FST - Interim / Quarterly Report 2017

Formosa Sumco Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2017 and 2016 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 September 30, 2017 and 2016 and the related consolidated statements of comprehensive income for the three months ended September 30, 2017 and 2016, and for the nine months ended September 30, 2017 and 2016, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2017 and 2016. 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 and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Deloitte & Touche Taipei, Taiwan Republic of China

November 13, 2017

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.

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) Trade receivables from unrelated parties (Notes 4 and 7) Trade receivables from related parties (Notes 4, 7 and 21) Other receivables (Notes 4, 7 and 21) Inventories (Notes 4, 5 and 8) Prepayments (Notes 4 and 12) Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Note 4) Property, plant and equipment (Notes 4, 5, 10, 21 and 22) Intangible assets (Notes 4, 5, 11 and 21) Deferred tax assets (Notes 4, 5 and 17) Prepayment for equipment (Note 4) Refundable deposits (Note 4) Other non-current assets (Notes 4 and 12) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Trade payables to unrelated parties (Note 4) Trade payables to related parties (Notes 4 and 21) Other payables (Notes 4 and 13) Other payables to related parties (Notes 4, 13 and 21) Current tax liabilities (Notes 4 and 17) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 17) Net defined benefit liabilities - non-current (Notes 4, 5 and 14) Guarantee deposits (Note 4) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY (Notes 4, 15, 17 and 19) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		September 30, 2017 (Reviewed) Amount % $ 6,454,868 28 1,964,905 9 141,933 1 12,019 - 2,229,644 10 123,316 - 10,926,685 48 344 - 11,751,324 51 274 - 129,201 1 103,375 - 205 - 5,652 - 11,990,375 52 $ 22,917,060 100 $ 391,812 2 170,191 1 542,680 2 259,535 1 172,624 1 10,395 - 1,547,237 7 4,443 - 320,578 1 702 - 39,350 - 365,073 1 1,912,310 8 7,756,966 34 5,739,080 25 1,298,337 6 6,192,744 27 7,491,081 33 17,623 - 21,004,750 92 $ 22,917,060 100		December 31, 2016 (Audited) Amount % $ 4,400,895 20 1,465,586 7 136,760 1 9,567 - 2,065,542 10 87,097 - 8,165,447 38 364 - 13,225,806 61 438 - 215,746 1 101,423 - 205 - 16,265 - 13,560,247 62 $ 21,725,694 100 $ 364,783 2 258,355 1 521,706 2 86,334 - 135,505 1 6,932 - 1,373,615 6 840 - 315,835 2 585 - 33,578 - 350,838 2 1,724,453 8 7,756,966 36 5,739,080 26 1,225,298 6 5,254,326 24 6,479,624 30 25,571 - 20,001,241 92 $ 21,725,694 100		September 30, 2016 (Reviewed)
						Amount % $ 3,205,389 15 1,458,067 7 178,571 1 10,049 - 2,229,891 10 138,936 1 7,220,903 34 306 - 13,842,749 65 493 - 203,115 1 64,597 - 205 - 26,971 - 14,138,436 66 $ 21,359,339 100 $ 328,085 2 202,429 1 475,651 2 82,032 - 96,562 1 12,063 - 1,196,822 6 1,032 - 311,625 1 898 - 25,545 - 339,100 1 1,535,922 7 7,756,966 36 5,739,080 27 1,225,298 6 5,040,551 24 6,265,849 30 61,522 - 19,823,417 93 $ 21,359,339 100

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
2017	2016	2017	2016
Amount % $ 3,271,774 100 (2,275,619) (70) 996,155 30 (126,229 ) (4 ) (55,329) (1) (181,558) (5) 814,597 25 11,901 - (13,605 ) - (90) - (1,794) - 812,803 25 (113,695) (4) 699,108 21 (1,734 ) - 3 - (1,731) - $ 697,377 21 $ 0.90 $ 0.90	Amount % $ 2,780,716 100 (2,442,812) (88) 337,904 12 (49,566 ) (2 ) (54,374) (2) (103,940) (4) 233,964 8 4,965 - (71,177 ) (2 ) (1,022) - (67,234) (2) 166,730 6 (34,429) (1) 132,301 5 (2,659 ) - 22 - (2,637) - $ 129,664 5 $ 0.17 $ 0.17	Amount % $ 9,390,712 100 (7,058,239) (75) 2,332,473 25 (292,638 ) (3 ) (160,418) (2) (453,056) (5) 1,879,417 20 31,134 - (116,098 ) (1 ) (292) - (85,256) (1) 1,794,161 19 (262,987) (3) 1,531,174 16 (7,928 ) - (20) - (7,948) - $ 1,523,226 16 $ 1.97 $ 1.97	Amount % $ 7,985,738 100 (7,025,969) (88) 959,769 12 (149,643 ) (2 ) (151,928) (2) (301,571) (4) 658,198 8 15,455 - (14,927 ) - (1,978) - (1,450) - 656,748 8 (146,239) (2) 510,509 6 36,715 1 50 - 36,765 1 $ 547,274 7 $ 0.66 $ 0.66










$	$		$

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

BALANCE AT JANUARY 1, 2016 Appropriation of the 2015 earnings Legal reserve Cash dividends Net profit for the nine months ended September 30, 2016 Other comprehensive income for the nine months ended September 30, 2016, net of income tax Total comprehensive income for the nine months ended September 30, 2016 BALANCE AT SEPTEMBER 30, 2016 BALANCE AT JANUARY 1, 2017 Appropriation of the 2016 earnings Legal reserve Cash dividends Net profit for the nine months ended September 30, 2017 Other comprehensive income for the nine months ended September 30, 2017, net of income tax Total comprehensive income for the nine months ended September 30, 2017 BALANCE AT SEPTEMBER 30, 2017	Share Capital Capital Surplus $ 7,756,966 $ 5,739,080 - - - - - - - - - - - - $ 7,756,966 $ 5,739,080 $ 7,756,966 $ 5,739,080 - - - - - - - - - - - - $ 7,756,966 $ 5,739,080		Retained Earnings	Total $ 6,608,606 - (853,266) (853,266) 510,509 - 510,509 $ 6,265,849 $ 6,479,624 - (519,717) (519,717) 1,531,174 - 1,531,174 $ 7,491,081		Others	Total $ 24,757 - - - - 36,765 36,765 $ 61,522 $ 25,571 - - - - (7,948) (7,948) $ 17,623	Total Equity $ 20,129,409 - (853,266) (853,266) 510,509 36,765 547,274 $ 19,823,417 $ 20,001,241 - (519,717) (519,717) 1,531,174 (7,948) 1,523,226 $ 21,004,750
						Exchange Unrealized Difference on Gain (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ 24,539 $ 218 - - - - - - - - 36,715 50 36,715 50 $ 61,254 $ 268 $ 25,245 $ 326 - - - - - - - - (7,928) (20) (7,928) (20) $ 17,317 $ 306
			Unappropriated Legal Reserve Earnings $ 1,097,493 $ 5,511,113 127,805 (127,805) - (853,266) 127,805 (981,071) - 510,509 - - - 510,509 $ 1,225,298 $ 5,040,551 $ 1,225,298 $ 5,254,326 73,039 (73,039) - (519,717) 73,039 (592,756) - 1,531,174 - - - 1,531,174 $ 1,298,337 $ 6,192,744

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

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 Dividend income Write-down of inventories Net gain on foreign currency exchange Other items Changes in operating assets and liabilities Trade receivables Other receivables Inventories Prepayments Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividend received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for intangible assets Proceeds on sale of debt investment with no active market Acquisitions of property, plant and equipment Increase in prepayment for equipment Decrease in refundable deposits Decrease (increase) in other investing activities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in guarantee deposits received Increase (decrease) in other non-current liabilities Cash dividends		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 1,794,161 1,565,614 10,605 292 (19,141) (19) 34,290 (7,251) (136) (506,525) (1,952) (200,329) (36,219) (54,238) 198,515 3,463 4,743 2,785,873 18,641 19 (824) (135,720) 2,667,989 - - (75,615) (50,894) - 136 (126,373) 117 5,772 (519,719)	2016 $ 656,748 1,567,542 28,591 1,978 (8,643) (13) 26,415 (15,512) 9 (224,944) 12,560 30,446 45,454 (109,413) (29,165) 5,360 5,388 1,992,801 8,643 13 (1,503) (189,529) 1,810,425 (584) 300,000 (708,023) (62,828) 12 (8,922) (480,345) 364 (89) (853,223) (Continued)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 (513,830) 26,187 2,053,973 4,400,895 $ 6,454,868	2016 (852,948) (59,255) 417,877 2,787,512 $ 3,205,389

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Formosa Sumco Technology Corporation (the “Company”, formerly Formosa Komatsu Silicon Corporation) was established by Formosa Plastics Corporation, Asia Pacific Investment Corporation and Komatsu Electronic Metals Co., Ltd. The Company was incorporated in Yulin County, Republic of China (“ROC”) and commenced its business in November 1995. The Company mainly manufactures, sells, and trades silicon wafers as well as trading of raw materials for producing silicon wafers.

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. Komatsu Silicon Corporation has changed its name to Sumco Techxiv Corporation.

The Company’s shares have been listed on Emerging Stock Board (”ESB”) on November 23, 2006, and subsequently became listed on the Taiwan Stock Exchange on December 10, 2007.

The Company’s parent is Sumco Techxiv Corporation, which held 47% and 48.85% of ordinary shares of the Company as of September 30, 2017 and 2016. The Company’s ultimate parent is Sumco Corporation.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 13, 2017.

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

1) Amendment 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 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.

2) Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

The amendments include additions of several accounting items and requirements for disclosures of impairment of non-financial assets as a consequence of the IFRSs endorsed and issued into effect by the FSC. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions and goodwill.

The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president, or is the spouse or second immediate family of the chairman of the board of directors or president of the Group are deemed to have a substantive related party relationship, unless it can be demonstrated that no control, joint control, or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationship with whom the Group has significant transaction. If the transaction or balance with a specific related party is 10% or more of the Group’s respective total transaction or balance, such transaction should be separately disclosed by the name of each related party.

b. The Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed by the FSC for application starting from 2018

New IFRSs Annual Improvements to IFRSs 2014-2016 Cycle Amendment to IFRS 2 “Classification and Measurement of Share-based Payment Transactions” Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts” IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” IFRS 15 “Revenue from Contracts with Customers” Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from Contracts with Customers” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS 40 “Transfers of Investment Property” IFRIC 22 “Foreign Currency Transactions and Advance Consideration”	Effective Date Announced by IASB (Note 1)
	Note 2 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018

New IFRSs
Annual Improvements to IFRSs 2014-2016 Cycle

Amendment to IFRS 2 “Classification and Measurement of
Share-based Payment Transactions”

Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts”

IFRS 9 “Financial Instruments”

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”

IFRS 15 “Revenue from Contracts with Customers”

Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from
Contracts with Customers”

Amendment to IAS 7 “Disclosure Initiative”

Amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealized Losses”

Amendments to IAS 40 “Transfers of Investment Property”

IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”

Effective Date
Announced by IASB (Note 1)

Note 2
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018

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 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.

The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Group’s accounting policies, 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.

c. New IFRSs in issue but not yet endorsed and issued into effect by FSC

New IFRSs Amendments to IFRS 9 “Prepayment Features with Negative Compensation” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 16 “Leases” IFRS 17 “Insurance Contracts” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty Over Income Tax Treatments”	Effective Date Announced by IASB (Note)
	January 1, 2019 To be determined by IASB January 1, 2019 January 1, 2021 January 1, 2019 January 1, 2019

New IFRSs
Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”

IFRS 16 “Leases”

IFRS 17 “Insurance Contracts”

Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”

IFRIC 23 “Uncertainty Over Income Tax Treatments”

Effective Date
Announced by IASB (Note)

January 1, 2019
To be determined by IASB
January 1, 2019
January 1, 2021
January 1, 2019
January 1, 2019

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The 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 and issued into effect by the FSC. Disclosure information included in the consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit plan liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
c. Basis of consolidation

See Note 9 and Table 6 for the detailed information of subsidiaries (including the percentage of ownership and main business).

d. 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, 2016. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2016.

1) 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, 2016.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2017		2016		2016
Checking deposits	$	643	$	1,684	$	1,518
Demand deposits		913		873		803
Foreign currency deposits		706,676		862,093		583,964
Cash equivalent (investments with original
maturities less than 3 months)
Commercial papers		800,641		1,883,869		581,753
Repurchase agreements collateralized by bonds		2,434,846		1,052,376		1,437,351
Time deposits		2,511,149		600,000		600,000
	$	6,454,868	$	4,400,895	$	3,205,389

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

September 30,
2017
December 31,
2016
September 30,
2016
Demand deposits
0.08%
0.08%
0.08%
Foreign currency deposits
0.01%
0.01%
0.01%
Commercial papers
0.36%-0.38%
0.45%-0.55%
0.32%-0.38%
Repurchase agreement collateralized by bonds
0.38%-0.42%
0.43%-0.46%
0.32%-0.35%
Time deposits
0.40%-1.65%
0.40%-0.60%
0.40%-0.60%
TRADE RECEIVABLES AND OTHER RECEIVABLES
September 30,
2017
December 31,
2016
September 30,
2016
Trade receivables
Trade receivables (inclusive of receivables from
related and unrelated parties)
$ 2,106,838
$ 1,602,346
$ 1,636,638
Less: Allowance for impairment loss

-

-

-
$ 2,106,838
$ 1,602,346
$ 1,636,638
Other receivables
Other receivable from unrelated parties
$ 2,859
$ 1,483
$ 2,682
Other receivables from related parties

9,160

8,084

7,367
$ 12,109
$ 9,567
$ 10,049

Trade Receivables

The average credit period on sales of goods was 30 to 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 overdue 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 day 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:

	September 30,	December 31,	December 31,	September 30,	September 30,
	2017		2016		2016
0-30 days	$ 1,136,924	$	954,450	$	943,495
31-60 days	660,377		504,555		583,607
61-90 days	302,547		140,721		93,580
91-120 days	6,990		2,620		15,956
	$ 2,106,838	$	1,602,346	$	1,636,638

The above aging schedule was based on past due days from invoice date.

There are no receivables that were past due but not impaired as of September 30, 2017, December 31, 2016 and September 30, 2016.

8. INVENTORIES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2017		2016		2016
Raw materials	$	506,059	$	365,482	$	442,963
Supplies		783,332		762,959		735,774
Work in progress		396,737		386,761		415,414
Finished goods		578,450		554,875		667,175
Merchandise inventories		16,842		12,951		25,267
Less: Allowance for inventory write-downs		(51,776)		(17,486)		(56,702)
	$	2,229,644	$	2,065,542	$	2,229,891

The cost of revenue recognized as cost of goods sold for the three months and nine months ended September 30, 2017, included inventory write-downs of $14,260 thousand and $34,290 thousand, and income from selling silicon waste of $23,732 thousand and $47,164 thousand, respectively.

The cost of revenue recognized as cost of goods sold for the three months and nine months ended September 30, 2016, included and inventory write-downs of $13,792 thousand and $26,415 thousand, respectively; unamortized fixed manufacturing overhead are $0 and $9,391 thousand for the three months and the nine months ended September 30, 2016; income from selling silicon waste are $9,243 thousand and $28,154 thousand for the three months and nine months ended September 30, 2016, respectively.

9. SUBSIDIARIES

Subsidiary included in the consolidated financial statements are below:

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
	September 30, 2017 December 31, 2016 September 30, 2016 100% 100% 100%

The above subsidiary was incorporated in the consolidated financial statements on the basis of reviewed financial statements as of and for the same reporting periods as the Company.

10. 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 September 30, 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 September 30, 2016 $ - Carrying amounts at January 1, 2016 $ 120,906 Carrying amounts at September 30, 2016 $ 120,906 Cost Balance at January 1, 2017 $ 120,906 Additions - Reclassified - Disposals - Effect of foreign currency exchange differences - Balance at September 30, 2017$ 120,906 Accumulated depreciation and impairment Balance at January 1, 2017 $ - Disposals - Reclassified - Depreciation expense - Effect of foreign currency exchange differences - Balance at September 30, 2017 $ - Carrying amounts at December 31, 2016 and January 1, 2017 $ 120,906 Carrying amounts at September 30, 2017 $ 120,906	Buildings Machinery and Equipment $ 3,896,948 $ 29,457,950 - 95,754 4,957 750,435 - (21 ) - 88,673 $ 3,901,905 $ 30,392,791 $ 1,023,022 $ 18,168,069 - (21 ) - - 82,373 1,469,285 - 2,690 $ 1,105,395 $ 19,640,023 $ 2,873,926 $ 11,289,881 $ 2,796,510 $ 10,752,768 $ 3,901,905 $ 30,263,306 - 101,112 - 87,404 - (46,902 ) - (32,599) $ 3,901,905 $ 30,372,321 $ 1,132,861 $ 20,099,698 - (46,902 ) - (376 ) 82,400 1,467,652 - (3,434) $ 1,215,261 $ 21,516,638 $ 2,769,044 $ 10,163,608 $ 2,686,644 $ 8,855,683	Other Equipment Equipment Under Installation and Construction in Progress $ 713,825 $ 432,180 16,739 371,143 10,665 (766,141 ) (1,121 ) - 1,599 41,943 $ 741,707 $ 79,125 $ 633,342 $ - (1,121 ) - 11 - 15,884 - 151 - $ 648,267 $ - $ 80,483 $ 432,180 $ 93,440 $ 79,125 $ 739,998 $ 84,662 6,608 13,031 376 (87,780 ) (1,263 ) - (528) - $ 745,191 $ 9,913 $ 652,412 $ - (1,263 ) - 376 - 15,562 - (74) - $ 667,013 $ - $ 87,586 $ 84,662 $ 78,178 $ 9,913	Total $ 34,621,809 483,636 (84 ) (1,142 ) 132,215 $ 35,236,434 $ 19,824,433 (1,142 ) 11 1,567,542 2,841 $ 21,393,685 $ 14,797,376 $ 13,842,749 $ 35,110,777 120,751 - (48,165 ) (33,127) $ 35,150,236 $ 21,884,971 (48,165 ) - 1,565,614 (3,508) $ 23,398,912 $ 13,225,806 $ 11,751,324

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

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

The accumulated impairment losses due to damaged machineries were $10,001 thousand, $10,001 thousand, and $17,997 thousand on September 30, 2017, December 31, 2016, and September 30, 2016, respectively. The impairment losses recognized were both $0 thousands for the three months ended September 30, 2017 and 2016; and $0 thousand and $11 thousand for the nine months ended September 30, 2017 and 2016, respectively. The impairment losses had been included in profit or loss in the statement of comprehensive income.

11. INTANGIBLE ASSETS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2017		2016		2016
Technical cooperation fee	$	274	$	438	$	493
					Technical
					Cooperation
					Agreement
Cost
Balance at January 1, 2016					$	-
Acquisition						584
Balance at September 30, 2016					$	584
Balance at January 1, 2017 and September 30, 2017					$	584
Accumulated amortization
Balance at January 1, 2016					$	-
Amortization expense						91
Balance at September 30, 2016					$	91
Balance at January 1, 2017					$	146
Amortization expense						164
Balance at September 30, 2017					$	310

The Company signed a technical cooperation arrangement with Sumco Corporation with total fee of JPY2,000 thousand dollars on in September 2014 and May 2015. A payment of $584 thousand dollars has been proceeded in May 2016, and being amortized over the period of 32 months.

The amortized amounts recognized as technical compensation expenses were $54 thousand and $55 thousand, respectively, in the three months ended September 30, 2017 and 2016; $164 thousand and $91 thousand, respectively, in the nine months ended September 30, 2017 and 2016.

12. OTHER ASSETS

13.

September 30,
2017
December 31,
2016
September 30,
2016
Prepayments
$ 123,316
$ 87,097
$ 138,936
Others (including test fee and electricity
subsidies)

5,652

16,265

26,971
$ 128,968
$ 103,362
$ 165,907
Current
$ 123,316
$ 87,097
$ 138,936
Non-current

5,652

16,265

26,971
$ 128,968
$ 103,362
$ 165,907
OTHER LIABILITIES
September 30,
2017
December 31,
2016
September 30,
2016
Other payables-current
Payable for purchase of equipment
$ 10,133
$ 18,008
$ 7,874
Payable for salary and bonus
304,555
370,654
254,845
Payable for insurance
24,381
23,193
21,229
Payable for utilities
59,887
46,662
51,757
Payable for dividends
103
105
161
Others (Note)

143,621

63,084

139,785
$ 542,680
$ 521,706
$ 475,651
Other payables to related parties-current
Payable for purchase of equipment - related
parties
$ 4,069
$ -
$ -
Payable for royalties - related parties
202,745
39,500
29,158
Accrued expenses - related parties

52,721

46,834

52,874
$ 259,535
$ 86,334
$ 82,032

Note: The others of other payables - current are mainly inclusive of payable for product specialty fee, pension cost, employees’ compensation and taxation.

14. RETIREMENT BENEFIT PLANS

Pension costs in respect of defined benefit plans are calculated by the actuarially determined pension cost rate at the years ended December 31, 2016 and 2015 are recognized in each period respectively as follow:

Operating cost Operating expenses	For the Three Months Ended September 30 2017 2016 $ 2,595 $ 2,610 512 662 $ 3,107 $ 3,272	For the Three Months Ended September 30 2017 2016 $ 2,595 $ 2,610 512 662 $ 3,107 $ 3,272	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 2,595 512 $ 3,107		2017 $ 7,684 1,503 $ 9,187	2016 $ 7,732 1,955 $ 9,687

15. EQUITY

a. Share capital

Ordinary shares

	September 30,	December 31,	September 30,
	2017	2016	2016
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.

b. Capital surplus

The capital surplus from shares issued in excess of par value 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.

c. Retained earnings and dividend policy

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 shareholders held their regular meeting on June 16, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of Incorporation (the “Articles”), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees’ compensation.

Under the dividend policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, please refer to f. employee benefits expense in Note 16.

The Company involves in a high-tech capital intensive industry that is at the fast-growing phase of its product life cycle. To ensure the cash required for the Company’s present and future expansion plans, the Company has three different methods to distribute its dividends including cash dividends, transfer of net profits into capital, and transfer of capital surplus into capital, and according to distributable surplus in exclusive of legal and special reserve up to 80% can be distributed as dividend with cash dividends being distributed first before other dividends. In principle, the aggregate of capital transferred from net profits and capital surplus shall not exceed 50% of total dividends distributed for the year.

The 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 2016 and 2015 approved in the shareholders’ meetings on June 21, 2017 and June 16, 2016, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2016 2015 $ 73,039 $ 127,805 519,717 853,266	Dividends Per Share (NTD)
		For the Year Ended December 31
		2016 2015 $ 0.67 $ 1.10

d. 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.

16. NET INCOME

a. Other income

For the Three Months Ended September 30 2017 2016 $ 8,173 $ 2,341 - 13 3,728 2,611 $ 11,901 $ 4,965 For the Three Months Ended September 30 2017 2016 $ (13,511) $ (71,100) - - - - (94) (77) $ (13,605) $ (71,177) For the Three Months Ended September 30 2017 2016 $ 90 $ 1,022	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2017 2016 $ 19,141 $ 8,643 19 13 11,974 6,799 $ 31,134 $ 15,455 For the Nine Months Ended September 30
	2017 2016 $(116,069) $ (14,526) - (11) 136 - (165) (390) $(116,098) $ 14,927 For the Nine Months Ended September 30
2017 $ 90		2017 $ 292	2016 $ 1,978

Property, plant and equipment Intangible assets and other non-current assets An analysis of depreciation by function Operating costs Operating expenses		For the Three Months Ended September 30 2017 2016 $ 518,466 $ 526,974 458 9,792 $ 518,924 $ 536,766 $ 515,900 $ 524,422 2,566 2,552 $ 518,466 $ 526,974		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 518,466 458 $ 518,924 $ 515,900 2,566 $ 518,466		2017 $ 1,565,614 10,605 $ 1,576,219 $ 1,557,941 7,673 $ 1,565,614	2016 $ 1,567,542 28,591 $ 1,596,133 $ 1,560,442 7,100 $ 1,567,542

An analysis of amortization expenses by function Operating costs Operating expenses		For the Three Months Ended September 30 2017 2016 $ 458 $ 9,792 - - $ 458 $ 9,792		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 458 - $ 458		2017 $ 10,605 - $ 10,605	2016 $ 28,591 - $ 28,591 (Concluded)

e. Employee benefits expense

Post-employment benefits (see Note 14) 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 September 30 2017 2016 $ 12,574 $ 11,514 3,107 3,272 15,681 14,786 380,888 339,458 $ 396,569 $ 354,244 $ 351,986 $ 313,542 44,583 40,702 $ 396,569 $ 354,244		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 12,574 3,107 15,681 380,888 $ 396,569 $ 351,986 44,583 $ 396,569		2017 $ 37,444 9,187 46,631 1,135,638 $ 1,182,269 $ 1,052,241 130,028 $ 1,182,269	2016 $ 35,153 9,687 44,840 994,552 $ 1,039,392 $ 921,869 117,523 $ 1,039,392

f. Employees’ compensation and remuneration to directors and supervisors

In compliance with the Company Act as amended in May 2015 and the amended Articles of Incorporation of the Company approved by the shareholders in their meeting in June 2016, the Company accrued employees’ compensation at the rates no less than 0.05% and no higher than 0.5%, respectively, of net profit before income tax and employees’ compensation. For the three months and nine months ended September 30, 2017 and 2016, the estimated employees’ compensation are as below:

Estimated Distribution Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended September 30 2017 2016 0.285% 0.05% - -	For the Nine Months Ended September 30
		2017 2016 0.285% 0.05% - -

Employees’ compensation Remuneration to directors and supervisors	For the Three Months Ended September 30 2017 2016 $ 2,299 $ 79 $ - $ -	For the Three Months Ended September 30 2017 2016 $ 2,299 $ 79 $ - $ -	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 2,299 $ -		2017 $ 5,102 $ -	2016 $ 323 $ -

If there is a change in the amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.

The appropriations of employees’ compensation and remuneration to directors and supervisors for 2016 and 2015 having been resolved by the board of directors on March 17, 2017 and March 16, 2016, respectively, were as below:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2016 Cash Bonus $ 2,549 -	2015
		Cash Bonus $ 768 -

There was no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2016 and 2015.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2017 and 2016 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

g. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses Net loss	For the Three Months Ended September 30 2017 2016 $ 16,124 $ 18,917 (29,635) (90,017) $ (13,511) $ (71,100)	For the Three Months Ended September 30 2017 2016 $ 16,124 $ 18,917 (29,635) (90,017) $ (13,511) $ (71,100)		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 16,124 (29,635) $ (13,511)		2017 $ 245,461 (361,530) $ (116,069)	2016 $ 190,367 (204,893) $ (14,526)

17. INCOME TAX

a. Major components of tax expense recognized in profit or loss

For the Three Months Ended September 30 For the Nine Months Ended September 30 2017 2016 2017 2016 Current tax In respect of the current period $ 90,473 $ 28,634 $ 159,561 $ 70,472 Income tax expense of unappropriated earnings - - 13,153 26,316 Adjustments for prior periods (5) - 125 636 Deferred tax In respect of the current period 23,227 5,795 90,148 48,815 Income tax expense recognized in profit or loss $ 113,695 $ 34,429 $ 262,987 $ 146,239 b. Integrated income tax September 30, 2017 December 31, 2016 September 30, 2016 Unappropriated earnings Generated before January 1, 1998 $ - $ - $ - Generated on and after January 1, 1998 6,192,744 5,254,326 5,040,551 $ 6,192,744 $ 5,254,326 $ 5,040,551 Shareholder - imputed credit amounts $ 741,274 $ 651,000 $ 613,312		For the Nine Months Ended September 30

The creditable ratio for distribution of earning for the years ended December 31, 2016 and 2015 were 12.39% and 11.64%, respectively.

c. Income tax assessments

The tax returns through 2015, has been assessed by the tax authorities.

18. EARNINGS PER SHARE

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

Net profit	For the Three Months Ended September 30 2017 2016 $ 699,108 $ 132,301	For the Three Months Ended September 30 2017 2016 $ 699,108 $ 132,301		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 699,108		2017 $1,531,174	2016 $ 510,509

Unit: Thousand Shares

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares Employees’ compensation Weighted average number of shares used in the computation of diluted earnings per share (in thousands)	For the Three Months Ended September 30 2017 2016 775,697 775,697 34 28 775,731 775,725	For the Three Months Ended September 30 2017 2016 775,697 775,697 34 28 775,731 775,725		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 775,697 34 775,731		2017 775,697 55 775,752	2016 775,697 16 775,713

Since 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, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees at their meeting in the following year.

19. CAPITAL MANAGEMENT

In consideration of the prevailing industry dynamics and the future development as well as the changes in the external economic environment, the Group manages its working capital and dividend needs in the future, to ensure that the Group will be able to continue as going concerns while maximizing the returns to shareholders as well as other beneficiaries through the optimization of capital structure.

The Group could make adjustment to pay dividends to shareholders or authorize new shares in order to maintain or adjust the capital structure.

20. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

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

b. Fair value of financial instruments that are measured at fair value on a recurring basis

Fair value hierarchy

September 30, 2017

	Level 1	Level 1	Level 2		Level 3			Total
Available-for-sale financial assets
Securities listed in ROC
Equity securities	$	344	$	-	$	-	$	344
December 31, 2016
	Level 1		Level 2		Level 3			Total
Available-for-sale financial assets
Securities listed in ROC
Equity securities	$	364	$	-	$	-	$	364
September 30, 2016
	Level 1		Level 2		Level 3			Total
Available-for-sale financial assets
Securities listed in ROC
Equity securities	$	306	$	-	$	-	$	306

There were no transfers between Levels 1 and 2 in the nine months ended September 30, 2017 and 2016.

c. Categories of financial instruments

	September 30,	December 31,	September 30,
	2017	2016	2016
Financial assets
Loans and receivables (1)	$ 8,573,930	$ 6,013,013	$ 4,850,525
Available-for-sale financial assets	344	364	306
Financial liabilities
Amortized cost (2)	1,041,925	845,524	816,310

1) The balance included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other receivables, and refundable deposits.
2) The balance included financial liabilities measured at amortized cost, which comprise trade payables, other payables (excluding payable for salary and bonus, employees’ compensation, pension cost, and taxation), and guarantee deposits.
d. Financial risk management objectives and policies

The Group’s major financial instruments include equity investments, trade receivables, 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.

1) Market risk

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

a) 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 23.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollars (USD) and Japanese Yen (JPY).

The following table details the Group’s sensitivity to a 10% increase and decrease in NTD (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 (decrease) in pre-tax profit associated with NTD weakening 10% against the relevant currency. For a 10% strengthening of NTD 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	USD Impact For the Nine Months Ended September 30 2017 2016 $ 329,159 (i) $ 181,479 (i)	JPY Impact
		For the Nine Months Ended September 30
		2017 2016 $ (22,886) (ii) $ (11,774) (ii)

i. This was mainly attributable to the exposure outstanding on USD cash and cash equivalents, trade receivables and trade payables, which were not hedged at the end of the reporting period.
ii. This was mainly attributable to the net liabilities exposed to outstanding JPY cash and cash equivalents, trade receivables, and trade payables, which were not hedged, at the end of the reporting period.

The Group’s sensitivity to USD increased during the current year is mainly due to the increase of USD bank deposits and trade receivables. The Group’s sensitivity to JPY increased during the current year mainly due to the increase of JPY trade payables.

b) Interest rate risk

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:

	September 30,	December 31,	September 30,
	2017	2016	2016
Fair value interest rate risk
Financial assets	$ 5,746,636	$ 3,536,245	$ 2,619,104
Cash flow interest rate risk
Financial assets	707,589	862,966	584,767

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% 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.

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2017 would increase/decrease by $5,307 thousand, which was mainly attributable to the Group’s exposure to interest rates on floating 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 nine months ended September 30, 2016 would increase/decrease by $4,386 thousand, respectively, which was mainly attributable to the Group’s exposure to interest rates on floating rate bank deposits.

The Group’s sensitivity to interest rates have no significant difference for the nine months ended September 30, 2016 and 2017.

2) 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’s key exposure to credit risk is the carrying amount of the respective recognized financial assets as stated in the balance sheets, primarily the trade receivables arise from operating activities.

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 any other counterparty did not exceed 10% of total monetary assets at any time during the nine months ended September 30, 2017, the year ended December 31, 2016, and the nine months ended September 30, 2016.

3) 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.

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.

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

September 30, 2017 Non-derivative financial liabilities Non-interest bearing December 31, 2016 Non-derivative financial liabilities Non-interest bearing	1-6 Months $ 1,364,218 1-6 Months $ 1,231,178	6 Months to 1 Year $ - 6 Months to 1 Year $ -	1-3 Years $ - 1-3 Years $ -	3+ Years $ -
				3+ Years $ -

September 30, 2016

Non-derivative financial liabilities Non-interest bearing	1-6 Months $ 1,088,197	6 Months to 1 Year $ -	1-3 Years $ -	3+ Years $ -

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.

September 30, 2017

Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets December 31, 2016 Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets	1-6 Months $ 2,119,500 707,625 5,768,419 $ 8,595,544 1-6 Months $ 1,613,597 862,966 3,536,245 $ 6,012,808	6 Months to 1 Year $ - - - $ - 6 Months to 1 Year $ - - - $ -

September 30, 2016

Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets	1-6 Months $ 1,648,205 584,767 2,619,104 $ 4,852,076	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.

21. 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.

a. Related parties and their relationships with the Group:

Related Party Sumco Corporation Sumco Techxiv Corporation Sumco Technology Corporation Formosa Plastic Corporation Formosa Technologies Corporation Formosa Daikin Advanced Chemicals Co., Ltd.	Related Party Categories and Relationship with the Group
	Ultimate parent company Parent company Sister company (subsidiary of Sumco Corporation) Associate (equity-method investor holds 29.06% of the Company) Others (a director is the chairman of the Company) Others (same chairman)

b. Operating transaction
1) Sale of good

Related Party Line Items Categories Sales Parent company		For the Three Months Ended September 30 2017 2016 $ 213,081 $ 277,494		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 213,081		2017 $ 567,820	2016 $ 674,348

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

2) Purchases of goods

Related Party Categories Ultimate parent company Parent company Associate Others (same chairman or a director is the chairman of the Company)		For the Three Months Ended September 30 2017 2016 $ 208,497 $ 234,470 9,053 17,467 7,041 5,510 6,567 4,004 $ 231,158 $ 261,451		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 208,497 9,053 7,041 6,567 $ 231,158		2017 $ 805,939 12,832 21,614 14,264 $ 854,649	2016 $ 747,468 29,257 15,537 11,206 $ 803,468

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.

3) Receivables from related parties

	Related Party	September 30,	December 31,	September 30,
Line Items	Categories	2017	2016	2016
Trade receivables	Parent company	$ 141,933	$ 136,760	$ 178,571
Payables to related	parties
	Related Party	September 30,	December 31,	September 30,
Line Items	Categories	2017	2016	2016
Trade payables	Ultimate parent	$ 165,794	$ 252,401	$ 197,453
	company
	Parent company	1,830	1,797	2,550
	Associate	2,333	2,563	1,839
	Others (same	234	1,594	587
	chairman or a
	director is the
	chairman of the
	Company)
		$ 170,191	$ 258,355	$ 202,429

4) Payables to related parties

The outstanding trade payables to related parties are unsecured and will be paid by cash. The outstanding trade receivables from related parties are unsecured. For the nine months ended September 30, 2017 and 2016, no impairment loss was recognized for trade receivables from related parties.

c. Commission, income from sale of scraps, and other receivables

For the Three Months Ended September 30 For the Nine Months Ended September 30 2017 2016 2017 2016 Ultimate parent company (commission income, account for as other revenue and offset of operating cost) $ 4,749 $ 5,829 $ 18,709 $ 16,086 Sister company (selling scraps income, accounted for as an offset to cost of revenue) 3,693 - 11,177 - $ 8,442 $ 5,829 $ 29,886 $ 16,086 Line Items September 30, 2017 December 31, 2016 September 30, 2016 Ultimate parent company (other receivables from related parties) $ 7,845 $ 8,084 $ 7,367 Sister company (other receivables from related parties) 1,315 - - $ 9,160 $ 8,084 $ 7,367		For the Nine Months Ended September 30

d. Loans to related parties

The Company has issued loans to the associate (Formosa Plastic Corporation) totaled $1,003,464 thousand. The Company provided the associate with loans at interest rate of 1%, which were unsecured and has been recovered as of June 30, 2017. The interest income from loan to associate (Formosa Plastic Corporation) were $0 and $27 thousands for the three months and nine months ended September 30, 2017, respectively.

The Company has issued loans to its associate (Formosa Plastic Corporation) totaled $1,160,320 thousand. The Company provided the associate with loans at interest rate of 1%, which were unsecured and has been recovered as of July 1, 2016. The interest income from loan to associate (Formosa Plastic Corporation) were $0 and $32 thousands for the three months and nine months ended September 30, 2016, respectively.

e. Loans from related parties

Japan Formosa Sumco Technology Corporation obtained loan from associate (Formosa Plastic Corporation) totaled $1,003,464 thousand at interest rate of 1% for the three months ended September 30, 2017, the loan is unsecured and has been recovered from Japan Formosa Sumco Technology Corporation as of June 30, 2017. The interest expense paid to associate (Formosa Plastic Corporation) for the three months and nine months ended September 30, 2017 were $0 and $27 thousand, respectively.

Japan Formosa Sumco Technology Corporation obtained loan from associate (Formosa Plastic Corporation) totaled $1,160,320 thousand at interest rate of 1% on September 30, 2016, the loan is unsecured and has been recovered from Japan Formosa Sumco Technology Corporation as of July 1, 2016. The interest expense paid to associate (Formosa Plastic Corporation) for the three months and nine months ended September 30, 2016 were $0 and $26 thousand, respectively.

f. Other transactions with related parties
1) Manufacturing expense and accrued expenses - related parties

The repairs and maintenance expenses of other related party (Formosa Technologies Corporation) were $5,603 thousand and $5,992 thousand for the three months ended September 30, 2017 and 2016, respectively; $17,327 thousand and $18,418 thousand for the nine months ended September 30, 2017 and 2016, respectively. The transaction amounts are based on mutual agreement, and will be paid upon completion.

The manufacturing expenses of the Company’s ultimate parent company were $81,556 thousand and $86,806 thousand for the three months ended September 30, 2017 and 2016, respectively; $248,654 thousand and $198,023 thousand for the nine months ended September 30, 2017 and 2016. The unpaid amount has been recognized as accrued expenses payable to related parties (accounted for as trade payables) for $52,721 thousand, $46,834 thousand and $52,874 thousand, as of September 30, 2017, December 31, 2016, and September 30, 2016, respectively, and will be paid in February of the subsequent year.

2) Acquisitions of equipment and payable for purchase of equipment - related parties

For the three months and nine months ended September 30, 2017, the Group purchased the equipment for heating processing from its ultimate parent company with contract price $4,069 thousand (before tax). The unpaid portion has been recognized as other payables (payable for purchase of equipment) for $4,069 thousand as of September 30, 2017, and will be paid after check and acceptance.

For the three months and nine months ended September 30, 2016, the Group purchased Pulling Machine from its ultimate parent company with contract price of $0 thousand (before tax) and $349,260 thousand (before tax), respectively. And has been paid on August, 2016, after check and acceptance.

3) Other transactions

In September 2014 and May 2015, the Company has signed technical compensation arrangement with its ultimate parent company and acquired the know-how of silicon wafer production worth JPY2,000 thousand. A payment of $584 thousand has been proceeded on May 2016. This is accounted for as intangible assets (refer to Note 11).

Under an existing agreement effective since 2003, the Company is liable of paying royalty to its parent company regularly. The royalty was recognized as selling expenses (technical commission fee) for the three months ended September 30, 2017 and 2016, and for the nine months ended September 30, 2017 and 2016. The unpaid amount as of September 30, 2017, December 31, 2016, and September 30, 2016 were recognized as royalties payable to related parties (accounted for as

other payables) and will be paid in February of the subsequent year.

In August 2010, the Company signed a technical right and support contract with its ultimate parent company. Under this contract, the Company receives support from the ultimate parent company in technical know-how and assistance in manufacturing of silicon wafer semiconductors. The Company should pay royalty to the ultimate parent company regularly. The royalty was recognized as technical commission fee classified under selling expenses for the three months and nine months ended September 30, 2017 and 2016. The unpaid amount as of September 30, 2017, December 31, 2016, and September 30, 2016 were recognized as royalties payable to related parties (other payables) and will be paid in February of the subsequent year.

The above-mentioned technical commission fee and royalties payable (accounted for as other payables) resulted from transactions with related parties are summarized as follows:

For the Three Months Ended September 30 For the Nine Months Ended September 30 2017 2016 2017 2016 Marketing expenses - technical commission fee Parent company $ 5,382 $ 8,343 $ 15,348 $ 23,190 Ultimate parent company 91,149 2,011 187,397 5,968 $ 96,531 $ 10,354 $ 202,745 $ 29,158 September 30, 2017 December 31, 2016 September 30, 2016 Other payables - royalties payable to related parties Parent company $ 15,348 $ 19,595 $ 23,190 Ultimate parent company 187,397 19,905 5,968 $ 202,745 $ 39,500 $ 29,158		For the Nine Months Ended September 30

g. Compensation of key management personnel

The compensation to the directors and other key executives were as follow:

Short-term employee benefits Post-employment benefits Other long-term employee benefits	For the Three Months Ended September 30 2017 2016 $ 2,262 $ 2,019 34 35 5 5 $ 2,301 $ 2,059	For the Three Months Ended September 30 2017 2016 $ 2,262 $ 2,019 34 35 5 5 $ 2,301 $ 2,059	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2017 $ 2,262 34 5 $ 2,301		2017 $ 6,573 101 15 $ 6,689	2016 $ 5,811 103 13 $ 5,927

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

22. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of September 30, 2017 were as follow:

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 transfer 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.

23. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group entities’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

September 30, 2017

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 122,010
30.305 (USD:NTD)
JPY
8,683
0.2695 (JPY:NTD)

Financial liabilities
Monetary items
USD
11,016
30.305 (USD:NTD)
USD
2,378
110.185 (USD:JPY)
JPY
857,388
0.2695 (JPY:NTD)

December 31, 2016
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 74,500
32.279 (USD:NTD)
JPY
58,158
0.2768 (JPY:NTD)

Financial liabilities
Monetary items
USD
11,850
32.279 (USD:NTD)

Carrying
Amount
$ 3,697,501

2,340
$ 3,699,841
$ 333,830

72,079

231,201
$ 637,110
Carrying
Amount
$ 2,404,801

16,098
$ 2,420,899
$ 382,512

Foreign Currencies Exchange Rate USD 1,908 109.963 (USD:JPY) JPY 644,300 0.2768 (JPY:NTD) September 30, 2016 Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 69,996 31.366 (USD:NTD) JPY 78,758 0.3109 (JPY:NTD) Financial liabilities Monetary items USD 10,793 31.366 (USD:NTD) USD 1,345 100.888 (USD:JPY) JPY 457,463 0.3109 (JPY:NTD)	Carrying Amount 61,593 178,342 $ 622,447 (Concluded) Carrying Amount $ 2,195,500 24,486 $ 2,219,986 $ 338,529 42,181 142,225 $ 522,935

The Group was mainly exposed to the USD and JPY. The significant realized and unrealized foreign exchange gains (losses), please see Note 16 b) and g).

24. 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 21 and Table 5)
k. Information on investees. (Table 6)

Information on Investments in Mainland China

None.

25. 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 in the nine months ended September 30, 2017 and 2016 is only the silicon wafer segment as the Group’s main activities are manufacturing and selling of silicon wafer electronic products. The accounting policy of the reportable segment is the same as the Note 4 “summary of significant accounting policies”.

a. 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 Dividend income Miscellaneous income Miscellaneous expense Profit before tax		Segment Revenue For the Nine Months Ended September 30 2017 2016 $ 9,390,712 $ 7,985,738		Segment Profit and Loss	Segment Profit and Loss
				For the Nine Months Ended September 30
		2017 $ 9,390,712		2017 $ 1,782,333 19 11,974 (165) $ 1,794,161	2016 $ 650,326 13 6,799 (390) $ 656,748

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales during the nine months ended September 30, 2017 and 2016.

Segment profit represents the profit earned by silicon wafer segment without allocation of miscellaneous income (accounted for as other income), miscellaneous expense (accounted for as other profit and loss) 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.

b. Segment total assets and liabilities

The assets and 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.

TABLE 1

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Lender	Borrower	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing (Note 2)	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
0	Formosa Sumco Technology Corporation	Formosa Plastic Corporation Japan Formosa Sumco Technology Corporation Yasuo Development Co., Ltd. Huaya Motor. Co., Ltd.	Receivables from related parties Receivables from related parties Receivables from related entities Receivables from related parties	Yes Yes No Yes	$ 1,550,000 (Note 3) 1,550,000 (Note 3) 1,060,000 (Note 3) 1,200,000 (Note 3)	$ - 1,550,000 (Notes 3 and 4) - -	$ - (Note 5) 949,988 (Note 6) - -	1.00% 1.00% 1.41% 1.41%	2 2 2 2	$ - - - -	Operating capital Operating capital Operating capital Operating capital	$ - - - -	None None None None	$ - - - -	$ 5,251,188 (Note 7) 2,100,475 (Note 8) 5,251,188 (Note 7) 5,251,188 (Note 7)	$ 10,502,375 (Note 9) 10,502,375 (Note 9) 10,502,375 (Note 9) 10,502,375 (Note 9)

Note 1: a. “0” financing provide.
b. “1” and onward coded based on reduce of companies invested.
Note 2: a. “1” with trade transaction.
b. “2” the need for short-term financing.

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

Note 4: Financing period from June 16, 2017 to June 15, 2018.
Note 5: The Company has recovered $1,003,464 thousand loan from Formosa Plastic Corporation.
Note 6: The amount was eliminated upon consolidation.
Note 7: For short-term financing requirements, the financing limits for each borrowing company should not exceed 25% of Formosa Sumco Technology Corp’s net worth.
Note 8: For short-term financing requirements, the financing limits for each borrowing company should not exceed 10% of Formosa Sumco Technology Corp’s net worth.

Note 9: The maximum total financing provided should not exceed 50% of Formosa Sumco Technology Corp.’s net worth.

TABLE 2

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2017

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

Held Company Name	Marketable Securities Type and Name (Note 1)	Relationship with the Company (Note 2)	Financial Statement Account		Ending	Balance		Note
				Shares	Carrying Value (Note 3)	Percentage of Ownership (%)	Fair Value
Formosa Sumco Technology Corporation	Stock Formosa Petrochemical Corporation		Available-for-sale financial asset - non-current	3,247	$ 344		$ 344

Note 1: The marketable securities, listed above includes stocks, bonds, beneficiary certifiable, and all form of securities listed under IAS 39: Financial Instruments.

Note 2: The issuer of security is unrelated party. Hence, no descriptions of relationship.

Note 3: The carrying value equals the original cost of $38 thousand pluses year-end evaluation of $306 thousand.

Note 4: Please refer to Table 6 for further information above investee.

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 NINE MONTHS ENDED SEPTEMBER 30, 2017

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

Buyer	Related Party	Relationship			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 Sumco Techxiv Corporation Japan Formosa Sumco Technology Corporation Formosa Sumco Technology Corporation	Ultimate parent company Parent company Subsidiary Parent company	Purchase Sale Purchase Sale	$ 767,109 567,820 549,909 549,909	18.83% 6.05% 13.50% 100.00%	60 to 120 days from the receipt of the Company’s goods Net 60 days from the end of the month of when invoice is issued 70 days from receipts of the Company’s goods 70 days from receipts of the Company’s 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	$ (157,835) 141,933 (180,415) 180,415	(23.83%) 6.74% (31.63%) 100.00%	Note Note

Note: The amount was eliminated upon consolidation.

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 NINE MONTHS ENDED SEPTEMBER 30, 2017

(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 Japan Formosa Sumco Technology Corporation	Sumco Techxiv Corporation Japan Formosa Sumco Technology Corporation Formosa Sumco Technology Corporation	Parent company Subsidiary Parent company	$ 141,933 952,195 (Notes 1 and 2) 180,415 (Note 2)	5.43 Not applicable 4.34	$ - - -	- - -	$ - - -	$ - - -

Note 1: The Company issued loan to Japan Formosa Sumco Technology Corporation which includes principal of $949,988 thousand and interest income of $2,207 thousand.

Note 2: The amount was eliminated upon consolidation.

TABLE 5

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	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 Interest income Trade payables Other receivables (include interest receivables)	$ 549,909 7,447 180,415 952,195	General terms General terms General terms General terms	5.86% 0.08% 0.79% 4.16%

Note 1: The intercompany relationships are coded as blow:

a. “0” parent company

b. “1” and above coded based on the type of intercompany relationship.

Note 2: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of the period ended September 30, 2017, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2017.

Note 3: The amount was eliminated upon consolidation.

TABLE 6

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (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 September 30, 2017	As of September 30, 2017	As of September 30, 2017	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				September 30, 2017	December 31, 2016	Shares	%	Carrying Amount
Formosa Sumco Technology Corporation	Japan Formosa Sumco Technology Corporation	Japan	Manufacture, selling and other related trading of high quality ingot	JPY 998,000 (NT$ 248,390)	JPY 998,000 (NT$ 248,390)	9,980	100	JPY 1,084,711 (NT$ 291,844)	JPY 63,482 (NT$ 17,279)	JPY 72,363 (NT$ 21,195)	Notes 1 and 2

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

Note 2: The share of profits (losses) of investee in the period 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.

AI assistant

FST — Interim / Quarterly Report 2017

52338_rns_2017-11-14_3146c70e-4a31-4ef3-b605-7dcd6cbd74a0.pdf

Formosa Sumco Technology Corporation and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Notice to Readers

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

b. Basis of preparation

1) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

Trade Receivables

8. INVENTORIES

9. SUBSIDIARIES

10. PROPERTY, PLANT AND EQUIPMENT

11. INTANGIBLE ASSETS

12. OTHER ASSETS

14. RETIREMENT BENEFIT PLANS

15. EQUITY

a. Share capital

Ordinary shares

b. Capital surplus

c. Retained earnings and dividend policy

d. Others equity items

16. NET INCOME

a. Other income

17. INCOME TAX

c. Income tax assessments

18. EARNINGS PER SHARE

Unit: Thousand Shares

19. CAPITAL MANAGEMENT

20. FINANCIAL INSTRUMENTS

Fair value hierarchy

September 30, 2017

1) Market risk

Sensitivity analysis

b) Interest rate risk

Sensitivity analysis

2) Credit risk

3) Liquidity risk

Liquidity and interest risk rate table

September 30, 2016

September 30, 2017

September 30, 2016

21. TRANSACTIONS WITH RELATED PARTIES

2) Purchases of goods

3) Receivables from related parties

3) Other transactions

22. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

23. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

24. DISCLOSED ITEMS

Information about Significant Transactions and Investees

Information on Investments in Mainland China

25. SEGMENT INFORMATION

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2017

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

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 NINE MONTHS ENDED SEPTEMBER 30, 2017

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

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 NINE MONTHS ENDED SEPTEMBER 30, 2017

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

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FST Interim / Quarterly Report 2017