FST - Interim / Quarterly Report 2018

Formosa Sumco Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2018 and 2017 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders Formosa Sumco Technology Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Formosa Sumco Technology Corporation and subsidiaries (the “Group”) as of September 30, 2018 and 2017, the related consolidated statements of comprehensive income for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the consolidated statements of changes in equity and cash flows for the nine months then ended, and related notes, including a summary of significant accounting policies “(collectively referred to as the consolidated financial statements)”. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement on Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, of the consolidated financial position of the Group as of September 30, 2018 and 2017, its consolidated financial performance for the three months ended September 30, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2018 and 2017 in accordance 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 of the Republic of China.

Deloitte & Touche Taipei, Taiwan Republic of China

November 13, 2018

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 independent 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 3, 4 and 6) Trade receivables from unrelated parties (Notes 3, 4 and 8) Trade receivables from related parties (Notes 3, 4, 8 and 22) Other receivables (Notes 3, 4, 8 and 22) Inventories (Notes 4, 5 and 9) Prepayments (Notes 4 and 13) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 3, 4 and 7) Available-for-sale financial assets - non-current (Notes 3 and 4) Property, plant and equipment (Notes 4, 5, 11, 22 and 23) Intangible assets (Notes 4, 5, 12 and 22) Deferred tax assets (Notes 4, 5 and 18) Prepayment for equipment (Note 4) Refundable deposits (Notes 3 and 4) Other non-current assets (Notes 4 and 13) 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 22) Other payables (Notes 4, 14 and 20) Other payables to related parties (Notes 4, 14 and 22) Current tax liabilities (Notes 4 and 18) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 18) Net defined benefit liabilities - non-current (Notes 4, 5 and 15) Guarantee deposits (Note 4) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY (Notes 3, 4, 16 and 20) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		September 30, 2018 (Reviewed) Amount % $ 5,340,009 23 2,481,267 11 479,037 2 415,573 2 2,558,547 11 165,415 1 11,439,848 50 481 - - - 11,229,320 49 385 - 184,631 1 109,898 - 205 - 4,140 - 11,529,060 50 $ 22,968,908 100 $ 377,717 2 134,820 - 613,981 3 352,119 1 597,857 3 55,186 - 2,131,680 9 10,546 - 367,437 2 587 - 47,926 - 426,496 2 2,558,176 11 3,878,483 17 5,739,085 25 1,522,614 7 9,253,531 40 10,776,145 47 17,019 - 20,410,732 89 $ 22,968,908 100		December 31, 2017 (Audited) Amount % $ 7,609,722 31 1,967,495 8 161,281 1 16,125 - 2,344,785 10 127,422 - 12,226,830 50 - - 375 - 11,812,997 49 219 - 124,937 1 64,227 - 213 - 5,169 - 12,008,137 50 $ 24,234,967 100 $ 396,403 2 146,217 1 950,077 4 370,644 1 268,540 1 20,702 - 2,152,583 9 5,621 - 362,584 2 748 - 41,423 - 410,376 2 2,562,959 11 7,756,966 32 5,739,082 23 1,298,337 6 6,866,184 28 8,164,521 34 11,439 - 21,672,008 89 $ 24,234,967 100		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

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)

OPERATING REVENUE (Notes 4, 22 and 26) OPERATING COST (Notes 9, 12, 15, 17 and 22) GROSS PROFIT OPERATING EXPENSES (Notes 15, 17 and 22) Marketing Administrative Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 17 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 18) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4 and 16) Items that will not be reclassified subsequently to profit or loss: Unrealized gain on investments in equity instruments designated as at fair value through other comprehensive income		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2018		2017		2018		2017
		Amount % $ 4,262,134 100 (2,327,198) (55) 1,934,936 45 (144,708 ) (3 ) (63,643) (2) (208,351) (5) 1,726,585 40 28,708 1 (1,466 ) - (142) - 27,100 1 1,753,685 41 (232,829) (6) 1,520,856 35 83 -		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 - -		Amount % $ 12,139,916 100 (6,937,698) (57) 5,202,218 43 (407,654 ) (3 ) (170,989) (2) (578,643) (5) 4,623,575 38 63,951 1 156,186 1 (380) - 219,757 2 4,843,332 40 (618,258) (5) 4,225,074 35 106 -		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 - - (Continued)

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
2018	2017	2018	2017
Amount % $ (8,990 ) - - - (8,907) - $ 1,511,949 35 $ 3.47 $ 3.47	Amount % $ (1,734 ) - 3 - (1,731) - $ 697,377 21 $ 0.90 $ 0.90	Amount % $ 5,474 - - - 5,580 - $ 4,230,654 35 $ 6.38 $ 6.38	Amount % $ (7,928 ) - (20) - (7,948) - $ 1,523,226 16 $ 1.97 $ 1.97

$	$	$	$

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

(Concluded)

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, 2017 $ 7,756,966 $ 5,739,080 Appropriation of the 2016 earnings Legal reserve - - Cash dividends - - - - Net profit for the six months ended September 30, 2017 - - Other comprehensive income for the nine months ended September 30, 2017 - - Total comprehensive income for the nine months ended September 30, 2017 - - BALANCE AT SEPTEMBER 30, 2017 $ 7,756,966 $ 5,739,080 BALANCE AT JANUARY 1, 2018 $ 7,756,966 $ 5,739,082 Effect of retrospective application and retrospective restatement - - BALANCE AT JANUARY 1, 2018 AS RESTATED 7,756,966 5,739,082 Appropriation of the 2017 earnings Legal reserve - - Cash dividends - - - - Overdue dividends not received by shareholders - 3 Net profit for the nine months ended September 30, 2018 - - Other comprehensive income for the nine months ended September 30, 2018 - - Total comprehensive income for the nine months ended September 30, 2018 - - Capital reduction by cash (3,878,483) - BALANCE AT SEPTEMBER 30, 2018 $ 3,878,483 $ 5,739,085	Retained Earnings	Total $ 6,479,624 - (519,717) (519,717) 1,531,174 - 1,531,174 $ 7,491,081 $ 8,164,521 - 8,164,521 - (1,613,450) (1,613,450) - 4,225,074 - 4,225,074 - $ 10,776,145		Others	Total $ 25,571 - - - - (7,948) (7,948) $ 17,623 $ 11,439 - 11,439 - - - - - 5,580 5,580 - $ 17,019	Total Equity $ 20,001,241 - (519,717) (519,717) 1,531,174 (7,948) 1,523,226 $ 21,004,750 $ 21,672,008 - 21,672,008 - (1,613,450) (1,613,450) 3 4,225,074 5,580 4,230,654 (3,878,483) $ 20,410,732
				Unrealized Gain (Loss) on Investments in Financial Assets Exchange Unrealized Designated as Difference on Gain (Loss) on at Fair Value Translating Available-for- Through Other Foreign sale Financial Comprehensive Operations Assets Income $ 25,245 $ 326 $ - - - - - - - - - - - - - (7,928) (20) - (7,928) (20) - $ 17,317 $ 306 $ - $ 11,102 $ 337 $ - - (337) 337 11,102 - 337 - - - - - - - - - - - - - - - 5,474 - 106 5,474 - 106 - - - $ 16,576 $ - $ 443
	Unappropriated Legal Reserve Earnings $ 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 $ 1,298,337 $ 6,866,184 - - 1,298,337 6,866,184 224,277 (224,277) - (1,613,450) 224,277 (1,837,727) - - - 4,225,074 - - - 4,225,074 - - $ 1,522,614 $ 9,253,531

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 Gain on disposal of property, plant and equipment 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 Increase in other receivables - related party Payments for property, plant and equipment Increase in prepayments for equipment Decrease in refundable deposits Payments for intangible assets Decrease in other investing activities items Net cash used in investing activities		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 4,843,332 1,552,136 2,317 380 (51,261) (20) 3,411 8,532 - (845,210) 2,399 (215,570) (37,993) (24,714) (21,735) 34,484 4,853 5,255,341 49,414 20 (380) (343,710) 4,960,685 (400,000) (1,243,956) (81,677) 8 (1,323) - (1,726,948)	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) (Continued)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in guarantee deposits received Increase in other non-current liabilities Cash dividends Capital reduction by cash Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ (161) 6,503 (1,613,420) (3,878,483) (5,485,561) (17,889) (2,269,713) 7,609,722 $ 5,340,009	2017 $ 117 5,772 (519,719) - (513,830) 26,187 2,053,973 4,400,895 $ 6,454,868

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, 2018 AND 2017 (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.

On October 18, 2006, Sumco Corporation acquired 51% of 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 became public listed on September 12, 2006. The Company’s shares have been listed on the 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 45.57% and 47% of ordinary shares of the Company as of September 30, 2018 and 2017, respectively. The Company’s ultimate parent is Sumco Corporation.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 13, 2018.

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) IFRS 9 “Financial Instruments” and related amendment

IFRS 9 “Financial Instruments” supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as at January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Group’s financial assets as at January 1, 2018.

		Measurement Category	Measurement Category	Measurement Category	Measurement Category		Carrying Amount	Carrying Amount	Carrying Amount	Carrying Amount
Financial Assets	IAS 39				IFRS 9		IAS	39		IFRS 9
Cash and cash equivalents	Loans and receivables			Amortized cost			$ 7,609,722			$ 7,609,722
Equity securities	Available‑for‑sale financial			Fair value through other				375		375
	assets			comprehensive income
				(i.e.	FVTOCI) - equity
				instruments
Trade receivables and	Loans and receivables			Amortized cost			2,144,901			2,144,901
other receivables
Refundable deposits	Loans and receivables			Amortized cost				213		213
	IAS	39 Carrying							IFRS 9 Carrying
	Amount as of								Amount as of
Financial Assets	January 1,		2018	Reclassifications Remeasurements					January 1, 2018
FVTOCI
Equity instruments	$		-
Add: Reclassification from
available-for-sale financial assets
(IAS 39) - equity instruments			-	$	375	$	-		$	375
			-		375		-			375
Amortized cost
Add: Reclassification from	loans
and receivables (IAS 39)			-		9,754,836		-			9,754,836
			-		9,754,836		-			9,754,386

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a) The Group elected to designated all its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTOCI under IFRS 9, because these investments are not held for trading. As a result, the related other equity - unrealized gain (loss) on available-for-sale financial assets of $337 thousand was reclassified to other equity - unrealized gain (loss) on financial assets at FVTOCI.
b) Trade receivables and other receivables that were previously classified as loans and receivables under IAS 39 were classified as measured at amortized cost with an assessment of expected credit losses under IFRS 9. As a result of retrospective application, the adjustments had no difference on January 1, 2018.
2) IFRS 15 “Revenue from Contracts with Customers” and related amendment

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Refer to Note 4 for related accounting policies.

IFRS 15 require that a good or service is distinct if it is capable of being distinct, for the sales of products by the Group, there should be no service provision. There is no transactions with goods and services being integrated, while there are no authorised trade and other transactions within the Group. Hence, IFRS 15 and its related amendments have no material impact on the Group.

b. 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 by the FSC for application starting from 2019

New IFRSs Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” 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 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

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 FSC permits the election for early adoption of the amendments starting from 2018.
Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

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Definition of a lease

Upon initial application of IFRS 16, the Group will elect to apply IFRS 16 only to contracts entered into (or changed) on or after January 1, 2019 in order to determine whether those contracts are, or contain, a lease. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right-of-use assets, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight-line basis. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

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.

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

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB (Note 1)
	January 1, 2020 (Note 2) To be determined by IASB January 1, 2021 January 1, 2020 (Note 3)

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 Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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.

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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 and issued into effect 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 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 liabilities which are valued by the present value of defined benefit minus fair value of 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

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

See Note 10 and Table 6 for the detailed information of subsidiaries (including the percentage of ownership and main businesses).

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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, 2017. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2017.

1) Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

a) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

i. Measurement category

2018

Financial assets are classified into the following categories: Financial assets at amortized cost and investments in equity instruments at FVTOCI.

i) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables at amortized cost, other receivables and refundable deposits, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset; and
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Financial asset that has subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset.

Cash equivalents include time deposits, commercial papers and repurchase agreements collateralized by bonds with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

ii) Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2017

Financial assets are classified into the following categories: Available-for-sale financial assets and loans and receivables.

i) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amounts of available-for-sale monetary financial assets (relating to changes in dividends on available-for-sale equity investments) are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when such investments are disposed of or are determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.

ii) Loans and receivables

Loans and receivables (including trade receivables, cash and cash equivalent, and other receivables) are measured using the effective interest method at amortized cost, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

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Cash equivalents include repurchase agreements collateralized by bonds, commercial papers and time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

ii. Impairment of financial assets

2018

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Group always recognizes lifetime Expected Credit Loss (i.e. ECL) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

2017

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as trade receivables, such assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments and an increase in the number of delayed payments in the portfolio past the average credit period.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

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For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When trade receivables are considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables that are written off against the allowance account.

iii. Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. From 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

b) Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

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Repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

c) Financial liabilities
i. Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

ii. Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

2) Revenue recognition

2018

The Group identifies the contract with the customers, allocates the transaction price to the performance obligations, and recognizes revenue when performance obligations are satisfied.

a) Revenue from sale of goods

Revenue from sale of goods comes from sales of silicon wafer. Sales of silicon wafer are recognized as revenue when the goods are delivered to the customer’s specific location or the goods are actually used because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers, and bears the risks of obsolescence. Trade receivable is recognized co-currently.

b) Revenue from rendering of services

Revenue from rendering of services comes from consignment. The Group is an agent and its performance obligation is to consignment. The Group recognizes revenue in the net amount of consideration received or receivable when the goods that are consignmented are transferred to the customer and the Group has no further obligation to the customer.

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

a) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

i. The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
ii. The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
iii. The amount of revenue can be measured reliably;
18 -
iv. It is probable that the economic benefits associated with the transaction will flow to the Group; and
v. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
b) Rendering of services

Service income (including that from operating service provided under service concession arrangements) is recognized when services are provided.

c) Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable effective interest rate.

3) Retirement benefit plan

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.

4) 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. The effect of a change in tax rate resulting from a change in tax law is recognized consistent with the accounting for the transaction itself which gives rise to the tax consequence, and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

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 consolidated financial statements for the year ended December 31, 2017.

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6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Cash on hand	$	4	$	-	$	-
Checking deposits		151,224		804		643
Demand deposits		428		414		913
Foreign currency deposits		655,882		789,466		706,676
Cash equivalent (investments with original
maturities less than 3 months)
Commercial papers		177,000		855,285		800,641
Repurchase agreements collateralized by bonds		611,600		2,316,674		2,434,846
Time deposits		3,743,871		3,647,079		2,511,149
	$	5,340,009	$	7,609,722	$	6,454,868

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,	December 31,	September 30,
	2018	2017	2017
Demand deposits	0.08%	0.08%	0.08%
Foreign currency deposits	0.01%	0.01%	0.01%
Commercial papers	0.44%	0.38%	0.36%-0.38%
Repurchase agreement collateralized by bonds	0.44%-0.47%	0.38%-0.42%	0.38%-0.42%
Time deposits	0.63%-2.7%	0.63%-1.82%	0.40%-1.65%

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

	September 30,	September 30,
		2018
Non-current
Investments in equity instruments at FVTOCI	$	481
Investments in equity instruments at FVTOCI
Non-current
Domestic investments
Listed shares
Ordinary shares - Formosa Petrochemical Corporation	$	481

The Group has investment in Formosa Petrochemical Corporation ordinary shares for its long-term strategy purposes, net return is expected through long-term investment. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. These investments in equity instruments were classified as available-for-sale financial assets under IAS 39. Refer to Note 3 and Table 2 of Note 25 for information relating to their reclassification and comparative information for 2017.

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8. TRADE RECEIVABLES AND OTHER RECEIVABLES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Trade receivables
At amortized cost
Trade receivables - unrelated parties	$	2,481,267	$	1,967,495	$	1,964,905
Trade receivables - related parties		479,037		161,281		141,933
Less: Allowance for impairment loss		-		-		-
	$	2,960,304	$	2,128,776	$	2,106,838
Other receivables-unrelated parties
Tax refund receivable (sales tax)	$	101	$	7,995	$	-
Other		4,411		3,118		2,859
	$	4,512	$	11,113	$	2,859
Other receivables-related parties
Receivable from loans to related parties - variable
interest rate	$	400,000	$	-	$	-
Receivable from interests to related parties		835		-		-
Other		10,226		5,012		9,160
	$	411,061	$	5,012	$	9,160

Trade Receivables

For the nine months ended September 30, 2018

In order to minimize credit risk, the management of the Company 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 allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

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The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

September 30, 2018

Not Past Due Expected credit loss rate 0% Gross carrying amount $ 2,960,304 Loss allowance (Lifetime ECL) - Amortized cost $ 2,960,304	Less than 60 Days 61 to 90 Days 0% 0% $ - $ - - - $ - $ -	91 to 120 Days 0% $ - - $ -	Over 120 Days 0% $ - - $ -	Total - $ 2,960,304 -
				$ 2,960,304

For the nine months ended September 30, 2017

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 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:

	December 31,	September 30,
	2017	2017
0-30 days	$ 1,095,011	$ 1,136,924
31-60 days	666,967	660,377
61-90 days	357,485	302,547
91-120 days	9,313	6,990
	$ 2,128,776	$ 2,106,838

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 December 31, 2017 and September 30, 2017.

9. INVENTORIES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Raw materials	$	687,987	$	567,581	$	506,059
Supplies		951,859		822,566		783,332
Work in progress		414,725		447,613		396,737
Finished goods		562,664		569,724		578,450
Merchandise inventories		23,960		16,538		16,842
Less: Allowance for inventory devaluation		(82,648)		(79,237)		(51,776)
	$	2,558,547	$	2,344,785	$	2,229,644

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The cost of inventories recognized as cost of goods sold for the three months and nine months ended September 30, 2018 was $2,327,198 thousand and $6,937,698 thousand, respectively.

The cost of revenue recognized as cost of goods sold for the three months and nine months ended September 30, 2018, included inventory write-downs of $1,242 thousand and $3,411 thousand, and income from selling silicon waste of $25,844 thousand and $74,915 thousand, respectively.

The cost of inventories recognized as cost of goods sold for the three months and nine months ended September 30, 2017 was $2,275,619 thousand and $7,058,239 thousand, respectively.

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.

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
	September 30, 2018 December 31, 2017 September 30, 2017 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.

11. PROPERTY, PLANT AND EQUIPMENT

Freehold Land 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 September 30, 2017 $ 120,906	Buildings Machinery and Equipment $ 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 $ 2,686,644 $ 8,855,683	Other Equipment Equipment Under Installation and Construction in Progress Total $ 739,998 $ 84,662 $ 35,110,777 6,608 13,031 120,751 376 (87,780 ) - (1,263 ) - (48,165 ) (528) - (33,127) $ 745,191 $ 9,913 $ 35,150,236 $ 652,412 $ - $ 21,884,971 (1,263 ) - (48,165 ) 376 - - 15,562 - 1,565,614 (74) - (3,508) $ 667,013 $ - $ 23,398,912 $ 78,178 $ 9,913 $ 11,751,324 (Continued)

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Freehold Land Cost Balance at January 1, 2018 $ 120,906 Additions - Reclassified - Disposals - Effect of foreign currency exchange differences - Balance at September 30, 2018$ 120,906 Accumulated depreciation and impairment Balance at January 1, 2018 $ - Disposals - Depreciation expense - Effect of foreign currency exchange differences - Balance at September 30, 2018 $ - Carrying amounts at December 31, 2017 and January 1, 2018 $ 120,906 Carrying amounts at September 30, 2018 $ 120,906	Buildings Machinery and Equipment $ 3,901,905 $ 30,372,636 - 38,743 - 693,497 - (1,166 ) - 22,774 $ 3,901,905 $ 31,126,484 $ 1,242,728 $ 21,994,691 - (1,166 ) 82,400 1,451,744 - 1,696 $ 1,325,128 $ 23,446,965 $ 2,659,177 $ 8,377,945 $ 2,576,777 $ 7,679,519	Other Equipment Equipment Under Installation and Construction in Progress Total $ 754,328 $ 572,626 $ 35,722,401 15,961 892,345 947,049 3,680 (697,177 ) - (5,842 ) - (7,008 ) 369 - 23,143 $ 768,496 $ 767,794 $ 36,685,585 $ 671,985 $ - $ 23,909,404 (5,842 ) - (7,008 ) 17,992 - 1,552,136 37 - 1,733 $ 684,172 $ - $ 25,456,265 $ 82,343 $ 572,626 $ 11,812,997 $ 84,324 $ 767,794 $ 11,229,320 (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

The accumulated impairment losses due to unusable machineries were all $10,001 thousand on September 30, 2018, December 31, 2017 and September 30, 2017, respectively. No impairment losses were recognized for the three months and nine months ended September 30, 2018 and 2017.

12. INTANGIBLE ASSETS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Technical cooperation fee	$	385	$	219	$	274

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	Technical	Technical
	Cooperation
		Fee
Cost
Balance at January 1, 2017 and September 30, 2017	$	584
Balance at January 1, 2018	$	584
Acquisition		1,323
Balance at September 30, 2018	$	1,907
Accumulated amortization
Balance at January 1, 2017	$	146
Amortization expense		164
Balance at September 30, 2017	$	310
Balance at January 1, 2018	$	365
Amortization expense		1,157
Balance at September 30, 2018	$	1,522

The Company signed a technical cooperation arrangement with Sumco Corporation with total fee of JPY7,000 thousand dollars on September 2017 and May 2015, respectively. A payment of $1,323 thousand and $584 thousand has been proceeded in January 2018 and May 2016, and being amortized over the period of 32 months.

The amortized amounts recognized as technical compensation expenses were $386 thousand and $54 thousand, respectively, in the three months ended September 30, 2018 and 2017; $1,157 thousand and $164 thousand, respectively, in the nine months ended September 30, 2018 and 2017.

13. OTHER ASSETS

	September 30,	December 31,	September 30,
	2018	2017	2017
Prepayments	$ 165,415	$ 127,422	$ 123,316
Others (including test fee and electricity
subsidies)	4,140	5,169	5,652
	$ 169,555	$ 132,591	$ 128,968
Current	$ 165,415	$ 127,422	$ 123,316
Non-current	4,140	5,169	5,652
	$ 169,555	$ 132,591	$ 128,968

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14. OTHER LIABILITIES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Current
Other payables
Payable for purchase of equipment	$	33,775	$	345,690	$	10,133
Payable for salary and bonus		312,850		446,265		304,555
Payable for insurance		26,076		26,440		24,381
Payable for utilities		61,585		45,575		59,887
Payables for dividends		130		103		103
Others (Note)		179,565		86,004		143,621
	$	613,981	$	950,077	$	542,680
Other payables - related parties
Payable for purchase of equipment - related
parties	$	1,090	$	22,088	$	4,069
Payable for royalties - related parties		303,391		300,662		202,745
Payable for expense - related parties		47,638		47,894		52,721
	$	352,119	$	370,644	$	259,535

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

15. 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 September 30 2018 2017 $ 2,542 $ 2,595 650 512 $ 3,192 $ 3,107	For the Three Months Ended September 30 2018 2017 $ 2,542 $ 2,595 650 512 $ 3,192 $ 3,107	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 2,542 650 $ 3,192		2018 $ 7,473 1,905 $ 9,378	2017 $ 7,684 1,503 $ 9,187

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16. EQUITY

a. Share capital

Ordinary shares

	September 30,	December 31,	September 30,
	2018	2017	2017
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)	387,848	775,697	775,697
Shares issued	$ 3,878,483	$ 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.

The Company has decided to reduce its equity in the meeting of the Company’s shareholder dated June 21, 2018, has be approved by the Financial Supervisory Commission (FSC) on July 12, 2018 and the Company’s chairman decided the record date is July 13, 2018, has be authorized by the board of directors. The capital reduced is estimated to be $3,878,483 thousand and cancellation of 387,848 thousand shares. Approximately 50% of shares will be reduced. The share capital will be $3,878,483 thousand, 387,848 thousand shares with par value of $10 per share.

b. Capital surplus

	September	September	30,	December	December	31,	September	September	30,
		2018			2017			2017
May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital
Issuance of ordinary shares (1)	$ 5,739,080			$ 5,739,080			$ 5,739,080
May be used to offset a deficit only
Overdue dividends not received by
shareholders (2)			5			2			-
	$ 5,739,085			$ 5,739,082			$ 5,739,080

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
2) Recognized as capital surplus - other, may be used to offset a deficit only.
c. Retained earnings and dividend policy

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

27 -

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. employees’ compensation and remuneration of directors and supervisors in Note 17.

The Company belongs to a high-tech capital intensive industry that is at the fast-growing phase of product life cycle. To ensure the cash require for the Company’s present and future expansion plans, the Company has 3 different methods to distribute its dividends, including cash dividends, capitalization of retained earnings, and capital surplus, and according to distributable surplus less legal and special reserve, no more than 80% of dividends are to be distributed. In principle, cash dividends are the five to be distributed, and the aggregate proportion of capitalization of retained earnings and capital surplus may not exceed 50% of total dividends.

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.

The appropriations of earnings for 2017 and 2016 were approved in the shareholders’ meetings on June 21, 2018 and June 21, 2017, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2017 2016 $ 224,277 $ 73,039 1,613,450 519,717	Dividends Per Share (NT$)
		For the Year Ended December 31
		2017 2016 $ 2.08 $ 0.67

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 financial assets at FVTOCI (recognized as unrealized gain/loss on available-for-sale financial assets under IAS 39) are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

28 -

17. NET INCOME

a. Other income

For the Three Months Ended September 30 2018 2017 $ 23,998 $ 8,173 20 - 4,690 3,728 $ 28,708 $ 11,901 For the Three Months Ended September 30 2018 2017 $ (1,322) $ (13,511) - - (144) (94) $ (1,466) $ (13,605) For the Three Months Ended September 30 2018 2017 $ 142 $ 90 For the Three Months Ended September 30 2018 2017 $ 527,301 $ 518,466 781 458 $ 528,082 $ 518,924	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2018 2017 $ 51,261 $ 19,141 20 19 12,670 11,974 $ 63,951 $ 31,134 For the Nine Months Ended September 30
	2018 2017 $ 156,570 $ (116,069) - 136 (384) (165) $ 156,186 $ (116,098) For the Nine Months Ended September 30
	2018 2017 $ 380 $ 292 For the Nine Months Ended September 30
2018 $ 527,301 781 $ 528,082	2018 $ 1,552,136 2,317 $ 1,554,453	2017 $ 1,565,614 10,605 $ 1,576,219 (Continued)

29 -

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses		For the Three Months Ended September 30 2018 2017 $ 524,811 $ 515,900 2,490 2,566 $ 527,301 $ 518,466 $ 781 $ 458 - - $ 781 $ 458		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 524,811 2,490 $ 527,301 $ 781 - $ 781		2018 $ 1,544,246 7,890 $ 1,552,136 $ 2,317 - $ 2,317	2017 $ 1,557,941 7,673 $ 1,565,614 $ 10,605 - $ 10,605 (Concluded)

e. Employee benefits expense

Post-employment benefits (see Note 15) 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 2018 2017 $ 13,409 $ 12,574 3,192 3,107 16,601 15,681 416,367 380,888 $ 432,968 $ 396,569 $ 385,247 $ 351,986 47,721 44,583 $ 432,968 $ 396,569		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 13,409 3,192 16,601 416,367 $ 432,968 $ 385,247 47,721 $ 432,968		2018 $ 39,939 9,378 49,317 1,167,504 $ 1,216,821 $ 1,085,618 131,203 $ 1,216,821	2017 $ 37,444 9,187 46,631 1,135,638 $ 1,182,269 $ 1,052,241 130,028 $ 1,182,269

f. Employees’ compensation and remuneration to directors and supervisors

According to the Articles of Incorporation of the Company, 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, 2018 and 2017, the employees’ compensation and the remuneration of directors and supervisors were as follows:

Accrual rate

Estimated Distribution Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended September 30 2018 2017 0.350% 0.285% - -	For the Nine Months Ended September 30
		2018 2017 0.350% 0.285% - -

30 -

Amount

Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended September 30 2018 2017 $ 6,128 $ 2,299 $ - $ -	For the Three Months Ended September 30 2018 2017 $ 6,128 $ 2,299 $ - $ -	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 6,128 $ -		2018 $ 16,977 $ -	2017 $ 5,102 $ -

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

The employees’ compensation and remuneration of directors and supervisors for 2017 and 2016 which have been approved by the Company’s board of directors on March 22, 2018 and March 17, 2017, respectively, were as follows:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31
	2017 2016 $ 9,125 $ 2,549 - -

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, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2018 and 2017 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 gain (loss)	For the Three Months Ended September 30 2018 2017 $ 33,983 $ 16,124 (35,305) (29,635) $ (1,322) $ (13,511)	For the Three Months Ended September 30 2018 2017 $ 33,983 $ 16,124 (35,305) (29,635) $ (1,322) $ (13,511)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 33,983 (35,305) $ (1,322)		2018 $ 289,171 (132,601) $ 156,570	2017 $ 245,461 (361,530) $ (116,069)

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18. INCOME TAX

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

Current tax In respect of the current period Income tax expense of unappropriated earnings Adjustments for prior periods Deferred tax In respect of the current period Adjustments to deferred tax attributable to changes in tax rates and laws Income tax expense recognized in profit or loss	For the Three Months Ended September 30 2018 2017 $ 226,656 $ 90,473 - - (1) (5) 6,174 23,227 - - $ 232,829 $ 113,695	For the Three Months Ended September 30 2018 2017 $ 226,656 $ 90,473 - - (1) (5) 6,174 23,227 - - $ 232,829 $ 113,695	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 226,656 - (1) 6,174 - $ 232,829		2018 $ 636,385 36,689 (47) (33,713) (21,056) $ 618,258	2017 $ 159,561 13,153 125 90,148 - $ 262,987

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income to be recognized in profit or loss is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings will be reduced from 10% to 5%.

b. Income tax assessments

The tax returns through 2016, has been assessed by the tax authorities.

19. 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 2018 2017 $ 1,520,856 $ 699,108		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 1,520,856		2018 $ 4,225,074	2017 $ 1,531,174

32 -

Unit: Thousand Shares

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 ordinary share used in the computation of diluted earnings per share (in thousands)	For the Three Months Ended September 30 2018 2017 438,437 775,697 173 34 438,610 775,731	For the Three Months Ended September 30 2018 2017 438,437 775,697 173 34 438,610 775,731	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 438,437 173 438,610		2018 662,041 133 662,174	2017 775,697 55 775,752

If the Group offered to settle bonuses or compensation paid to employees in cash or shares, the Group assumed the entire amount of the bonus or 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 directors resolve the number of shares to be distributed to employees at their meeting in the following year.

20. 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 related parties through the optimization of capital structure.

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

21. 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 measured at fair value on a recurring basis

Fair value hierarchy

September 30, 2018
	Level 1		Level 2		Level 3			Total
Financial assets at FVTOCI
Investments in equity instruments
at FVTOCI
Domestic listed shares	$	481	$	-	$	-	$	481

33 -

December 31, 2017
	Level 1		Level 2		Level 3			Total
Available-for-sale financial assets
Equity securities
Domestic listed shares	$	375	$	-	$	-	$	375
September 30, 2017
	Level 1		Level 2		Level 3			Total
Available-for-sale financial assets
Equity securities
Domestic listed shares	$	344	$	-	$	-	$	344

There were no transfers between Levels 1 and 2 in the current and prior periods.

c. Categories of financial instruments

	September 30,	September 30,	December 31,	September 30,
		2018	2017	2017
Financial assets
Loans and receivables (1)	$	-	$ 9,746,841	$ 8,573,930
Available-for-sale financial assets		-	375	344
Financial assets at amortized cost (2)		8,715,990	-	-
Financial assets at FVTOCI
Equity instruments		481	-	-
Financial liabilities
Amortized cost (3)		1,136,794	1,396,423	1,041,925

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other receivables (excluding sales tax refund receivables), and refundable deposits.
2) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, trade receivables, other receivables (excluding sales tax refund receivables), and refundable deposits.
3) The balances 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.

34 -

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 24.

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 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 2018 2017 $ 537,013 (i) $ 329,159 (i)	JPY Impact
		For the Nine Months Ended September 30
		2018 2017 $ (21,501) (ii) $ (22,886) (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 exposure to outstanding on 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 for the nine months ended September 30, 2018 mainly due to the increase of USD bank deposits and trade receivables. In addition, the Group’s sensitivity to JPY has no major difference for the nine months ended September 30, 2018 and 2017.

35 -

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,
	2018	2017	2017
Fair value interest rate risk
Financial assets	$ 4,532,471	$ 6,819,038	$ 5,746,636
Cash flow interest rate risk
Financial assets	656,310	789,880	707,589
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. A 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, 2018 would increase/decrease by $4,922 thousand, respectively, 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, 2017 would increase/decrease by $5,307 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 has no major difference for the nine months ended September 30, 2018 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 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, 2018, the year ended December 31, 2017, and the nine months ended September 30, 2017.

36 -

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, 2018 Non-derivative financial liabilities Non-interest bearing December 31, 2017 Non-derivative financial liabilities Non-interest bearing September 30, 2017 Non-derivative financial liabilities Non-interest bearing	1-6 Months $ 1,136,208 1-6 Months $ 1,396,422 1-6 Months $ 1,364,218	6 Months to 1 Year $ - 6 Months to 1 Year $ - 6 Months to 1 Year $ -	1-3 Years $ - 1-3 Years $ - 1-3 Years $ -	3+ Years $ -
				3+ Years $ -
				3+ Years $ -

37 -

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, 2018

Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets December 31, 2017 Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets September 30, 2017 Non-derivative financial assets Non-interest bearing Variable interest rate assets Fixed interest rate assets	1-6 Months $ 3,115,944 1,057,178 4,546,866 $ 8,719,988 1-6 Months $ 2,145,705 790,189 6,840,518 $ 9,776,412 1-6 Months $ 2,119,500 707,625 5,768,419 $ 8,595,544	6 Months to 1 Year $ - - - $ - 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.

38 -

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.

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. Hwa Ya Power Corporation	Related Party Categories and Relationship with the Group
	Ultimate parent company Parent company Fellow subsidiary (subsidiary company of Sumco Corporation) Investor with significant influence (equity-method investor holds 29.06% of the Company) Others (a director is the chairman of the Company) Others (same chairman) Others (same chairman)

b. Operating Transaction
1) Sale of good

Related Party Line Items Categories Sales Parent company (Sumco Techxiv Corporation)		For the Three Months Ended September 30 2018 2017 $ 715,443 $ 213,081		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 715,443		2018 $ 1,810,343	2017 $ 567,820

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 (Sumco Corporation) Parent company Investor with significant influence Others (same chairman or a director is the chairman of the Company)		For the Three Months Ended September 30 2018 2017 $ 199,728 $ 208,497 3,773 9,053 7,117 7,041 4,421 6,567 $ 215,039 $ 231,158		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 199,728 3,773 7,117 4,421 $ 215,039		2018 $ 603,836 14,424 24,361 12,920 $ 655,541	2017 $ 805,939 12,832 21,614 14,264 $ 854,649

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.

39 -
3) Receivables from related parties

	Related Party	September	30,	December 31,	September 30,
Line Items	Categories	2018		2017	2017
Trade receivable	Parent company	$ 479,037		$ 161,281	$ 141,933
	(Sumco Techxiv
	Corporation)
Payables to related	parties
	Related Party	September	30,	December 31,	September 30,
Line Items	Categories	2018		2017	2017
Trade payables	Ultimate parent	$ 132,862		$ 140,381	$ 165,794
	company (Sumco
	Corporation)
	Parent company	1,426		2,507	1,830
	Investor with		-	2,945	2,333
	significant influence
	Others (same chairman	532		384	234
	or a director is the
	chairman of the
	Company)
		$ 134,820		$ 146,217	$ 170,191

4) Payables to related parties

The outstanding trade receivables from related parties are unsecured. For the nine months ended September 30, 2018 and 2017, no impairment loss was recognized for trade receivables from related parties.

The outstanding trade payables to related parties are unsecured and will be paid by cash.

c. Commission income, selling waste income, other income and other receivables

Ultimate parent company (commission, account in other revenue and deduction of operating cost) Fellow subsidiary (selling waste income, account in deduction of operating cost)	For the Three Months Ended September 30 2018 2017 $ 5,449 $ 4,749 9,144 3,693 $ 14,593 $ 8,442	For the Three Months Ended September 30 2018 2017 $ 5,449 $ 4,749 9,144 3,693 $ 14,593 $ 8,442	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 5,449 9,144 $ 14,593		2018 $ 15,830 31,557 $ 47,387	2017 $ 18,709 11,177 $ 29,886

40 -

Line Items
September 30,
2018
December 31,
2017
September 30,
2017
Other receivables
Ultimate parent company
$ 6,351
$ 3,721
$ 7,845
Fellow subsidiary

3,875

1,291

1,315
$ 10,226
$ 5,012
$ 9,160
Loans to related parties
September 30,
2018
December 31,
2017
September 30,
2017
Other receivables-related parties
Others (Hwa Ya Power Corporation)
Receivable from loans to related parties -
variable interest rate
$ 400,000
$ -
$ -
Receivable from interests to related parties
835

-

-
$ 400,835
$ -
$ -

The Company has issued loans to the others (Hwa Ya Power Corporation) totaled $1,000,000 thousand. The receivable balance is $400,000 thousand as of September 30, 2018. The Company provided the others with loans at interest rate of 1.41%, which were unsecured. The interest income from loan to others (Hwa Ya Power Corporation) were $3,325 thousand and $5,871 thousand, respectively, in the three months and nine months ended September 30, 2018 and 2017. The unreceived amount of interest is $835 thousand as of September 30, 2018.

The Company has issued loans to the investor with significant influence (Formosa Plastic Corporation) totaled $844,935 thousand. The Company provided the investor with significant influence with loans at interest rate of 1%, which were unsecured and has been recovered before June 30, 2018. The interest income from loan to the investor with significant influence (Formosa Plastic Corporation) were $0 thousand and $24 thousands, respectively, in the three months and nine months ended September 30, 2018.

The Company has issued loans to the investor with significant influence (Formosa Plastic Corporation) totaled $1,003,464 thousand. The Company provided the investor with significant influence 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 the investor with significant influence (Formosa Plastic Corporation) were $0 thousand and $27 thousands, respectively, in the three months and nine months ended September 30, 2017.

e. Loans from related parties

Japan Formosa Sumco Technology Corporation obtained loan from the investor with significant influence (Formosa Plastic Corporation) totaled $844,935 thousand at interest rate of 1% on June 15, 2018, the loan is unsecured and has been repaid by Japan Formosa Sumco Technology Corporation before June 30, 2018. The interest expense paid to the investor with significant influence (Formosa Plastic Corporation) for the three months and nine months ended September 30, 2017 were $0 thousand and $24 thousand, respectively.

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Japan Formosa Sumco Technology Corporation obtained loan from the investor with significant influence (Formosa Plastic Corporation) totaled $1,003,464 thousand at interest rate of 1% on June 15, 2017, the loan is unsecured and has been repaid by Japan Formosa Sumco Technology Corporation before June 30, 2017. The interest expense paid to the investor with significant influence (Formosa Plastic Corporation) for the three months and nine months ended September 30, 2017 were $0 thousand and $27 thousand, respectively.

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

The repairs and maintenance expenses of others (Formosa Technologies Corporation) were $5,345 thousand and $5,603 thousand for the 3 months ended September 30, 2018 and 2017, respectively; $16,105 thousand and $17,327 thousand for the nine months ended September 30, 2018 and 2017, respectively. The repairs and maintenance expenses are based on mutual agreement, and will be paid upon completion.

The manufacturing expenses of ultimate parent company (Sumco Corporation) were $90,233 thousand and $81,556 thousand for the 3 months ended September 30, 2018 and 2017, respectively; $268,452 thousand and $248,654 thousand for the nine months ended September 30, 2018 and 2017. The unpaid amount has been recognized as accrued expenses of $47,638 thousand, $47,894 thousand and $52,721 thousand, as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively, and will be paid in next month.

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

The Group acquired warehouse management system from other related parties (Formosa Technologies Corporation) in the three months and nine months ended September 30, 2018 with contract price of $0 thousand and $19,700 thousand, respectively. The payable balance of $1,090 thousand, as of September 30, 2018, accounted for as payable for equipments to related parties (other payable), and will be paid upon receipts.

The Group purchase crystal puller strengthening system from other related party (Formosa Technologies Corporation), with contract price of $21,800 thousand. The payable balance is $21,800 thousand as of December 31, 2017, accounted for as payable for equipments to related parties (other payable), and will be paid upon receipts.

The Group acquired control system from inventor with significant influence (Formosa Plastic Corporation) with contract price of $288 thousand. The payable balance is $288 thousand as of December 31, 2017, accounted for as payable for equipments to related parties (other payable), and will be paid upon receipts.

The Group acquired heat treatment equipment from parent company in the three months and nine months ended September 30, 2018 with contract price were both $4,069 thousand. The payable balance of $4,069 thousand, as of September 30, 2018, accounted for as payable for equipments to related parties (other payable), and will be paid upon receipts.

3) Other transactions

In September 2017 and May 2015, the Group has signed technical compensation arrangement with its ultimate parent company (Sumco Corporation). The Group has acquired the know-how of silicon wafer production worth JPY7,000 thousand. A payment of $1,323 thousand and $584 thousand have been proceeded on January 2018 and May 2016. This is recorded as intangible asset (refer to Note 12).

42 -

Under an existing agreement began in 2003, the Company is liable of paying royalty to parent company regularly. The royalty was recognized as selling expenses from January 1 to September 30, 2018 and 2017. The unpaid amount as of September 30, 2018, December 31, 2017 and September 30, 2017 were recognized as accrued expenses (other payables) and will be paid in February of the following year.

In August 2010, the Company signed a contract with its ultimate parent company. Under this contract, the ultimate parent company will provide the Company with technical know-how 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 technical commission fee classified under selling expenses from January 1 to September 30, 2018 and 2017. The unpaid amount as of September 30, 2018, December 31, 2017 and September 30, 2017 was recognized as accrued expenses (other payables) and will be paid in February of the following year.

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

	For	the Three Months Ended	the Three Months Ended		For the Nine	For the Nine	Months Ended	Months Ended
		September 30				September		30
		2018	2017			2018		2017
Selling expenses
Parent company	$	6,719	$ 5,382		$	19,523	$	15,348
Ultimate parent company
(Sumco Corporation)		101,149	91,149			283,868		187,397
	$	107,868	$ 96,531		$	303,391	$	202,745
		September 30,		December 31,			September 30,
			2018		2017			2017
Accrued royalties-related party
Parent company		$	19,523	$		20,938	$	15,348
Ultimate parent company (Sumco
Corporation)			283,868		279,724			187,397
		$	303,391	$	300,662		$	202,745

e. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Other long-term employee benefits	For the Three Months Ended September 30 2018 2017 $ 2,329 $ 2,262 30 34 4 5 $ 2,363 $ 2,301	For the Three Months Ended September 30 2018 2017 $ 2,329 $ 2,262 30 34 4 5 $ 2,363 $ 2,301	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 2,329 30 4 $ 2,363		2018 $ 6,303 92 11 $ 6,406	2017 $ 6,573 101 15 $ 6,689

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

43 -

23. 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, 2018 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.

24. 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:

September 30, 2018

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 187,235
30.551 (USD:NTD)
JPY
137,136
0.2692 (JPY:NTD)

Financial liabilities
Monetary items
USD
9,707
30.500 (USD:NTD)
USD
1,571
113.299 (USD:JPY)
JPY
935,834
0.2692 (JPY:NTD)

December 31, 2017
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 131,500
29.848 (USD:NTD)
JPY
91,488
0.2641 (JPY:NTD)

Carrying
Amount
$ 5,720,203

36,917
$ 5,757,120
$ 302,166

47,907

251,927
$ 602,000
Carrying
Amount
$ 3,925,022

24,162
$ 3,949,184
(Continued)

44 -

Foreign
Currencies
Exchange Rate
Financial liabilities
Monetary items
USD
$ 16,807
29.848 (USD:NTD)
USD
1,827
113.018 (USD:JPY)
JPY
890,209
0.2641 (JPY:NTD)

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
857,888
0.2695 (JPY:NTD)

Carrying
Amount
$ 501,657

54,554

235,104
$ 791,315
(Concluded)
Carrying
Amount
$ 3,697,501

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

72,079

231,201
$ 637,110

The Group is mainly exposed to USD and JPY. For the significant realized and unrealized foreign exchange gains (losses), please refer to Note 17 b and g.

25. 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)
45 -
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.

26. 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 under IFRS 8 “Operating Segments” in the nine months ended September 30, 2018 and 2017 is only the silicon wafer segment as the Group’s main activities are manufacturing and selling the 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 2018 2017 $ 12,139,916 $ 9,390,712		Segment Profit and Loss	Segment Profit and Loss
				For the Nine Months Ended September 30
		2018 $ 12,139,916		2018 $ 4,831,026 20 12,670 (384) $ 4,843,332	2017 $ 1,782,333 19 11,974 (165) $ 1,794,161

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales during the nine months ended September 30, 2018 and 2017.

Segment profit represents the profit earned by silicon wafer segment without allocation of dividend income, miscellaneous income (included in other income), miscellaneous expense (included in 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.

46 -
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.

47 -

TABLE 1

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (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 Formosa Heavy Industries Corporation Hwa Ya Power Corporation	Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties	Yes Yes Yes Yes	$ 1,220,000 (Note 3) 1,220,000 (Note 3) 1,200,000 (Note 3) 1,000,000 (Note 3)	$ - (Notes 3) 1,220,000 (Notes 3 and 4) - 1,000,000 (Notes 3 and 5)	- (Note 6) 824,829 (Note 7) - 400,000	1.00% 1.00% 1.41% 1.41%	2 2 2 2	$ - - - -	Operating capital Operating capital Operating capital Operating capital	$ - - - -	None None None None	$ - - - -	$ 5,102,683 (Note 8) 2,041,073 (Note 9) 5,102,683 (Note 8) 5,102,683 (Note 8)	$ 10,205,366 (Note 10) 10,205,366 (Note 10) 10,205,366 (Note 10) 10,205,366 (Note 10)

Note 1: a. “0” financing provide.

b. “1” and onward coded based on reduce of companies inverted.

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 13, 2018 to June 12, 2019.

Note 5: Financing period from April 26, 2018 to April 25, 2019.

Note 6: The Company has recovered $844,935 thousand loan from Formosa Plastic Corporation.

Note 7: The amount was eliminated upon consolidation.

Note 8: For short-term financing requirements, the financing limits for each borrowing company should not exceed 25% of Formosa Sumco Technology Corporation’s net worth.

Note 9: For short-term financing requirements, the financing limits for each borrowing company should not exceed 10% of Formosa Sumco Technology Corporation’s net worth.

Note 10: The maximum total financing provided should not exceed 50% of Formosa Sumco Technology Corporation’s net worth.

48 -

TABLE 2

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2018

(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		Financial assets at FVTOCI	3,247	$ 481		$ 481

Note 1: The marketable securities, listed above includes stocks, bonds, beneficiary certifiable, and all form of securities listed under IFRS 9: 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 $443 thousand.

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

49 -

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, 2018

(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 Sumco Techxiv Corporation Japan Formosa Sumco Technology Corporation Formosa Sumco Technology Corporation	Ultimate parent company Parent Company Subsidiary Parent company	Purchase Sale Purchase Sale	$ 568,428 1,810,343 564,723 564,723	11.91 14.91 11.83 100.00	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 receipts of the Company’s goods 70 days 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	$ (122,966) 479,037 (189,151) 189,151	(18.81) 16.18 (28.94) 100.00	Note Note

Note: The amount was eliminated upon consolidation.

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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 NINE MONTHS ENDED SEPTEMBER 30, 2018

(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 Hwa Ya Power Corporation Formosa Sumco Technology Corporation	Parent company Subsidiary Others (same chairman) Parent company	$ 479,037 826,093 (Notes 1 and 2) 400,835 (Note 3) 189,151 (Note 2)	7.54 Not applicable Not applicable 4.46	$ - - - -	- - - -	$ - - - -	$ - - - -

Note 1: The Company issued loan to Japan Formosa Sumco Technology Corporation which includes principal $824,829 thousand and interest $1,264 thousand.

Note 2: The amount was eliminated upon consolidation.

Note 3: The Company issued loan to Hwa Ya Power Corporation which includes principal $400,000 thousand and interest $835 thousand.

51 -

TABLE 5

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Company Name	Counterparty	Relationship		Transactions	Details
				Financial Statement Accounts	Amount (Note 3)	Payment Terms	% to Total Sales or Assets (Note 2)
0	The Company	Japan Formosa Sumco Technology Corporation `〃` `〃` `〃`	Subsidiary `〃` `〃` `〃`	Purchases of goods Interest income Trade payables Other receivables (include interest receivables)	$ 564,723 6,530 189,151 826,093	General terms General terms General terms General terms	4.65 0.05 0.82 3.60

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 September 30, 2018, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2018.

Note 3: The amount was eliminated upon consolidation.

52 -

TABLE 6

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (In Thousands of Foreign Currency/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, 2018	As of September 30, 2018	As of September 30, 2018	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				September 30, 2018	December 31, 2017	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 1,181,563 NT$ 317,696	(JPY 72,915) (NT$ 20,171)	JPY 70,967 NT$ 19,663	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 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.

53 -

AI assistant

FST — Interim / Quarterly Report 2018

52338_rns_2018-12-13_018a4b28-38e4-4461-85af-3b536d31430d.pdf

Formosa Sumco Technology Corporation and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Conclusion

Notice to Readers

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

FORMOSA SUMCO TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

Classification, measurement and impairment of financial assets

IFRS 16 “Leases”

Definition of a lease

The Group as lessee

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

2018

ii) Investments in equity instruments at FVTOCI

2017

ii) Loans and receivables

2018

2017

iii. Derecognition of financial assets

b) Equity instruments

2) Revenue recognition

2018

2017

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

8. TRADE RECEIVABLES AND OTHER RECEIVABLES

Trade Receivables

For the nine months ended September 30, 2018

September 30, 2018

9. INVENTORIES

10. SUBSIDIARIES

Subsidiary Included in the Consolidated Financial Statements

11. PROPERTY, PLANT AND EQUIPMENT

12. INTANGIBLE ASSETS

13. OTHER ASSETS

14. OTHER LIABILITIES

15. RETIREMENT BENEFIT PLANS

16. EQUITY

Ordinary shares

17. NET INCOME

a. Other income

Accrual rate

Amount

18. INCOME TAX

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

b. Income tax assessments

19. EARNINGS PER SHARE

Unit: Thousand Shares

20. CAPITAL MANAGEMENT

21. FINANCIAL INSTRUMENTS

1) Market risk

a) Foreign currency risk

Sensitivity analysis

b) Interest rate risk

2) Credit risk

3) Liquidity risk

Liquidity and interest risk rate table

September 30, 2018

22. TRANSACTIONS WITH RELATED PARTIES

e. Loans from related parties

23. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

24. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

FST Interim / Quarterly Report 2018