3,210	2015 $ 2,845 524 $ 3,369

17. EQUITY

Share Capital

Ordinary shares

		December 31,
	March 31, 2016	2015	March 31, 2015
Numbers of shares authorized (in thousands)	775,697	775,697	775,697
Shares authorized	$ 7,756,966	$ 7,756,966	$ 7,756,966
Number of shares issued and fully paid (in
thousands)	775,697	775,697	775,697
Shares issued	$ 7,756,966	$ 7,756,966	$ 7,756,966

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

Capital Surplus

The capital surplus from shares issued in excess of par may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed in cash or transferred to share capital limited to a certain percentage of the Company’s paid-in capital and once a year.

Retained Earnings and Dividend Policy

Under the Company’s Articles of Incorporation, the Company should make appropriations from its net income (less any deficit) and 10% legal reserve as well as special reserve if necessary, plus the unappropriated earnings of prior years, and Board of Directors will distribute the dividends on the shareholders meeting. The Company should be distributed bonus (0.1%-1% of distributable earnings deducting dividends) to employees as the annual expenses that year.

• 16 -

The Company belongs to a high tech capital intensive industry. To ensure the cash needs for the Company’s present and future expansion plans, the Company has three different methods to distribute dividends, including cash dividends, capitalization of retained earnings, and capital surplus, and according to distributable surplus less legal and special reserve, the dividends are distributed to 80% at most. In principle, cash dividends are the priority to distribute, and the aggregate proportion of capitalization of retained earnings and capital surplus may not exceed 50% of total dividends.

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The Company expects to make consequential amendments to the Company’s Articles of Incorporation to be approved on June 16, 2016 annual shareholders’ meeting. For information about the accrual basis of the employees’ compensation and remuneration to directors and supervisors, and the actual appropriations, please refer to Employee benefits expense in Note 18.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Company.

The appropriations of earnings for 2015 and 2014 had been proposed by the Company’s board of directors on March 16, 2016 and approved in the shareholders’ meetings on June 18, 2015, respectively. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2015 2014 $ 127,805 $ 108,680 853,266 775,697	Dividends Per Share (NT$)
		For the Year Ended December 31
		2015 2014 $ 1.10 $ 1.00

The appropriations of earnings for 2015 are subject to the resolution of the shareholders’ meeting to held on June 16, 2016.

Others Equity Items

The exchange differences arising on translation of foreign operation’s net assets from its functional currency to the Group’s presentation currency (NTD) are recognized directly in other comprehensive income and also accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the exchange differences on translating foreign operations are reclassified to profit or loss on the disposal of the foreign operation.

Unrealized gain/loss on available-for-sale financial assets represents the cumulative gains or losses arising from the fair value measurement on available-for-sale financial assets that are recognized in other comprehensive income, excluding when those available-for-sale financial assets have been disposed of or are determined to be impaired subsequently, the related cumulative gains or losses in other comprehensive income are reclassified to profit or loss.

• 17 -

18. NET INCOME

Other Income

Interest income Others (including commission income)	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 3,431 1,894 $ 5,325	2015 $ 3,901 3,878 $ 7,779

Other Gains and Losses

Net foreign exchange losses Impairment loss on equipment Others	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ (21,655) (11) (239) $ (21,905)	2015 $ (10,048) - (121) $ (10,169)

Finance Costs

Interest on bank loans Other interest expense Depreciation and Amortization Property, plant and equipment Amortization An analysis of depreciation by function Operating costs Operating expenses	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 2015 $ - $ 2,925 431 14 $ 431 $ 2,939 For the Three Months Ended March 31
		2016 $ 518,851 9,381 $ 528,232 $ 516,844 2,007 $ 518,851	2015 $ 509,139 18,002 $ 527,141 $ 507,067 2,072 $ 509,139 (Continued)

• 18 -

An analysis of amortization by function Operating costs Operating expenses Employee Benefits Expense Post-employment benefits (see Note 16) Defined contribution plans Defined benefit plans Salary and bonus etc. An analysis of employee benefits expense by function Operating costs Operating expenses	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
	2016 2015 $ 9,381 $ 18,002 - - $ 9,381 $ 18,002 (Concluded) For the Three Months Ended March 31
		2016 $ 12,071 3,210 15,281 332,314 $ 347,595 $ 309,267 38,328 $ 347,595	2015 $ 11,713 3,369 15,082 317,648 $ 332,730 $ 297,459 35,271 $ 332,730

The existing Articles of Incorporation of the Company stipulate to distribute bonus to employees at the rates 0.1%-1% of distributable earnings deducting dividends and legal reserve. For the three months ended March 31, 2015, the bonus to employees was $259 thousand.

To be in compliance with the Company Act as amended in May 2015, the proposed amended Articles of Incorporation of the Company stipulate to distribute employees’ compensation at the rates 0.05%-0.5% of net profit before income tax, and employees’ compensation. For the three months ended March 31, 2016, the employees’ compensation was $82 thousand representing 0.05% of the base net profit.

Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the annual consolidated financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

• 19 -

The appropriations of bonuses to employees and remuneration to directors and supervisors for 2015 and 2014 have been proposed by the Company’s board of directs on March 16, 2016, and approved in the shareholders’ meetings on June 18, 2015, respectively, were as follows:

Bonus to employees Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2015 Cash Dividends Share Dividends $ 768 $ - - -	2014
		Cash Dividends Share Dividends $ 1,580 $ - - -

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors resolved by the Company’s board of directors on March 16, 2016, and approved in the shareholders’ meetings on June 18, 2015, respectively, and the amounts recognized in the financial statements for the year ended December 31, 2015 and 2014.

Information on the employee’s compensation and remuneration to directors and supervisors resolved by the Company’s board of directors in 2016 and bonus to employees, directors and supervisors approved in the shareholders’ meetings in 2105 is available on the Market Observation Post System website of the Taiwan Stock Exchange.

Gain or Loss on Foreign Currency Exchange

Foreign exchange gains Foreign exchange losses Net loss	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 63,479 (85,134) $ (21,655)	2015 $ 9,938 (19,986) $ (10,048)

19. INCOME TAX

Income Tax Recognized in Profit or Loss

The major components of tax expense were as follows:

Current tax In respect of the current period Adjustments for prior periods Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 26,134 - 2,848 $ 28,982	2015 $ 58,490 179 22,207 $ 80,876

• 20 -

Integrated Income Tax

			December 31,	December 31,
	March 31, 2016			2015	March 31, 2015
Unappropriated earnings
Generated before January 1, 1998	$	-	$	-	$	-
Generated on and after January 1, 1998		5,646,606		5,511,113		5,545,064
	$	5,646,606	$	5,511,113	$	5,545,064
Imputation credits accounts	$	665,501	$	640,599	$	603,127

The creditable ratio for distribution of earnings of 2015 and 2014 was 11.62% (estimate) and 10.57%, respectively.

Income Tax Assessments

The tax authorities have examined income tax returns of the Company through 2013.

20. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per shares were as follows:

Net income Weighted average number of ordinary shares in computation of basic earnings per share (in thousands) Effect of potentially dilutive ordinary shares Employees’ compensation (in thousands) Weighted average number of shares outstanding used for the earnings per share computation (in thousands)	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 135,493 775,697 20 775,717	2015 $ 393,808 775,697 34 775,731

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

21. FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

a. Fair value of financial instruments not carried at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

• 21 -

• b. Fair value measurements recognized in the balance sheets

The available-for-sale financial assets the Group invested on March 31, 2016, December 31, 2015 and March 31, 2015 are mainly stocks of listed company in Taiwan. The stocks are measured by fair value of Level 1. There were no transfers between Levels 1 and 2 for the three months ended March 31, 2016 and 2015, respectively.

Categories of Financial Instruments

		December 31,
	March 31, 2016	2015	March 31, 2015
Financial assets
Loans and receivables (a)	$ 4,382,301	$ 4,514,629	$ 4,712,080
Available-for-sale financial assets	300	256	222
Financial liabilities
Measured at amortized cost (b)	967,256	1,158,275	1,569,930

• a. The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalent, debt investments with no active market, trade and other receivables (excluding tax receivables), and refundable deposits.

• b. The balances included financial liabilities measured at amortized cost, which comprise long-term loans (including current portion), trade and other payables (excluding payable for salary, bonus, pension cost, and taxation), and guarantee deposits.

Financial Risk Management Objectives and Policies

The Group’s major financial instruments include equity investments, trade receivable, trade payables, and bank borrowings. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

a. Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (1) below) and interest rates (see (2) below).

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

• 1) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 25.

Sensitivity analysis

The Group was mainly exposed to the Currency USD and Currency JPY.

• 22 -

The following table details the Group’s sensitivity to a 10% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit associated with New Taiwan dollars weakening 10% against the relevant currency. For a 10% strengthening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and the balances below would be negative.

Profit or loss	Currency USD Impact For the Three Months Ended March 31 2016 2015 $ 160,956 (a) $ 150,008 (a)	Currency JPY Impact
		For the Three Months Ended March 31
		2016 2015 $ (9,263) (b) $ (3,940) (b)

• a) This was mainly attributable to the exposure outstanding on Currency USD cash, receivables and payables, which were not hedged at the end of the reporting period.

• b) This was mainly attributable to the exposure to outstanding on Currency JPY cash, receivables and payables, which were not hedged, at the end of the reporting period.

The Group’s sensitivity to foreign currency has no major difference for the three months ended March 31, 2016 and 2015.

• 2) Interest rate risk

The Group was exposed to interest rate risk because the Group borrowed funds at floating interest rates.

The Group also borrowed funds at fixed interest rates, and there is no exposure to interest rate risk because those are short-term.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

		December	31,
	March 31, 2016	2015		March 31, 2015
Fair value interest rate risk
Financial assets	$ 1,978,587	$ 2,564,658		$ 2,830,131
Cash flow interest rate risk
Financial assets	936,527	522,121		177,349
Financial liabilities	-		-	690,916

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. An 1% basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

• 23 -

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the three months ended March 31, 2016 would increase/decrease by $2,341 thousand, which was mainly attributable to the Group’s exposure to interest rates on its variable-rate bank deposits.

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the three months ended March 31, 2015 would decrease/increase by $1,284 thousand, which was mainly attributable to the Group’s exposure to interest rates on its variable-rate bank deposits and bank borrowings.

The Group’s sensitivity to interest rates has no major difference for the three months ended March 31, 2016 and 2015.

b. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is exposed to credit risk from operating activities, primarily trade receivables.

In order to minimize credit risk, management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this regard, management believes the Group’s credit risk was significantly reduced.

The Group did not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics, except for the clients with trade receivables accounting for 10% of total monetary assets. The Group defines counterparties as having similar characteristics if they are related entities. The receivables from the clients with trade receivables accounting for 10% of total monetary assets amounted to $0 thousand, $0 thousand and $0 thousand as of March 31, 2016, December 31, 2015 and March 31, 2015, respectively.

c. Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents, highly liquid marketable securities, and sufficient bank borrowings deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

1) Liquidity and interest risk rate table

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

• 24 -

March 31, 2016

		6	Months to
	1-6 Months		1 Year		1-3 Years		3+ Years
Non-derivative financial
liabilities
Non-interest bearing	$ 1,115,466	$	-	$	-	$	-
December 31, 2015
		6	Months to
	1-6 Months		1 Year		1-3 Years		3+ Years
Non-derivative financial
liabilities
Non-interest bearing	$ 1,498,946	$	-	$	-	$	-
March 31, 2015
		6	Months to
	1-6 Months		1 Year		1-3 Years		3+ Years
Non-derivative financial
liabilities
Non-interest bearing	$ 1,063,126	$	-	$	-	$	-
Variable interest rate
liabilities	177,832		176,350		348,253		-
	$ 1,240,958	$	176,350	$	348,253	$	-
The following table details the	Group’s expected maturity for some of its non-derivative financi
assets. The tables below had	been drawn up	based on the undiscounted contractual					maturities
the financial assets including	interest that will		be earned on those assets.			The	inclusion
information on non-derivative	financial assets is		necessary in order to understand				the Group
liquidity risk management as the liquidity is managed on a net asset and liability						basis.
March 31, 2016
						6	Months to
				1-6 Months			1 Year
Non-derivative financial assets
Non-interest bearing				$ 1,480,750		$	-
Variable interest rate assets					936,527		-
Fixed interest rate assets				1,978,587			-
				$ 4,395,864		$	-

The following table details the Group’s expected maturity for some of its non-derivative financial assets. The tables below had been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

• 25 -

December 31, 2015

Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets March 31, 2015 Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets	1-6 Months $ 1,445,747 522,116 2,564,658 $ 4,532,521 1-6 Months $ 1,712,195 177,349 2,830,131 $ 4,719,675	6 Months to 1 Year $ - - - $ - 6 Months to 1 Year $ - - - $ -

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

22. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and its related parties are disclosed below.

Related parties and their relationships with the Group:

Related Party Categories and Related Party Relationship with the Group

Sumco Corporation Ultimate parent company Sumco Techxiv Corporation Parent company Formosa Plastic Corporation Associate (equity-method investor holds 29.06% of the Company Formosa Technologies Corporation Others (a director is the chairman of the Company) Asia Pacific Investment Corporation Others (a director is the chairman of the Company) Formosa Daikin Advanced Chemicals Co., Ltd. Others (same chairman)

• 26 -

Operating Transaction

Sales of goods Parent company	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 184,684	2015 $ 160,685

The transaction prices are based on mutual agreement. The credit term is 60 days from the day the related party confirms the sale.

Purchases of goods Ultimate parent company Parent company Associate Others (same chairman or a director is the chairman of the Company)	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 295,172 2,393 5,461 3,308 $ 306,334	2015 $ 369,291 4,296 5,600 3,657 $ 382,844

The transaction prices are based on mutual agreement. Payments are due within the following number of days from the receipt of the Group’s goods: (a) 30 to 70 days - Parent company; (b) 60 to 120 days - Ultimate parent company; (c) immediately upon delivery - others.

Receivables from Related Parties

		December 31,
	March 31, 2016	2015	March 31, 2015
Parent company	$ 120,720	$ 119,977	$ 104,469
Payables to Related Parties
		December 31,
	March 31, 2016	2015	March 31, 2015
Ultimate parent company	$ 194,917	$ 256,496	$ 304,310
Parent company	37	7,326	1,909
Associate	1,793	1,824	1,968
Others (same chairman or a director is the
chairman of the Company)	360	240	126
	$ 197,107	$ 265,886	$ 308,313

The outstanding trade payables to related parties are unsecured and will pay by cash. The outstanding trade receivables from related parties are unsecured. For the three months ended March 31, 2016 and 2015, no impairment loss was recognized for trade receivables from related parties.

• 27 -

Commission and Other Receivables

Ultimate parent company (commission, other revenue, deduction of operating cost) March 31, 2016 Ultimate parent company (other receivables) $ 5,433 Compensation of Key Management Personnel	For the Three Months Ended March 31
	2016 2015 $ 4,724 $ 7,736 December 31, 2015 March 31, 2015 $ 3,713 $ 9,386

Short-term employee benefits Post-employment benefits Other long-term employee benefits	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2016 $ 1,898 34 3 $ 1,935	2015 $ 1,586 34 5 $ 1,625

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

Other Transactions with Related Parties

• a. Endorsements and guarantees

There are no endorsements and guarantees provided by related parties as of March 31, 2016 and December 31, 2015.

Sumco Techxiv Corporation, Formosa Plastics Corporation and Asia Pacific Investment Corporation provided endorsement and guarantees for the long-term loans, amounting to $3,455,837 thousand, $1,614,164 thousand and $1,680,999 thousand as of March 31, 2015. Actually amount disbursed is described in Note 15.

• b. Manufacturing expense

The repairs and maintenance expenses of Formosa Technologies Corporation were $6,309 thousand and $7,598 thousand for the three months ended March 31, 2016 and 2015, respectively. The transaction amounts are based on mutual agreement, and will be paid upon completion.

The manufacturing expenses of ultimate parent company were $40,333 thousand for the three months ended March 31, 2016. The unpaid amount has been recognized as accrued expenses for $40,333 thousand as of March 31, 2016 and will be paid until May 2016.

• c. For the three months ended March 31, 2016, the Group purchased Pulling Machine from ultimate parent company with a contract price of $253,921 thousand (before tax). After deducting the paid amount, the unpaid amount has been recognized as payable for purchase of equipment for $117,512 thousand as of March 31, 2016 and will be paid after check and acceptance.

• 28 -

For the year ended December 31, 2015, the Group purchased HG Furance, Pulling Machine and other equipments from ultimate parent company. The unpaid amount has been recognized as payable for purchase of equipment for $245,967 thousand as of December 31, 2015 has been paid after check and acceptance as of March 31, 2016.

d. Other transactions

In February 2005, the Company signed a contract with parent company. Under this contract, parent company will provide the Company with technology and assistance in manufacturing silicon wafer semiconductors. On March 24, 2005, the Company paid US$10,000 thousand ($306,475 thousand) for technology licensing, which was recognized as intangible assets. (Note 12)

Under another contract, the Company should pay royalty to parent company regularly starting in 2003. The royalty was recognized as selling expenses. The unpaid amount on March 31, 2016 and 2015 was recognized as accrued expenses (other payables) and will be paid in February 2016.

In August 2010, the Company signed a contract with the ultimate parent company. Under this contract, the ultimate parent company will provide the Company with technology and assistance in manufacturing silicon wafer semiconductors. The Company should pay royalty to the ultimate parent company regularly starting in 2010. The royalty was recognized as selling expenses. The unpaid amount on March 31, 2016 and 2015 was recognized as accrued expenses (other payables) and will be paid in February 2017 and February 2016, respectively.

The above-mentioned selling expenses and accrued expenses (other payables) resulted from transactions with related parties are summarized as follows:

Selling expenses Parent company Ultimate parent company March 31, 2016 Accrued expenses (other payables) Parent company $ 7,028 Ultimate parent company 1,804 $ 8,832	For the Three Months Ended March 31
	2016 2015 $ 7,028 $ 30,566 1,804 5,284 $ 8,832 $ 35,850 December 31, 2015 March 31, 2015 $ 76,297 $ 30,566 20,326 5,284 $ 96,623 $ 35,850

• 29 -

23. PLEDGED ASSETS

The following assets were provided as collateral for bank borrowings:

					December	31,
		March	31,	2016	2015		March 31, 2015
Buildings		$		-	$	-	$ 1,863,929
Machinery	and equipment, net			-		-	1,219,352
		$		-	$	-	$ 3,083,281

The above pledged assets have been registered the deletion of collateral in August 2015.

24. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of March 31, 2016 were as follows:

• a. As of March 31, 2016, unused letters of credit for purchased of raw materials and equipment amounted to approximately $11,551 thousand.

• b. The newly purchased machinery and equipment are exempt from tariff. Under the “estimated useful lives of fixed assets” enacted by Executive Yuan, if there’s any capital reduction or other way to transfer the usage of the machinery, equipment or components mentioned above to third party, except those transfer to permitted business, the Company should make a supplementary import duties of the fixed assets.

• c. The Group entered into a contract to purchase equipment with a contract price of $1,185,341 thousand (before tax). As of March 31, 2016, the Group has already paid $984,660 thousand and recognized as machinery and equipment under installation. The unpaid amount was $200,681 thousand.

25. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

March 31, 2016

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 63,865 32.282 (USD:NTD) JPY 11,291 0.2859 (JPY:NTD)	Carrying Amount $ 2,061,700 3,228 $ 2,064,928 (Continued)

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Foreign Currencies Exchange Rate Financial liabilities Monetary items USD $ 12,178 32.282 (USD:NTD) USD 1,828 112,874 (USD:JPY) JPY 335,292 0.2859 (JPY:NTD) December 31, 2015 Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 49,551 33.066 (USD:NTD) JPY 12,805 0.2736 (JPY:NTD) Financial liabilities Monetary items USD 12,912 33.066 (USD:NTD) USD 799 120.855(USD:JPY) JPY 270,041 0.2736 (JPY:NTD) March 31, 2015 Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 59,244 31.401 (USD:NTD) JPY 35,068 0.2604 (JPY:NTD) Financial liabilities Monetary items USD 11,473 31.401 (USD:NTD) JPY 186,390 0.2604 (JPY:NTD)

Carrying Amount $ 393,134 59,002 95,860 $ 547,996 (Concluded) Carrying Amount $ 1,638,460 3,503 $ 1,641,963 $ 426,949 26,436 73,883 $ 527,268 Carrying Amount $ 1,860,326 9,132 $ 1,869,458 $ 360,250 48,536 $ 408,786

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The Group is mainly exposed to USD and JPY. The significant realized and unrealized foreign exchange gains (losses), please see Note 18.

26. DISCLOSED ITEMS

Information about significant transactions and investees:

• a. Financing provided to others. (Table 1)

• b. Endorsements/guarantees provided. (None)

• c. Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities). (Table 2)

• d. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital. (None)

• e. Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

• f. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

• g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 3)

• h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)

• i. Trading in derivative instruments. (None)

• j. Intercompany relationships and significant intercompany transactions. (Note 22 and Table 5)

• k. Information on investees. (Table 6)

Information on Investments in Mainland China

None.

27. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods. The Group’s reportable segment is only the silicon wafer segment because the Group is mainly manufacturing and selling the silicon wafer electronic products. The accounting policy of reportable segment is the same as the Note 4 “summary of significant accounting policies”.

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Segment Revenues and Results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment.

Silicon wafer segment Miscellaneous income Miscellaneous expense Profit before tax		Segment Revenue For the Three Months Ended March 31 2016 2015 $ 2,535,917 $ 2,912,896		Segment Profit	Segment Profit
				For the Three Months Ended March 31
		2016 $ 2,535,917		2016 $ 162,820 1,894 (239) $ 164,475	2015 $ 470,927 3,878 (121) $ 474,684

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales during the three months ended March 31, 2016 and 2015.

Segment profit represents the profit earned by silicon wafer segment without allocation of miscellaneous income and expense and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Segment Total Assets and Liabilities

The liabilities information is not reported to chief management decision maker on a regular basis. Therefore, all the assets and liabilities are not allocated to the reportable segment.

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TABLE 1

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE THREE MONTHS ENDED MARCH 31, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Note 3)	Actual Borrowing Amount	Interest Rate	Nature for Financing	Business Transaction Amounts	Reason for Short-term Financing	Allowance for Bad Debt	**Collateral **	**Collateral **	Financing Limits for Each Borrower	Total Financing Amount Limits	Note
													Item	Value
1	Formosa Sumco Technology Corporation	Formosa Plastic Corporation	Receivables from related parties	Yes	$ 1,500,000	$ 1,500,000	$ -	1%	The need for short-term financing	$ -	Operating capital	$ -	None	$ -	$ 5,069,224 (Note 1)	$ 10,138,448 (Note 1)
2	Formosa Sumco Technology Corporation	Japan Formosa Samco Technology Corporation	Receivables from related parties	Yes	1,680,000	1,680,000	917,629 (Note 4)	1%	The need for short-term financing	-	Operating capital	-	None	-	2,027,690 (Note 2)	10,138,448 (Note 2)

Note 1: For short-term financing requirements, the financing limits for each borrowing company should not exceed 25% of Formosa Sumco Technology Corp’s net worth. The maximum total financing provided should not exceed 50% of Formosa Sumco Technology Corp’s net worth.

Note 2: For short-term financing requirements, the financing limits for each borrowing company should not exceed 10% of Formosa Sumco Technology Corp’s net worth. The maximum total financing provided should not exceed 50% of Formosa Sumco Technology Corp’s net worth.

Note 3: The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors.

Note 4: The amount was eliminated upon consolidation.

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TABLE 2

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD MARCH 31, 2016

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	March 31, 2016	March 31, 2016	March 31, 2016	March 31, 2016	Note
				Shares	Carrying Value	Percentage of Ownership (%)	Fair Value
Formosa Sumco Technology Corporation	Stock Formosa Petrochemical Corporation	-	Available-for-sale financial asset - non-current	3,247	$ 300 (Note)		$ 300

Note: The carrying value equals the original cost of $38 pluses year-end evaluation of $262.

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TABLE 3

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2016

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Formosa Sumco Technology Corporation Japan Formosa Sumco Technology Corporation	Sumco Corporation Japan Formosa Sumco Technology Corporation Sumco Techxiv Corporation Formosa Sumco Technology Corporation	Ultimate parent company of Formosa Sumco Technology Corp. Subsidiary company of Formosa Sumco Technology Corp. Parent company of Formosa Sumco Technology Corp. Parent company of Formosa Sumco Technology Corp.	Purchase Purchase Sale Sale	$ 292,454 112,702 184,684 112,702	22 8 7 100	60 to 120 days from the receipt of the Company’s goods 70 days from the receipt of goods Net 60 days from the end of the month of when invoice is issued 70 days from the receipt of goods	No significant difference No significant difference No significant difference No significant difference	No significant difference No significant difference No significant difference No significant difference	$ (194,917) (91,437) 120,720 91,437	(30) (14) 8 100

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TABLE 4

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2016

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Nature of Relationships	**Ending Balance **	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
					Amount	Actions Taken
Formosa Sumco Technology Corporation	Sumco Techxiv Corporation Japan Formosa Sumco Technology Corporation	Parent company of Formosa Sumco Technology Corp. Subsidiary company of Formosa Sumco Technology Corporation	$ 120,720 919,147 (Notes 1 and 2)	6.14 Not applicable	$ - -	- -	$ - -	$ - -

Note 1: Including principal $917,629 thousand and interest $1,518 thousand.

Note 2: The amount was eliminated upon consolidation.

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TABLE 5

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2016 (Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Counterparty	Relationship		Transactions	Details
				Financial Statement Accounts	Amount (Note 2)	Payment Terms	% to Total Sales or Assets (Note 1)
0	The Company	Japan Formosa Sumco Technology Corporation 〃 〃	Subsidiary 〃 〃	Purchases of goods Payables to related parties Other receivables	$ 112,702 91,437 919,147	General terms 〃 〃	4.44 0.42 4.19

Note 1: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of March 31, 2016, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the three months ended March 31, 2016.

Note 2: The amount was eliminated upon consolidation.

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TABLE 6

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE THREE MONTHS ENDED MARCH 31, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of March 31,	As of March 31,	2016	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				March 31, 2016	December 31, 2015	Shares	%	Carrying Amount
Formosa Sumco Technology Corporation	Japan Formosa Sumco Technology Corporation	Japan	Manufacture, selling and other related business of high quality ingot	JPY 998,000 (NT$ 248,390)	JPY 998,000 (NT$ 248,390)	9,980	100	JPY 969,533 (NT$ 277,196)	JPY 4,087 (NT$ 1,181)	JPY (16,743) (NT$ (4,599))	Notes 1 and 2

Note 1: Carrying amount and share of profits (loss) is calculated from the financial statement reviewed by independent accountant and the percentage of ownership of investor company.

Note 2: The share of profits (losses) of investee includes the effect of unrealized gross profit on intercompany transaction.

Note 3: Intercompany balances and transactions between investor company and investee company have been eliminated upon consolidation.

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