ICHIA - Capital/Financing Update 2014

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Ichia Technologies, Inc.

(Incorporated as a company limited by shares in Taiwan, the Republic of China)

US$70,000,000

Zero Coupon Convertible Bonds due 2009

Issue Price: 101 percent

The US$70,000,000 Zero Coupon Convertible Bonds due 2009 (the "Bonds") will be issued in registered form by Ichia Technologies Inc. (the "Company"). Unless previously repurchased and cancelled, converted or redeemed, the Bonds will be redeemed on July 22, 2009 at their principal amount. See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation".

The Company will, at the option of the holder of any Bond (the "Bondholder"), redeem such Bond on July 22, 2006, or July 22, 2007 at the Bond's principal amount (as defined herein). The Bonds may be redeemed, in whole or in part, at the option of the Company at any time on or after January 22, 2005, at the Bonds' principal amount, in certain circumstances relating to the then prevailing Closing Price of the Shares relative to the Conversion Price. The Bonds may be redeemed, in whole but not in part, at the option of the Company, at the Bond's principal amount, at any time if at least 90 percent in principal amount of the Bonds has already been converted, redeemed or repurchased and cancelled. The Bonds may also be redeemed, in whole but not in part, at any time, at the option of the Company at the Bonds' principal amount in the event of certain changes relating to taxation in the Republic of China (the "ROC" or "Taiwan"). See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation".

The Bonds may be converted at any time on or after August 21, 2004 and prior to the close of business (at the place the Bond is deposited for conversion) on July 12, 2009 into common shares, par value NT$10 per share, of the Company (the "Shares") unless previously redeemed, converted or repurchased and cancelled and except during a Closed Period (as defined herein).

Investing in the Bonds involves certain risks. See the section on "Risk Factors".

The Conversion Price will initially be NT$82.00 per Share subject to adjustment in the manner provided herein and with a fixed rate of exchange applicable on conversion of the Bonds of NT$33.724 = US$1.00. In addition, the Conversion Price will be adjusted on the Reset Date (as defined herein) in certain circumstances relating to the then prevailing Closing Price of the Shares relative to the Conversion Price. See "Terms and Conditions of the Bonds - Conversion". The Shares are listed on the Taiwan Stock Exchange ("TSE") with trade number of 2402 and application will be made to list the Shares issued on conversion of the Bonds on the TSE. On July 15, 2004, the Closing Price of the Shares on the TSE was NT$68.0 per Share.

Application has been made to list the Bonds on the Société de la Bourse de Luxembourg S.A. (the "Luxembourg Stock Exchange"). Delivery of the Bonds will be made in book entry form through the facilities of Euroclear and Clearstream, Luxembourg (each as defined herein) on July 22, 2004 (the "Closing Date").

The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act).

Joint Lead Managers

Taiwan Securities Co., Ltd. Taiwan Securities (Hong Kong) Co., Ltd.

The date of this Offering Circular is July 22, 2004

The Company, having made all reasonable inquiries, confirms that this Offering Circular contains all information with respect to the Company, the Bonds and the Shares which is material in the context of the issue and offering of the Bonds (including all information required by applicable laws of the ROC), that the information contained herein (save as set out below) is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed herein are honestly held and have been reached after considering all relevant circumstances and are based on reasonable assumptions, that there are no other facts, the omission of which would, in the context of the issue and offering of the Bonds, make this Offering Circular as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respects and that all reasonable inquiries have been made by the Company to verify the accuracy of such information and that this Offering Circular does not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary in order to make the statements herein, in the light of the circumstances under which they are made, not misleading. The Company accepts responsibility accordingly. Information provided herein with respect to the ROC, its political status and economy, has been derived from government and other public sources such as the websites of the Ministry of Economic Affairs, the Securities and Futures Commission, the Central Bank of China, the TSE and the GreTai Securities Market and the Company accepts responsibility only for accurately extracting information from such sources.

The distribution of this Offering Circular and the offering and sale of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Company and the Managers (as defined in "Subscription and Sale") to inform themselves about and to observe any such restrictions. For a description of certain further restrictions on offers and sales of the Bonds and distribution of this Offering Circular, see "Subscription and Sale". This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Company, the Trustee or the Managers to subscribe for or purchase any of the Bonds in any jurisdiction in which such offer or invitation would be unlawful.

No person is authorized in connection with the issue, offering or sale of the Bonds to give any information or to make any representation not contained in this Offering Circular and any information or representation not contained herein must not be relied upon as having been authorized by the Company, the Trustee or the Managers. Neither the delivery of this Offering Circular nor any sale or allotment made in connection with the issue of the Bonds shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to its date.

The Managers make no representations or warranties (express or implied) as to the accuracy or completeness of the information contained herein and nothing contained in this Offering Circular is, or shall be relied upon, as a promise or representation, whether as to the past or the future. The Managers have not independently verified any such information and assumes no responsibility for its accuracy or completeness.

The Bonds will be represented by beneficial interests in a permanent global certificate (the "Global Certificate") in registered form, which will be registered in the name of a nominee of, and shall be deposited on or about the Closing Date with a common depositary for, Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). Definitive Certificates will be issued to Bondholders only if either Euroclear or Clearstream, Luxembourg (or any other clearing system as shall have been designated by the Company and approved by the Trustee on behalf of which the Bonds evidenced by the Global Certificate may be held) is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so.

References to the "ROC" are to the island of Taiwan and other areas under the effective control of the Republic of China.

The Company has prepared audited consolidated and non-consolidated financial statements as at and for the three years ended December 31, 2001, 2002 and 2003 and unaudited non-consolidated financial statements as at and for the three months ended March 31, 2003 and 2004 contained herein.

IN CONNECTION WITH THE ISSUE OF THE BONDS, TAIWAN SECURITIES (HONG KONG) CO., LTD. ON BEHALF OF THE PURCHASERS MAY OVERALLOT OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS OR THE SHARES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD AFTER THE CLOSING DATE. HOWEVER, TAIWAN SECURITIES (HONG KONG) CO., LTD. IS UNDER NO OBLIGATION TO DO SO. SUCH STABILIZING, IF COMMENCED, MAY BE DISCOUNTINUED AT ANY TIME.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking statements made in this Offering Circular contain information regarding, among other things, the financial condition, future expansion plans and business strategy of the Company. These forward-looking statements are based on current expectations and projections by the Company about future events. Although the Company believes that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions, including, among other things:

the intensely competitive industries in which the Company operates;
market demand for the Company's products;
availability of raw materials;
industry risks;
the regulations to which the Company is subject;
general economic, political and social conditions and developments in ROC and other jurisdictions in which the Company operates its business;
risks associated with expansion of the Company’s facilities;
legal proceedings; and
other risks identified in "Risk Factors".

ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE ROC

The Company is a company limited by shares and incorporated under the ROC Company Law. Substantially all of the Company's directors and executive officers, its supervisors and certain other parties named herein are residents of the ROC and a substantial portion of the assets of the Company and such persons are located in the ROC. As a result, it may not be possible for investors to effect service of process upon the Company or such persons outside of the ROC, or to enforce against any of them judgments obtained in courts outside of the ROC. Any final judgment obtained against the Company or such person in any court other than the courts of the ROC in respect of any legal suit or proceeding arising out of or relating to the Bonds will be enforced by the courts of the ROC without further review of the merits only if the court of the ROC in which enforcement is sought is satisfied that: (i) the court rendering the judgment has jurisdiction over the subject matter according to the laws of the ROC; (ii) the judgment is not contrary to the public order or good morals of the ROC; (iii) the judgment is a final judgment for which the period for appeal has expired or from which no appeal can be taken; (iv) if the judgment was rendered by default by the court rendering the judgment, the Company or such persons were served within the jurisdiction of such court, or process was served on the Company or such persons with judicial assistance of the ROC; and (v) judgments of the courts of the ROC are recognized and enforceable in the court rendering the judgment on a reciprocal basis. Remittance out of the ROC of any amount recovered from enforcing a foreign judgment in the ROC is also subject to the Foreign Exchange Control Statute and regulations as described in "Foreign Investment and Exchange Controls in the ROC" herein.

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SUMMARY...............................................................................................................................................................1 USE OF PROCEEDS ...............................................................................................................................................5 RISK FACTORS.......................................................................................................................................................6 CAPITALIZATION................................................................................................................................................13 BUSINESS OF THE COMPANY..........................................................................................................................14 MANAGEMENT....................................................................................................................................................30 PRINCIPAL SHAREHOLDERS ..........................................................................................................................33 RECENT DEVELOPMENTS AND OUTLOOK ................................................................................................34 DIVIDENDS............................................................................................................................................................36 MARKET PRICE INFORMATION.....................................................................................................................37 CHANGES IN ISSUED SHARE CAPITAL ........................................................................................................38 TERMS AND CONDITIONS OF THE BONDS .................................................................................................39 THE GLOBAL CERTIFICATE............................................................................................................................59 EXCHANGE RATES .............................................................................................................................................61 FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN THE ROC...................................................62 DESCRIPTION OF THE COMMON STOCK....................................................................................................66 THE SECURITIES MARKET OF THE ROC ....................................................................................................70 ROC TAXATION OF NON-RESIDENTS ...........................................................................................................73 SUMMARY OF MATERIAL DIFFERENCES BETWEEN ROC GAAP AND US GAAP.............................75 SUBSCRIPTION AND SALE................................................................................................................................84 GENERAL INFORMATION ................................................................................................................................87 AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT ACCOUNTANTS FOR THE PERIODS ENDED DECEMBER 31, 2001, 2002 AND 2003 ……................. F-1 AUDITED NON-CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT ACCOUNTANTS FOR THE PERIODS ENDED DECEMBER 31, 2001, 2002 AND 2003 ……........................................................................................................................................... F-45 UNAUDITED NON-CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT ACCOUNTANTS FOR THE PERIODS ENDED MARCH 31, 2003 AND 2004 …….. F-94

Unless otherwise specified or the context requires, references to "US dollars" and "US$" are to the lawful currency of the United States of America, references to "New Taiwan dollars", "NT dollars", "NT$" and "$" are to the lawful currency of the ROC. Unless otherwise specified, where financial information in relation to the Company has been translated into US dollars, it has been so translated, for convenience only, at the rate of NT$33.724 = US$1.00 using the closing exchange rate on July 2, 2004 provided by Taipei Forex Inc. The rate of NT$33.025 = US$1.00, the closing exchange rate as of March 31, 2004 quoted by the Bank of Taiwan, is used for financial statements for the three years ending December 31, 2003 and financial statements for the three months ending March 31, 2003 and 2004. Such translation should not be construed as a representation that the amounts in question have been, could have been or could be converted into US dollars at that or any other rate. The closing rate of exchange provided by Taipei Forex Inc. between the NT dollar the US dollar on July 15, 2004 was NT$33.911 = US$1.00. Except where the context otherwise requires, all references to the "Company" are to Ichia Technologies, Inc. or Ichia Technologies, Inc. and its subsidiaries, as the context requires.

The Company's financial statements are prepared using ROC GAAP and are not intended to present the financial conditions, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions, including the United States, other than those in the ROC. The material differences between ROC GAAP and generally accepted accounting principals in the United States ("U.S. GAAP") as applicable to us are discussed under the caption "Summary of Material Difference Between ROC GAAP and U.S. GAAP". Certain financial amounts presented herein may not correspond directly to the Company's financial statements include elsewhere herein or may not add up due to rounding.

Unless otherwise specified or the context requires, references in this Offering Circular to audited consolidated and non-consolidated financial information as of and for the years ended December 31, 2001, 2002 and 2003 and for the three months ended March 31, 2003 and 2004 refer to the Company's financial information derived from the audited consolidated and non-consolidated financial statements included elsewhere herein.

SUMMARY

The following summary is qualified in its entirety by and subject to the more detailed corporate information and unconsolidated financial statements and notes thereto included elsewhere herein. For a discussion of certain factors which should be considered in connection with an investment in the Bonds offered in this offering, see "Risk Factors" .

The Company

The Company is a professional manufacturer and one of the best component makers in the world. Its major product areas include: (1) Keypads and Domes: The Company designs and manufactures plastic and rubber keypads for electronic devices such as mobile phones, handheld devices, home and business telephones, pagers, remote controllers, calculators, game consoles and personal digital assistants ("PDAs"). The Company also designs and manufactures metal domes and poly domes that are critical components of mobile phones and many electronic devices; and (2) Flexible printed circuit boards: The Company designs and fabricates flexible printed circuit boards ("FPC") with high density, lightweight, redundant circuitry for end use applications in the LCD panels of mobile phones, notebook computers, hard disc drives, and other compact electronic consumer goods such as camcorders, cameras, and car stereos.

The Company supplies its products on an OEM or ODM basis. The Company's OEM/ODM customers consist of global leading companies in the industry, such as Alcatel, BenQ, Flextronics, Hyundai, Lucent, Motorola, Nokia, Nortel, Samsung SDI, Selectron, Sharp, Sony Ericcson, and TCL.

The Company's strong expertise and extensive know-how in production process place the Company at the technological forefront in the keypad and FPC markets. In addition, the Company's ability in making copper foil and certain other key raw materials for the production of FPC enhances its competitiveness as compared to many of its competitors. Further, the Company’s strength in mechanical engineering and tooling fabrication allows it to produce precision prototypes for new products based on customers' timetable and needs, which help customers in meeting their time-to-market requirements and ramp up production rapidly to commercial volumes.

The Company currently has six main manufacturing facilities in Taiwan, Malaysia, Mexico and the PRC to produce Keypads, Domes and FPC products. The plant in Taiwan carries the Company's complete product lines. To meet the customers’ requirement of time-to-market, the Company plans to expand its production facilities in Taiwan, the PRC and Mexico to provide global logistics services to its customers. See "- Manufacturing Facilities" and "- Subsidiaries and Investments".

Consolidated net sales of the Company have grown at a compound annual growth rate of 83.5% from NT$2,170 million (US$64.35 million) in 2002 to NT$3,983 million (US$118.1 million) in 2003. For the first three months ended March 31, 2004, the Company recorded non-consolidated net sales of NT$1,080 million (US$32.02 million) and net income of NT$216.2 million (US$6.411 million), compared to net sales of NT$529.2 million (US$15.69 million) and net income of NT$81.7 million (US$2.42 million) for the same period in 2003.

Corporate and Other Information

The Company was incorporated as a company limited by shares on November 7, 1989 under ROC Company Law with uniform registration number of 23588039. The Company's shares of common stocks have been listed on the Taiwan Stock Exchange since January 14, 2000. Its principal office is located at No. 268 Hwa-Ya Second Road, Hwa-Ya Technology Park, Gueishan, Taoyuan Hsien, Taiwan, ROC, and its telephone number is 886-3-397-3345. The Company’s website is http://www.ichia.com. The information on its website is not part of this Offering Circular. The trustee for the Bonds is J.P. Morgan Corporate Trustee Services Limited, whose office is located at Trinity Tower, 9 Thomas More Street, London E1W1YT, England and whose facsimile number is 44-20-7777-5420.

The Issue

Issuer: Ichia Technologies, Inc. Issue: US$70,000,000 Zero Coupon Convertible Bonds due 2009 Issue Price: 101 percent Closing Date: July 22, 2004 Maturity Date: July 22, 2009 Conversion:

Subject to prior redemption and subject as otherwise provided herein, the Bonds are convertible at any time on or after August 21, 2004 and prior to the close of business (at the place at which the Bond is deposited for conversion) on July 12, 2009, except during any Closed Period, into Shares at a conversion price per Share (subject to adjustment as described herein) (the "Conversion Price") of NT$82.00, determined on the basis of a fixed exchange rate of NT$33.724 = US$1.00 (the "Fixed Exchange Rate"). For a fuller description, see "Terms and Conditions of the Bonds - Conversion".

Conversion Price Reset:

In addition to any downward adjustments for anti-dilution protection as referred to under Condition 6(C) of the Bonds, the Conversion Price will be adjusted on a day ("Reset Date"), which is on or after January 22, 2005, in the event that the Average Closing Price (as defined herein) of the Shares for the 20 consecutive Trading Days immediately preceding the Reset Date translated into US dollars based on the then prevailing foreign exchange rate and multiplied by 120.59%, is less than 90% of the Conversion Price on the relevant Reset Date, translated into US dollars based on the Fixed Exchange Rate; provided that any adjustment to the Conversion Price pursuant to this mechanism shall be limited to the extent that the adjusted Conversion Price shall not be less than 80 percent of the initial Conversion Price prevailing on the Closing Date, as adjusted to reflect any adjustments pursuant to Condition 6(C) of the Bonds. See "Terms and Conditions of the Bonds - Conversion - Conversion Price Reset".

Negative Pledge:

The Company will not create or permit to subsist security for the benefit of holders of any International Investment Securities (as defined in the Terms and Conditions of the Bonds) or for any guarantee thereof without granting equivalent security in respect of the Bonds. See "Terms and Conditions of the Bonds - Negative Pledge".

Final Redemption:

Unless previously redeemed, converted or repurchased and cancelled in the circumstances referred to in "Terms and Conditions of the Bonds", the Bonds will be redeemed at their principal amount in US dollars on July 22, 2009. See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation - Redemption at Maturity".

Redemption at the Option of the Company:

The Company may redeem the Bonds, in whole or in part, on or after January 22, 2005, at their principal amount in US dollars, if the Closing Price of the Shares on the TSE translated into US dollars at the Prevailing Rate on each of the 20 consecutive Trading Days is at least 130 percent of the Conversion Price of the Bonds then in effect, translated into US dollars at the Fixed Exchange Rate on each such Trading Day.

The Company may redeem the Bonds, in whole but not in part, at their principal amount if at least 90 percent in principal amount of the Bonds has already been converted, redeemed or repurchased and cancelled. See "Terms and Conditions of the Bonds - Redemption, Repurchase and Cancellation - Redemption at the Option of the Company".

Redemption at the Option of	The Company will, at the option of the holder of any Bond, redeem such
the Bondholders:	Bond at its principal amount on July 22, 2006 or July 22, 2007. See
	"Terms and Conditions of the Bonds - Redemption, Repurchase and
	Cancellation - Redemption at the Option of the Bondholders".
Tax Redemption:	The Company may redeem the Bond at the principal amount, in whole but
	not in part, if, as a result of certain changes in ROC laws or regulations
	occurring after the Closing Date, the Company becomes obligated to pay
	additional tax amounts.
Redemption in the Event of	If the Shares are delisted from the TSE, at the option of the holders of the
Delisting:	Bonds, the Company will, at the option of the holders of any Bond, redeem
	the Bonds at their principal amount.
Form and Registration of the	The Bonds will be issued in registered form in the denomination of
Bonds:	US$1,000 and integral multiples thereof and will be transferable in principal
	amounts of US$1,000 or an integral multiple thereof. The Bonds will be
	represented by beneficial interests in the Global Certificate, which will be
	registered in the name of a nominee of, and shall be deposited on or about
	the Closing Date with a common depositary for Euroclear and Clearstream,
	Luxembourg. Beneficial interests in the Global Certificate will be shown
	on, and transfers thereof will be effected only through, records maintained
	by Euroclear and Clearstream, Luxembourg. Except as described herein,
	definitive certificates for Bonds will not be issued in exchange for beneficial
	interests in the Global Certificate.
Lock up:	The Company has agreed in the Subscription Agreement (as defined herein)
	that neither the Company, nor any person acting on its behalf, will issue,
	offer, sell, contract to sell or otherwise dispose of any Shares or securities of
	the same class as the Shares (other than pursuant to (i) employee benefits
	plans or distributions of dividends from retained earnings and capital reserve
	or employee bonuses in the form of Shares or (ii) conversion of the Bonds or
	of other convertible bonds issued prior to the date of the Subscription
	Agreement) or any securities convertible into, exchangeable for or which
	carry rights to subscribe or purchase Bonds, Shares, or securities of the same
	class as the Bonds, Shares or other instruments representing interests in
	Bonds, Shares or securities of the same class as the Bonds, Shares (other
	than the Bonds and other than as aforesaid), or announce plans or otherwise
	make public an intention to do any of the foregoing (other than as aforesaid),
	in any such case without the prior written consent of the Managers between
	the date of the Subscription Agreement and the date which is 120 days after
	the Closing Date (both dates inclusive).
Governing law:	The Bonds and the Trust Deed (as defined herein) are governed by English
	law.
Trustee:	J.P. Morgan Corporate Trustee Services Limited.

Listing:

Application has been made to list the Bonds on the Luxembourg Stock Exchange. The Shares are listed on the TSE and application will be made for the Shares issuable upon conversion of the Bonds to be listed on the TSE.

The listing of the Bonds on the Luxembourg Stock Exchange may subject the Company to the EU Transparency Obligations Directive, which may be implemented in a manner, which is unduly burdensome for the Company. In particular, the Company may be required to prepare its financial statements in accordance with International Financial Reporting Standards for accounting periods beginning on or after January 1, 2005. Pursuant to the Trust Deed, in those circumstances, the Company would be entitled to seek an alternative listing for the Bonds on a stock exchange outside the European Union approved in writing by the Trustee provided that the Trustee is satisfied that the interests of the Bondholders would not thereby be materially prejudiced.

Use of Proceeds:

The net proceeds from the offering of the Bonds will be approximately US$70,700,000. The net proceeds of issue of the Bonds will be used for procurement of raw materials overseas and of equipments and for investment of overseas subsidiaries.

USE OF PROCEEDS

RISK FACTORS

Prior to making an investment decision, you should carefully consider the following risk factors, along with the other matters set out in this Offering Circular. The following risk factors could affect the Company's actual results and could cause them to differ materially from estimates in any forward-looking statements given by or on behalf of the Company. ROC laws and regulations may differ from the laws and regulations in other countries.

Risks Relating to the Company's Business

The Company is dependent on its ability to attract and retain qualified employees.

The Company's success depends to a significant extent on the skills and efforts of its R&D team, management team and other experienced engineers and employees. Therefore, the Company’s ability to recruit, retain and motivate qualified personnel is a key to its success. Since the Company has diversified its products with a relative short period of time, recruitment of qualified employees in a timely fashion has become an important factor to support the Company's growth. In addition, the Company’s competitors may offer better employment terms to attract technical and other qualified employees of the Company, and the competition for talents in the industry is intense. There can be no assurance that the Company will be able to continue to recruit and retain qualified employees, which is essential for the Company's growth. The loss of the services of certain of these employees or inability to attract or retain qualified employees could have a material adverse effect on the Company.

The Company's business is highly dependent on the mobile phone businesses.

The Company's sales depend on the continuing growth of the mobile phone and consumer electronic industry. The major mobile phone makers in turn depend on the continuing growth of the industry, which, however, is cyclical in nature. The consumer electronic industry is characterized by rapidly changing technologies and short product life cycles. The factors affecting the mobile phone industry in general or any of the Company's major customers could have a material adverse effect on the Company's results of operations. The Company's success depends to a significant extent on the success of its customers in continuing developing and marketing their products. If customers' products become obsolete or fail to gain widespread commercial acceptance, the Company's business could also be materially affected.

The Company's business depends on a limited number of customers.

For 2003, the Company's largest customer and second largest customer accounted for approximately 10.4% and 9.2%, respectively, of consolidated net operating revenues, and for 2002 the Company's largest customer and second largest customer accounted for approximately 13.1% and 3.6% of consolidated net operating revenues, respectively. The Company estimates that for 2003, its five largest customers accounted for approximately 36% of consolidated net operating revenues. The loss of one or more of the Company's major customers, or reduced orders by them, could materially and adversely affect the Company's results of operations.

The Company may experience shortages of raw materials and components.

The Company currently purchases certain of its key components and raw materials from a limited number of suppliers. The Company is, in certain circumstances, required to source certain key components from suppliers who have been qualified by its customers and the Company may not be able to obtain alternative satisfactory sources of supply should such qualified suppliers be unable to supply it in the future. Accordingly, there can be no assurance that shortages of supply of key raw materials will not occur in the future and that, if such shortage occurs, the Company will be able to obtain an adequate alternative supply of components and raw materials to meet production demand. Although the Company believes that it has purchasing advantage over its competitors due to its large consumption, if the Company is unable to obtain sufficient components and raw materials on a timely basis, the Company could experience manufacturing and shipping delays, which could adversely affect customer relationships and reduce sales. In addition, there can be no assurance that the Company would be able to pass on any increased costs of components and raw materials to its customers. See "Business of the Company - Raw Materials".

The Company may not be able to manage its growth effectively.

The Company has expanded its manufacturing and global logistics rapidly. The Company's ability to manage expansion and growth effectively will require it to continue to implement and improve its operational, financial and management systems; continue to develop the management skills of its managers; and continue to train, motivate and manage its employees in Taiwan and overseas. If the Company fails to manage such expansion and growth effectively, the Company's results of operations could be adversely affected.

The Company may not be able to obtain sufficient capital to support its expansion plan.

Manufacturing of increasingly sophisticated FPCs and keypads requires substantial investment in advanced production facilities, global logistics, engineering and manufacturing expertise and technology. In addition, the Company believes that its long-term competitive position depends in part on its ability to expand manufacturing capacity and diversify its product lines. As a result, the Company's business growth strategy will require substantial capital expenditures to fund R&D, equipment and facilities expansion. The Company cannot assure that additional financing will be available or will be available on satisfactory terms to the Company. If the Company is unable to obtain the financing required for expansion, it will not be able to implement its business plan, which could materially and adversely affect is future business development.

The Company may not be able to develop new products or keep pace with technological change.

The Company's future success will depend in part on its ability to develop and market products and manufacturing processes which meet changing customer needs and to successfully anticipate or respond to technological changes in manufacturing processes in cost-effective and timely ways. Many of the Company's products have short product life cycles due to frequent product introductions, rapidly changing technology and evolving industry standards. There can be no assurance that the Company will be successful in developing new products as a result of its research and development efforts or its cooperation with industry leaders or that it will keep pace with technological changes taking place in the market. Failure to do so or delay in reacting to the technological changes could have a material adverse effect on the Company's business, or results of operations.

The mobile phone and consumer electronics components manufacturing industries are highly competitive.

The mobile phone and consumer electronics components manufacturing industry in which the Company operates is highly competitive and includes hundreds of companies with widely varying levels of engineering expertise and sophistication, some of which have achieved substantial market shares. General competition in the computers, communications and consumer electronics components manufacturing industry is characterized by price erosion and rapid technological change. The Company competes with different companies, depending upon the type of product and geographic area. The Company also faces competition from the manufacturing operations of its current and prospective customers, which continually evaluate the merits of manufacturing products internally. A number of the Company's competitors are much larger and have greater manufacturing, financial, research and development and marketing resources than the Company. Some of these competitors also carry product lines that the Company does not carry and provide services that the Company does not provide. No assurance can be given that the Company will be able to continue to compete successfully with its competitors.

The Company's performance depends in part on its ability to control cost in production.

The Company aims to reduce the per-unit-costs of its keypads, dome and FPCs by maintaining a high sales volume, moving the manufacturing facilities to the PRC and managing the sourcing of raw material components. The Company believes that its current cost structure is very competitive compared with those of its competitors, and that it is able to offer its products at competitive prices while generating satisfactory margins to sustain its operations. However, there can be no assurance that the Company will continue to be able to produce products at lower or even comparable prices in the future while maintaining its margins. Should the Company be unable for any reason to maintain its cost leadership in the future, the Company's results of operations and financial condition would likely be adversely affected.

The terms of the Company's long-term supply contracts may not all be favorable to the Company and some its customers may cancel, reduce or postpone their orders.

Although the Company has entered into firm, long-term supply contract with some of its major customers, the terms of the supply contracts may not all be favorable to the Company or set forth binding purchasing commitments of the customers. The Company's customers may cancel their orders or change the size or timing of their orders for a number of reasons. Cancellations, reductions or postponements of purchase orders by a significant customer or by a group of customers could seriously adversely affect the Company's results of operations.

In addition, the Company makes significant decisions, including determining the levels of business that it will seek and accept, production schedules, components and raw material procurement commitments, personnel needs and other resource requirements, based o

n its estimates of customer requirements. The short-term nature of the Company's customers' commitments and the possibility of rapid changes in demand for their products reduce the Company's ability to estimate accurately future customer requirements. On occasion, customers may require rapid increases in production, which can stress the Company's resources. Although the Company has increased its manufacturing capacity and plans further capacity increases, it may not have sufficient capacity at any given time to meet its customers' demands. In addition, because many of the Company's costs and operating expenses are relatively fixed, a reduction in customer demand could impact the Company's gross margins and operating income.

The Company's operating results vary significantly.

The Company experiences significant fluctuations in its results of operations. The factors which contribute to fluctuations include:

the timing of customer orders;
the volume of these orders relative to the Company's capacity;
market acceptance of customers' new products;
changes in demand for customers' products and product obsolescence:
the timing of the Company's expenditure in anticipation of future orders;
the Company's effectiveness in managing manufacturing processes;
changes in the cost and availability of labor and components:
changes in the Company's product mix;
changes in economic conditions; and
local factors and events that may affect the Company's production volume.

The consumer electronic markets and mobile phone markets are subject to a certain degree of seasonality. These markets exhibit particular strength toward the end of each year in connection with holiday season sales. Accordingly, the Company's third and fourth quarter revenues are ordinarily higher than its first and second quarter revenues.

The Company is subject to operational risk.

The operation of manufacturing facilities involves many risks and hazards, including the breakdown, failure or substandard performance of equipment, delay in delivery of equipment or improper installation or operation of equipment, difficulties in upgrading or expanding existing facilities in changing manufacturing line technologies, capacity constraints, labor disturbances, fire, natural disasters such as earthquakes or typhoons, environmental hazards and industrial accidents. The occurrence of material operational problems, including but not limited to the above events, could adversely affect the Company's manufacturing plants. These problems could cause delivery delays and reduced output.

The Company's s insurance may not be adequate.

The Company maintains insurance typical in the electronics manufacturing industry in Taiwan and in amount that the Company believes to be adequate. Such insurance, however, may not provide adequate coverage in certain circumstances. In particular, the Company’s subsidiaries in PRC do not currently carry any third party liability insurance to cover claims in respect of bodily injury or property or environmental damage

resulting from accidents on these subsidiaries’' property or relating to these subsidiaries' operations. Nor does the Company carry business interruption insurance, or insurances for earthquake, typhoon or flood. No assurance can be given that uninsured losses and liabilities incurred by the Company will not have a material adverse effect on the Company's results of operations.

The Company may not be able to protect its intellectual property.

The Company has proprietary intellectual property rights and information with respect to certain of its products and manufacturing processes. Accordingly, the Company has taken appropriate steps to protect this proprietary information and actively seeks to protect its intellectual property rights. Notwithstanding these steps, the Company's protective measures may not be sufficient to prevent the misappropriation or unauthorized disclosure of the Company's property or information. There can be no assurance that the Company will be successful in its intellectual property enforcement actions. Even if the Company is successful, it may have to incur significant costs and time to litigate its claims. Seeking patent protection can be expensive and time consuming. There can be no assurance that patents will be issued from pending or future applications or that, if patents are issued, they will provide meaningful protection or other commercial advantage to the Company.

The Company's historical sales growth and historical margins may not be sustainable.

The Company recorded sales growth of 10.5%, 48.6% and 83.5% for the years 2001, 2002 and 2003, respectively. This level of sales growth may not be sustained in the future. As the Company continues to develop and expand its operations and production capacity, its operating costs and expenses will continue to increase, putting pressure on gross margin and operating margin. In addition, competition could result in price pressure, lower sales, reduced margins and lower market share, any of which could materially and adversely affect the Company's results of operations. Therefore, period-to-period comparisons of operating results may not be meaningful and investors should not rely on the results of any period as an indication of future performance.

The Company's failure to comply with environmental regulations could expose it to liability.

The FPC manufacturing process requires the use of a variety of materials, including metals and chemicals. Water used in the FPC manufacturing process must be treated to remove metal particles and other contaminants before it can be discharged into the environment. As a result, the Company is required to comply with environmental regulations in Taiwan regarding environmental protection, including those governing the storage, use, discharge and disposal of hazardous substances in the ordinary course of the Company's manufacturing processes. Environmental claims or the failure to comply with any environmental regulations could result in damages or fines against the Company or suspension of production. The Company may be required by new regulations to acquire costly equipment or to incur other significant expenses. If the Company fails to control the use of hazardous substances, it could incur future liabilities, including clean up costs.

The Company is exposed to the risks of currency exchange rate fluctuations.

Historically, a majority of the operating costs and expenses of the Company have been denominated in U.S. Dollars, Japanese Yen, RMB and NT Dollars and the Company's revenue has been denominated primarily in NT Dollars, Japanese Yen, RMB and U.S. Dollars. Accordingly, a portion of the Company's consolidated costs of sales, operating expenses and revenues are exposed to fluctuations between the U.S. Dollar, Japanese Yen, RMB and NT Dollar. Therefore, fluctuations in exchange rates may have an adverse impact on the Company's future gross and operating margins and results of operations. See "Exchange Rates".

The Company may be subject to changes in tax benefits and increased taxes.

The Company has structured its operations in a manner designed to maximize income in countries where tax incentives have been extended to encourage foreign investment, such as the PRC or where income tax rates are low. If the tax rates and policies applicable to the Company are rescinded or changed or if tax authorities were to challenge successfully the manner in which profits are recognized among the members of the Company, the Company's taxes could increase and its results of operations and cash flow could be adversely

affected.

RISKS RELATING TO THE BONDS AND THE SHARES

As of April 13, 2004, the Company's directors and supervisors directly and indirectly owned 19.41% of the then Company's outstanding Shares. While no single person, as far as known to the Company, exercises or could exercise control over the Company, the Company's directors and supervisors, will continue to have the ability to exercise a significant influence over the Company's business and policy, including the matters relating to the management and policies, the timing and distribution of dividends and the election of the directors and supervisors of the Company. This influence may be exercised in a way that may not be consistent with the interest of other shareholders.

The Bondholders' ability to exercise their conversion rights may be limited. The Bonds are convertible into Shares at the option of the converting Bondholders pursuant to the terms of the Bonds. Purchasers of the Bonds will not be able to exercise their conversion right during the Closed Periods, as defined in the terms and conditions of the Bonds. Under current ROC law, regulations and policy, PRC persons are not permitted to hold or convert the Bonds or to register as shareholders of the Company.

Although application has been made to list the Bonds on the Luxembourg Stock Exchange, a liquid market for the Bonds and Shares may not develop. There can be no assurance that an active trading market or a trading market for the Bonds will develop. The trading market for the Shares is the TSE on which the Shares were listed.

Shares eligible for future sale by the current shareholders may adversely affect the market price of the Shares. While the Company is not aware of any plans by any major shareholders to dispose of a significant amount of Shares, it is possible that one or more of the shareholders will not dispose of the Shares in the future. The Company also cannot predict the effect, if any, that future sales of the Shares, or the availability of the Shares for future sale, will have on the market price of the Shares prevailing from time to time. Sales of substantial amounts of common shares in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of the Shares.

When a Non-ROC Holder (as defined in "ROC Taxation of Non-Residents") exercises its conversion rights to receive Shares and register as a shareholder of the Company, such holders will be required to appoint an agent (a "Tax Guarantor") in the ROC. Such Tax Guarantor will be required to meet the qualifications set by the ROC Ministry of Finance (the "ROC MOF") and will act as the guarantor of such holder's tax payment obligations. Evidence of the appointment of a Tax Guarantor and the approval of such appointment is required as conditions to withdrawing such holder's profits derived from the sale of Shares from the holder's brokerage account. There can be no assurance that such holders will be able to appoint and obtain approval for a Tax Guarantor in a timely manner.

In addition, under current ROC law, such converting or withdrawing holder is required to appoint a local agent in the ROC to, among other things, open a securities trading account with a local securities brokerage firm and a bank account, remit funds and exercise a shareholder's rights. Further, such converting or withdrawing holder must appoint a local bank to act as custodian for confirmation and settlement of trades, safekeeping of securities and cash proceeds and reporting and declaration of information. Without satisfying these requirements, converting Bondholders that receive Shares or withdraw and hold Shares represented thereby will not be able to hold or otherwise transfer Shares on the TSE.

RISKS RELATING TO THE ROC

Risks relating to the ROC Securities Market

The ROC securities markets are smaller and more volatile than the securities markets in the United States and in certain European and other countries. The TSE have experienced substantial fluctuations in the prices and volumes of sales of listed securities, and there are currently limits on the range of daily price movements on the TSE and the GTSM. In the past decade, the TSE peaked at 10,393.59 in February 2000, and reached a low of 3,411.68 in September 2001. During 2003, the Taiwan Stock Exchange Index peaked at 6,182.20 in November, 2003, and reached a low of 4,044.73 in April 2003. In 2004, up to June 30, 2004, the daily

closing values of the Shares, which are listed on the TSE, ranged from NT$90.5 per Share to NT$62 per Share. On July 15, 2004, the TSE Index closed at 5542.80 and the daily closing value of the Shares was NT$68.0 per Share. The TSE has in the past experienced problems such as market manipulation, insider trading and payment defaults. The recurrence of these or similar problems could adversely affect the market price and liquidity of the securities of ROC companies, including the Shares, in both the domestic and the international markets.

The political status and international relations of the ROC may affect the Company and the Bonds

The Company is incorporated in the ROC. The ROC has a unique international political status. Although the Chinese nation has existed for several thousand years, since 1949, Taiwan and the Chinese mainland have been separately governed. The ROC, which was founded in 1912, governs Taiwan while the PRC, which was founded in 1949, has governed the Chinese mainland for over 50 years. The former President of the ROC asserted that the ROC and the PRC are equal political entities which should enter into a "special state to state" relations, while the PRC claims that it is the sole government in China and that Taiwan is part of China. Although significant economic and cultural relations have been established during recent years between the ROC and the PRC, the PRC has refused to renounce the possibility that it may at some point use force to gain control over the ROC. These developments have had from time to time an adverse effect on the price of the Shares. Relations between the ROC and the PRC may also have an adverse effect on the ROC's economy and stock market, the Company's results of operation, and the market price and liquidity of the Shares and the Bonds. There can be no assurance that the present tensions will not worsen, which could have a significant adverse impact on the ROC's economy, Taiwan's stock market, the price of the Shares and the Company's results of operations and financial condition.

Political uncertainty may influence the TSE index

The ROC presidential campaign and elections have in the past caused the fluctuation of the TSE Index. In 2004, ROC's incumbent president won the ROC presidential election by a very narrow margin. The opposition party refused to concede, challenged the validity of the election results and filed a petition for a recount of the votes. The political uncertainty surrounding the election has affected the securities market in ROC. Such political uncertainty and related developments could adversely affect the Company’s business, financial condition and results of operations, and the price of the Bonds and the Shares.

Foreign exchange approvals may be required

Under existing ROC law, foreign exchange transactions must be reported to the Central Bank of China (the "CBC") on a payment-by-payment basis, including the conversion into foreign currencies of the net proceeds realized from sale of the Shares issued on conversion of Bonds or any dividends relating to such Shares, or of any cash dividends or other cash distributions in respect of such Shares, as well as for inward remittances of subscription payments in connection with a rights issue. However, there can be no assurance that ROC law will continue to permit such transactions without regulatory approval. See "Foreign Investment and Exchange Controls in the ROC - Overseas Corporate Bonds".

Financial reporting and accounting standards in the ROC differ from other countries

The Company is subject to financial reporting requirements in the ROC that differ in significant respects from those applicable to companies in certain other countries, including the United States and the United Kingdom. In addition, the Company's financial statements are prepared in accordance with ROC GAAP, and are not intended to present the financial condition, results of operations and cash flows in accordance with accounting principals and practices generally accepted in countries and jurisdictions, including the United States, other than those in the ROC. ROC GAAP differs in certain material respects from US GAAP. See "Summary of Principal Differences Between ROC GAAP and US GAAP". Potential investors should consult their own professional advisers for an understanding of such differences and how they might affect the financial information contained herein.

Future natural disasters and disruptive events may occur

From time to time, the ROC experiences severe earthquakes and other natural disasters that may cause

significant property damage and loss of life. The Company's operation and the operation of its customers, distributors and suppliers may be adversely affected in the event of future earthquake and natural disruptions. As such, no assurance can be given that any future natural disaster will not have a material adverse effect on the business, financial condition, results of operations and future prospects of the Company.

Risks relating to the PRC

The Company is subject to the political situation, economic policy and legal developments in the PRC.

Currently a substantial part of the Company's operations and assets are located in the PRC and the Company expects to make further investments in the PRC. The Company is also selling and marketing its products in the PRC. Accordingly, financial condition, results of operations and future prospects of the Company are subject, to a significant degree, to the economic policy, political situation and legal environment in the PRC. Prior to 1978, the PRC had adopted a central economic planning system. All production and economic activities in the country were governed by the economic goals set out in the five-year plans and annual plans adopted by central authorities. Since 1978, the PRC government has permitted foreign investment and implemented economic reforms, gradually changing from a planned economy towards a market-oriented economy. However, many of the reforms and economic policies adopted or to be adopted by the PRC government are unprecedented or experimental in nature and may have unforeseen results. Recently, the PRC Government has announced certain control measures over its over-heating economy, which may have a material effect on enterprises with substantial business in the PRC.

The Company is subject to risks associated with the PRC legal system.

Since 1979, many laws and regulations dealing with general economic matters or particular economic activities have been promulgated in the PRC. However, enforcement of existing laws and regulations may be uncertain and sporadic and implementation and interpretation thereof may be inconsistent. The PRC judiciary is relatively inexperienced in enforcing the laws and regulations that currently exist, leading to a degree of uncertainty as to the outcome of any litigation. Further, it may be difficult to obtain swift and equitable enforcement or to obtain enforcement of a judgment by a court of another jurisdiction. The PRC's legal system is based on written statutes and, therefore, decided legal cases do not have binding legal effect, although they are often followed by judges as guidance. The introduction of new PRC laws and regulations and the interpretation of existing laws and regulations may be subject to policy changes reflecting domestic political or social changes. As the PRC legal system develops, there can be no assurance that changes in such legislation or interpretation thereof will not have a material adverse effect on the business, financial condition, results of operations and future prospects of the Company.

CAPITALIZATION

The following table sets forth the unaudited non-consolidated short-term and long-term debt, and the capitalization of the Company as of March 31, 2004 and as adjusted to reflect the issuance of the Bonds. This table should be read in conjunction with the Company's unaudited non-consolidated financial statements for the three months ended ad as at March 31, 2004 included elsewhere in this Offering Circular, which were prepared in accordance with ROC GAAP and which may differ in material respects from U.S. GAAP or the generally accepted accounting principles of certain other countries. See "Summary of Material Differences between ROC GAAP and U.S. GAAP".

Short-term debt (including current portion of long-term debt) Short-term loans Total short-term debt Long-term debt: Bonds payable Total long-term debt The Bonds now being issued Stockholder' equity: Common stock Capital surplus Legal reserve Special reserve Unappropriated earnings Cumulative translation adjustments Total Stockholders’ equity Total consolidated capitalization	As atMarch31,2004 Actual As adjusted NT$ US$(1) NT$ US$(1) 666,150 20,171 666,150 20,171 666,150 20,171 666,150 20,171 1,096,349 33,198 1,096,349 33,198 1,096,349 33,198 1,096,349 33,198 - - 2,311,750 70,000 1,910,053 57,836 1,910,053 57,836 1,372,661 41,564 1,372,661 41,564 134,432 4,070 134,432 4,070 359 11 359 11 870,880 26,370 870,880 26,370 (31,020 ) (939 ) (31,020) (939 ) 4,257,365 128,912 4,257,365 128,912 5,353,714 162,110 7,665,464 232,110	As atMarch31,2004 Actual As adjusted NT$ US$(1) NT$ US$(1) 666,150 20,171 666,150 20,171 666,150 20,171 666,150 20,171 1,096,349 33,198 1,096,349 33,198 1,096,349 33,198 1,096,349 33,198 - - 2,311,750 70,000 1,910,053 57,836 1,910,053 57,836 1,372,661 41,564 1,372,661 41,564 134,432 4,070 134,432 4,070 359 11 359 11 870,880 26,370 870,880 26,370 (31,020 ) (939 ) (31,020) (939 ) 4,257,365 128,912 4,257,365 128,912 5,353,714 162,110 7,665,464 232,110
	Actual NT$ US$(1) 666,150 20,171 666,150 20,171 1,096,349 33,198 1,096,349 33,198 - - 1,910,053 57,836 1,372,661 41,564 134,432 4,070 359 11 870,880 26,370 (31,020 ) (939 ) 4,257,365 128,912 5,353,714 162,110
	NT$ 666,150 666,150 1,096,349 1,096,349 - 1,910,053 1,372,661 134,432 359 870,880 (31,020 ) 4,257,365 5,353,714	NT$ 666,150 666,150 1,096,349 1,096,349 2,311,750 1,910,053 1,372,661 134,432 359 870,880 (31,020) 4,257,365 7,665,464

Notes:

(1) New Taiwan Dollar amounts have been translated into U.S. Dollars (and the principal amount of the Bonds, being US$70,000,000) using the closing exchange rate on March 31, 2004 provided by the Bank of Taiwan of NT$33.025 = US$1.00 solely for the convenience of the reader.
(2) Except as disclosed above, there have been no material changes in the capitalization of the Company since March 31, 2004.
(3) The Company as of April 13, 2004 has outstanding euro convertible bonds (issued in 2003) in the principal amount of US$32.7 million. If these bonds were converted at the then applicable conversion price, additional 19,414,215 Shares would be issued
(4) Total capitalization is the summation of long-term borrowings, convertible bonds payable and stockholders' equity.

BUSINESS OF THE COMPANY

This Offering Circular contains certain forward-looking statements. When used in this Offering Circular, the words "believes," "intends," "anticipates" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include the timing and acceptance of new product introductions, the actions of the Company's competitors and business partners, and those discussed above under "Risk Factors".

The following discussion shall be read in conjunction with the Company audited consolidated and non-consolidated financial statements as of and for the years ended December 31, 2001, 2002 and 2003, and the unaudited non-consolidated financial statements as of and for the three months ended March 31, 2003 and 2004 including, the notes thereto, included elsewhere in this Offering Circular.

Overview

History and Organization of the Company

The Company was founded on November 7, 1989 as a company limited by shares in Taiwan under the ROC Company Law. The Company started producing rubber keypads for home and business telephones and electronic goods in leased manufacturing facilities. In 1992, the Company established its own manufacturing plant in Hsinchu Hsien, Taiwan. To efficiently supply the demands of the North American market, in 1993, the Company established Ichia USA, Inc. in California, the United States as its sales office in the area. Currently, Ichia USA, Inc. owns Ichia Rubber De (Mexico) S.A. DE C.V., which has operated the Company's North American manufacturing facilities in Mexico since 1994. In 1996, the Company acquired and owned 80% of the equity interests of Ichia Rubber Industry (Malaysia) SDN BHD in Malaysia to manufacture rubber keypads in Malaysia. Ichia Rubber Industry (Malaysia) SDN BHD is currently owned by Ichia Holding (BVI) Limited, the Company's primary investment holding subsidiary. In 1996, the Company established Ichia Electronics (Zhongshan) Co., Ltd., which

operates the Company's Zhongshan Plant in southern China. In order to sell its keypad products in the PRC and overseas, the Company further incorporated Ihwa Electronics (Zhongshan) Co., Ltd. in 2000. In 2001, the Company decided to expand its operation in the PRC and established Ichia (Suzhou) Technologies Inc., which has operated the Company's Suzhou Plant to supply the PRC and overseas customers. As a result of the investments and acquisitions, the Company currently operates six main manufacturing facilities located in Taoyuan, Taiwan, Penang, Malaysia, Tijuana, Mexico, and Zhongshan City, Guangdong Province, and Suzhou City, Jiangsu Province, the PRC. See "- Manufacturing Facilities" and "- Subsidiaries and Investments".

In 2000, the Company's headquarters was moved from Taipei City to Hwa-Ya Technology Park, Taoyuan Hsien, Taiwan, where all corporate functions, such as general administration, sales and marketing, research and development and manufacturing are performed. After moving to its new corporate headquarters, the Company started manufacturing FPC products. The Company's manufacturing technology became one of the most advanced among its competitors. The Company's headquarters and all manufacturing facilities around the world have been accredited with IS09002, QS9000 and ISO 14001 quality standards.

The Company's Shares have been listed on the Taiwan Stock Exchange with ticker number of 2402 since January 14, 2000.

The following sets forth the Company's scope of business as set out in Article Two of the Company's Articles of Incorporation:

Manufacture, process, purchase and sale of electronic parts and components of various home-use electrical appliances, electrical engineering equipments, electrical devices, telecommunication computers (conductive silicon rubber), plastic keypads, keyboards, keyboard combos, input devices and the material thereof;
Surface processing;
Manufacture of data-storage and data-processing equipment;
Manufacture of fixed-line communication machines and equipment;
Manufacture of wireless telecommunication machines and equipment;
Manufacture of electronic parts and components;
Manufacture of tooling;
Manufacture and export trade;
Manufacture of optics;
Intellectual property business;
Import and export and acting as distributor, agent in bidding and quoting offers of the above goods; and
Other business not prohibited or restricted by laws and regulations.

The following diagram shows the structure of the Company and its principal subsidiaries, as of March 31, 2004, together with details of the Company's direct and indirect equity interests in its subsidiaries and affiliate(s). See "- Subsidiaries and Investments".

			ICHIA TECHNOLOGIES, INC.	ICHIA TECHNOLOGIES, INC.	ICHIA TECHNOLOGIES, INC.	100%


Ichia USA, Inc.(1)	Ichia (H.K.) Limited		Ichia Holding (BVI) Limited(1)	Homesolution Inc.		Ichia International TradingLtd.(BVI)
						100% Ichia (Suzhou) Technologies, Inc.(1)
		100%	100% Ichia Rubber Industry (Malaysia) Sdn Bhd(1)		100%
Ichia Rubber De (Mexico) S.A. DE C.V.(1)	Ichia Electronics (Zhongshan) Co., Ltd.(1)			Ihwa Electronics (Zhongshan) Co., Ltd.(1)

(1) The financial statements of these companies have been consolidated with those of the Company. For more information, please see "Notes to Consolidated Financial Statements for the years ended December 31, 2001 2002 and 2003".
(2) There have been no material changes in the Company's direct and indirect equity interests in each of its principal subsidiaries since March 31, 2004.

The Company's corporate headquarters and principal place of business are located at No. 268 Hwa-Y. Second Road, Hwa-Ya Technology Park, Gueishan, Taoyuan Hsien, Taiwan, R.O.C. Its telephone number is 886-3-397-3345.

Its web-site is www.ichia.com. The information on its web-site is no part of this Offering Circular.

Competitive Strengths

The Company believes that the following strengths contribute to its competitive position in the relevant markets:

Experienced management team

The senior management of the Company is led by a core team of professionals in the fields of R&D, engineering, management and finance, with an average experience of over 20 years in the electronics industry. As a result, the Company believes that it is able to capture the market trend and opportunities in the high growth areas.

Strong engineering, manufacturing and mold making expertise

The Company's engineering, manufacturing and mold making expertise in mobile phone and other consumer electronic products place the Company at the technological forefront in its product markets. The Company believes that it is one of the few producers in Taiwan to have mastered commercialized precision manufacturing processes and proprietary technologies in the production of a wide range of keypad for the applications of mobile phones, home and business phones, PDAs, remote controllers and other electronic devices. In addition, the Company is able to utilize its manufacturing expertise and know-how to make molds produce other key components and parts for compact electronic devices, such as FPC. The Company's engineering, manufacturing and mold making ability enables it to produce large quantity of high-quality keypads on a timely basis to meet its customers' increasing time-to-market requirement, ramp up production capacity rapidly to commercial volumes and provide production flexibility to optimize capacity utilization. In the area of FPC manufacturing, the Company considers itself to be more advanced than most of its domestic and Korean competitors in FPC production technology such as the reel type COF (i.e. reel to reel manufacturing), fine pitch, single and double sided FPC, IC bounding and SMT technologies. The Company believes that its technological advantage over its competitors in FPC allows it to provide better solutions to its customers.

Close relationships with key industry leaders

The Company has established close supplier and customer relationships with the world's leading manufacturers of mobile phones and electronic goods. Such leading names include Alcatel, BenQ, Flextronics, Hyundai, Lucent, Motorola, Nokia, Nortel, Samsung SDI, Selectron, Sharp, Sony Ericcson, Siemens, and TCL have placed the Company on their approved vendor lists in recognition of the consistently high product quality and quick delivery time of the Company.

Highly vertically-integrated production process

The Company’s expertise in manufacturing process is critical to its success. The Company's manufacturing processes are highly vertically integrated, and most of the critical materials and components used in the production of keypads and FPCs are produced in-house. This gives the Company control over quality, costs and supply chain management, as well as flexibility necessary to customize components to match its customers' specifications and to roll out and ramp up production of new products.

Strong research and development programs

The Company invests significant resources in research and development through in-house research and development activities. The Company's research and development activities focus on developing new products, making raw materials, enhancing manufacturing processes and equipment and improving production efficiency. The Company is now focused on developing more reliable, more innovated products which enable the Company to gain higher margin for its products.

Strategy

Continue its research and development efforts on high value-added mobile phone parts and components and other high-growth products

The Company believes that wireless communications will continue to be a primary direction of the evolution of electronic devices. To meet current and anticipated future demands, the Company has committed significant resources to the research and development of keypads for use in wireless communication devices, including

next-generation mobile phones and PDAs. Among the Company's achievements in this area are the development of plastic plus rubber keypads and dual plastic injection technology, and the production of its own automation equipment for precision keypads and FPC manufacturing. The Company will also target other high-growth mobile phone component products, such as magnesium alloys housing products. The Company believes that the rate of turnover in these areas will increase rapidly with the evolution of new technologies, the increasing functionality of each successive generation and increasing rates of penetration.

Expand production capacity and diversity product lines

The Company believes that global demand for mobile phone components and parts will continue to grow, driven by increasing demand for mobile communication products. To increase its production capacity and shorten the delivery time, the Company will continue to expand its manufacturing production facilities in the PRC, Mexico and elsewhere. In addition, the Company keeps developing new technology for producing sophisticated and modulated components for mobile products. For example, the Company has been gradually increasing the percentage of its module products consisting of keypads, domes and FPCs. The Company believes that its customers may benefit from these module products in terms of one-stop shopping convenience and consistency of quality.

Establish Global Logistics to Provide Just-in-time Services to Customers

Due to the EMS customers’ requirement to reduce the supply chain, the Company has established production facilities, warehouses, technical support centers and sales office in many areas throughout the world. The Company believes that by establishing this global logistic network, it is in a better position to meet its customers' time-to-market requirement.

Capitalize on superior manufacturing and engineering capabilities to extend scope of operations and offer module assembly solutions for mobile phone manufacturers

By capitalizing on its superior component manufacturing capabilities and vertically integrated production processes, the Company expects to extend the scope of its manufacturing services to include the provision of module assembly services that combine its precision keypads and FPC products for customers.

Products

The Company's major product groups consist of:

Rubber or plastic keypads and metal domes; and
Flexible printed circuit boards.

Based on its two main product groups, the Company establishes two business units, namely the MMI Business Unit for keypad products and the FPC Business Unit for its FPC products.

The table below sets out the Company's total sales by its two business units for the periods indicated:

				(non-consolidated)
		(consolidated)		Three months ended
	Year	ended December 31		March 31
	2001	2002	2003	2003 2004
			(in NT$'000)
MMI Business Unit(1)	1,372,591	1,712,072	2,736,885	438,671 404,703
FPC Business Unit(2)	117,186	505,550	1,299,205	100,092 688,868
Total sales	1,489,777	2,217,622	4,036,090	538,763 1,093,571
Sales return and allowances	29,556	47,240	53,440	9,522 13,871
Net sales	1,460,221	2,170,382	3,982,650	529,241 1,079,700

Note: (1) Sales from the MMI Business Unit included sales from molds manufactured for keypads, dome switches, plastic housing, LED backlight modules, and other parts manufactured by the Company for use in conjunction with the keypads.
(2) Sales from the FPC Business Unit included sales from single sided-FPCs, double-sided FPCs, and COFs.

Keypads

The Company manufactures and sells keypads, which are key components of mobile phones, home and business phones, PDAs, remote controllers, pagers, calculators, game consoles and other electronic devices. Although keypads can be installed on a wide variety of electronic products, most of the Company's keypad products are applied to telephone systems, including mobile phones and home and business telephone sets.

The Company utilizes its patented porous, or screen printing, technology to mass produce keypads in different languages, functions and designs in accordance with customers' requests. The keypads manufactured by the Company for the application on mobile phones and other telephone handsets primarily consist of:

Plastic or rubber keypads;
Laser-etched keypads;
Film-in plastic keypads;
Film-on rubber keypads;
Epoxy-coated hardtop keypads;
Polycarbonate hardtop keypads; and
Conductive silicon rubber keypads.

A portion of the Company's keypads products are shipped in the form of sub-assemblies, which consist of keypads, dome switches, plastic housing, LED backlight modules, and other parts manufactured by the Company. The Company believes that its keypad products with enhanced functions in abrasion resistance, surface coating and backlight effect will enhance its competitiveness in the keypad market.

For the years ended December 31, 2001, 2002 and 2003, sales of keypad products accounted for 92.1%, 77.2% and 67.8% of the Company's total consolidated gross sales, respectively. For the three months ended March 31, 2003 and 2004, sales of keypad products accounted for 81.4% and 37.0% of the Company's total non-consolidated gross sales, respectively.

Flexible printed circuit products

Flexible printed circuit or FPC has become an import contributor to the Company's revenues in recent years. An FPC, like an ordinary printed circuit board, consists of patterns of electrical circuitry etched from copper that has been laminated on a board of insulating material. The printed circuits are the basic platforms used to interconnect microprocessors, integrated circuits and other components that are essential to the operation of electronic products and systems. Compared to conventional printed circuit boards, FPCs are thin, lightweight, flexible, and durable and are more suited for dynamic applications and vibration conditions than are conventional printed circuit boards.

The Company has designed and fabricated FPCs with high density, lightweight, redundant circuitry for LCD displays, mobile phones, notebook computers, camcorders, radios, car stereos and other compact-size electronic devices. The Company currently offers single-sided and double-sided FPCs, as well as chips on FPC ("COF"). The FPCs manufactured by the Company are customized for specific electronic applications and are sold mainly to original equipment manufacturers, or OEMs, and contract manufacturers of mobile phones and other electronic devices.

Single-sided FPCs. Single-sided FPCs are generally applied to dynamic flexing applications, unusual folding and forming applications or where there are limitations on space and thickness. The Company's single-sided FPC products have the following characteristics:
Highly vertical integrated production that substantially all key materials are produced in-house. The Company therefore may control the quality and lead time in accordance with the customers' requirements in a timely and cost effective way;
Automatic reel-to-reel production is suitable for the fabrication of huge volume, stable quality and thinner FPC production;
Highly-automatic production saves labor cost and prevents neglects or mistakes caused by manual handling thus the total yield rate can be improved effectively; and
Fine-pitch FPC manufacturing capability of line-width/spacing 25µm/25µm is available.
Double-sided FPCs. Double-sided FPCs are generally adopted when circuit density and layout cannot be routed on a single layer, ground and power plane applications are required, or shielding applications are used.

The Company's double-sided FPC products carry the following characteristics:

Fine-pitch FPC manufacturing capability of line-width/spacing 50µm/50µm is available;
Thinner copper material processing capability is available. Selective electro-plating as an option adds higher flexibility to the products made by the Company;
One side treated with immersion gold for IC bonding; and the other side treated with gold plating to protect the gold finger; and
The finished hole can be as small as 0.25mm in diameter.
COF (Chip on FPC). The Company also offers COF products integrated circuits and other electronic parts affixed on FPCs before shipping. The COF products have the fol lowing characteristics:
Fine-pitch FPC manufacturing capability of line-width/spacing 35µm/35µm is available;
Turn-key solution including COF film, IC bonding, and SMT is available upon customers' request; and
� Double-access type of COF is also available.
Reel Type COF.

For the years ended December 31, 2001, 2002 and 2003, sales of FPC products accounted for 7.9%, 22.8% and 32.2% of the Company's total consolidated gross sales, respectively. For the three months ended March 31, 2003 and 2004, sales of FPC products accounted for 18.6% and 63% of the Company's total non-consolidated gross sales, respectively.

Production Process

Keypad products

As part of its overall vertical integration strategy, the Company produces a substantial portion of the materials and components required for the manufacturing of its final products. This allows the Company to achieve cost savings and ensures a steady supply of components that meet the Company's quality specifications. The in-house manufacturing of components also provides the Company with greater flexibility in customizing components to match customers' specifications. The following diagram sets forth the typical production process for the Company's keypad products:

==> picture [183 x 325] intentionally omitted <==

----- Start of picture text -----

Rubber Plastic
Incoming Inspection Double Injection
Mixing (color)/Stripping QC
Molding Punching
Curing
Punching
QC Inspection
Use instant glue
Assembly with Key cap
QC
Packing
Delivery
----- End of picture text -----

The quality of most of the Company's products depends, to a significant extent, on the quality and precision of the dies and molds used for the production of the components. The Company focuses on developing its molding and tooling resources and capabilities as it believes this enables it to manage its production process effectively and alleviate any significant bottlenecks in the production cycle. The Company believes this expertise has positioned the Company to compete effectively with its competitors as significant capital and internal know-how are required to develop precision molding and tooling expertise. The Company's manufacturing capacity has also been enhanced by the use of CAD/CAM tools to customize and automate molding and tooling equipment and to design prototypes of new products.

Although the Company has installed computerized equipment to increase the automation of its production process, it believes that manual assembly will continue to be one of the important elements in the production of certain of its products.

FPC products

The increasing complexity of compact electronic products in increasingly smaller sizes has resulted in rapid technological improvements in FPCs, which has forced equal technological improvements in the manufacturing process. The Company has invested in production technology to manufacture single-sided, double-sided and COF FPCs utilizing advanced fabrication processes in volume production. The Company employs numerous advanced manufacturing techniques and systems, including dry-film imaging, automated optical inspection, fly probe test, computer controlled lamination, computer controlled laser drilling and routing, double-access electrical testing, and surface coating. The Company also develops its own material manufacturing processes, including thickness control of adhesive and reel to reel production for open window type FPCs. The Company believes it is able to achieve a high manufacturing yield rate and produce high-quality FPCs on a timely basis as a result of the Company's advanced manufacturing techniques, design efficiencies and general manufacturing expertise. The following diagram sets forth the typical production process for the Company's FPC products:

==> picture [464 x 402] intentionally omitted <==

----- Start of picture text -----

Warehouse Receiving
Raw Material Character Inspection Cover Film, Stiffener Lamination
(Single-Sided Layer) (Double-Sided Layer) Electrolytic Gold Plating or Solder Plating
NC Drilling
Copper Base Piercing
Pre-treatment
PTH Plating
Electrical Check
Photo-resist Dry Film Lamination
Blanking
Parallel Light Exposure
Final Inspection
Pilot Inspection
Outgoing Inspection
Developing Etching Stripping
Packing/Shipping
Optical Guide Hole Punching
Cover Film, Stiffener Punching/Cutting
----- End of picture text -----

The Company receives circuit designs in electronic form directly from customers. The Company uses separate codes for these designs to ensure security. The Company reviews these circuit designs to ensure that the designs can be successfully and cost effectively manufactured. The Company then generates images of the circuit patterns that it develops on individual layers. Through a variety of plating and etching processes, the Company selectively adds and removes conductive materials forming horizontal layers of thin traces or circuits, which are separated by insulating material. Because of the tolerances involved in complex multilayer printed circuit boards, the Company uses clean rooms in certain manufacturing processes where tiny particles might otherwise create defects on the circuit patterns, and uses automated optical inspection systems to ensure consistent quality.

Raw Materials

Raw materials used to produce the Company's keypad products are primarily silicon, plastic resins, metallic plates and printing inks. Raw materials used to produce the Company's FPC products are generally integrated circuits, flexible cooper clad laminate and chemicals. As a key element of the Company’s development strategy the Company has in recent years focused on improving raw materials cost management for key raw materials.

The raw materials for the products of the Company are supplied by local and foreign suppliers, with satisfactory quality standards and stable volume requirements. The Company generally does not enter into long-term contract with its suppliers. The Company believes that it maintains a good and mutually beneficial relationship with these suppliers of key components.

The Company continues to pursue strategies that enable it to source its raw materials with increasing effectiveness. The Company has implemented various inventory and resource management systems to enable it to plan the allocation of resources to ensure a steady and timely supply of principal raw materials and components. The Company's materials supply force is responsible for the procurement of raw materials and components, based on the requirements provided by each production division from time to time. By centralizing procurement, the Company believes that it can increase its bargaining power to achieve competitive pricing, payment, delivery, quality and other terms of supply. The Company's quality control department performs a series of incoming quality checks to assure compliance with standards of all incoming materials and components.

The Company has not experienced any significant delay or constraint in production due to disruption of supply of materials.

Sales and Marketing

The Company has a global sales network, consisting of a direct sales force and customer service representatives. To conduct its sales and marketing activities, the Company has sales offices located in Taipei, Taiwan; Penang, Malaysia; San Diego, California, U.S.A.; Zhongshan City, Guangdong Province, Suzhou City, Jiangsu Province, Beijing City and Hong Kong Special Administrative Region, the PRC. Each sales office is located close to its customers and responsible for the provision of sales and customer support and maintaining existing customer relationships. The primary sales and marketing efforts for the Company are conducted by the Company's product divisions, each of which is responsible for developing the sales and marketing strategies of new and existing products produced by the division. As of March 31, 2004, the Company and its subsidiaries had 88 sales staff worldwide. The Company also uses independent sales agents in Denmark, Spain, and Italy for its European customers and in the United States and Brazil for its North and South American customers, respectively. Sales agents operate on a commission basis.

The Company sells its products on an OEM/ODM basis primarily pursuant to specific customer purchase orders or pursuant to longer-term contractual commitments. The Company's customers may cancel the purchase orders subject to a penalty, which is charged based on the timing of such cancellation. Generally, the sales and marketing process involves a customer first designating the Company as an approved vendor or supplier. This process typically involves exchanges of information through written surveys, presentations, site visits, formal audits, sample quotations and first piece builds. The Company is an approved vendor for all of the major mobile telephone manufacturers, including Alcatel, BenQ, Flextronics, Hyundai, Lucent, Motorola, Nokia, Nortel, Samsung SDI, Selectron, Sharp, Sony Ericcson, TCL and other electronic goods manufacturers. The Company also conducts a direct and active marketing strategy, including advertising in trade publications and attending trade shows and exhibitions.

The Company's customers are generally invoiced either at the time of delivery of the products or upon receipt of the products, with varying credit terms, depending, in part, on where the customer is located and the product type. The

Company's pricing policy takes account of a number of factors, including customer relations, product specification, cost of production, and mode of transportation and size of order.

The following table sets out a breakdown of the Company's total sales by geographical region for the periods indicated:

indicated:
Taiwan America Europe Asia (except Taiwan) Total	Year	(NT$ millions, except percentages) (Consolidated) (Non-consolidated) ended December 31, Three months ended March 31, 2002 2003 2003 2004 % % % % 506.9 23.3 1,170.5 29.4 211.7 40.0 476.5 44.2 183.5 8.5 371.4 9.3 68.8 13.0 79.8 7.4 216.4 10.0 493.8 12.3 89.9 17.0 81.6 7.6 1,263.6 58.2 1,947.0 48.9 158.8 30.0 441.3 40.8 2,170.4 100.0 3,982.7 100.0 529.2 100.0 1,079.2 100.0
	2001 % 50.3 3.4 291.1 19.9 546.3 37.4 572.5 39.3 1,460.2 100.0	2002 % 506.9 23.3 183.5 8.5 216.4 10.0 1,263.6 58.2 2,170.4 100.0	2003 % 211.7 40.0 68.8 13.0 89.9 17.0 158.8 30.0 529.2 100.0	2004
				% 476.5 44.2 79.8 7.4 81.6 7.6 441.3 40.8 1,079.2 100.0

Customers

The Company emphasizes customer relations as a key to its growth and profitability. A key aspect of the Company's customer development strategy is to locate the sales and marketing and in certain instances the production facilities near the customers in order to provide better and more efficient services. The Company also supplies the products to OEMs and sub-contractors, who in turn supply these products to global telecommunications and electronics companies.

The Company supplies keypads and FPCs to key customers in the mobile phone and consumer electronics industries. Some of the Company's key customers are Alcatel, BenQ, Flextronics, Lucent, Motorola, Nokia, Nortel, Selectron, Sony Ericcson, and TCL. For 2003, the Company's largest and the second largest customer accounted for approximately 10.4% and 9.2% of consolidated net operating revenues, respectively. For 2002, the Company's largest customer and second largest customer accounted for approximately 13.1% and 3.6%, respectively, of consolidated net operating revenues, and for 2001 the Company's largest customer accounted for approximately 16.9% of consolidated net operating revenues. For 2001, 2002 and 2003, no other customers accounted for 10% or more of consolidated net operating revenues.

Quality Control

The Company has instituted a comprehensive quality assurance program to ensure the quality of its products. In order to implement the quality assurance program comprehensively, the Company has established quality assurance divisions in both of its keypads and FPC business units, as well as dedicated quality control teams in all of its manufacturing facilities, which are responsible for quality assurance and quality control. The missions in connection with quality assurance include:

quality goal planning and follow-up;
establishing and auditing the operation of the quality system;
certification programs, including QS and ISO;
quality education and training;
customer complaint follow-up and improvement;
quality documentation control; and
obtaining customer feedback through after-sales service.

The tasks in connection with quality control involve a series of rigorous quality checks at all stages of product development and production, including:

participation in each step of new product plan, design, prototyping, pilot production and new product release;
conducting vendor quality assessments;
incoming quality control;
process control and periodic test of reliability; and
final inspection and shipping control.

All manufacturing facilities of the Company are accredited with QS9000, IS09002 and IS014001. QS9000 is a quality assurance model which is developed by and for the automotive industry. To be accredited as meeting QS9000 standards, a company must have been accredited for IS09001 and IS014001. IS09002 is a quality assurance model which is made up of 20 sets of quality system requirements, and applies to organizations that design, develop, produce, install and service products. IS014001 is an environmental management system accreditation. The ISO certification process involves subjecting the Company's production and research and development processes and the quality management systems at its production facilities to review and surveillance at fixed intervals. The Company believes that through rigorous implementation of the quality assurance program, it has been able to achieve a reputation for consistently high product quality, and that this reputation is an important competitive advantage for retaining existing customers and attracting new customers among industry leaders in the mobile phones and consumer electronics industries.

Production Facilities

The Company and its subsidiaries currently operate six main production facilities in Taiwan, Malaysia, Mexico and the PRC. The Company's production facilities are located near the Company's customers for the prompt delivery of products. The following table sets out the location and primary use of the production facilities of the Company and its subsidiaries as of March 31, 2004:

Facilities	Principal products	Location	Space(1) (M2)	Owned or leased
Taoyuan Plant	Keypads andFPCs	Gueishan Taoyuan Hsien,Taiwan,ROC	22.310	Owned
IchiaZhongshan Plant	Keypads	Zhongshan, GuangdongProvince,thePRC	10.811	Leased
IhwaZhongshan Plant	Keypads	Zhongshan, GuangdongProvince,thePRC	16.055	Leased
SuzhouPlant	Keypads andFPCs	Suzhou, JiangsuProvince,thePRC	75.000	Owned
MalaysiaPlant	Keypads	Penang, West Malaysia	4,745	Owned
MexicoPlant	Keypads	Tijuana,Mexico	3,738	Owned
Taoyuan Plant II(2)	Notyetoperational	Taoyuan,Taiwan,ROC	1,000	Leased
HsinchuPlant(2)	Notyetoperational	Hsingchu,Taiwan,ROC	1,500	Owned
TaichungPlant(2)	Notyetoperational	Taichung,Taiwan,ROC	500	Leased

(1) Includes manufacturing, staff dormitory and other administrative areas.

(2) Recently established by the Company and are not yet operational. The Company does not expect these facilities to become operational prior to July of 2004. These new facilities are expected to be used for the manufacturing of keypad and other new products of the Company.

The following is a description of the main production facilities of the Company and its subsidiaries:

Taoyuan Plant. The Company has one production plant in Taiwan, which is co-located with the corporate headquarters in Hwa-Ya Technology Park. This plant produces all product lines that the Company currently carries. Taoyuan Plant is located at No. 268 Hwa-Ya Second Road, Hwa-Ya Technology Park, Gueishan, Taoyuan Hsien, Taiwan, in a five-story building owned by the Company. Currently approximately 809 persons are employed to work in the Taoyuan Plant. The total floor area of the Taoyuan Plant and the headquarters is approximately 22,310 square meters. The Company currently utilizes the Taoyuan Plant and the adjacent corporate headquarters to provide firm wide sales and marketing, research and development, testing and administrative services. The Company's tooling center is also located in the headquarters building.

Ichia Zhongshan Plant. The Ichia Zhongshan Plant is the Company's first manufacturing facility in the PRC that currently provides keypad products to the OEM and sub-contractor mobile phone and electronic manufacturers outside the PRC. The Ichia Zhongshan Plant is located at Yaotiao Management District, Zhong Shan High Tech. Industry Development District, Zhongshan, Guangdong Province, the PRC. The total floor area of the Ichia Zhongshan Plant is 10,811 square meters. As of March 31, 2004, 787 direct labors were employed by the Ichia Zhongshan Plant. All products made in Ichia Zhongshan Plant are for export sales only. The factory complex has dormitory facilities to accommodate factory workers.

Ihwa Zhongshan Plant. The Ihwa Zhongshan Plant manufactures keypad products to the OEM and sub-contractor mobile phone and electronic manufacturers located in the PRC for domestic sales. The Ihwa Zhongshan Plant is located at Zhangjibian, the First Industry District, Zhongshan, Guangdong Province, the PRC. The total floor area of the Ihwa Zhongshan Plant is 16,055 square meters. As of March 31, 2004, 855 direct labors were employed by the Ihwa Zhongshan Plant. The factory complex also has dormitory facilities to accommodate factory workers.

Suzhou Plant. The Suzhou Plant is the Company's newest manufacturing facility that currently provides keypad and will provide PPC products to PRC and overseas OEM and sub-contractor mobile phone manufacturers. The Company started operating the Suzhou Plant in 2003. The Suzhou Plant is located at 199, Jin Feng Road, New District, Suzhou City, Jiangsu Province, the PRC. The total floor area of the Suzhou Plant is 75,000 square meters. As of March 31, 2004, 681 direct labors were employed by the Suzhou Plant. The factory complex also has dormitory facilities to accommodate factory workers.

Malaysia Plant. The Company establishes and maintains one production plant in Malaysia, operated through Ichia Rubber Industry (Malaysia) SDN BHD. The Malaysia Plant is located at No. 977A, Solok Perusahaan 3, Prai Industry Estate, 13600 Prai, Penang, West Malaysia, in a two-story building owned by Ichia Rubber Industry (Malaysia) SDN BHD. The total floor area of the Malaysia Plant is 4,745 square meters. As of March 31, 2004, 152direct labors were employed by the Malaysia Plant. The Malaysia Plant is also equipped with a tooling center that provides tooling fabrication services to the Malaysia Plant exclusively.

Mexico Plant. The Mexico Plant is located at Privada Valle de Las Palmas, Lote 4, Manzana 102, Parque Industrial Valle del Sur. Tijuana, B.C., Mexico. The Mexico Plant is currently operated by Ichia Rubber De (Mexico) S.A. DE C.V. under Maquila doras Plan to manufacture keypads for the mobile phone and electronic goods manufacturers in the North America. As of March 31, 2004, 132 persons are employed to work in the Mexico Plant. The total floor area of the Mexico Plant is 3,738 square meters.

The total floor area of the Company's six main facilities is 132,659 square meters.

The Company has not experienced any significant interruptions in production at any of its production facilities due to equipment failure or breakdown, raw materials shortages, power interruptions, fire, labor disputes or other causes.

Research and Development

To meet its customers' needs and to contribute to its continued Success, the Company continually engages in research and development activities. Research and development activities consist of:

designing and developing new products with high added value, including in collaboration with key customers;
developing new materials, manufacturing processes and equipment;
tooling design and fabrication; and
designing and developing new manufacturing techniques which take advantage of the latest technologies and product designs and packaging to improve production efficiency and reduce costs.

In conducting its research and development activities, the Company works closely with its customers at each stage of the design and development process. This close cooperative relationship positions the Company at the leading edge of technological innovation in the manufacturing of mobile phones and other electronic devices.

The research and development improvements have helped the Company to manufacture its products in a cost-effective and reliable manner. The Company's recent research and development achievements include:

Year 2000: Film-in-Plastic Keypads, Film-in-Rubber Keypads, Soft Touch Film-in-Plastic Keypads, Painted Housings, Single Sided FPC and Chip on Glass FPC
Year 2001: Print Lens, In-Mold-Labeling Housings, In-Mold Foil Housings, In-Mold-Decoration Lens, Two-Component Molded Housings, Keyboard Module, Chip on Print Circuit FPC, Single Sided FPC (fine pitch). Double Sided FPC (fine pitch)
Year 2002: P+R I (2nd Surface Decorated Plastic on Rubber Keypad), P+R 2 (1st Surface Decorated Plastic on Rubber Keypads), P+R 3 (1st Surface Decorated Plastic on Rubber Keypad), P+R 4 (Film-in-Plastic on Rubber Keypad), P+R 5 (Plastic on Film Keypad), P+R 6 (Film-in Plastic with Rubber Actuator Keypad), IC Bonding in FPC, SMT in FPC, fine pitch FPC
Year 2003: P+R 7, Keypad Sub-Assembly, Integrated Keypad Module, Navigator Key, Cluster Keypad, Highly Decorative Keypad, Multi-Layer FPC, Rigid and Flexible PCB, fine pitch FPC
Year 2004: Reel Type COFs, multiple layer FPC, and precision printing and coating production process

As of March 31, 2004, the Company had approximately 90 personnel engaged in research and development

activities. Research and development activities are conducted separately for each business unit of the Company.

For the years of 2001, 2002 and 2003, the Company expended NT$33.1 (US$0.981 million), NT$36.6 million (US$1.09 million) and NT$52.3 million (US$1.55 million), respectively, on research and development activities, which accounted for 2.3%, 1.7% and 1.3% of the Company's total consolidated sales.

Intellectual Property

A number of elements of the Company's products and technological processes are proprietary in nature, and are owned by the Company or utilized under license from third parties.

As of March 31, 2004, the Company has a total of 33 patents registered in Taiwan and the PRC. In addition, as of March 31, 2004, the Company also had approximately five patents either pending or under review in various jurisdictions, including Taiwan, Japan, and the PRC. The Company intends to continue to seek patent protection on any new inventions in design or process technology.

The Company has registered as its trademark in the ROC. The trademark is designated for use on the Company's products such as keypads.

Competition

The Company operates in an international market characterized by intense competition among companies that engage in mobile phone and electronic components and parts manufacturing. The Company competes with competitors worldwide, depending on the type of product or geographic area. While these companies are largely fragmented throughout different sectors of the industry, a number of companies are much larger and have greater manufacturing, financial, research and development and marketing resources than the Company. Some of these competitors also carry product lines that the Company does not carry and provide services that the Company does not provide.

The Company believes that the primary basis of competition is a combination of manufacturing capability, services, manufacturing quality, price, cost reduction, production capacity, manufacturing technology, design expertise, breadth of product line, time to production and reliability of delivery. The Company believes that it currently competes favorably with respect to these factors. However, to remain competitive, the Company must continue to provide technologically advanced manufacturing services, maintain quality levels, offer flexible and reliable delivery and provide competitive pricing.

Environmental Matters

The Company's manufacturing processes use various chemicals and materials, including heavy metals, toxic fluids, solvents and others that may be toxic or hazardous if they are released into the environment without treatment. These processes generate solid and liquid waste, as well as discharge of waste water and gaseous emissions.

The Company is subject to environmental regulations in Taiwan, the PRC, Malaysia and Mexico relating to the use, storage, discharge and disposal of chemical and other materials used during its manufacturing process.

The Company has adopted comprehensive environmental compliance and abatement programs for all of its industrial processes. Under the Company's guidelines, solid waste is either recycled, as in the case of plastic material, or is removed under contract by waste management services that have been certified by the applicable environment authorities in the handling of the relevant materials. Waste water from industrial processes is treated before being discharged. Emissions are filtered before being discharged.

Under applicable PRC law and regulations, the feasibility study for new facilities must contain an environmental impact assessment, as well as a comprehensive compliance and abatement plan. The Company's facilities in the PRC, which employ environmentally sensitive manufacturing processes, have passed the feasibility studies and received all governmental approval and certificates as required by PRC environmental regulations. In addition, the Company meets all environment protection regulations and inspections in Malaysia and Mexico, where it operates manufacturing facilities.

All of the Company's main production facilities have received ISO 14001 accreditation, which certifies that its production facilities conform to the prescribed environmental management system standards. The Company believes it is in substantial compliance with all material environmental regulations. In addition, the Company has

not been subject to any fines or legal action involving non-compliance with any relevant environmental regulations, nor is it aware of any threatened or pending action by any environmental regulatory authority in Taiwan, the PRC, Malaysia, Mexico, or the U.S. However, any failure to comply with present and future regulations could subject the Company to future liabilities or the suspension of production. In addition, any such regulations could restrict the Company's ability to expand its facilities or could require it to acquire costly equipment or to incur other significant expense to comply with environmental regulations.

Litigation

Neither the Company nor any of its subsidiaries is involved in any litigation or other proceedings, which the Company believes would, singly or taken as a whole, materially and adversely affect the financial condition or results of operations of the Company and its subsidiaries.

Insurance

The Company maintains insurance policies with independent third parties in respect of buildings, goods in transit equipment and certain inventories covering loss due to fire, explosion and certain other risks. While the Company believes that its insurance policies to be adequate and in line with industry norms in Taiwan, significant damage to any of the Company's production facilities, whether as a result of fire or other causes, could have a material adverse effect on the Company. Insurance coverage on property, plant, equipment and inventories amounted to approximately NT$1,463 million (US$43.38 million), NT$1,583 million (US$46.93 million) and NT$2,771 million (US$82.17 million) as of December 31, 2001, 2002 and 2003, respectively. The Company does not carry business interruption insurance or any policy of a similar nature.

Employees

As of December 31, 2003, the Company and its subsidiaries had 4,654 full-time employees compared to 2,721 and 1,613 employees as of December 31, 2002 and 2001. The following depicts the break-down of the Company and its subsidiaries' employees for the period indicated:

Administrative Research and Development Manufacturing Sales and Marketing Total:	As of 2001 150 69 1,355 39 1,613	December 31 2002 212 101 2,357 51 2,721	2003 298 190 3,729 88 4,654

Employee salaries are reviewed once per year and are adjusted based on industry standards, inflation and individual performances. Under the Company's articles of incorporation, the Company's employees are to participate in the Company's profit distribution where the employees are entitled to receive bonuses based on a percentage of allocable net income as incentive.

The Company provides accidental benefits and medical insurance to its employees. The Company also collects pension fund contributions for its local employees in accordance with the Labor Standards Laws of Taiwan. In addition, the Company provides extensive training programs for its employees at various departments on various subjects. The Company has never experienced a work stoppage due to labor disputes or labor shortage. None of the Company's employees is represented by collective bargaining organization, such as a union, or subject to any bargaining agreements. The Company believes it maintains a good relationship with its employees.

The Company, under the ROC Company Law, is required to provide its employees with a preemptive right to subscribe to between 10% and 15% of any of the Company's rights issue. Further, pursuant to the Articles of Incorporation of the Company, the employees of the Company are entitled to receive bonuses based on a percentage of the allocable surplus income of the Company (see "Dividends").

Subsidiaries and Investments

The table below sets forth information on the Company's subsidiaries and major investments as of March 31, 2004.

Company	Main business	Place of incorporation	Total paid-in capital	The Company’s direct and indirect equity interest
Ichia Holding (BVI) Limited(1)	Investment holding of the Company's manufacturingsubsidiaries	British Virgin Islands	US$32,904,836	100%
Ichia Technologies (H.K.) Limited(2)	Sales of keypads	Hong Kong	US$10,000	100%
Ichia International Trading Ltd.(2)	Sales of keypads	British Virgin Islands	US$50,000	100%
Ichia USA,Inc.(1)	Sales of keypads and FPCs	U.S.A.	US$4,106,060	100%
Ichia Rubber De (Mexico) S.A. DE C.V.(1)	Production of keypads	Mexico	US$240,042	100%
Ichia Rubber Industry (Malaysia)SDN BHD(1)	Production and sale of keypads	Malaysia	MYR9,000,000	100%
Ichia Electronics (Zhongshan)Co.,Ltd.(1)	Production and export sale of keypads	PRC	RMB33,765,504	100%
Ihwa Electronics (Zhongshan)Co.,Ltd.(1)	Domestic sale of keypads	PRC	RMB8,278,305	100%
Ichia (Suzhou) TechnologyInc.(1)	Production and export sale of keypads and FPCs	PRC	RMB99,322,874(3)	100%
Homesolution Inc.	Non-operational	ROC	NT$90,000,000	50%
Landsfair Technology Corporation	Manufacturing and sales of Magnesium Alloys housing products	ROC	NT$800,000,000	30%

(1) Consolidated subsidiaries. For consolidation principles applied, please see Note 1 to the "Consolidated Financial Statements as at and for the years ended December 31, 2001, 2002 and 2003".

(2) Ichia Technologies (H.K.) Limited and Ichia International Trading Ltd. are non-consolidated subsidiaries of the Company since their total assets and operating income are less than 10% of the corresponding unconsolidated amount of the Company. (3) Does not include advance receipts for common stock totaling RMB8,435,705.

There has been no material change in the Company's direct and indirect equity interests in each of its subsidiaries since March 31, 2004.

Ichia Holding (BVI) Limited ("Ichia BVI") was established in the British Virgin Islands in 1997. Its registered office is at Wickhams Cay I, P.O. Box 362, Road Town, Tortola, British Virgin Islands. Ichia BVI is an investment holding company. The companies currently owned by the Company through Ichia BVI include Ichia Zhongshan, Ihwa Zhongshan, Ichia Malaysia and Ichia Suzhou.

As of and for the year ended December 31, 2003, Ichia BVI had audited net assets, operating revenues and net profits of NT$1,580 million (US$46.85 million), NT$230 million (US$6.82 million) and NT$229 million (US$6.79 million), respectively. As of December 31, 2003, Ichia BVI had paid-in capital and reserves of NT$1,093 million (US$32.41 million) and NT$0 (US$0), respectively. In 2003, the Company received from Ichia BVI dividend in the amount of US$5.3 million and the shares of Ichia BVI held by the Company have been fully paid by the Company.

Ichia Technologies (H.K.) Limited ("Ichia Hong Kong") was established in Hong Kong Special Administrative Region of the PRC in 1998. Its registered office is at Unit A13, Block A, 2/F, Proficient Industrial Centre, 6 Wang Kwun Road, Kowloon Bay, Kowloon, Hong Kong SAR. Ichia Hong Kong is a trading company that sells the Company's keypad products in the PRC.

As of and for the year ended December 31, 2003, Ichia Hong Kong had audited net assets, operating loss and net loss of HK$(87,794), HK$5,083 and HK$4,737, respectively. As of December 31, 2003, Ichia Hong Kong had paid-in capital and reserves of US$80,100 million and US$0, respectively.

Ichia International Trading Ltd. ("Ichia International"), was established in the British Virgin Islands in 2001. Its registered office is at P.O. Box 3152, Road Town, Tortola, British Virgin Islands. Ichia International is a trading company.

As of and for the year ended December 31, 2003, Ichia International had audited net assets, operating revenues and

net loss of US$(280,111), US$0 and US$275,947, respectively. As of December 31, 2003, Ichia International had paid-in capital and reserves of US$50,000 million and US$0, respectively.

Ichia USA Inc. ("Ichia USA") was established in the State of California of the Untied States in 1993. Its registered office is at 1057 Tierra Del Rey Suite G Chula Vista, CA 91910, U.S.A. Ichia USA currently wholly owns Ichia Mexico, who operates the Company's Mexico Plant to manufacture keypads in Mexico to supply mobile phone and electronic manufacturers who have factories in North America. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ichia USA had audited net assets, operating revenues and net loss of US$4.1 million, US$4 million and US$7,807 million, respectively. As of December 31, 2003, Ichia USA had paid-in capital and reserves of US$4.1 million and US$0, respectively. In 2003, the Company has not received from Ichia USA any dividend and the shares of Ichia USA held by the Company have been fully paid by the Company.

Ichia Rubber De (Mexico) S.A. DE C.V. ("Ichia Mexico") was established in Mexico in 1994. Its registered office is at Privada Valle de Las Palmas, Lote 4, Manzana 102, Parque Industrial Valle del Sur. Tijuana, B.C., Mexico. Ichia Mexico currently operates the Company's Mexico Plant to manufacture keypads in Mexico to supply mobile phone and electronic manufacturers who have factories in North America. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ichia Mexico had audited net assets, operating revenues and net profits of US$0.6 million, US$1.4 million and US$0.001 million, respectively. As of December 31, 2003, Ichia Mexico had paid-in capital and reserves of US$0.2 million and US$0, respectively. In 2003, the Company has not received from Ichia Mexico any dividend and the shares of Ichia Mexico held by the Company have been fully paid by the Company.

Ichia Rubber Industry (Malaysia) SDN BHD ("Ichia Malaysia") was acquired by the Company as its principal manufacturing base in the Southeast Asia region in 1996. Its registered office is at No. 977A, Solok Perusahaan 3, Prai Industry Estate, 13600 Prai, Penang, West Malaysia. Ichia Malaysia currently operates the Company's Malaysia Plant to manufacture keypads. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ichia Malaysia had audited net assets, operating revenues and net profits of MYR9.7 million, MYR13 million and MYR0.2 million, respectively. As of December 31, 2003, Ichia Malaysia had paid-in capital and reserves of MYR9 million and MYR0, respectively. In 2003, the Company has not received from Ichia Malaysia any dividend and the shares of Ichia Malaysia held by the Company have been fully paid by the Company.

Ichia Electronics (Zhongshan) Co., Ltd. ("Ichia Zhongshan") was established in the PRC in 1996. Its registered office is at Yaotiao Management District, Zhong Shan High Tech. Industry Development District, Zhongshan, Guangdong Province, the PRC. Ichia Zhongshan currently operates the Company's Ichia Zhongshan Plant to manufacture keypads in Guangdong Province, the PRC to supply mobile phone and electronic manufacturers outside the PRC. The finished products equipped with Ichia Zhongshan's products are for export sales only. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ichia Zhongshan had audited net assets, operating revenues and net profits of RMB90.9 million, RMB106.9 million and RMB8.9 million, respectively. As of December 31, 2003, Ichia Zhongshan had paid-in capital and reserves of RMB33.8 million and RMB0, respectively. In 2003, the Company received from Ichia Zhongshan dividend in the amount of RMB15.8 million and the shares of Ichia Zhongshan held by the Company have been fully paid by the Company.

Ihwa Electronics (Zhongshan) Co., Ltd. ("Ihwa Zhongshan") was established in the PRC in 2001. Its registered office is at First Management District, Zhong Shan High Tech. Industry Development District, Zhongshan, Guangdong Province, the PRC. Ihwa Zhongshan currently operates the Company's Ihwa Zhongshan Plant to manufacture keypads in Guangdong Province, the PRC to supply mobile phone and electronic manufacturers who have factories in southern China. The finished products equipped with Ihwa Zhongshan's products are supplied to the end users domestically. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ihwa Zhongshan had audited net assets, operating revenues and net profits of RMB62.4 million, RMB201.9million, and RMB50.2 million, respectively. As of December 31, 2003, Ihwa Zhongshan had paid-in capital and reserves of RMB8.3million and RMB0, respectively. In 2003, the Company received from Ihwa Zhongshan dividend in the amount of RMB28.6 million and the shares of Ihwa Zhongshan held by the Company have been fully paid by the Company.

Ichia (Suzhou) Technologies, Inc. ("Ichia Suzhou") was established in the PRC in 2000. Its registered office is at 199, Jin Feng Road, New District, Suzhou, Jiangsu Province, the PRC. Ichia Suzhou currently operates the Company's Suzhou Plant to manufacture keypads and FPCs in Jiangsu Province, the PRC to supply PRC and overseas mobile phone and electronic manufacturers. See "- Production Facilities".

As of and for the year ended December 31, 2003, Ichia Suzhou had audited net assets, operating revenues and net loss of RMB101.2million, RMB13.8million, and RMB5.1 million, respectively. As of December 31, 2003, Ichia Suzhou had paid-in capital and reserves of RMB107.8 million and RMB0, respectively. In 2003, the Company has not received from Ichia Suzhou any dividend and the shares of Ichia Suzhou held by the Company have been fully paid by the Company.

Homesolution Inc. was established in Taiwan in 2000 to provide internet solution services. Homesolution Inc. is located at Taoyuan, Taiwan. The Company invested in Homesolution Inc. and acquired 50% of its equity interests in 2001. The Company is in the process of dissolving this subsidiary which is currently non-operational.

Landsfair Technology Corporation ("Landsfair") was established in the ROC in 1998 to manufacture and sell Magnesium Alloys housing products. Landsfair is located at No. 528 Fu-shing Third Road, Hwa-Ya Technology Park, Gueishan, Taoyuan Hsien, Taiwan, ROC. The Company invested in Landsfair and acquired 30% of the equity interests of Landsfair in 2001. The Company believes that Magnesium Alloys housing products have market potentials and relevant to it core business.

The Company makes short-term and long-term investments. The Company's short-term investments may from time to time consist of credit-linked notes, corporate bonds, and funds. The Company's primary goals in relation to its short-term investments are low risk profile and liquidity.

Short-term investments are funded with cash, and the balance of short-term investments may vary from time to time depending on the Company's cash requirements. For details of the Company's short-term investments as of December 31, 2001, 2002 and 2003, see Note 4 to the "Non-consolidated Financial Statements as of and for the years ended December 31, 2001, 2002 and 2003" and Note 4 to the "Consolidated Financial Statements as of and for the years ended December 31, 2001, 2002 and 2003.

The Company makes long-term equity investments for strategic reasons. As of December 31, 2003, the Company directly and indirectly invested in Ichia International, Ichia BVI, Ichia USA, Ichia Malaysia, Ichia Hong Kong, Ichia International, Ichia Zhongshan, Ichia Suzhou, and Ihwa Zhongshan. The Company also invests in Landsfair Technologies Corp., whose business includes development and manufacturing of Magnesium Alloy housing for mobile electronic products, such as notebook computers, and PDAs. The Company believes that through the investment, it is able to gather market information in efficient ways. The Company expects that its investments in these companies will allow it to benefit from investments in promoting its global sales, developing a diversified product portfolio, and forming an international alliance for integrated production. For details of the Company's long-term equity investments, see Note 7 to the "Non-consolidated Financial Statements as of and for the years ended December 31, 2001, 2002 and 2003" and Note 7 to the "Consolidated Financial Statements as of and for the years ended December 31, 2001, 2002 and 2003".

Related Party Transactions

The Company, its subsidiaries and certain of its affiliates, in the ordinary course of business or from time to time, enter into transactions with each other. The Company believes that all such transactions were based on general commercial practice, where the prices and payment terms made from and to the Company may depend upon the overall financial status of the Company and such affiliates. See Note 18 to the "Non-consolidated Financial Statements as at and for the three months ended March 31, 2003 and 2004", and Note 20 to the "Consolidated Financial Statements as at and for the years ended December 31, 2001, 2002 and 2003".

MANAGEMENT

Directors

The Company's board of directors is elected by the shareholders in a general meeting at which a quorum, consisting of a majority of all issued and outstanding common shares, is present. The Chairman is elected by the board from among the directors. The Company's five-member board of directors is responsible for the management of the Company's business.

The term of office for the Company's directors is three years from the date of election. Directors may serve any number of consecutive terms and may be removed from office at any time with or without a valid reason by a resolution adopted at a meeting of shareholders. A director removed without a valid reason may be entitled to compensations for damages suffered. Normally, all board members are elected at the same time, except where the posts of one-third or more of the directors are vacant, at which time a special meeting of shareholders will be convened to elect directors to fill the vacancies.

The following table sets forth the name of each of the Company's current directors, his position in the Company, the number of Shares held as of April 13, 2004:

	Other Position with the	Numbers of	Percent of
Name	Company	Shares held	Shares held
Benny Huang	Chairman and CEO	21,229,524	11.07%
Jennifer Huang	Vice Chairman and President	54,313,003	2.77%
Jacob Kuo		2,992,574	1.56%
Mei-na Juan		2,619,609	1.37%
Chien-ping Chen		-	0%

Supervisors

The Company currently has three supervisors, each serving a three-year term. Supervisors are typically elected at the time that directors are elected. The supervisors' duties and powers include investigation of the Company's business condition, inspection of the Company's corporate records, verification and review of financial statements presented by the Company's board of directors at shareholders' meetings, convening of shareholders' meetings when the supervisor deems necessary, representing the Company in negotiations with the Company's directors and notification, when appropriate, to the board of directors or to any individual director to cease the director or the board acting in contravention of any applicable law or regulation or in contravention of the Company's Articles of Incorporation or resolutions adopted by its shareholders. Each supervisor is elected by the Company's shareholders and cannot concurrently serve as a director, management officer or other staff member. The ROC Company Law requires that a supervisor's term of office be no more than three years but may serve any number of consecutive terms.

The following table sets forth the name of each of the Company's current supervisors and their shareholding in the Company as of April 13, 2004:

Name	Numbers of Shares held
Pi-yu Wang	1,317,596
Tien-kuei Chen	1,106,351
Xian-xi Chen	2,488,071

In accordance with the ROC law, each of the Company's directors and supervisors owes fiduciary duties to all shareholders. All of the Company's directors and supervisors serve in their capacity as individual shareholders. The Company's articles of incorporation provide that the Company's directors and supervisors in the aggregate shall own certain percentage of issued and outstanding shares as required under the relevant ROC Securities and Futures Commission's regulations.

Executive Officers

The following table sets forth information relating to the Company's executive officers as of April 13, 2004:

		Years with the
Name	Position	Company
Benny Huang	Chairman and CEO	16
Simon Yu	President of MMI Business Unit	6
Tom Chen	President of FPC Business Unit	6
Jennifer Huang	Vice President	16

Biographies of Directors. Supervisors and Executive Officers

Benny Huang has served as the Chairman and CEO of the Company and General Manger since 1989. Before founding the Company, Mr. Huang served as a Research and Development Engineer at Kinpo Electronic Inc. He received a Diploma in Mechanical Engineering from Lung Hwa College of Science and Technology in Taiwan. Mr. Huang also attended an EMBA program offered by Tarnkang University.

Jennifer Huang has served as the President of General Administration Department and Vice Chairman of the Company since 1999. She is also a Deputy Chairperson of ICHIA. Ms. Huang is one of the founders of ICHIA. Ms. Huang received a Bachelor's degree in economics from Fu-Jen Catholic University in Taiwan. Ms. Huang also attended an EMBA program offered by National Taipei University.

M.N. Juan has served as director of the Company since 2002. Ms. Juan received a diploma in Secretarial Business from Shih Chien College of Home Economic in Taiwan.

Jacob Kuo has served as director of the Company since 2002. Mr. Kuo also serves as director of San Wu Rubber Mfg. Co., Ltd. Mr. Kuo received a diploma in National Chunghua Senior High School.

C.P. Chen has served as director of the Company since 2002. Mr. Chen also serves as the Executive Director and CEO of Ta Chong Commercial Bank. He holds master's degree of business administration from California State Polytechnic University in U.S.A.

P.Y. Wang has served as supervisor of the Company since 2000. Ms. Wang received a vocational diploma from Ten Ren Commercial Senior High School.

X.X. Chen has served as supervisor of the Company since 2000. He holds a Bachelor's degree in economics from Soochow University in Taiwan.

T. K. Chen has served as supervisor of the Company since 2002. Currently, Mr. Chen is the Chinaman of Gloria Prince Hotel Taipei. Mr. Chen received a diploma in business administration from Tamsui Institute of English in Taiwan.

Simon Yu has served as the President of the MMI Business Unit of the Company since 2000. Before serving as the president of this business unit, Mr. Yu was the General Manger of Ichia USA and Ichia Mexico. Before joining the Company, Mr. Yu served as a Plant Manager in Raychem Technologies, Inc. Mr. Yu graduated from Department of Mechanical Engineering of National Taipei Institute of Technology.

Tom Chen has served as the President of the FPC Business Unit of the Company since 2000. Before he set up this business unit, Mr. Chen was the General Manger of Ichia Malaysia. Before joining the Company, Mr. Chen was a procurement manager in Kinpo Electronic Ltd. Mr. Chen graduated from the Department of Mechanical Engineering of Min-Hsin College of Science and Technology in Taiwan.

Share Ownership and Compensation

As of April 13, 2004, the members of the Company's Board of Directors and Supervisors, together with members of their immediate families, owned of record approximately 38,259,047 shares, or approximately 19.95% of the then total issued share capital of the Company.

The aggregate remuneration paid and benefits in kind granted by the Company to its directors, supervisors and executive officers were NT$6.2 million in 2003. There are no outstanding loans granted by the Company to any of

the directors, supervisors or executive officers and there are no outstanding guarantees provided by the Company for the benefit of any of the directors, supervisors or executive officers.

PRINCIPAL SHAREHOLDERS

As of April 13, 2004, except for the Company's Chairman who owns 21,229,524 shares (or 11.07%) of the Company, there is no person who, directly or indirectly, has interest in 10% or more of the Company's Shares. As of April 13, 2004, the largest ten shareholders of the Company hold, in aggregate, 40,499,220 shares (or 21.11%) of the Company.

RECENT DEVELOPMENTS AND OUTLOOK

The Company has prepared audited consolidated financial statements for the three years ended December 31, 2001, 2002 and 2003. The financial statements have been audited by Deloitte & Touche, who conducted the audit of such financial statements in accordance with auditing standards generally accepted in the ROC.

The following discussion and analysis has been made on the basis of the Company's audited consolidated financial statements as at and for the years ended December 31, 2001, 2002 and 2003.

Results of Operations in 2003

The consolidated net sales of the Company increased by NT$1,812.3 million, or 83.5%, from NT$2,170.4 million (US$62 million) for the year ended December 31, 2002 to NT$3,982.7 million (US$117 million) for the year ended December 31, 2003. The increase was primarily due to increase in the sales of FPC and MMI products. The sales of MMI grew by approximately 60% while the sales growth in FPC products increased by approximately 157%.

The gross profit of the Company increased by NT$480.3 million, or 62.56%, from NT$767.8 million (US$22.77 million) for the year ended December 31, 2002 to NT$1,248 million (US$37.01 million) for the year ended December 31, 2003. The increase in gross profit was due to increase in sales.

The operating expenses of the Company increased by NT$80.7 million, or 28.0% from NT$288.2 million (US$8.546 million) for the year ended December 31, 2002 to NT$368.9 million (US$10.94 million) for the year ended December 31, 2003. The increase in operating expenses is proportionally less than the increase the operating revenue due to better scale economy of the Company’s production. The consolidated operating income of the Company increased by NT$399.6 million, or 83.3%, from NT$479.6 million (US$14.22 million) for the year ended December 31, 2002 to NT$879.2 million (US$26.07 million) for the year ended December 31, 2003. The increase in operating income was basically in line with the increase in sales.

The consolidated non-operating income of the Company decreased by NT$1.8 million, or 4.4%, from NT$41.1 million (US$1.22 million) for the year ended December 31, 2002 to NT$39.3 million (US$1.17 million) for the year ended December 31, 2003.

The consolidated non-operating expenses of the Company increased by NT$72.6 million, or 80.2%, from NT$90.5 million (US$2.68 million) for the year ended December 31, 2002 to NT$163.1 million (US$4.84 million) for the year ended December 31, 2003. The increase is primarily due to loss due to inventory evaluation.

The Company has consolidated income before income tax of NT$755.4 million (US$22.40 million) in 2003 as opposed to a income before income tax of NT$430.2 million (US$12.76 million) in 2002, and the net income of the Company increased by NT$308.1 million, or 90.5%, from NT$340.5 million (US$10.10 million) for the year ended December 31, 2002 to NT$648.6 million (US$19.23) for the year ended December 31, 2003. The increase in net income was primarily due to increase in sales.

Results of Operations in the first Three Months of 2004

For the three months ended March 31, 2004, the Company recorded non-consolidated net sales of NT$1,080 million (US$32.02 million), a 104% increase from NT$529.2 million (US$15.69 million) for the corresponding period in 2003, attributable primarily to increase in sales of FPC products by six to seven folds.

The non-consolidated gross profit of the Company for the three months ended March 31, 2004 was NT293.5 million (US$8.703 million), compared with a gross profit of NT$135.2 million (US$4.009 million) for the same period in 2003. The gross profit increased in line with increase in sales.

The non-consolidated operating income of the Company for the three months ended March 31, 2004 increased to NT192.2 million (US$5.699 million) from an operating income of NT$74.0 million (US$2.19 million) for the same period in 2003. The increase is due to increase in the Company’s sales.

The non-consolidated non-operating income of the Company for the three months ended March 31, 2004 increased to NT$85.9 million (US$2.55 million) from NT$44.7 million (US$1.33 million) for the same period in 2003. The increase is due to increase sale of the Company’s subsidiaries.

The non-consolidated non-operating expenses of the Company for the three months ended March 31, 2004 decreased to NT$12.9 million (US$0.38 million) from NT$16.9 million (US$0.50 million) for the same period in

The decrease is due to decrease in interest expenses in the first quarter of 2004.

Principally as a result of these factors, the non-consolidated net income of the Company for the three months ended March 31, 2004 increased to NT$216.2 million (US$6.411 million) from a NT$81.7 million (US$2.42 million) for the same period in 2003.

Financial Resources and Capital Expenditure

Net cash flow generated by the Company from its consolidated operating activities was NT$348.6 million, NT$262.3 million and NT$539.9 million (US$16.01 million) in 2001, 2002 and 2003 respectively; and negative NT$9.6 million (US$0.28) (on a non-consolidated basis) for the three months ended March 31, 2004. The Company's principal cash requirements during these periods included financing of its working capital, capital expenditures related to the expansion of its production capacities, investments in subsidiaries and servicing the Company's indebtedness.

The Company incurred capital expenditure, in the form of purchase of fixed assets, in 2001, 2002 and 2003, Capital expenditure in these periods related principally to fixed asset procurement and purchase of property, plant and equipment.

The Company's primary sources of finance have been net cash provided by operating activities, and short-term and long-term bank borrowings, disposal of short-term investments and the proceeds from issuance of new Shares and convertible bonds for cash. The Company's short-term borrowings consist primarily of credit facilities and mortgage loans from banks. The Company’s foreign currency borrowings are primarily for the purpose of purchase of raw materials and equipments overseas and investment in subsidiaries. As of December 31, 2003, the Company’s foreign currency borrowings are equivalent to approximately US$35.8 million.

The Company's principal working capital requirements are the purchase of raw materials and financing of inventories and accounts receivables. The Company expects to meet its working capital, capital expenditure and investment requirements for 2004 from cash generated from operations, disposal of investments and the proceeds from the offer of the Bonds.

From time to time, the Company reviews investment opportunities and may, a suitable opportunity arises, make an investment. Future investments may be in the form of capital expenditures made directly or through subsidiaries, or acquisitions of, or investments in, other businesses or joint ventures with third parties. The Company intends only to invest in businesses and companies which will complement the Company's core business.

DIVIDENDS

The following table sets forth the cash dividends per share and stock dividends per share as a percentage of shares outstanding paid during each of the years indicated in respect of Shares outstanding at the end of each such year, excepted as otherwise noted:

	Cash Dividend	Stock Dividend	Total Number of Shares
	Per Share	Per Share(1)	Issued as Stock Dividend
	(NT$)	(NT$)	(in thousands)
2001………………	0	3.1	118,000
2002………………	0.5	1.5	137,700
2003………………	0	2.0	168,000

Note (1): The Company declares stock dividends in New Taiwan dollar amount per Share, but it pays the dividends to its shareholders in the form of Shares. The amount of Shares distributed to each shareholder is calculated by multiplying the dividend declared by the number of Shares held by the given shareholder, divided by the par value of NT$10 per Share. The stock divided figures include stock dividends from both distributable earnings and reserves.

The Company's board of directors in its meeting on March 23, 2004 has proposed cash dividend of NT$0.75 per Share and stock dividend of NT$2.0 per Share to be issued to the Company's shareholders in 2004. The Company's 2004 annual general meeting of the shareholders held on June 11, 2004 has approved the dividends. Please note that because the total outstanding number of Shares of the Company can change prior to the ex-dividend date (such as due to conversion of convertible bonds), the exact amount of stock and cash dividends per Share may change. The ex-dividend date has been scheduled to take place on August 8, 2004.

The Company has historically paid stock dividends on the Shares with respect to the preceding year after approval by the shareholders at the annual general meeting of shareholders and necessary approvals from the competent authorities. The form, frequency and amount of future cash or stock dividends on the Shares will depend upon the Company's earnings, cash flow, financial condition and other factors.

Under the ROC Company Law, except under certain limited circumstances, an ROC company is not permitted to distribute dividends or make any other distributions to shareholders in any year in which the Company has no earnings, after adjusting for previous years' losses and gains, if any.

The ROC Company Law also requires that 10% of the Company's annual earnings, less prior years' losses, if any, and outstanding tax, should be set aside as a legal reserve until the accumulated legal reserve equals the paid-in capital. The Company may set aside a special reserve in accordance with applicable laws and regulations. According to the Company's Articles of Incorporation, the Company's annual earnings, after paying income tax and offsetting deficit, if any, should be appropriated and distributed in the following order:

10% thereof as legal reserve until such retention equals the amount of issued common stock; if necessary, the company can provide special reserve;
no less than 5% thereof as bonuses to employees;
no more than 3% thereof as bonuses to directors and supervisors; and
any remaining balance is appropriated in accordance with the resolutions reached in the stockholders' annual meeting.

The Articles of Incorporation of the Company also provide that the shareholders' dividends shall be no less than 60% of the distributable earnings of that year, of which distribution of stock dividends will be prioritized and not less than 10% of distributable earnings of that year shall be distributed in the form of cash in principle. Furthermore, employee bonuses in the form of Shares may be distributed to the employees of the Company or certain employees of the Company's subsidiaries who are qualified under the conditions set forth by the board of directors of the Company.

MARKET PRICE INFORMATION

The Shares have been quoted and traded on the TSE since 2000. The table below sets forth, for the period indicated, the high and low closing price and the accumulate monthly trading volume on the TSE for the Shares (adjusted for the effects of right issues, employee bonus issues and stock dividends) and the high and low of the daily closing values of the TSE Index.

2000 (listed on Jan.14) 2001 2002 January February March April May June July August September October November December 2003 January February March April May June July August September October November December 2004 January February March April May June	Closing price per Share High Low Accumulated monthly trading volume (NT$) (in thousands of shares) 253.0 66.0 355,603 119.5 24.5 1,101,291 60.0 47.5 175,921 52.0 43.8 49,616 58.5 46.5 126,200 69.0 57.5 115,386 62.5 53.0 60,536 58.0 45.2 44,389 57.0 40.0 116,283 52.0 41.1 101,664 51.0 45.3 87,339 47.4 41.7 124,542 51.5 41.8 148,613 54.0 42.0 78,230 46.0 41.5 41,131 45.8 41.7 23,077 42.9 38.0 31,923 41.6 35.6 65,129 42.2 36.0 37,224 54.5 41.2 116,877 58.5 48.0 106,795 55.0 47.5 64,815 63.0 52.0 72,952 66.0 59.5 65,724 70.5 61.5 68,860 69.0 60.5 40,642 74.0 63.5 60,894 74.5 69.0 47,593 73.5 67.0 49,367 90.5 71.0 112,007 86.0 77.0 69,234 83.0 62.0 54,824	TSE Index	TSE Index
		High 10202.20 6104.24 6007.33 5968.61 6242.64 6462.30 5910.69 5599.42 5416.50 4968.85 4668.01 4601.37 4813.53 4823.67 5078.80 4833.58 4599.25 4658.30 4555.90 5048.91 5451.80 5686.85 5757.91 6108.13 6142.32 5924.24 6386.25 6750.54 7034.10 6880.18 6188.15 6125.23	Low
			4,614.63 3,446.26 5,488.33 5,499.79 5,680.78 6,059.21 5,443.18 5,071.76 4,855.34 4,572.35 4,185.95 3,850.04 4,500.55 4,452.45 4,524.87 4,432.46 4,260.45 4,139.50 4,187.82 4,678.08 5,017.78 5,214.60 5,611.41 5,581.66 5,740.57 5,752.01 6,041.56 6,241.39 6,132.62 6,117.81 5,482.96 5,700.80

Source: TSE

On July 15, 2004, the reported closing price of the Shares was NT$68.0 per Share and the TSE Index closed at 5542.80.

CHANGES IN ISSUED SHARE CAPITAL

Changes in the share capital of the Company since incorporation are set out below:

			Number of
		Number of	Shares
Record Date	Type of Issue	Shares issued	Outstanding
November 1989	Incorporation	1,200,000	1,200,000
October 1990	Rights issue	3,300,000	4,500,000
August 1992	Rights issue	3,518,000	8,018,000
October 1995	Rights issue and capitalization of stock dividends and employees' bonus	3,982,000	12,000,000
December 1995	Rights issue	600,000	12,600,000
June 1996	Rights issue	4,000,000	16,600,000
November 1997	Capitalization of stock dividends and capital reserve and rights issue	13,400,000	30,000,000
August 1998	Capitalization of stock dividends, capital reserve and employees' bonuses	10,000,000	40,000,000
November 1998	Rights issue	4,000,000	44,000,000
August 1999	Capitalization of stock dividends, capital reserve and employees' bonus	16,000,000	60,000,000
February 2000	Rights issue	10,000,000	70,000,000
August 2000	Capitalization of stock dividends and employees' bonus	18,150,000	88,150,000
August 2001	Capitalization of stock dividends and employees' bonuses	29,850,000	118,000,000
August 2002	Capitalization of stock dividends, capital reserve and employees' bonuses	19,700,000	137,700,000
August 2003	Capitalization of stock dividends and employees' bonuses	30,300,000	168,000,000
October, 2003	Conversion from convertible bonds	6,572,150	174,572,150
January, 2004	Conversion from convertible bonds	13,872,182	188,444,332
May, 2004	Conversion from convertible bonds and stock option	2,560,925	191,005,257

TERMS AND CONDITIONS OF THE BONDS

The following terms and conditions (subject to amendment and except for the sentences in italics) will be endorsed on the Certificates issued in respect of the Bonds:

The issue of US$70,000,000 Zero Coupon Convertible Bonds due 2009 (the " Bonds ") of Ichia Technologies Inc. (the " Company ") was authorized by a resolution of the Board of Directors of the Company adopted on April 30, 2004. The Bonds are constituted by a trust deed (the " Trust Deed ") dated as of July 22, 2004 and made between the Company and J.P. Morgan Corporate Trustee Services Limited (the " Trustee ", which term includes any successor trustee under the Trust Deed), as trustee for the holders of the Bonds (the " Bondholders "). The Company has entered into a paying and conversion agency agreement (the " Agency Agreement ") dated as of July 22, 2004 with the Trustee, JPMorgan Chase Bank as the principal paying, transfer and conversion agent (the " Principal Agent ") and J.P. Morgan Bank Luxembourg S.A. as the registrar (the " Registrar ") and paying, transfer and conversion agent (the " Paying Agent ", the " Transfer Agent " and the " Conversion Agent " respectively, and the expressions "Paying Agents", "Conversion Agents" and "Transfer Agents" shall include the Principal Agent, and the expression "Transfer Agent" shall include the Registrar) in relation to the Bonds. The Registrar, the Principal Agent, the Paying Agent, the Conversion Agent and the Transfer Agent are together referred to as the " Agents ". The statements in these Terms and Conditions (" Conditions ") include summaries of, and are subject to, the detailed provisions of the Trust Deed. Copies of the Trust Deed and the Agency Agreement will be available for inspection during normal business hours at the principal office of the Trustee, currently at Trinity Tower, 9 Thomas More Street, London E1W 1YT, England and at the specified offices of each of the Agents. The Bondholders are entitled to the benefit of the Trust Deed and are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement.

The owners shown in the records of Euroclear Bank S.A./N.V. as operator of the Euroclear System (" Euroclear ") and Clearstream Banking, société anonyme (" Clearstream, Luxembourg ") of book-entry interests in the Bonds are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them.

1. Status

The Bonds constitute unsubordinated and (subject to the provisions of Condition 3) unsecured obligations of the Company and rank pari passu without any preference among themselves and (subject as aforesaid) with all other present and future unsubordinated and unsecured obligations of the Company.

2. Form, Denomination and Title

(A) Form and Denomination

The Bonds will be issued in registered form, in denominations of US$1,000 and integral multiples thereof. The Bonds will be offered, sold and will be transferable in principal amounts of US$1,000 or an integral multiple thereof. The Bonds are not issuable in bearer form. A bond certificate (each a " Certificate ") will be issued to each Bondholder in respect of its registered holding of Bonds. Each Bond and each Certificate will be serially numbered with an identifying number which will be recorded on the relevant Certificate and in the register of Bondholders which the Company will procure to be kept by the Registrar.

The Bonds will initially be represented by a global certificate (the " Global Certificate ") deposited with JPMorgan Chase Bank, as common depositary for, and registered in the name of a nominee for, Euroclear and Clearstream, Luxembourg.

Owners of interests in the Bonds will not be entitled to receive definitive physical certificates in denominations of US$1,000 and integral multiples thereof in respect of their Bonds except in the limited circumstances described in the Global Certificate.

(B) Title

Title to the Bonds will pass only by transfer and registration in the register of Bondholders. The

registered holder of any Bond will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating the holder. In these Conditions, " Bondholder " and (in relation to a Bond) " holder " mean the person in whose name a Bond is registered in the register of Bondholders.

3. Negative Pledge

So long as any of the Bonds remain outstanding (as defined in the Trust Deed), the Company shall not create or permit to be outstanding any mortgage, charge, pledge, lien or other form of encumbrance (each an " Encumbrance ") upon the whole or any part of its undertaking, property, assets or revenues, present or future, to secure for the benefit of the holders of any International Investment Securities (as defined below) (i) payment of any sum due in respect of any such International Investment Securities, (ii) any payment under any guarantee of any such International Investment Securities or (iii) any payment under any indemnity or other like obligation relating to any such International Investment Securities without in any such case at the same time according to the Bonds, either the same security as is granted to or is outstanding in respect of such International Investment Securities, or any security, guarantee, indemnity or other like obligation as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

As used herein, the term " International Investment Securities " means bonds, debentures, notes or investment securities of the Company or any other person evidencing indebtedness with a maturity of not less than one year from the date of their issue which (a) either (i) are by their terms payable, or confer a right to receive payment, in any currency other than New Taiwan Dollars (" NT dollars " or " NT$ ") or (ii) are denominated or payable in New Taiwan Dollars and more than 50 percent of the aggregate principal amount thereof is initially distributed outside ROC by or with the authorization of the issuer thereof and (b) are for the time being, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange, quotation system or over-the-counter or other similar securities market outside the island of Taiwan and other areas under the effective control of the Republic of China (" ROC ").

4. Interest

No interest will be payable on the Bonds, except for the default interest as provided in Condition 10.

5. Transfers of Bonds; Issue of Certificates

(A) Transfers

Subject to Condition 5(D) below, a Bond may be transferred upon the surrender at the specified office of any Transfer Agent of the Certificate in respect of the Bond to be transferred, together with the form of transfer obtainable from any of the Transfer Agents (the " Form of Transfer "), duly completed and executed and any other evidence that such Transfer Agent may require. In the case of a transfer of only part of a holding of Bonds in respect of which a Certificate is issued, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. The Form of Transfer is available at the specified office of the Paying Agent during normal business hours.

Transfers of interests in the Bonds evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.

(B) Delivery of New Certificates

Each new Certificate to be issued upon a transfer of Bonds shall be available for delivery within five Business Days upon receipt by the Transfer Agent (including the Transfer Agent in Luxembourg) at its specified office of the relevant Certificate and the Form of Transfer. Delivery of the new Certificates shall be made at the specified office of such Transfer Agent to whom the relevant Certificate and the Form of Transfer shall have been surrendered or delivered or, at the

option of the holder making such delivery or surrender as aforesaid and as specified in the relevant of Form of Transfer or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify.

For the purposes of this Condition 5(B), " Business Day " shall mean a day on which banks are open for business in the city in which the specified office of the relevant Transfer Agent with whom a Certificate is deposited in connection with a transfer is located.

Except in the limited circumstances described in the Global Certificate, owners of interests in the Bonds represented by the Global Certificate will not be entitled to receive definitive physical certificates in respect of their individual holdings of the Bonds.

(C) Formalities Free of Charge

Registration of transfers of the Bonds will be effected without charge by or on behalf of the Company or any Paying Agent, but only upon payment (or the giving of such indemnity as such Paying Agent may require) of any tax or other governmental charges, which may be imposed in relation to it.

(D) No Transfer Periods

No Bondholder may require the transfer of a Bond to be registered (i) during the period of 10 days ending on the due date for any payment of principal, interest (if any) and premium (if any) on the Bond; (ii) after such Bond has been selected for redemption pursuant to Condition 8(B); (iii) after the Conversion Notice (as defined in Condition 6(B)) and the Certificate in respect of such Bond have been deposited for conversion pursuant to Condition 6; or (iv) following exercise of the Bondholder's put option pursuant to Condition 8(C) or the Delisting Put Right pursuant to Condition 8(F).

(E) Regulations

All transfers of Bonds and entries on the register of Bondholders will be made subject to the detailed regulations concerning transfer of Bonds (the " Regulations ") set forth in the Agency Agreement. The Regulations may be changed by the Company with the prior written approval of the Trustee and the Registrar. A copy of the Regulations will be mailed (at the expense of the Company) by the Registrar to any Bondholder who requests one and copies are freely available at the specified office of the Paying Agent and Conversion Agent in Luxembourg.

6. Conversion

On exercise of the Conversion Right (as defined below), the converting Bondholders pursuant to the election made by such Bondholder will receive Shares, or in the event that the Company establishes a depositary receipt facility following the closing and subject to compliance with the terms and conditions of the deposit agreement established with such depositary receipt facility and the relevant laws and regulations, elect to receive depositary shares representing the interests in the Shares and the Bondholder may direct the Company to procure that Shares transferred and delivered upon conversion of the Bonds are deposited with the custodian for the DR Depositary (as defined in Condition 6(A)(i)) for the issuance and delivery of the DRs (as defined in Condition 6(A)(i)) by the DR Depositary.

In the event that the Company establishes a depositary receipt facility, it may procure additional Shares for deposit with the custodian for the DR Depositary subject to compliance with the terms and conditions of the deposit agreement and applicable laws and regulations. Such Shares could be procured by issuing new Shares, subject to compliance with applicable ROC laws and regulations and the Company’s articles of incorporation.

In the event the Company does establish a depositary receipt facility, the procedure for Bondholders to convert the Bonds into DRs will be substantially similar to the conversion procedure for Bondholders to

convert the Bonds into Shares. In each case, the Bondholder will deposit the Conversion Notice (as defined herein) and the Certificate in respect of that Bond with a Conversion Agent. However, in the case of conversion into DRs, the Bondholder will direct that all or some only of the Shares issuable upon conversion be deposited with the relevant DR Depositary for issuance of DRs.

The Company shall, within five Trading Days (as defined in Condition 8(B) and subject to certain exceptions) after the Conversion Date (as defined in Condition 6(B)(ii)), issue and deliver the Shares converted from the Bond to the converting Bondholder or its designee, subject to the requirements relating to the conversion in the Agency Agreement being satisfied.

The Trust Deed provides, in summary, that the term " Shares " means, when used to refer to the Company's common shares, NT$10 par value per share, but such term also includes shares of any other class or classes of the share capital of the Company authorized after the date of the Trust Deed which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation or winding-up of the Company.

(A) Conversion Right

(i) Conversion Period:

Conversion Period: Each Bondholder has the right during the Conversion Period (as defined below) to convert any Bond into the Company's common shares, NT$10 par value per share (" Shares "), credited as fully paid, and may, if a depositary receipt facility has been established and depositary receipts representing the Shares (" DRs ") have been issued, and subject to compliance with the terms and conditions of the relevant deposit agreement, direct in the Conversion Notice (as defined herein) that all or some only of the Shares issuable upon conversion be deposited with the relevant DR depositary (the " DR Depositary ") for issuance of DRs on and subject to the terms set forth herein (the " Conversion Right "). Subject to and upon compliance with the provisions of this Condition, the Conversion Right attaching to any Bond may be exercised, at the option of the holder thereof, at any time on or after August 21, 2004 and prior to the close of business (at the place where the Conversion Notice and the Certificate in respect of such Bond are deposited for conversion) on July 12, 2009 (or if such date shall not be a business day (as defined below), on the immediately preceding business day at such place), or, if such Bond shall have been called for redemption prior to July 22, 2009, then up to the close of business (at the place aforesaid) on the date seven days prior to the date fixed for redemption thereof (or if such day shall not be a business day, on the immediately preceding business day) (the " Conversion Period "); provided, however, that the Conversion Right shall be suspended during any Closed Period and the Conversion Period shall not include any such Closed Period. " Closed Period " shall mean any period during which under the laws and regulations of the ROC the Company shall close its shareholders' register, which period includes 60 days prior to the date of the annual general meeting of shareholders (" AGM "), 30 days prior to an extraordinary shareholders' meeting, and the period from the third Trading Day prior to the date for reporting the record date for determination of shareholders entitled to receive annual dividend distributions or other benefits or rights to the Taiwan Stock Exchange (" TSE ") to such record date. In case any amendments are made to the aforesaid laws and regulations, the conversion shall be construed in accordance with the prevailing laws and regulations. The Company shall procure that the Bondholders, the Trustee and the Agents are given timely prior notice of any Closed Period in accordance with Condition 15.

In this Condition 6(A)(i), " business day " means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London, and in the place where the Conversion Agent with whom the Certificate and the Conversion Notice are deposited is open for business.

Under current ROC law, regulation and policy, PRC persons are not permitted to hold or convert the Bonds or to register as a shareholder of the Company. Under current ROC law, "PRC person" means an individual holding a passport issued by the People's Republic of China ("PRC"), a resident of any area of China under the effective control or jurisdiction of the PRC (but not including a special administrative region of the PRC such as Hong Kong or Macau, if

so excluded by applicable laws of the ROC), any agency or instrumentality of the PRC and any corporation, partnership and other entity organized under the laws of any such area or controlled or beneficially owned by any such person, resident, agency or instrumentality.

Under current ROC law, a non-ROC converting Bondholder when exercising his Conversion Right to convert a Bond into Shares is required (unless the Bondholder has the option under these Conditions to elect, and elects to receive DRs with respect to the Bonds to be converted. In such case, the Shares will be delivered to and deposited with a custodian appointed by the relevant DR Depositary) to appoint a local agent in the ROC with such qualifications as are set by the ROC Securities and Futures Commission to open a securities trading account with a local brokerage firm and a NT Dollar bank account, pay ROC withholding taxes, remit funds, exercise shareholders' rights, handle conversion applications and perform such other matters as may be designated by such converting Bondholder (or its designee), on behalf of and as agent for such converting Bondholder (or its designee). The Executive Yuan has approved certain amendments to the Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals on June 27, 2003. Prior to the amendment, a non-ROC converting Bondholder when exercising his Conversion Right to convert a Bond into Shares is required to obtain approval from the Taiwan Stock Exchange to open a foreign convertible bond conversion account. Under the amended regulation, foreign convertible bond conversion accounts should be merged with general investment accounts, and assets in foreign convertible bond conversion accounts should be transferred to general investment accounts. In addition, such non-ROC converting Bondholder must also appoint a custodian bank to hold the securities for safekeeping, make confirmation and settlement, and report all relevant information. Under existing ROC laws and regulations, without opening such accounts, an investor in the Bonds would not be able to receive, hold, sell or otherwise transfer the Shares into which the Bonds may have been converted on the TSE or otherwise. See "Foreign Investment and Exchange Controls in the ROC" and "Description of the Shares".

(ii) Number of Shares and/or DRs Issuable on Conversion:

The number of Shares to be issued upon conversion of any Bond will be determined by dividing the principal amount of the Bond (translated into NT dollars at the fixed exchange rate of NT$33.724 = US$1.00 (the " Fixed Exchange Rate ")) by the Conversion Price (as defined in Condition 6(A)(iii)) in effect on the Conversion Date (as defined in Condition 6(B)(ii)). The number of DRs to be issued upon conversion of any Bond (if applicable) will be determined by dividing the principal amount of the Bond by the Conversion Price in effect on the Conversion Date, and multiplying of dividing, as the case may be, the Conversion Price by the number of Shares represented by each DR on the Conversion Date. The number of Shares represented by the DRs shall be determined by the depositary and custodian facilities.

If a Certificate or Certificates in respect of more than one Bond shall be deposited for conversion at any one time by the same Bondholder, the number of Shares to be issued upon conversion thereof will be calculated on the basis of the aggregate principal amount of the Bonds in respect of which the Certificate(s) were so deposited. Fractions of Shares will not be issued on conversion, and cash adjustments will not be made in respect thereof by the Company. Notwithstanding the foregoing, in the event of a consolidation or reclassification of Shares by operation of law or otherwise occurring after July 22, 2004, the Company will upon conversion of the Bonds pay to the converting Bondholder in US dollars a sum equal to such portion of the principal amount of the Bond or Bonds converted as corresponds to any fraction of a Share not issued as aforesaid if such sum exceeds US$10. For the purpose of calculating the amount of such payment, the Company shall use the exchange rate referred to above in this Condition 6(A)(ii).

(iii) Initial Conversion Price: The price at which Shares will be issued upon conversion (the " Conversion Price ") will initially be NT$82.00 per Share, but will be subject to adjustment in the manner provided in Conditions 6(C) and 6(D). The price at which DRs will be issued upon conversion, in the event that the Company establishes a depositary receipt facility, will be determined by multiplying, or dividing, as the case may be, the Conversion Price by the number of Shares represented by each DR on the Conversion Date and will be subject to adjustment in

the manger provided in Conditions 6(C) and 6(D). In the event that a depositary receipt facility is established and DRs may be issued upon conversion, the term "Conversion Price" shall be understood to mean the price at which DRs will be issued or the price at which Shares will be issued, as the situation and the context dictate.

(iv) Revival on Default: Notwithstanding the provisions of Condition 6(A)(i), if there shall be default in making payment in full in respect of any Bond which shall have been called for redemption on the date fixed for redemption thereof, the Conversion Right attaching to such Bond will continue to be exercisable up to and including the close of business (at the place where the Certificate in respect of such Bond and the Conversion Notice are deposited for conversion) on the date upon which the full amount of the monies payable in respect of such Bond has been duly received by the Trustee or the Principal Agent and notice of such receipt has been duly given to the Bondholders.
(B) Conversion Procedure
(i) Exercise Procedure: To exercise the Conversion Right attaching to any Bond, the holder thereof must complete, execute and deposit at its own expense between 9:00 a.m. and 3:00 p.m. (local time at the specified office referred to below) on any business day (as defined below) during the Conversion Period at the specified office of a Conversion Agent outside of the ROC, a notice of conversion (a " Conversion Notice ") in duplicate, duly completed and signed, in the then current form obtainable from the specified office of any Conversion Agent, together with the relevant Certificate and any certificates and other documents as may be required under the law of the ROC or the jurisdiction in which such Conversion Agent is located.

A Conversion Notice or a Certificate deposited outside the hours specified above or on a day which is not a business day at the place of the specified office of the relevant Conversion Agent shall for all purposes be deemed to have been deposited with that Agent between 9:00 a.m. and 3:00 p.m. on the next following business day.

Bondholders who deposit a Conversion Notice during a Closed Period will not be permitted to convert their Bonds until the Trading Day following the last day of the Closed Period which (if all other conditions of conversion have been fulfilled) will be the Conversion Date for such Bonds. Such Bondholders will not be registered as holders of Shares until the Conversion Date.

If a DR facility has been established and DRs have been issued, the Conversion Notice shall contain an option for the Bondholder to elect to receive Shares and/or DRs upon such conversion. The Conversion Notice shall contain, inter alia, an appointment of a local agent by such converting Bondholder and an irrevocable instruction to convert the relevant Bond for Shares issued pursuant to Condition 6(B)(iii), on a date that is not more than five Trading Days after the Conversion Date, or as soon as Shares are available, whichever is earlier. A Conversion Notice once deposited may not be withdrawn without the consent in writing of the Company. The Company shall immediately notify the Trustee in writing of such written consent, such notification to be accompanied by the relevant Conversion Notice.

In this Condition 6(B)(i), "business day" means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London, in the city of the Conversion Agent with whom the Certificate and the Conversion Notice are deposited.

(ii) Taxes and Expenses; Deposit Date and Conversion Date: Together with the deposit of the Conversion Notice, the Bondholder must pay to the relevant Conversion Agent all stamp, issue, registration, excise and similar taxes or duties or transfer costs (if any) arising on conversion in the country in which the Bond is deposited for conversion, or payable in any jurisdiction consequent upon the issue or delivery of Shares (and/or DRs, if applicable) or any other property or cash upon conversion to or to the order of a person other than the converting Bondholder. The Bondholder and the person other than the Bondholder to whom the Shares (and/or DRs, if applicable) are to be issued or transferred) must provide the Conversion Agent with details of the tax authorities to which the Conversion Agent must pay monies received.

The Conversion Agent is under no obligation to determine whether a Bondholder is liable to pay stamp, issue, registration or similar taxes and duties or the amounts payable (if any). The Conversion Agent shall be entitled to rely without further enquiry and without liability on any information provided by such Bondholder as to any such amounts payable. Except as aforesaid, the Company will pay the expenses arising in the ROC on the issue of Shares (and/or DRs, if applicable) on conversion of Bonds and all charges of the Conversion Agents (and the relevant DR Depositary, if applicable) in connection therewith. The date on which, in respect of any Bond, the relevant Certificate and the Conversion Notice (in duplicate) relating thereto, together with any certificates and other documents as may be required under applicable law, are deposited with a Conversion Agent and the payments, if any, required to be paid by the Bondholder are made is hereinafter referred to as the " Deposit Date ". The " Conversion Date " applicable to a Bond shall mean the next day following the Deposit Date, which day both is a Trading Day and occurs during the Conversion Period.

(iii) Holder of Record: With effect from the opening of business in the ROC on the Conversion Date, the Company will deem the converting Bondholder (or its designee) as indicated in the Conversion Notice to have become the holder of record of the number of Shares to be issued upon such conversion to such holder (disregarding any retroactive adjustment of the Conversion Price referred to below prior to the time such retroactive adjustment shall have become effective) and at such time, subject to Condition 6(B)(v), the rights of such converting Bondholder as a Bondholder with respect to such Bonds deposited for conversion shall cease (except rights arising under Conditions 6(B)(iv) and 6(B)(vi)).

In the event that a converting Bondholder has the option under these Conditions to elect, and elects, to receive DRs, with effect from the opening of business in the ROC on the Conversion Date, the Company will deem the relevant DR Depositary to have become the holder of record of the number of Shares represented by such DRs to be issued upon such conversion (disregarding any retroactive adjustment of the Conversion Price referred to below prior to the time such retroactive adjustment shall have become effective) and upon delivery by the relevant DR Depositary to the Bondholder of the number of DRs into which the Bonds are convertible, subject to Condition 6(B)(v), the rights of such converting Bondholder as a Bondholder with respect to such Bonds converted shall cease (except rights arising under Condition 6(B)(iv) and 6(B)(vi)).

(iv) Delivery of Shares and/or DRs: As of the Conversion Date, the Company will register the converting Bondholder (or its designee) or the relevant DR Depositary (or its designee), as applicable, in the Company's register of shareholders as the owner of the number of Shares to be issued pursuant to Condition 6(B)(iii) upon conversion of such Bonds and, subject to any applicable limitations then imposed by ROC laws and regulations, according to the request made in the relevant Conversion Notice, procure that, as soon as practicable, and in any event, with limited exceptions, within five Trading Days after the Conversion Date, there be delivered to the local agent appointed by the converting Bondholder, and/or to the relevant custodian, as agent for the relevant DR Depositary (if the converting Bondholder has the option under these Conditions to elect, and elects, to receive DRs), a certificate or certificates for the relevant Shares, registered in the name specified for that purpose in the relevant Conversion Notice, together with any other property or cash (including, without limitation, cash payable pursuant to Condition 6(A)(ii)) required to be delivered upon conversion and such assignments and other documents (if any) as may be required by law to effect the delivery thereof.

In the event a converting Bondholder has the option under these Conditions to elect, and elects to receive DRs on exercise of its Conversion Right, the Company agrees to deliver to and deposit with the relevant custodian, as agent for the relevant DR Depositary, a sufficient number of Shares to represent the DRs such Bondholder is entitled to receive upon conversion. Such Shares will be registered in the name of the relevant DR Depositary or its nominee and deposited in accordance with the terms of the relevant deposit agreement.

(v) Retroactive Adjustment of Conversion Price: If the Conversion Date in relation to any Bond shall be on or after a date with effect from which an adjustment to the Conversion Price takes retroactive effect pursuant to any of the provisions referred to in Conditions 6(C) and 6(D) and

the Trust Deed and the relevant Conversion Date falls on a date when the relevant adjustment has not been reflected in the Conversion Price, the Company will, within a reasonable period of time after the effective date of such adjustment of the Conversion Price, issue and deliver (to the local agent appointed by the converting Bondholder and/or, if applicable, to the relevant custodian, as agent for the relevant DR Depositary) such number of Shares as is equal to the excess of the number of Shares that would have been required to be issued on conversion of such Bond if the relevant retroactive adjustment had been made as at the said Conversion Date over the number of Shares previously issued pursuant to such conversion, and in such event and in respect of such number of Shares, references in Condition 6(B)(v) to the Conversion Date shall be deemed to refer to the date upon which such retroactive adjustment becomes effective (disregarding the fact that it becomes effective retroactively).

(vi) Conversion Agents: The Company reserves the right, subject to the provisions of the Agency Agreement, at any time to vary or terminate the appointment of any Conversion Agent and to appoint further or other Conversion Agents; provided that the Company will at all times maintain a Conversion Agent having specified offices in London and, so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange so require, in Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of the Conversion Agents will be given promptly and in writing by the Company to the Principal Agent, the Trustee, the Bondholders and the Luxembourg Stock Exchange.
(C) Adjustments to Conversion Price

The Conversion Price will be subject to adjustment in the manner set forth in the Trust Deed upon the occurrence of certain events set out in the Trust Deed, including:

(i) the making of a free distribution or bonus issue of Shares;
(ii) subdivisions, consolidations or reclassifications of Shares;
(iii) the declaration of a dividend in Shares;
(iv) the grant, issue or offer to the holders of Shares of rights or warrants to subscribe for or purchase Shares at less than the then Current Market Price (as defined in the Trust Deed) or to subscribe for or purchase any securities convertible into or exchangeable for Shares at less than the then Current Market Price;
(v) the distribution to the holders of Shares of evidences of indebtedness of the Company or of shares of capital stock of the Company (other than Shares) or of assets (including regular periodic dividends in cash) or of rights or warrants to subscribe for or purchase shares or securities (other than those mentioned in (iv) above);
(vi) the issue of securities (other than the Bonds and those mentioned in (iv) and (v) above) convertible into or exchangeable for Shares at less than the then Current Market Price or of rights or warrants (other than those mentioned in (iv) and (v) above) to subscribe for or purchase Shares at less than the then Current Market Price or to subscribe for or purchase securities convertible into or exchangeable for Shares at less than the then Current Market Price;
(vii) the issue of Shares (other than Shares issued (a) on conversion of convertible bonds, including the Bonds or (b) in any of the circumstances described above; but including Shares issued under any employee bonus or profit-sharing arrangements) at less than the then Current Market Price; and
(viii) any other event or circumstance which would have in the determination of the Company an analogous effect to any of the events in (i) to (viii) above including, but not limited to, issues of receipts or certificates entitling holders to receive securities, in accordance with the formulae stipulated in the Trust Deed.

No adjustment will be made where such adjustment would be less than one percent of the Conversion Price then in effect; provided, however, that any adjustment that otherwise would be required to be made will be carried forward and taken into account in determining any subsequent adjustment. No adjustment in Conversion Price shall be made upon the Company canceling its treasury stock. All adjustments made to the Conversion Price under this Condition 6 shall be rounded to the nearest cent. Any adjustment will be notified promptly and in writing by the Company to the Trustee and the Bondholders in accordance with Condition 15 and to the Luxembourg Stock Exchange.

The Trust Deed provides that the Conversion Price may be reduced, as a result of any adjustment required by this Condition 6(C), below the par value of the Shares for the time being to the extent permitted by ROC law, provided that any Shares issued on conversion of Bonds at such reduced Conversion Price would be legally issued and fully-paid Shares that cannot be assessed to pay debts of the Company in the event of its bankruptcy and liquidation.

The Trustee will not be obliged to monitor whether any event has occurred which might fall within (i) to (viii) above and will not be responsible to the Bondholders or the Company for any loss arising from any failure by it to do so.

(D) Conversion Price Reset

The Conversion Price shall be adjusted on a day (" Reset Date "), which is on or after January 22, 2005 in the event that the average of the Closing Prices (as defined in Condition 8(B)) of the Shares on the TSE for the 20 consecutive Trading Days (Trading Day is as defined in Condition 8(B)) immediately preceding the Reset Date (the " Average Closing Price ") translated into US dollars at the then Prevailing Rate (as defined below) and multiplied by 120.59% is less than 90% of the Conversion Price in effect on the relevant Reset Date translated into U.S. dollars at the Fixed Exchange Rate, in accordance with the following formula:

Fixed Exchange Rate Adjusted Conversion Price = Average Closing Price × 120.59% × Prevailing Rate

Such adjusted Conversion Price shall be rounded upwards, if necessary, to the nearest NT$0.01, provided that:

(i) any adjustment to the Conversion Price pursuant to this Condition 6(D) shall be limited so that the Conversion Price adjusted in accordance with this Condition 6(D) shall not be less than 80 percent of the initial Conversion Price (as adjusted to reflect any adjustments required under Condition 6(C) above, which may have occurred prior to the Reset Date);
(ii) the provisions of Condition 6(C) shall apply mutatis mutandis to this Condition 6(D) to ensure that appropriate adjustments shall be made to any Closing Price to reflect any adjustments made to the Conversion Price in accordance with Condition 6(C) during the period of calculation of the Average Closing Price; and
(iii) for the avoidance of doubt any adjustments to the Conversion Price made pursuant to this Condition 6(D) shall only be downward adjustments.

The " Prevailing Rate " for the translation of the Closing Prices shall be the arithmetic average of the closing rate for the purchase of US dollars with NT dollars quoted by Taipei Forex Inc. (or any replacement entity selected by the Company with the written consent of the Trustee) at the close of business on each day during the 20 consecutive Trading Day period.

For the purpose of the formula in this Condition, the Prevailing Rate shall be expressed as the number of NT dollars per US$1.00.

Any such adjustment shall become effective as of the relevant Reset Date and the Bondholders, the Conversion Agent and the Trustee shall be notified promptly in writing by the Company of any

adjustment to the Conversion Price in accordance with Condition 15.

(E) Mergers; Disposals

The Company will not merge, amalgamate or consolidate with or into any other corporation or entity where the Company is not the continuing entity or sell or transfer all, or substantially all, of the assets of the Company, whether as a single transaction or a number of transactions, related or not, to any corporation, entity or person or to one or more members of any group under the common control of any corporation, entity or person unless the Company shall have notified the Bondholders and the Trustee (promptly and in writing) of such event in accordance with Condition 15 (with a copy of such notice sent to the Luxembourg Stock Exchange for so long as the Bonds are listed thereon) and the Company and such corporation, entity or person shall have executed a trust deed supplemental to the Trust Deed in form and substance satisfactory to the Trustee providing that such corporation, entity or person shall assume the obligations of the Company under the Bonds, the Trust Deed and the Agency Agreement and providing that each Bond then outstanding shall be convertible into the class and amount of shares and other securities, cash and other property receivable upon such consolidation, amalgamation, merger, sale or transfer by a holder of the number of Shares into which such Bond would have been convertible immediately prior to such consolidation, amalgamation, merger, sale or transfer (assuming for such purpose that the Bonds were convertible at the time of such consolidation, amalgamation, merger, sale or transfer) at the Conversion Price as adjusted from time to time pursuant to the Trust Deed. Such supplemental Trust Deed will provide for adjustments, which will be as nearly equivalent as may be practicable to the adjustments provided for in the foregoing provisions to this Condition. The Trustee shall be entitled to require from the Company such opinions, consents, documents and other matters at the expense of the Company in connection with the foregoing as it may consider appropriate. The above provisions of this Condition 6(E) will apply in the same way to any subsequent or further consolidations, amalgamations, mergers, sales or transfers.

(F) Conversion Undertakings

(i) Depositary receipts: Subject to the ROC SFC’s separate approval, if required, the Company may, at its option, but is not required to, make arrangements satisfactory to the Trustee for the Bonds to be converted into DRs (as defined in Condition 6(A)(i)) or other scrip evidencing Shares. Any such arrangements shall be in addition to the provisions of these Conditions relating to conversion into Shares.

The Company has not at the date of this Offering Circular established or authorized the establishment of any depositary receipt facility. Accordingly, conversion into DRs is not currently available. If in the future a depositary receipt facility is established or authorized by the Company, the Company will, to the extent permitted by applicable laws and regulations, make arrangements satisfactory to the Trustee for Shares issued on conversion of Bonds to be accepted for deposit (at the option of the converting Bondholder) into such depositary receipt facility, subject always to the terms of such depositary facility, which terms may include certification of other requirements as conditions to the acceptance for deposit of Shares issued on conversion of Bonds. Any such DRs issuable on conversion of Bonds shall, when issued, be listed. There can be no assurance that the Company will in future establish or authorize any depositary facility or that any arrangements for the deposit of Shares into such depositary facility would be available to all Bondholders.

The Company shall give notice to the Conversion Agents, the Principal Agent, the Trustee, the Bondholders and the Luxemburg Stock Exchange in accordance with Condition 15 within 14 days of the establishment of any depositary receipt facility.

(ii) Closed Periods: The Company undertakes to ensure that any Closed Period is as short a period as is reasonably practicable having regard to applicable ROC laws and regulation and practices.

7. Payments

(A) Principal, Premium (if any) and Interest (if any)

Payment of principal, premium (if any) and interest (if any) will be made against surrender of the relevant Certificate at the specified office of any Agent by transfer to the registered account of the Bondholder or by US dollar cheque drawn on a bank in New York City mailed to the registered address of the Bondholder if it does not have a registered account. Payments of principal, interest (if any) and premium (if any) will only be made after surrender of the relevant Certificate at the specified office of any Agent.

(B) Registered Accounts

A Bondholder's registered account means the US dollar account maintained by or on behalf of it with a bank in New York City details of which appear on the register of Bondholders at the close of business on the second Business Day (as defined below) before the due date for payment and a Bondholder's registered address means its address appearing on the register of Bondholders at that time.

All payments are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 9. No commissions or expenses shall be charged to the Bondholders in respect of such payments.

(D) Payment Initiation

Where payment is to be made by transfer to a registered account, payment instructions (for value on the due date or, if that date is not a Business Day, for value the next following Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed, on the later of the due date for payment and the Business Day on which the relevant Certificate is surrendered (if applicable) at the specified office of an Agent.

(E) Payment Delay

Bondholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a Business Day, if the Bondholder is late in surrendering its Certificate (if applicable) or if a cheque mailed in accordance with this Condition arrives after the due date for payment.

(F) Business Days

In this Condition 7, the term " Business Day " means a day (other than a Saturday or Sunday) on which commercial banks are open for business in New York City and London and, in the case of the surrender of a Certificate, in London and in the place where the Certificate is surrendered.

(G) Partial Payments

If the amount of principal, interest (if any) and premium (if any) which is due on the Bonds is not paid in full, the Registrar will annotate the register of Bondholders with a record of the amount of principal and/or interest and/or premium, in fact paid.

8. Redemption, Repurchase and Cancellation

(A) Redemption at Maturity

Unless previously redeemed, converted or repurchased and cancelled as herein provided, the Company will redeem the Bonds at their principal amount in US dollars on July 22, 2009.

(B) Redemption at the Option of the Company

(i) On or at any time after January 22, 2005, the Company may, having given not less than 30 nor more than 60 days' notice to the Bondholders (which notice will be irrevocable), redeem all or, some only (being US$1,000 in principal amount or an integral multiple thereof) of the Bonds at their principal amount if the Closing Price of the Shares translated into US dollars at the Prevailing Rate, as defined above, for each of the 20 consecutive Trading Days selected by the Company, the last of which occurs not more than 10 Trading Days prior to the date upon which notice of such redemption is given, is at least 130 percent of the Conversion Price then in effect, translated into US dollars at the Fixed Exchange Rate, on each such Trading Day. If there shall occur an event giving rise to a change in the Conversion Price during any such 30 consecutive Trading Day period, appropriate adjustment for the relevant days shall be made for the purpose of calculating the Closing Price for such days. If the Closing Price cannot be determined for one or more consecutive Trading Days, such day or days will be disregarded in the relevant calculation and will be deemed not to have existed when ascertaining such 20 Trading Day period.
(ii) The Company may, having given not less than 30 nor more than 60 days' notice to the Bondholders, redeem all but not some only of the Bonds at their principal amount if at least 90 percent of the Bonds has been previously converted, redeemed, or repurchased and cancelled.

Upon the expiry of any such notice, the Company will be bound to redeem the Bonds to which such notice relates at the price aforesaid applicable at the date fixed for redemption.

The " Closing Price " of the Shares for each Trading Day shall be the last reported transaction price of the Shares on the TSE for such day or, if no transaction takes place on such day, the last available reported transaction price of the Shares on the TSE in effect on the Trading Day immediately preceding such day or, if the Shares are not listed or admitted to trading on such exchange as of such date, the average of the closing bid and offered prices of Shares for such day as furnished by a leading independent securities firm licensed to trade on the TSE selected by the Company for the purpose.

The term " Trading Day " means a day on which the TSE is open for business but does not include a day when (a) no such last transaction price or closing bid and offered prices are reported and (b) (if the Shares are not listed or admitted to trading on such exchange as of such date) no such closing bid and offered prices are furnished as aforesaid.

The Company will, at the option of the holder of any Bond, redeem the Bonds held by that Bondholder on July 22, 2006 or July 22, 2007 (each a " Put Date ") at their principal amount.

To exercise such option the holder must deposit the Certificate in respect of such Bond with any Agent and a duly completed redemption notice in the form obtainable from any of the Agents, not more than 60 nor less than 30 days prior to the relevant Put Date. No Bond so deposited may be withdrawn (except as provided in the Agency Agreement) without the prior written consent of the Company and such written consent must be notified by the Company in writing to the Principal Agent no later than seven days prior to the Put Date. The Company shall give the Bondholders not less than 30 days or more than 45 days notice of the commencement of the period for the deposit of Certificates for redemption pursuant to this Condition 8(C) in accordance with Condition 15. The exercise of the Bondholders' option under this Condition 8(C) in respect of any Bonds then outstanding shall override any exercise of the Company's right under Condition 8(B) with respect to those Bonds, irrespective of the dates fixed for redemption under Condition 8(B) and 8(C) or the timing of the notices given by the Bondholders or the Company pursuant thereto.

(D) Redemption for Taxation Reasons

At any time, the Company may, having given not less than 30 nor more than 60 days' notice to the Bondholders in accordance with Condition 15 (which notice shall be irrevocable) redeem all but not some only of the Bonds at their principal amount if (i) the Company satisfies the Trustee immediately prior to the giving of such notice that it has or will become obliged to pay additional

amounts as provided or referred to in Condition 9(C) as a result of any change in, or amendment to, the laws or regulations of the ROC or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after July 22, 2004 and (ii) such obligation cannot be avoided by the Company taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 60 days prior to the earliest date on which the Company would be obliged to pay such additional amounts were a payment in respect of the Bonds then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate signed by two directors of the Company stating that the obligation referred to in (i) above cannot be avoided by the Company taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in (ii) above, in which event it shall be conclusive and binding on the Bondholders. Bonds in respect of which a notice of redemption has been given under Condition 8(C) shall not be affected by any notice given subsequently under this Condition 8(D).

(E) Purchase

The Company may at any time and from time to time purchase Bonds in the open market or otherwise. Bonds so purchased will be surrendered and deemed cancelled and may not be reissued or resold.

(F) Delisting Put Right

(i) In the event the Shares cease to be listed or admitted to trading on the TSE (collectively, a " Delisting ") each Bondholder shall have the right (the " Delisting Put Right "), at such Bondholder's option, to require the Company to purchase all (but not some only) of the Bonds held by that Bondholder on a day (the " Delisting Put Date ") that is the 30th Business Day (as defined in Condition 7(F)) after the Bondholder has been notified by the Company of the Delisting at the Delisting Put Price. The " Delisting Put Price " shall be equal to the Bond's principal amount.
(ii) Promptly after becoming aware of a Delisting, the Company shall notify the Bondholders in writing of the Delisting and of their Delisting Put Right in accordance with Condition 15.

To exercise its right to require the Company to purchase its Bonds, the Bondholder must deliver a written notice of the exercise of such right (a " Purchase Notice ") to any Paying Agent on any Business Day (as defined in Condition 7(F)) prior to the close of business at the specified office of such Paying Agent on such day and which day is not less than 10 Business Days (as defined in Condition 7(F)) prior to the Delisting Put Date.

Payment of the Delisting Put Price upon exercise of the Delisting Put Right for any Certificate for which a Purchase Notice has been delivered is conditional upon delivery of such Certificate (together with any necessary endorsements) to any Paying Agent on any Business Day (as defined in Condition 7(F)) together with the delivery of such Purchase Notice and will be made promptly and no later than five days following the later of the Delisting Put Date and the time of delivery of such Certificate. If the Paying Agent holds on the Delisting Put Date money sufficient to pay the Delisting Put Price of Bonds for which Purchase Notices have been delivered in accordance with the provisions hereof upon exercise of such right, then, whether or not such Bond is delivered to the Paying Agent, on and after such Delisting Put Date, (i) such Bond will cease to be outstanding, (ii) such Bond will be deemed paid; and (iii) all other rights of the Bondholder shall terminate (other than the right to receive the Delisting Put Price).

(G) Selection of Bonds

In the case of redemption of some only of the Bonds pursuant to Condition 8(B) the Bonds to be redeemed will be selected individually by lot by the Principal Agent, in such place as the Trustee shall approve and in such manner as the Trustee shall deem to be appropriate and fair not more than 60 days and not less than 30 days prior to the date fixed for redemption.

(H) Cancellation

All Bonds, which are redeemed or converted or repurchased and surrendered to any Agent, will forthwith be cancelled. Certificates in respect of all Bonds cancelled will be forwarded to or to the order of the Principal Agent and such Bonds may not be reissued or resold.

(I) Redemption Notices

All notices to Bondholders given by or on behalf of the Company pursuant to this Condition will specify the date fixed for redemption, the redemption price, the Conversion Price as at the date of the relevant notice, the Closing Price of the Shares and the aggregate principal amount of the Bonds outstanding as at the latest practicable date prior to the publication of the notice and, in the case of a partial redemption, a list of the Bonds called for redemption all in accordance with Condition 15. The Company will notify the Luxembourg Stock Exchange of any redemption of the Bonds prior to their maturity.

9. Taxation

(A) All payments of principal, premium (if any) and interest (if any) by the Company will be made free and clear of and without any deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the government of the ROC or any authority thereof or therein having power to tax, unless deduction or withholding of such taxes, duties, assessments or governmental charges is compelled by law.
(B) Where such withholding or deduction is in respect of ROC withholding tax on premium or interest payments at the rate of up to and including 20 percent, the Company will increase the amount of premium (if any) or interest (if any) paid by it to the extent required so that the net amount of premium (if any) or interest (if any) received by Bondholders (without prejudice to Condition 7) would be equal to the amounts which would have been receivable in the absence of any such withholding or deduction.
(C) In the event that any such withholding or deduction in respect of principal or any additional withholding or deduction in excess of 20 percent in respect of interest (if any) or premium (if any) is required, the Company will pay such additional amounts by way of principal, premium (if any) and interest (if any), as will result in the receipt by the Bondholders of the amounts which would have been receivable in the absence of any such withholding or deduction, except that no such additional amounts shall be payable in respect of any Bond:
(i) to, or on behalf of, a holder who is subject to such taxes, duties, assessments or governmental charges in respect of such Bond by reason of his being connected with the ROC otherwise than merely by holding such Bond or by the receipt of principal, premium (if any) or interest (if any) in respect of the Bond; or
(ii) if the Certificate in respect of such Bond is surrendered more than 30 days after the relevant date except to the extent that the holder would have been entitled to such additional amount on surrendering the relevant Certificate for payment on the last day of such 30 day period.

For this purpose, the " relevant date " in relation to any Bond means (a) the due date for payment in respect thereof or (b) (if the full amount of the monies payable on such due date has not been received by the Trustee or the Principal Agent on or prior to such due date) the date on which notice is duly given to the Bondholders that such monies have been so received.

(D) References in these Conditions to principal, premium or interest shall be deemed also to refer to any increased or additional amounts which may be payable in respect thereof under this Condition or any undertaking given in addition to or in substitution for it under the Trust Deed.

10. Events of Default

The Trustee at its discretion may, and if so requested in writing by the holders of not less than 25 percent in principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders shall (but subject to being indemnified and/or provided with security to its satisfaction), give notice in writing to the Company that the Bonds are immediately due and payable, if any of the following events (an " Event of Default ") shall have occurred and be continuing:

(i) the Company fails to pay the principal of or interest (if any) or premium (if any) on any of the Bonds within seven Business Days (as defined in Condition 7(F)) after the same shall become due and payable in accordance with these Conditions; or
(ii) the Company defaults in performance or observance of or compliance with any of its other obligations (other than the covenant to pay the principal, premium (if any) or interest (if any) in respect of the Bonds) set out in the Bonds or the Trust Deed which default is, in the opinion of the Trustee, incapable of remedy or, if in the opinion of the Trustee such default is capable of remedy, such default is not in the opinion of the Trustee remedied within 30 days after written notice of such default shall have been given to the Company by the Trustee; or
(iii) any other present or future indebtedness of the Company, or of any of its Principal Subsidiaries, for or in respect of monies borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of an event of default (howsoever described), or any such indebtedness is not paid when due or, as the case may be, within any applicable grace period originally provided for, or the Company or any of its Principal Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee or indemnity or arrangement or obligation having a like or similar effect (howsoever described) for any monies borrowed or raised by any person, provided that the aggregate amount of the relevant indebtedness and guarantees in respect of which one or more events mentioned above in this paragraph (iii) have occurred and is continuing equals or exceeds US$5,000,000 or its equivalent in any other currency (determined as provided below), and provided further that where two or more of the Company and/or its Principal Subsidiaries are liable for the payment of the same relevant indebtedness or guarantee (whether liable jointly and severally, by way of guarantee, surety or otherwise), any such amount shall be counted once only; or
(iv) an execution by a court having jurisdiction is levied or enforced or sued out, or other legal enforcement process is levied or sued out upon, commenced or issued upon, against or in respect of the whole or any (in the opinion of the Trustee) substantial part of the undertaking, property, assets or revenues of the Company or any of its Principal Subsidiaries and in any such case is not discharged or stayed within 60 days of having been so levied, sued out, commenced or issued; or
(v) any person entitled to the benefit thereof shall institute appropriate legal proceedings to enforce any Encumbrance (as defined in Condition 3) upon the whole or any substantial part of the assets or revenues of the Company or any Principal Subsidiary; or
(vi) the Company or any of its Principal Subsidiaries becomes bankrupt or insolvent, or consents to or suffers the appointment of an administrator, liquidator (except for the purpose of and followed by a voluntary solvent reorganization, merger, consolidation, amalgamation or other similar arrangement the terms of which have previously been approved in writing by an Extraordinary Resolution of the Bondholders) or receiver (or other similar official) in bankruptcy or insolvency of the Company or any of its Principal Subsidiaries or in respect of the whole or any (in the opinion of the Trustee) substantial part of the undertakings, property, assets or revenues of the Company or any of its Principal Subsidiaries or the Company or any of its Principal Subsidiaries stops, suspends or threatens to stop or suspend payment of all or (in the opinion of the Trustee) a material part of (or of a particular type of) its debts; or
(vii) an order issued by a court with competent jurisdiction is made or an effective resolution passed by the Company or any of its Principal Subsidiaries for the winding-up or dissolution of the Company or any of its Principal Subsidiaries (except for the purpose of and followed by a solvent

reconstruction, merger, consolidation, amalgamation or other similar arrangement the terms of which have previously been approved in writing by an Extraordinary Resolution of the Bondholders); or

(viii) any governmental authority or agency condemns, seizes, compulsorily purchases or expropriates all or a (in the opinion of the Trustee) substantial part of the assets or shares of the Company or any of its Principal Subsidiaries; or
(ix) proceedings shall have been initiated against the Company or any of its Principal Subsidiaries under any applicable bankruptcy, insolvency or reorganization law and such proceedings shall not have been discharged or stayed within a period of 60 days; or
(x) any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorization, exemption, filing, license, order, recording or registration) at any time required to be taken, fulfilled or done in order to (i) enable the Company lawfully to enter into, exercise its rights and perform and comply with its obligations under the Bonds and the Trust Deed, (ii) ensure that those obligations are legally binding and enforceable (subject to the qualifications set out in the legal opinion issued in connection therewith on or about April 27, 2004) and (iii) make the Bonds and the Trust Deed admissible in evidence in the courts of the ROC is not taken, fulfilled or done, and such case is incapable of remedy or, if in the opinion of the Trustee is capable of remedy, is not in the opinion of the Trustee remedied within 30 days after written notice requiring such remedy shall have been given to the Company by the Trustee; or
(xi) any event occurs which under the laws of the ROC has an analogous effect to any of the events referred to in the foregoing paragraphs.

Upon any such notice being given to the Company, the Bonds will immediately become due and payable at their principal amount, and overdue interest on the amounts due, from the date on which such amounts first become due, shall be payable, to the extent permitted by law, at the rate of six percent per annum.

For the purposes of Condition 10 (iii) above, any indebtedness which is in a currency other than US dollars shall be translated into US dollars at the spot rate for the sale of US dollars against the purchase of the relevant currency quoted by any leading bank in the relevant market selected by the Trustee in its sole discretion on any day when the Trustee requests such a quotation for such purposes. If no direct spot rate is available, a rate shall be calculated by reference to the cross-rates through US dollars and relevant currencies. Any calculation or translation so made shall be conclusive and binding on the Company and the Bondholders without liability for any loss or liability occasioned thereby.

For the purpose of this Condition, " Subsidiary " means any corporation or other business entity more than 50 percent of the outstanding voting stock of which is for the time being owned directly or indirectly by the Company, and " Principal Subsidiary " means any Subsidiary (i) whose total revenues, as shown by the latest audited accounts (consolidated in the case of a company which itself has subsidiaries) of such Subsidiary at the time that the event of default occurs, are at least 10 percent of the total revenues of the Company and its consolidated Subsidiaries as shown by the latest audited consolidated accounts of the Company or (ii) whose gross assets, as shown by the latest audited accounts (consolidated in the case of a company which itself has subsidiaries) of such Subsidiary at the time that the event of default occurs are at least 10 percent of the gross assets of the Company and its consolidated Subsidiaries as shown by the latest audited consolidated accounts of the Company.

The Company shall, on request by the Trustee, provide the Trustee with a certificate, signed by two directors or authorized officers of the Company, identifying as of the date of such certificate or such other date as stipulated by the Trustee, such Subsidiaries and Principal Subsidiaries and stating the amount of stock so held or revenue or assets, as the case may be. Such Certificate would be accompanied by a report by the auditors of the Company addressed to the directors or authorized officers of the Company and the Trustee as to the proper extraction of the figures used by the Company in determining the Principal Subsidiaries of the Company and mathematical accuracy of the calculations. The Trustee shall be entitled to rely on such certificate without enquires and shall not be liable for any loss or liability occasioned by such reliance or by any errors contained in such certificate.

11. Prescription

Claims in respect of (a) principal and premium (if any) and (b) interest (if any) will become unenforceable after 10 years (in the case of (a)) and five years (in the case of (b)), from the relevant date for payment in respect thereof.

12. Enforcement

At any time after the Bonds shall have become due and payable, the Trustee may, at its discretion and without further notice, take such proceedings against the Company as it may think fit to enforce payment of the Bonds together with premium (if any) and interest (if any) with respect thereto and to enforce the provisions of the Trust Deed, but it will not be bound to take any such proceedings unless (a) it shall have been so requested in writing by the holders of at least 25 percent in principal amount of the Bonds then outstanding or so directed by an Extraordinary Resolution and (b) it shall have been indemnified and/or secured to its satisfaction. No Bondholder will be entitled to proceed directly against the Company, unless the Trustee, having become bound to do so, fails to do so and such failure shall have continued for a period of 60 days and no written direction inconsistent with such written request or Extraordinary Resolution has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the outstanding Bonds.

13. Meetings of Bondholders, Modification and Waiver

(A) Meetings

The Trust Deed contains provisions for convening meetings of Bondholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Bonds or the provisions of the Trust Deed. The quorum at any such meeting for passing an Extraordinary Resolution will be two or more persons holding or representing over 50 percent in principal amount of the Bonds for the time being outstanding or, at any such meeting which has been adjourned, two or more persons being or representing Bondholders whatever the principal amount of the Bonds so held or represented unless the business of such meeting includes consideration of proposals, inter alia , (i) to modify the maturity date of the Bonds or the put right of the Bondholders under Condition 8(C) and 8(F), (ii) to reduce or cancel the amount of principal, premium (if any) or interest (if any) payable in respect of the Bonds, (iii) to change the currency of payment of the Bonds, (iv) to modify or cancel the Conversion Right (except in accordance with Condition 6(B) and 13(B)), (v) to modify the provisions concerning the quorum required at any meeting of the Bondholders or the majority required to pass an Extraordinary Resolution or sign a resolution in writing, in which case the necessary quorum for passing an Extraordinary Resolution will be two or more persons holding or representing over two-thirds, or at any adjourned such meeting over one-third, in principal amount of the Bonds for the time being outstanding. An Extraordinary Resolution passed at any meeting of Bondholders will be binding on all Bondholders, whether or not they are present at the meeting, and will be conclusive and binding upon all future Bondholders.

The Trust Deed provides that a written resolution signed by or on behalf of the holders of not less than 90 percent of the aggregate principal amount of Bonds outstanding shall be as valid and effective as a duly passed Extraordinary Resolution.

The Trust Deed defines " Extraordinary Resolution " as a resolution passed at a meeting of Bondholders duly convened and held in accordance with these provisions by a majority consisting of not less than three-quarters of the votes cast.

(B) Modification of Conversion Right

Notwithstanding Conditions 13(A)(iv) and (v) above, the Trustee may (but shall not be in any way obligated to) agree, in writing, without the consent of the Bondholders, to any modification to or variation of the Conversion Right (including modification of and additions to the declarations and statements to be made by Bondholders in a Conversion Notice) which is in its opinion necessary or desirable to effect or facilitate conversion as contemplated in these Conditions and which is not, in

the Trustee's opinion, materially prejudicial to the interests of the Bondholders. The Trustee's agreement may be subject to it being indemnified to and/or secured to its satisfaction and to any other condition, which the Trustee requires, including but not limited to obtaining, at the sole expense of the Company, such advice from or an opinion of any leading investment bank or any legal counsel or other experts as the Trustee deems fit and a certificate signed by two directors or authorized officers of the Company. The Trustee shall be entitled to but shall not be obligated to rely on such advice. The Trustee shall not be liable for any loss or liability occasioned by any such modification or variation as aforesaid. Any such modification shall be binding on all Bondholders. The Company shall notify Bondholders of such modification in accordance with Condition 15 and to the Luxembourg Stock Exchange as soon as practicable.

(C) Other Modifications and Waivers

The Trustee may (but shall not be in any way be obligated to) agree, in writing, without the consent of the Bondholders, to (i) any modification (except as mentioned above) of, or the waiver or authorization of any breach or proposed breach of, the Bonds or the Trust Deed which is not, in the opinion of the Trustee, materially prejudicial to the interests of the Bondholders or (ii) any modification of the Bonds or the Trust Deed which, in the Trustee's opinion, is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of law or applicable regulation as the case may be or an error which in the opinion of the Trustee is proven. The Trustee's agreement may be subject to it being indemnified and/or secured to its satisfaction and to any other condition which the Trustee requires, including but not limited to obtaining, at the sole expense of the Company, such advice from or an opinion of any leading investment bank or legal counsel or other experts as the Trustee deems fit and a certificate signed by two directors or authorized officers of the Company. The Trustee shall be entitled to but shall not be obligated to rely on such advice. The Trustee shall not be liable for any loss or liability occasioned by any such modification or variation as aforesaid. Any such modification, waiver or authorization will be binding on the Bondholders and any such modification will be notified by the Company to the Bondholders in accordance with Condition 15 and to the Luxembourg Stock Exchange as soon as practicable thereafter.

(D) Exercise of Trustee's Functions

In connection with the exercise of its functions (including but not limited to those in relation to any proposed modification, authorization or waiver) the Trustee shall have regard to the interests of the Bondholders as a class and shall not have regard to the consequences of such exercise for individual Bondholders, and no Bondholder shall be entitled to claim, from the Company or the Trustee, any indemnification or payment in respect of any tax consequences of any such exercise upon individual Bondholders.

14. Replacement of Certificates

If any Certificate is mutilated, defaced or is alleged to be destroyed, stolen or lost, it may be replaced at the specified office of the Registrar or at the office of the Agent in Luxembourg upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Company may reasonably require (which terms will require, inter alia , that if such Certificate is subsequently deposited for conversion into Shares there shall be paid to the Company on demand such costs (equal to the principal, premium (if any) and interest (if any) due on the relevant Bond at the Fixed Exchange Rate). Mutilated or defaced Certificates must be surrendered before replacements will be issued.

15. Notices

All notices to Bondholders shall be validly given if mailed to them at their respective addresses in the register of Bondholders maintained by the Registrar, and, so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort ).

Any such notice shall be deemed to have been given on the later of the date of such publication and the

seventh day after being so mailed.

16. Indemnification

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking proceedings to enforce payment unless indemnified or secured to its satisfaction. In addition, the Trustee is entitled to enter into business transactions with the Company and any entity relating to the Company without accounting for any profit.

The Trustee may rely without liability to the Bondholders on any certificate prepared by the directors or authorized officers of the Company and accompanied by a certificate or report prepared by the auditors of the Company pursuant to the Conditions and/or the Trust Deed, whether or not addressed to the Trustee and whether or not the liability of the auditors of the Company in respect thereof is limited by a monetary cap or otherwise limited or excluded and shall be obliged to do so where the certificate or report is delivered pursuant to the obligation of the Company to procure such delivery under the Conditions; any such certificate or report shall be conclusive and binding on the Company, the Trustee and the Bondholders.

17. Agents

The Company reserves the right, subject to the provisions of the Agency Agreement, at any time to vary or terminate the appointment of Agents, provided that the Company will at all times maintain (a) a Principal Agent, (b) a Registrar and (c) a Paying Agent having its specified office in Luxembourg for so long as the Bonds are listed on the Luxembourg Stock Exchange and a Paying Agent with a specified office in an EU member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other European Union Directive implementing the provisions of the ECOFIN Council Meeting of 26-27 November, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive. Notice of any such termination or appointment, of any changes in the specified offices of any Agent or the Registrar and of any change in the identity of the Registrar or the Principal Agent will be given promptly by the Company to the Bondholders in accordance with Condition 15 and in any event not less than 45 days’ notice will be given.

18. Governing Law and Jurisdiction

(A) Governing Law

The Trust Deed and the Bonds are governed by and shall be construed in accordance with English law.

(B) Jurisdiction

The courts of England are to have jurisdiction over any disputes, which may arise out of, or in connection with the Bonds, and accordingly any legal action or proceedings arising out of or in connection with the Bonds (" Proceedings ") may be brought in such courts. The Company has in the Trust Deed irrevocably submitted to the jurisdiction of such courts.

(C) Agent for Service of Process

The Company has irrevocably appointed Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent in England to receive service of process in any Proceedings in England based on any of the Bonds.

(D) Third Party Rights

No rights are conferred on any person to enforce any term or condition of the Bonds under the Contracts (Rights of Third Parties) Act 1999, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

THE GLOBAL CERTIFICATE

The Global Certificate contains provisions, which apply to the Bonds in respect of which the Global Certificate is issued, some of which modify the effect of the terms and conditions of the Bonds (the " Conditions ") set out in this Offering Circular. Terms defined in the Conditions have the same meaning in the paragraphs below. The following is a summary of those provisions:

Meetings

The registered holder (as defined in the Conditions) of the Global Certificate will be treated as being two persons for the purposes of any quorum requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each US$1,000 in principal amount of Bonds for which the Global Certificate is issued. The Trustee may allow any accountholder (or the representative of any such person) of a clearing system entitled to the Bonds in respect of which this Global Certificate is issued on confirmation of entitlement and proof of his identity, to attend and speak (but not to vote) at any meeting of Bondholders.

Cancellation

Cancellation of any Bond following its redemption, conversion or repurchase by the Company will be effected by a reduction in the principal amount of the Bonds in the register of Bondholders.

Conversion

Subject to the requirements of Euroclear and Clearstream, Luxembourg (or any Alternative Clearing System (as defined below)), the Conversion Rights attaching to the Bonds in respect of which the Global Certificate is issued may be exercised by the presentation thereof to or to the order of the Principal Agent for notation of exercise of the Conversion Rights, together with one or more Conversion Notices duly completed by or on behalf of a holder of a book-entry interest in such Bonds. Deposit of the Global Certificate with the Principal Agent together with the relevant Conversion Notice shall not be required. The exercise of the Conversion Right shall be notified by the Principal Agent to the Registrar and the holder of the Global Certificate.

Payments

Payments of principal and any other amounts in respect of Bonds represented by the Global Certificate will be made without presentation or, if no further payment is to be made in respect of the Bonds, against presentation and surrender of the Global Certificate to or to the order of the Principal Agent or such other Paying Agent as shall have been notified to the Bondholders for such purpose.

Notices

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear or Clearstream, Luxembourg or the Alternative Clearing System (as defined below), notices to Bondholders may be given by delivery of the relevant notice to Euroclear or Clearstream, Luxembourg or the Alternative Clearing System, for communication by it to entitled accountholders in substitution for notification as required by the Conditions except that so long as the Bonds are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, notices shall also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort).

Bondholder’s redemption

The Bondholders' redemption options in Conditions 8(C) and 8(F) may be exercised by the holder of the Global Certificate giving notice to the Principal Agent of the principal amount of Bonds in respect of which the relevant option is exercised and presenting the Global Certificate for endorsement or exercise within the time limits specified in Conditions 8(C) and 8(F).

Company’s Redemption

The redemption option exercisable by the Company in Conditions 8(B) and 8(D) may be exercised by the Company giving notice to the Bondholder within the time limits set out in and containing the information

required by those Conditions and Condition 8(I), except that the notice shall not be required to contain the serial numbers of Bonds drawn for redemption in the case of a partial redemption of Bonds and accordingly no drawing of Bonds for redemption shall be required.

Registration of Title

Certificates in definitive form for individual holdings of Bonds will not be issued in exchange for interests in Bonds in respect of which the Global Certificate is issued, except where either Euroclear or Clearstream, Luxembourg (or any alternative clearing system on behalf of which the Bonds evidenced by the Global Certificate may be held (the " the Alternative Clearing System ")) is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so.

Transfers

Transfers of interests in the Bonds will be effected through the records of Euroclear and Clearstream, Luxembourg and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants.

Trustee's Powers

In considering the interests of the holders of the Bonds while the Global Certificate is registered in the name of a nominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, (a) have regard to such information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of the Bonds and (b) consider such interests on the basis that such accountholders were the holders of the Bonds in respect of which this Global Certificate is issued.

Enforcement

For the purposes of enforcement of the provisions of the Trust Deed, the persons named in a certificate of the holder of the Bonds in respect of which the Global Certificate is issued shall be recognized as the beneficiaries of the trusts set out in the Trust Deed, to the extent of the principal amount of their interest in the Bonds set out in the certificate of the holder, as if they were themselves the holders of Bonds in such principal amounts.

Accountholders

For so long as any of the Bonds are represented by the Global Certificate and such Global Certificate is held on behalf of Euroclear and/or Clearstream, Luxembourg, each person who is for the time being shown in the records of Euroclear or Clearstream, Luxembourg as the holder of a particular principal amount of such Bonds (each an " Accountholder ") (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Bonds standing to the account of any person shall be conclusive and binding for all purposes) shall be treated as the holder of such principal amount of such Bonds for all purposes (including for the purposes of any quorum requirements of, or in the right to demand a poll at, meetings of the Bondholders) other than with respect to the payment of principal and premium and interest (if any) on such Bonds, the right to which shall be vested, as against the Company, solely in the holder of the Global Certificate in accordance with and subject to its terms and the terms of the Trust Deed. Each Accountholder must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for its share of each payment made to the holder of the Global Certificate.

EXCHANGE RATES

Fluctuations in the exchange rate between NT dollars and US dollars will affect the US dollar equivalent of the NT dollar price of the Shares on the TSE and, as a result, are likely to affect the market price of the Bonds.

Set forth below are the period-end spot exchange rates in effect between the NT dollar and the US dollar expressed in NT dollars per US dollar, for the period indicated.

Period-End	NT$ per US$1.00
1991	25.75
1992	25.40
1993	26.67
1994	26.29
1995	27.29
1997	27.49
1998	32.55
1999	32.20
1st Quarter	32.80
2nd Quarter	34.35
3rd Quarter	34.37
4th Quarter	32.20
2000
1st Quarter	33.14
2nd Quarter	32.30
3rd Quarter	31.79
4th Quarter	31.40
2001
1st Quarter	30.43
2nd Quarter	30.80
3rd Quarter	31.32
4th Quarter	33.08
2002
1st Quarter	34.71
2nd Quarter	33.56
3rd Quarter	34.92
4th Quarter	34.76
2003
1st Quarter	34.72
2nd Quarter	34.62
3rd Quarter	33.75
4th Quarter	33.98
2004
January	33.39
February	33.37
March	33.02
April	33.37
May	33.39
June	33.78

Source: Taipei Forex Inc.

The closing rate of exchange between the NT dollar and the US dollar on July 15, 2004 was NT$33.911 = US$1.00.

FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN THE ROC

The information presented in this section has been extracted from publicly available sources such as governmental websites (e.g. http://www.sfc.gov.tw and http://www.moea.gov.tw) which have not been prepared or independently verified by the Company, the Managers or any of their respective affiliates or advisors in connection with the offering of the Bonds. References to the Securities and Futures Commission (the "ROC SFC") herein include both the ROC SFC and the ROC Securities and Exchange Commission, its predecessor.

General

Historically, foreign investments in the securities market of Taiwan were restricted. However, commencing in 1983, the ROC government has from time to time enacted legislation and adopted regulations to make foreign investment in the Taiwan securities market possible. Initially, only overseas investment trust funds of authorized securities investment trust enterprises established in Taiwan were permitted to invest in the Taiwan securities market. Since January 1, 1991, qualified foreign institutional investors ("QFII") have been allowed to make investments in the Taiwan listed securities market. Since March 1, 1996, overseas Chinese, foreign institutional and foreign individual investors (other than QFII), called "general foreign investors", have been permitted to make direct investments in the Taiwan listed securities market. Since July 9, 2003 the ROC SFC has adopted various new rules which have the effect of removing the restrictions on investment amounts, the qualification requirements in terms of asset size and the inward and outward remittance period limits previously applicable to QFII. On September 30, 2003, the ROC SFC further revised the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, and eliminated the category of QFII and re-categorized foreign investors into four new categories: (1) "Off-Shore General Foreign Investors", (2) "On-Shore General Foreign Investors", (3) "Off-Shore Foreign Institutional Investors" and (4) "On-Shore Foreign Institutional Investors" in accordance with whether the investors are institutions or natural person, and whether or not they have a presence in the ROC.

Off-Shore Foreign Institutional Investors

Each Off-Shore Foreign Institutional Investor wishing to invest directly in the Taiwan securities market is required to register with the TSE and apply for approval from the Central Bank of China. The registration with the TSE and the application to the Central Bank of China require, among other things:

the appointment of a local agent and custodian;
proof of identification;
other documents required by the ROC SFC.

Off-Shore Foreign Institutional Investors having registered with the Taiwan Stock Exchange may apply to invest without amount limit. Capital remitted into Taiwan for investments in the Taiwan securities market may be repatriated at any time. Off-Shore Foreign Institutional Investors and Off-Shore General Foreign Investors (see below) may engage in New Taiwan dollar denominated interest rate derivatives trading (including interest rate forward, interest rate swaps and interest rate options), provided that the trading are limited to spot positions of government bonds, time deposits and money market instruments held by them.

Off-Shore General Foreign Investors

Off-Shore General Foreign Investors may generally invest in TSE-listed securities or securities traded on the GTSM up to a limit of US$5 million, after registering with the TSE.

On-Shore General Foreign Investors and On-Shore Foreign Institutional Investors

On-Shore General Foreign Investors and On-Shore Foreign Institutional Investors having registered with the TSE may apply to invest without amount limit, and without making an application to the Central Bank of China.

Foreign Ownership Limitations

Except for certain limits imposed by laws and regulations, there are no limits on the foreign ownership in a TSE listed company or a GTSM traded company.

Foreign Investment Approval

Other than:

Off-Shore Foreign Institutional Investors;
Off-Shore General Foreign Investors; and
investors in overseas convertible bonds and depositary receipts,

foreign investors who wish to make direct investments in the shares of ROC companies may submit a "foreign investment approval" application to the Investment Commission of the Ministry of Economic Affairs of Taiwan or other governmental authority. Foreign investors who obtain this approval will be subject to the Law Governing Investments by Foreigners. The Investment Commission or other governmental authority reviews each foreign investment approval application and approves or disapproves the application after consultation with other governmental agencies. Any non-ROC person possessing a foreign investment approval may repatriate annual net profits, interests and cash dividends attributable to an approved investment. Stock dividends, investment capital and capital gains attributable to the investment may be repatriated with approval of the Investment Commission or other governmental authority.

In addition to the general restrictions against direct investment by non-ROC persons in ROC companies, non-ROC persons are currently prohibited from investing in prohibited industries in Taiwan, which are listed under a Negative List, as amended by the Executive Yuan from time to time. The prohibition on direct foreign investment in the prohibited industries in the Negative List is absolute and provides no specific exemption from its application. Under the Negative List, some industries are restricted so that non-ROC persons may directly invest only up to a specified level and with the specific approval of the relevant government authority. The Company is not in a restricted industry under the Negative List.

Depositary Receipts

In April 1992, the ROC SFC began allowing ROC companies listed on the Taiwan Stock Exchange to sponsor the issuance and sale of depositary receipts evidencing depositary shares. In December 1994, the Ministry of Finance began allowing companies whose shares are traded on the GTSM also to sponsor the issuance and sale of depositary receipts evidencing depositary shares. Approvals for these issuances are still required. On October 24, 2002, the ROC SFC began allowing public companies that are not listed on the Taiwan Stock Exchange and the GTSM to sponsor the issuance and sale of depositary receipts by way of private placement outside the ROC.

No deposits of shares may be made in a depositary receipt facility and no depositary receipts may be issued against deposits without specific ROC SFC approval, unless they are:

stock dividends;
free distributions of shares.
due to the exercise by depositary receipt holders of their preemptive rights in the event of capital increases for cash, or
due to the purchase by depositary receipt holders, directly or through the depositary, of shares on the Taiwan Stock Exchange or the GTSM for deposit in the depositary receipt facility. In this event, the total number of depositary receipts outstanding after an issuance cannot exceed the aggregate number of:
the number of issued depositary receipts previously approved by the ROC SFC; and

the number of depositary shares created from stock dividends, free distributions of shares and right offerings. These issuances of depositary receipts may only be made to the extent that previously issued depositary receipts have been cancelled and the shares have been sold on the Taiwan Stock Exchange or the GTSM.

For depositary shares, immediately after the issuance of depositary receipts, a holder may request the depositary to cause the underlying shares to be sold in Taiwan or to withdraw the shares and deliver the shares to the holder.

A depositary receipt holder (who has not registered as an Off-Shore Foreign Institutional Investor or an Off-Shore General Foreign Investor) wishing to withdraw shares represented by depositary receipts in order to hold the shares is required to register as an Off-Shore Foreign Institutional Investor or an Off-Shore General Foreign Investor (as appropriate) and then appoint a qualified local agent to, among other things, open a securities account with a local securities brokerage firm, remit funds, exercise shareholders' rights and perform such other actions as may be designated by such depositary receipt holder. If a depositary receipt holder has already been registered as an Off-Shore Foreign Institutional Investor or an Off-Shore General Foreign Investor, the shares held in the special securities trading account opened by the depository receipt holder for withdrawing the shares represented by the GDRs can be transferred into the general securities trading account upon filing an application with the appropriate government agency. In addition, the withdrawing holder is also required to appoint a custodian bank to hold the securities and cash proceeds in safekeeping, make confirmations, settle trades and report all relevant information. Without making this appointment, opening these accounts, and obtaining prior approval of the TSE, the withdrawing holder would be unable to subsequently hold or sell the shares withdrawn from a depositary receipt facility on the Taiwan Stock Exchange or otherwise. The withdrawing holder is also required to appoint a tax guarantor for filing tax returns and making tax payments. A citizen of the PRC or an entity organized under the laws of the PRC is not permitted to withdraw or hold the shares.

A depositary may without obtaining further approvals from the Central Bank of China or any other governmental authority or agency of Taiwan, convert New Taiwan Dollars from:

the proceeds of the sale of shares represented by depositary receipts or received as stock dividends of the shares and deposited into the depositary receipt facility; or
cash distributions received,

into other currencies, including U.S. Dollars. In addition, a depositary may convert into NT Dollars inward remittances of payments for purchases of underlying shares for deposit in the depositary facility against the creation of depositary shares. A depositary, must obtain foreign exchange approval from the Central Bank of China on a payment-by-payment basis for conversion into foreign currencies from the proceeds from the sale of subscription rights for new shares. It is expected that the Central Bank of China will grant this approval as a routine matter. A depositary receipt holder may, after becoming a holder of shares, convert New Taiwan Dollars into other currencies from proceeds from the sale of any underlying shares withdrawn from the depositary receipt facility. Proceeds from the sale of the underlying shares withdrawn from the depositary receipt facility may be used for reinvestment in securities listed on the Taiwan Stock Exchange or traded on the GTSM. These reinvestments will need to comply with the limitations and restrictions, which apply to Offshore Foreign Institutional Investors or Off-Shore General Foreign Investors discussed above.

Overseas Corporate Bonds

Since 1989, the ROC SFC has approved a series of overseas corporate bond issues by ROC companies listed on the Taiwan Stock Exchange and traded on the GTSM. Under current ROC laws and regulations, these overseas corporate bonds (if their terms so provide) may be held or converted by non-ROC persons, other than mainland Chinese persons, into shares of ROC companies or, with ROC SFC approval, may be converted into depositary receipts issued under the sponsorship of the same Taiwanese company or the shares of other companies, in the case of exchangeable bonds. Public issuing companies may issue corporate debt in offerings outside Taiwan.

A non-Taiwanese converting bondholder when exercising conversion right to convent the bonds, need to

comply with the limitations and restrictions which apply to Off-Shore Foreign Institutional Investors or Off-Shore General Foreign Investors discussed above.

Exchange Controls

Taiwan's Foreign Exchange Control Statute and regulations provide that all foreign exchange transactions must be executed by banks designated by the Ministry of Finance and by the Central Bank of China to handle foreign exchange transactions. Current regulations favor trade-related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters. All foreign currency needed for the importation of merchandise and services may be purchased freely from the designated foreign exchange banks.

Aside from trade-related foreign exchange transactions, ROC companies and residents may, without foreign exchange approval, remit to and from Taiwan foreign currencies of up to US$50 million, or its equivalent, and US$5 million, or its equivalent, respectively, each calendar year. These limits apply to remittances involving a conversion between New Taiwan Dollars and U.S. Dollars or other foreign currencies. In addition, all private enterprises are required to register all medium and long-term foreign debt with the Central Bank of China.

In addition, a foreign person may, subject to certain requirements but without foreign exchange approval, remit to and from Taiwan foreign currencies of up to US$100,000 per remittance if the required documentation is provided to the Taiwan authorities. This limit applies only to remittances involving a conversion between New Taiwan Dollars and U.S. Dollars or other foreign currencies.

DESCRIPTION OF THE COMMON STOCK

The following is a summary of certain provisions of the Company's Articles of Incorporation (the "Articles"), the ROC Securities and Exchange Law (the "Securities and Exchange Law") and regulations promulgated thereunder and the Company Law of the ROC, all as currently in effect.

General

As of April 13, 2004, the Company's authorized share capital is NT$2,500,000,000, consisting of 250,000,000 Shares with a par value of NT$10 per Share. As of April 13, 2004, the Company’s issued and paid-in capital is NT$1,918,092,570, consisting of 191,809,257 common shares of the Company in registered form which are issued and fully paid for.

The Company as of April 13, 2004 has outstanding euro convertible bonds (issued in 2003) in the principal amount of US$32.7 million. As of March 31, 2004, the applicable conversion price on the euro convertible bonds is NT$58.0.

Other than the above-described convertibles bonds and the Bonds offered hereby, the Company does not have any outstanding convertible debt securities, exchangeable debt securities or debt securities with warrants attached.

The Company has in place three stock option plans for its employees. As of April 13, 2004, all options available for granting under the first, second and third stock option plan, representing 5,495,000, 1,800,000, and 8,000,000 Shares, were granted at per share exercise price of NT$34.8, NT$34.4, and NT$61.5 respectively, subject to anti-dilution adjustments in accordance with terms and conditions of the stock option plan. These options are exercisable from March, 2004, December, 2004, and December 2005 respectively. As of April 13, 2004, a total of 2,415,000 Shares were issued by the Company as result of the exercise of the employee stock option.

The Company Law provides that any change in the issued share capital of a company requires approval of the Board of Directors. In the event that the issuance of any new shares will result in any change in the authorized share capital of the Company, in accordance with the Company Law, the Company must amend the Articles and obtain shareholders' approval at a shareholders' meeting. The Company must also obtain the approval of, or submit a registration to, the ROC SFC and Ministry of Economic Affairs for the issuance of any new shares. The approval for the issuance of new shares for the conversion of the Bonds has been obtained by the Company.

Dividends

Under the Company Law, except under certain limited circumstances, a ROC company is not permitted to distribute dividends or make any other distributions to shareholders at any time other than when it is generating net profits ("Earnings"). Before distributing a dividend or making any other distribution to shareholders from Earnings, a company must first apply such Earnings to its losses suffered in previous years, if any, pay all outstanding taxes and set aside the legal reserve referred to below.

Subject to compliance of the above requirements, following approval of the financial statements for the preceding fiscal year by the shareholders in an annual shareholders' meeting, dividends are, unless otherwise stipulated under that company's articles of incorporation, distributed in proportion to the number of shares owned by each shareholder as listed on the register of shareholders as at the relevant record date determined by the Board of Directors ("Annual Dividends"). Annual Dividends may be distributed either in cash or in the form of common stock or a combination thereof. The ratio between any cash dividend and stock dividend is proposed by the Board of Directors and is determined by the shareholders at a shareholders' meeting. The stock dividend of the Company is distributed to the shareholders by the Company’s share registrar office in Taipei ("Share Registrar") while the cash dividend is distributed by paying agents appointed by the Company for the specific distribution to the shareholders listed on the Share Registrar.

Distribution of Additional Shares

In addition to dividends paid out of Earnings of a company, the Company Law also permits a company to make distributions to shareholders in the form of additional shares from reserves (including its legal reserve referred

to above, any special reserve and capital reserve). However, the capitalized portion payable out of a company's legal reserve is limited to 50 percent of the total accumulated legal reserve, and such capitalization can only be effected when and to the extent that the accumulated legal reserve exceeds 50 percent of the paid-in capital of such company. (For information as to ROC taxes on cash and stock dividends, see the section headed "Taxation - ROC Taxation of Non-Residents" below.)

Pre-emptive Rights and Issue of Additional Common Stock

The Company Law provides that between 10 percent and 15 percent of any new issue of shares of capital stock sold for cash must be offered first to the issuing company's employees. In addition, the Securities and Exchange Law and the relevant securities regulations require that, if a public company listed on the TSE or GTSM intends to offer new shares for cash, at least 10 percent of such issue must be offered to the public except under certain circumstances or when exempted by the ROC SFC. This percentage can be increased by a resolution passed at a shareholders' meeting, thereby reducing the number of new shares subject to the pre-emptive rights of existing shareholders. Unless the percentage of shares to be offered to the public is increased by shareholders, existing shareholders who are listed on the shareholders' register as of the record date have a pre-emptive right to acquire the remaining 75 to 80 percent of the issue in proportion to their existing shareholdings. The shares not subscribed for by the employees and shareholders at the expiration of the period for the exercise of their rights may be freely offered by the Company (subject to ROC law) to the public or specified person through the arrangement of the Board of Directors. The Preemptive rights do not apply to shares issued upon conversion of convertible bonds or exercise of warrants or stock options.

Meetings of Shareholders

The general meeting of shareholders of the Company is usually held in the Company's head office in Taoyuan, Taiwan, as determined by the Board of Directors, within six months after the end of each calendar year. Extraordinary meetings of shareholders may be convened by resolution of the Board of Directors whenever they consider it necessary, and they must do so if requested in writing by shareholders holding not less than three percent of the paid-in capital who have held these shares for more than a year. Extraordinary meetings of shareholders may also be convened by a Supervisor of the Company when necessary. Notice in writing of general and extraordinary shareholders' meetings stating the place, time and purpose thereof must be dispatched to each shareholder of the Company at least 30 days and 15 days, respectively, prior to the date set for the meeting.

Voting Rights

A holder of common stock has one vote for each share of common stock. With respect to election of Directors and Supervisor by shareholders, it is carried out on a cumulative voting basis.

Notwithstanding the above, in order to approve certain major corporate actions, including any amendment to the Articles (which is required for, inter alia , any increase in authorized share capital), the dissolution or amalgamation of a company, the entering into, amendment or termination of any contract for the lease of the Company's business in whole, or for entrusted business or for regular joint operation with third parties, the transfer of all or an important part of its business or its properties, the taking over of the whole of the business or properties of any other company which would have a significant impact on the acquiring company's operations, or the distribution of any stock dividend, the Company Law provides that a resolution has to be passed at a meeting of the shareholders with a quorum of holders of at least two-thirds of all issued and outstanding common stock at which the majority present vote in favor thereof. Alternatively, in the case of a public company, such as the Company, such a resolution may be approved by the holders of at least two-thirds of the common stock represented at a meeting of shareholders with a quorum of holders of at least a majority of issued and outstanding common stock.

A shareholder may be represented at a general meeting or an extraordinary meeting by proxy. A valid proxy form must be delivered to the Company at least five days prior to the date fixed for the general or extraordinary meeting. Voting rights attaching to the shares exercised by proxy shall be subject to ROC proxy regulation.

Registration of Shareholders and Record Dates

The Company maintains the register of shareholders of the Company at its Share Registrar in Taipei, Taiwan

and enters transfers of common stock in the register of shareholders upon presentation of the certificates in respect of the common stock transferred accompanied by other required documents.

As mentioned above, the record date for an Annual Dividend will be determined and announced by the Company. For the purpose of determining the shareholders of common stock entitled to Annual Dividends and other rights pertaining to the common stock, the Company Law provides that, for a public company, the register of shareholders is closed for a period of 60 days, 30 days and five days immediately before each date of general shareholders' meeting, each extraordinary shareholders' meeting and the record date, respectively.

Annual Financial Statements

Under the Company Law, 10 days before the ordinary shareholders' meeting, the Company's annual audited financial statements must be available at the principal office of the Company for inspection by the shareholders.

Transfers of Common Stock

Under the Company Law, the transfer of common stock (in registered form) is effected by endorsement and delivery of share certificates. In order to assert shareholders' rights against the Company, the transferee must have his name and address registered on the Company's register of shareholders. Shareholders are required to register their respective specimen seal or chop with the Company. The settlement of trading of the common stock is normally carried out on the book-entry system maintained by Taiwan Securities Central Depository Co., Ltd.

Acquisition by the Company of its own Common Stock

Except as permitted under the ROC Company Law and the ROC Securities and Exchange Law, the Company cannot acquire its own common stock and any common stock acquired by the Company must be sold by the Company at the current market price within six months after its acquisition.

Under an amendment to the Securities and Exchange Law which took effect on 21 July 2001, a company whose shares are listed on the TSE or GTSM may, pursuant to a board resolution adopted by a majority consent at a meeting attended by more than two-thirds of the directors and pursuant to the procedures prescribed by the ROC SFC, purchase its shares on the TSE or GTSM or by a tender offer for the following purposes:

for transfer of shares to its employees;
for conversion into shares from bonds with warrants, preferred shares with warrants, convertible bonds, convertible preferred shares or certificates of warrants issued by the company; and
for maintaining its credit and its shareholders' equity; provided that the shares so purchased shall be cancelled thereafter.

The total shares purchased by the company shall not exceed 10 percent of its total issued and outstanding shares. In addition, the total amount for purchase of the shares shall not exceed the aggregate amount of the retained earnings, the premium from stock issues and the realized portion of the capital reserve.

The shares purchased by the company shall not be pledged or hypothecated. In addition, the company may not exercise any shareholders' rights attaching to such shares. The Company's affiliates (as defined in Article 369-1 of the ROC Company Law), directors, supervisors, managers and their respective spouses and minor children and/or nominees are prohibited from selling the shares of the company held by them during the period in which the company purchases its shares.

Effective from November 2001 under the revised Company Law, a company's subsidiary may not acquire the shares of its parent company. This restriction does not affect any acquisition occurring prior to November 14, 2001.

Liquidation Rights

In the event of the liquidation of the Company, the assets remaining after payment of all debts, liquidation

expenses, taxes and distributions to holders of preference shares, if any, will be distributed pro rata to the shareholders in accordance with the Company Law.

Notification to shareholders

Information concerning shareholders is published in the local newspapers and a notice is also sent to the shareholders according to the records maintained in the Company's share register. For shareholders holding less than 1000 shares of a company, an individual notice for shareholders is not required provided that public notice is published. The Company is responsible for the handling of any financial services with respect to the Company's Shares.

THE SECURITIES MARKET OF THE ROC

The information presented in this section has been extracted from publicly available sources such as governmental websites (e.g. http://www.sfc.gov.tw and http://www.moea.gov.tw), the Taiwan Stock Exchange and the GreTai Securities Market websites (http://www.tse.com.tw and http://www.gtsm.com.tw), which have not been prepared or independently verified by the Company, and the Company accepts responsibility only for accurately extracting information from such sources.

In 1960, the ROC government established the Securities and Exchange Commission to supervise and control all aspects of the securities market. The Securities and Exchange Commission of the ROC was restructured in early 1997 and its name was changed to the Securities and Futures Commission (the "ROC SFC", which reference herein shall include the ROC Securities and Exchange Commission). In the 1970s and the early 1980s, the ROC government implemented a number of steps designed to upgrade the quality and importance of the ROC securities market, such as encouraging listing on the TSE and establishing an over-the-counter market. In the mid-1980s, the ROC government began to revise its laws and regulations in a manner designed to facilitate the gradual internationalization of the ROC securities market.

The Taiwan Stock Exchange

In 1961, the ROC SFC, working together with private interests, established the TSE to provide a marketplace for securities trading. The TSE is a corporation owned by government-controlled and private banks and enterprises. The TSE is independent of entities transacting business through it, each of which pays a user's fee. Subject to limited exceptions, all transactions in listed securities by brokers, traders and integrated securities firms (firms which are permitted to combine the activities of brokerage, dealing and underwriting) must be made through the TSE.

The TSE commenced operations in 1962 and during the remainder of the 1960s grew at a slow pace, largely due to lack of experience amongst issuers and investors and an unwillingness on the part of ROC businesses to offer their shares to the public. During the early 1980s, the ROC SFC more actively encouraged new listings on the TSE and the number of listed companies grew from 119 in 1983 to 670 as at February 29, 2004. As at February 29, 2004, the total market value of shares listed on the TSE was approximately NT$14,759 billion.

The instruments traded on the TSE have primarily been limited to shares and bonds. However, recent legislative revisions and the present attitude of the ROC SFC regarding liberalization of the securities regulations have encouraged some innovation. In 1988, the ROC SFC permitted the issue of the ROC's first convertible bonds (such bonds being convertible at the option of the bondholders into shares of companies owned by the Company). Since 1989, there have been offerings of domestic convertible bonds and convertible preferred shares. In addition, beneficiary units evidencing beneficiary interests in closed-end investment funds and Dragon Bonds issued by Asia Development Bank are also listed on the TSE.

In the absence of special regulatory approval, only ROC companies are permitted to list their securities on the TSE. The ROC SFC has promulgated regulations that would permit foreign issuers to list their equity securities directly on the TSE or through the use of Taiwan depositary receipts. The TSE has established specific requirements for listing based on the duration of corporate existence, the amount of capital, profitability and dispersion of shareholdings.

For certain technology companies and businesses for the promotion of national economic development, special listing requirements will apply.

The GreTai Securities Market

To complement the TSE, an over-the-counter, or OTC, market was established in September 1982 on the initiative of the ROC SFC to encourage trading of securities of companies that do not qualify for listing on the TSE. The OTC market was limited to unlisted equity securities, bank and corporate bonds and debentures and government bonds. As trading volume on the OTC market was minimal, the GTSM established in 1994 to take over the previous OTC market. Since the GTSM instituted a reformed trading system in 1995, the trading volume on the GTSM has grown more rapidly. The GTSM has used the TSE's method of trading as a model, and aims to reform the GTSM trading to the point where few differences exist between the two markets systems. As of February 29, 2004, 436 companies had equity securities listed on the GTSM. As of

February 29, 2004, the total market capitalization of companies with equity securities listed on the GTSM was 652.57 billion. In addition, the Emerging Stock Trading System of the GTSM was established on January 1, 2002 on the initiative of the ROC SFC to encourage trading of securities of companies that are public companies but not qualified for listing on the TSE or the GTSM.

Price Limits, Commissions, Transaction Tax and Other Matters

In order to reduce market volatility, the TSE has placed limits on block trading and on the range of daily price movements. Transactions that involve 500 trading lots (500,000 shares) or more must be registered and executed pursuant to certain TSE guidelines. Fluctuations in the price of stocks traded on the TSE are subject to a limit of seven percent above and below the previous day's closing price (or reference price set by the TSE if the previous day's closing price is not available because of lack of trading activity) in the case of equity securities and five percent in the case of debt securities. Over the last few years, the limit on the price movements of equity securities has fluctuated, moving from five percent to three percent following the 1987 market crash, then back to five percent and finally, in October 1989, from five percent to the current level of seven percent. The ROC SFC has indicated that the limits on share price movements may be further relaxed or abolished entirely.

All shares have a par value of NT$10 and trade in board lots of 1,000 shares. Although odd-lot trading may be conducted on the TSE, delays are occasionally experienced in respect of such trading.

Effective from July 1, 2000, the brokerage commission may be any rate not exceeding 0.1425 percent of the transaction price. A securities transaction tax, currently levied at the rate of 0.3 percent of the transaction price for shares is payable by the seller of securities and a tax at the rate of 0.1% of the transaction price is payable by the seller of debt securities other than government bonds. Such securities transaction taxes are withheld at the time of the transactions giving rise to such taxes. According to the amended Statute for Upgrading Industries effective as of February 1, 2002, no securities transaction tax will be imposed on the transfer of corporate bonds and financial debentures until December 31, 2009.

Regulation and Supervision

The ROC SFC has been under the jurisdiction of the Ministry of Finance since 1981. The ROC SFC has extensive regulatory authority over companies listed on the TSE, companies whose shares are traded in the GTSM and unlisted public companies. Such companies are generally required to obtain approval from, or registration with, the ROC SFC for all securities offerings. The ROC SFC has promulgated regulations requiring, unless otherwise exempted, periodic reporting of financial and operating information by all public companies. In addition, the ROC SFC is responsible for the establishment of standards for financial reporting and carries out licensing and supervision with respect to the other participants in the ROC securities market. The ROC SFC has responsibility for implementation of the ROC Securities and Exchange Law and for overall administration of governmental policies in the ROC securities market. It has extensive regulatory authority over the offering, issuing and trading of securities. In addition, the ROC Securities and Exchange Law specifically empowers the ROC SFC to promulgate rules under certain circumstances.

The ROC Securities and Exchange Law prohibits market manipulation. It permits a company to recover certain short-swing trading profits made through purchases and sales within six months by directors, managerial personnel, supervisors and stockholders, together with their spouses, minor children and nominees, holding 10 percent or more of the shares of the company. The ROC Securities and Exchange Law prohibits trading by "insiders" based on non-public information that materially affects share price movement. Pursuant to the ROC Securities and Exchange Law, the term "insiders" includes directors, supervisors, managers and stockholders having shareholding of 10 percent or more, together with their spouses, minor children and nominees, or any person who has learned such information due to an occupational or controlling relationship with the issuing company and any person who has learned such information from any of the foregoing. Sanctions include prison terms. In addition, damages may be awarded to persons injured by the transaction.

The ROC Securities and Exchange Law also imposes criminal liability on certified public accountants and lawyers who make false certifications in their examination and audit of a company's contracts, reports and other evidentiary documents that are related to securities transactions. ROC SFC regulations require that financial reports of public companies be audited by accounting firms consisting of at least three certified public accountants and be signed by at least two certified public accountants.

The ROC Securities and Exchange Law also provide for, amongst other things, regulations relating to public offerings of securities; measures to strengthen the capital structure of issuers; civil liability for material misstatements or omissions made by issuers; more stringent regulation of the securities activities of officers, supervisors, directors and major stockholders of issuers; regulations regarding tender offers; and a significant expansion of the prohibitions against insider trading, including the imposition of treble civil damages and criminal sanctions.

The ROC SFC does not have criminal or civil enforcement powers under the ROC Securities and Exchange Law. Criminal actions may be pursued only by prosecutors. Under ROC law, civil actions may only be brought by plaintiffs who assert that they have suffered damages. The ROC SFC is directly empowered to curb abuses and violations by securities firms of applicable laws and regulations only through administrative measures.

In addition to providing a market for securities trading, the TSE has primary responsibility for reviewing applications by ROC issuers to list securities on the TSE. The ROC SFC reviews all securities offerings by listed companies. If issuers of listed securities violate relevant laws and regulations or encounter significant difficulties, the TSE may, with the approval of the ROC SFC, delist securities of such issuers.

ROC TAXATION OF NON-RESIDENTS

Prospective investors should consult their own advisers concerning the tax consequences of an investment in Bonds or Shares:

The following is a summary under present law of the principal ROC tax consequences of the ownership and disposition of Bonds and Shares to a Non-Resident Individual or Non-Resident Entity that holds Bonds or Shares (each a "Non-ROC Holder"). As used in the preceding sentence, a "Non-Resident Individual" is a foreign national individual who owns Bonds or Shares and is not physically present in the ROC for 183 days or more during any calendar year and a "Non-Resident Entity" is a corporation or a non-corporate body that owns Bonds or Shares and is organized under the laws of a jurisdiction other than the ROC and has no fixed place of business or other permanent establishment in the ROC. Prospective purchasers of Bonds should consult their own tax advisers concerning the tax consequences of owning Bonds or Shares in the ROC and any other relevant-taxing jurisdiction to which they are subject.

Premium and Interest

Payments of premium or interest (if any) on a Bond to a Non-ROC Holder are subject to ROC withholding tax, currently at a rate of 20% at the time of payment. The Company has agreed to gross-up payment to Bondholders for such withholding tax on the payments of premium or interest (if any). See "Terms and Conditions of the Bonds - Taxation".

Conversion

ROC law currently provides no specific provisions regarding the ROC income tax consequences of a conversion of Bonds into Shares. Without further clarification from the ROC tax authorities, it is impossible to conclude definitively that the conversion of Bonds into Shares will not be deemed as taxable capital gain event, or subject to additional interest income (subject to the 20 percent withholding tax) or other ROC taxes. Transfers of Bonds by Non-ROC Holders are regarded as transactions outside the ROC and thus any gains derived from such transfers are not subject to ROC income tax.

There is no ROC transfer, stamp, issue or registration tax imposed on the issuance of Shares upon conversion of the Bonds.

Dividends on the Shares

Dividends (whether in cash or shares) declared by the Company out of retained earnings and paid out to holders of Shares are normally subject to ROC income tax collected by way of withholding at the time of distribution. The current rate of withholding for non-residents is 30% for a Non-Resident Individual and 25% for a Non-Resident Entity of the amount of the distribution in the case of cash dividends or the par value of the share distributed in the case of stock dividends. However, the rate of withholding is 20% if the Non-ROC Holder obtains foreign investment approval pursuant to the Statute for Foreigner's Investment or the Statute for Overseas Chinese's Investment. Distributions of stock dividends declared by the Company out of capital reserves are not subject to withholding tax. Because the issue of the Bonds has been approved by the relevant ROC competent authorities, for Non-ROC Holders, dividends on the Shares derived from the conversion of the Bonds are subject to withholding tax of 20%.

Capital Gains

Under current ROC law, gains realized upon the sale or other disposition of securities are exempt from ROC income tax. The losses from disposition of securities likewise may not be used to offset income. This exemption will apply to a sale or other disposition of the Bonds or the Shares.

Securities Transaction Tax

The ROC government imposes a securities transaction tax that will apply to sales of Shares. The transaction tax, which is payable by the seller, is generally levied on sales of shares at the rate of 0.3 percent of the sales proceeds. However, according to the amended Statue of Upgrading Industries effective on February 1, 2002,

no transaction tax will be imposed on the transfer of corporate bonds and financial debentures until December 31, 2009.

Estate Taxation and Gift Tax

ROC estate tax is payable on any property within the ROC of a deceased Non-Resident Individual, and ROC gift tax is payable on any property within the ROC donated by a Non-Resident Individual. Estate tax is currently imposed at rates ranging from two percent of the first NT$600,000 to 50 percent of amounts in excess of NT$100,000,000. Gift tax is imposed at rates ranging from four percent of the first NT$600,000 donated to 50 percent of amounts donated in excess of NT$45,000,000. Under ROC estate and gift tax laws, because the issuer is a ROC entity, the Bonds and Shares will be deemed to be located in the ROC without regard to the location of the owner.

Tax Treaty

At present, the ROC has income tax treaties with Australia, Gambia, Indonesia, Macedonia, Malaysia, New Zealand, The Netherlands, Singapore, South Africa, Vietnam, Swaziland and the United Kingdom. It is unclear whether a Non-ROC Holder will be considered to own Bonds or Shares for the purposes of such treaties. Accordingly, a holder of Bonds or Shares who is otherwise entitled to the benefit of a treaty should consult its own tax advisers concerning eligibility for benefit under the treaty with respect to the Bonds or the Shares.

Tax Reform

In order to increase Taiwan's competitiveness, an amendment to the ROC Income Tax law ("Amendment") was enacted on January 1, 1998, to integrate the corporate income tax and the shareholder dividend income with the aim of eliminating the double taxation effect for resident shareholders of ROC companies. Under the Amendment, a 10 percent retained earnings tax will be imposed on a company for its after-tax earnings generated after January 1, 1998, which are not distributed in the following year. The retained earnings tax so paid will further reduce the retained earnings available for future distribution. When the Company declares dividends out of those retained earnings, a maximum amount of up to 10 percent of the declared dividends will be credited against the 20 percent withholding tax imposed on the Non-ROC Holders of the Shares.

SUMMARY OF MATERIAL DIFFERENCES BETWEEN ROC GAAP AND US GAAP

Certain of the differences between ROC GAAP and U.S. GAAP, including but not limited to, the accounting for derivatives and impairment of long-term assets and bonuses to employees, directors and supervisors, could have a material impact on reported net income and stockholders’ equity. Given the number and nature of differences between ROC GAAP and U.S. GAAP, users of ROC GAAP financial statements should not assume that such financial statements are comparable to financial statements prepared in accordance with U.S. GAAP.

Our financial statements are prepared and presented in accordance with ROC GAAP, which differs in certain material respects from U.S. GAAP. Certain material differences between ROC GAAP applicable to us and U.S. GAAP are summarized below. The summary should not be taken as inclusive of all ROC GAAP/U.S. GAAP differences. Additionally, no attempt has been made to identify all disclosure, presentation or classification differences that would affect the manner in which events and transactions are presented in the financial statements or notes thereto. Further, no attempt has been made to identify future differences between ROC GAAP and U.S. GAAP as a result of prescribed changes in accounting standards. Regulatory bodies that promulgate ROC GAAP and U.S. GAAP have significant projects ongoing that could affect future comparisons such as this one.

If we were to prepare a complete reconciliation between ROC GAAP and U.S. GAAP additional accounting and disclosure differences might have come to our attention.

Subject Presentation of Non- Consolidated Financial Statements Consolidation	ROC GAAP Under ROC GAAP requirements, non-consolidated financial statements of a company are presented as the primary financial statements and consolidated financial statements as supplemental financial statements. Under ROC GAAP, a company is required to include in its annual consolidated financial statements only those subsidiaries that are directly or indirectly more than 50% owned. For directly owned subsidiaries (i) with total assets and operating revenues less than 10% of the company’s non-consolidated total assets and operating revenues, (ii) which are in a negative equity position which is considered to be other than temporary and the company did not guarantee the obligations of the subsidiary or commit to provide additional financial support, or (iii) with business activities which differ from that of the company, the company has the option of whether or not to consolidate such subsidiaries. For purposes of applying the above test, the amounts are determined on the basis of each respective subsidiary’s non-consolidated financial statements. Under ROC SFC requirements, beginning in 1995, if the combined revenues or total assets of all non-consolidated subsidiaries exceed 30% of the company’s nonconsolidated total assets and operating revenues,	US GAAP
		Under U.S. GAAP, parent- company-only non-consolidated financial statements are not allowed to be presented as the primary financial statements for any period. Under U.S. GAAP, consolidation of majority owned subsidiaries is required when the parent controls the subsidiary, which is generally indicated by ownership of more than 50% of voting shares of the subsidiary. However, control can be overcome by parties having significant participating right over the activities of the subsidiary.

Subject Investment in Debt and Equity Securities of Less than 20%	ROC GAAP then each individual subsidiary with total assets or operating revenues greater than three percent of the company’s respective non-consolidated amounts shall be consolidated. Such subsidiaries shall be included in the consolidated financial statements thereafter, unless the percentage of the combined total assets or operating revenues for all such subsidiaries decreases to less than 20% of the company’s respective non-consolidated amount. However, a company is not required to prepare interim financial statements on a consolidated basis. Instead, the company is only required to recognize investment income/ loss in majority-owned subsidiaries under the equity method. Short-term investments are stated at the lower of cost or market value, investments in debt securities are stated at the lower of amortized cost or market value and unrealized losses are reported in current earnings. Long-term investments in listed equity securities in respect of which the company does not exercise significant influences on operating and financial decisions of the investee are stated at the lower of cost or market value, and unrealized losses are deducted from shareholders’ equity. Investments in non-listed equity securities in respect of which the company does not exercise significant influences on operating and financial decisions of the investee are stated at cost, subject to the permanent impairment test. Shares dividends received are recorded as an increase in voting shares and not as investment income.	US GAAP
		Investments in marketable equity securities are classified in one of three categories: trading, held-to-maturity or available-for-sale. Marketable debt securities that are held principally for selling them in the near term or for speculative purposes should be classified as trading, while debt securities wherein the holder has the intent and ability to hold the securities to maturity can be classified as held-to-maturity. All debt securities not classified as either trading or held-to-maturity must be classified as available-for-sale. Marketable equity securities can be classified in one of the two categories: trading or available-for-sale. Marketable equity securities that are held principally for selling them in the near term or for speculative purposes are classified as trading, while any marketable equity securities not classified as trading will be classified as available-for- sale. Held-to-maturity securities are carried at amortized cost. Trading securities are carried at fair value which changes in fair value reported in current earning. Available-for-sale securities are carried at fair value with changes in fair value reported as a separate component of equity until the securities mature or are sold. Share dividends and interest received on marketable securities are recorded as investment income.

US GAAP

Subject ROC GAAP Equity Investments of at Under ROC GAAP, equity investments Least 20% where a company has voting rights of at least 20% are generally required to be accounted for under the equity method. However, when a company has not received the audited financial statements of the equity-method investee company in time to recognize its equity in the investee company’s income (loss), the company may delay the recognition of its equity in the investee company’s income (loss) until the subsequent year, unless the company meets the following criteria, in which case no delay in recognition is possible; (i) the beginning balance of the company’s long-term investment balance exceeds NT$50 million and 5% of the investor company’s paid-incapital; (ii) direct ownership of the investee company exceeds 30%, or direct ownership plus indirect ownership through directors, supervisors, and management exceeds 50%; and (iii) the investor company is one of the top three shareholders of the investee company or the investee company’s chairperson or general manager was appointed by the investor company. Under ROC GAAP, when an investee issues additional shares and the investor’s ownership interest changes as a result, any resulting difference between the investor’s investment balance and its proportionate share of the investee’s net equity is adjusted to investment account with an offsetting entry in investor’s capital reserve or retained earnings. Upon subsequent disposition of the investment, amounts previously recorded to capital reserve or retained earnings relating to the respective will be reversed and recorded as part of the gain or loss recorded on disposal. With respect to intercompany transactions between an investor company and an unconsolidated investee affiliate, ROC GAAP provides that any resulting profit on such transactions be eliminated in the investor company’s financial statements. In general, net intercompany profit on such transactions is deferred and offset against the long-term investment account, with the deferred net intercompany profit amortized to

Under U.S. GAAP, the equity method of accounting is generally required for investments with an ownership percentage of greater than 20% but less than 50%, unless (i) the investment is considered temporary, or (ii) the investor does not possess the ability to exercise significant influence over the investee. There are no provisions which allow the investor company to delay recognition of its equity in the investee company’s income (loss). Under U.S. GAAP, when an investee issues additional shares at amount over/under the carrying value of the shares held by the investor, and the investor’s ownership interest decreases as a result of not fully subscribing to the issue, the resulting difference between the investor’s investment balance and its proportionate share of the investee’s net equity is adjusted to its investment account with an offsetting entry either to (i) gin or loss to record the deemed disposition of shares or (ii) paid-in capital. If an adjustment has been made to paid-in-capital transactions, U.S. GAAP would not permit the adjustment of such amounts on the subsequent disposition of all or a part of the adjustment. Under U.S. GAAP, the gross impact as well as the net intercompany transactions between an investor company and an unconsolidated investee affiliate are generally eliminated in the investor company’s financial statement. This elimination is either complete or partial to the extent of the investee affiliate.

Subject Bonuses to Employees, Directors and Supervisors Stock Dividends Gains on Disposition of Property, Plant and Equipment Capital Surplus Accounting for	ROC GAAP income over future periods based on the nature of the transaction which give rise to the deferred intercompany profit. According to ROC regulations and our articles of incorporation, a portion of distributable earnings should be appropriated as bonuses to employees, directors and supervisors. Bonuses to directors and supervisors are always paid in cash, while bonuses to employees may be granted in cash or shares or both. All of these appropriations, including stock bonuses, which are valued at par value of NT$10, are charged against retained earnings under ROC GAAP, after such appropriations are formally approved by the shareholders in the following year. Stock dividends are recorded as a reduction to retained earnings for the par value of the stock issued, and a like amount is recorded to the capital stock account. Gains on the dispositions of property, plant and equipment generated before 2001 are first credited to non-operating income and then transferred, after deducting the applicable income tax, to capital surplus in the applicable fiscal year. Starting 2001, the treatment of gains on disposition of property, plant and equipment is the same under both ROC GAAP and U.S. GAAP. Under ROC GAAP, the following items are treated as capital surplus: (a) premium on issuance of common stock; (b) prior to 2001, gain, net of applicable income tax, on disposal of properties; (c) donations in relation to capital transactions; (d) revaluation increment on properties; and (e) the value of the assets of a company acquired in a merger in excess of assumed liabilities and the consideration paid for shares of such company in connection with the acquisition. ROC Statement of Financial	US GAAP
		Under US GAAP, such bonuses and remuneration are charged against income. Shares issued as part of those bonuses are recorded at fair market value. However, since the amount and form of such bonuses are not finally determinable until the shareholders’ meeting in the subsequent year, the total amount of such bonuses is initially accrued based on management’s estimate of the number of shares to be issued, valued at par value. Any difference between the initially accrued amount and the fair market value of the bonuses upon the issuance of shares is recognized in the year of shareholder approval. Stock dividends are recorded as a reduction to retained earnings, based on the fair value of the stock issued, and alike amount is recorded to the capital stock and capital surplus accounts. Any gain on the dispositions of property, plant and equipment is classified within operating income under U.S. GAAP. Under U.S. GAAP, items (a) and (c) are the same as in ROC GAAP; item (b) is recorded as part of net income, which is then included as a component of retained earnings and items (d) and (e) are not permitted. Under U.S. GAAP, the annual pension

Subject Pensions Impairment of Long- Lived Assets and Long- Lived Assets to Be Disposed of Provision for Inventory Obsolescence and Devaluation	ROC GAAP Accounting Standards (SFAS) No. 18 “Accounting for Pensions”, is similar to U.S. SFAS No.87 and provides accounting regulations regarding an employer’s accounting for employee retirement plans, including pension of companies covered by the Labor Standards Law which require contribution of a percentage of wages and salaries costs to an independent fund. ROC SFAS No. 18 is effective for financial statements in the year ended December 31, 1995. In the year of adoption, certain additional disclosures are required related to pension-related assets and liabilities as determined pursuant to an actuarial valuation; however, net periodic pension cost is not calculated pursuant to an actuarial valuation until the year ended December 31, 1996, pension expense under ROC GAAP was generally calculated as a fixed percentage of total annual salaries and wages. ROC GAAP has no specific standards that address impairment of long-lived assets held and used by an entity. Normally such assets would be carried at cost less accumulated depreciation. Assets purchased for use in the business but not subsequently used for that purpose are generally recorded as idle assets and reclassified from fixed assets to other assets. There is a requirement to assess the net realizable value such that idle assets are not recorded at an amount in excess of net realizable value. A provision for inventory obsolescence when and devaluation is recorded when management determines that the market values of inventories are less than their cost basis. Under ROC GAAP, such provisions can be reversed in whole or in part if management further determines that the market values of inventories are	US GAAP
		provision is recognized in accordance with SFAS No.87. U.S. SFAS No.87 is substantially similar to ROC SFAS No. 18. However, the unrecognized transitional asset/liabilities balance, representing the initial difference between the projected benefit obligation and the fair value of the plan upon adoption of ROC SFAS No. 18, would be different under U.S. SFAS No. 87, as U.S. SFAS No. 87 would have been implemented prior to December 31, 1995. U.S. SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” requires entities to perform separate calculation for assets to be held and used to determine whether recognition of an impairment loss is required, and if so, to measure the impairment. If the sum of the expected future cash flows, undiscounted and without interest charges, is less than an asset’s carrying value, an impairment loss is recognized; if the sum of the expected future cash flows is greater than an asset’s carrying value, an impairment gain can not be recognized. Measurement of an impairment loss is based on the fair value of the asset. U.S. SFAS No.144 also requires that long-lived assets to be disposed of be reported at the lower of the carrying value or fair value less cost to sell. Under U.S. GAAP, provisions for inventory obsolescence and devaluation become a permanent to the carving amount of the specific inventory whose market values are less than their cost basis, as deemed by management. Obsolescence and devaluation provision adjustments are included as part of cost of goods sold

Subject Computer Software Developed or Obtained for Internal Use Zero Coupon Bonds Issued Derivative Financial Instrument Transactions	ROC GAAP greater than their cost basis. Under ROC GAAP, there is no specific accounting guideline related to costs of computer software developed or obtained for internal use. Under ROC GAAP, there are no specific rules requiring the imputation of interest costs on non-interest bearing debt. There are no definitive accounting standards under ROC GAAP that address accounting for derivative financial instruments such as interest rate or foreign currency option, futures or swap. Forward exchange transactions entered into as hedge for foreign-currency net assets or net liabilities are recorded in New Taiwan dollars at the spot rates on the date of each forward contract. The differences between spot rates and forward rates are amortized over the period of each forward contract and recognized as gains or losses. Year-end balances of forward exchange contracts are restated at prevailing exchange rates and the resulting adjustments are credited or charged to income. Exchange gains or losses on forward exchange transactions entered into as hedge for foreign-currency commitments are deferred as adjustments to transaction prices. If the adjusted transaction prices are over their market value, the exchange loss is recognized when it occurs.	US GAAP
		under U.S. GAAP, and cannot be reversed once they are recorded. US GAAP provides detailed guidance regarding the accounting treatment for internal-use software costs. American Institute of Certified Public Accountants Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for internal use”, specifies the requirements for the capitalization of computer software costs obtained or developed for internal use. Under U.S. GAAP, when debt is noninterest bearing or carries an unreasonable rate of interest, or when the cash value of the consideration received is different from the face amount of the debt, interest should be imputed at an appropriate rate and the debt recorded at its fair value. Under U.S. GAAP, accounting for derivative financial instruments is in large part determined by the purpose for which the instrument was entered into. In general, derivative financial instruments that are entered into for speculative or trading purposes (or which do not meet the criteria for accounting for such items as hedges), rather than to hedge exposures to risks, are accounted for at fair value with all gains and losses recognized currently in earning. Derivative financial instruments that (i) are entered into in order to hedge certain exposure and (ii) meet defined criteria in order to be classified as hedges are accounted for in a manner so as to offset the gains and losses applicable to the derivative financial instrument against the gains and losses on transactions or commitments that are being hedged (i.e., either by recording the gains and losses on derivative financial instruments currently when they are used as hedges of existing (non-balance sheet) transactions or by deferring the gains and losses on derivative financial instruments in the equity section of the balance sheet when they are used as hedges of forecasted transactions). In addition, U.S. SFAS N0. 133 also defined the concept of embedded derivatives that may now exist due to

Subject Deferred Expenses Income Tax Retained Earnings Tax	ROC GAAP Under ROC GAAP, deferred expenses include issuance costs of bonds, testing costs of reinstallation of machinery and equipment. Deferred expenses shall be amortized by systematic charges to income over the periods estimated to be benefited. Prior to January 1, 1995, generally income tax expenses were provided based on current taxable income; deferred income tax was not recognized for timing differences. ROC Statements of Financial Accounting Standards No. 22 (ROC SFAS No. 22) “Accounting for Income Taxes,” was issued in June 1994, and has been adopted by us as of January 1, 1995. ROC SFAS No. 22 is similar to U.S. GAAP. However, under ROC GAAP, the cumulative effect of adoption is included in the current year’s provision for income tax rather than being separately presented as the cumulative effect of a change in accounting principle. Under ROC GAAP, a valuation allowance determined is less stringent as compared to U.S. GAAP. Under U.S. GAAP, if a company has experienced cumulative losses in recent years, it is not generally able to consider projections of future operating profits for the purpose of determining the valuation allowance for deferred income tax assets. Companies in the ROC are subject to a 10% surtax on profits retained and earned after December 31, 1997. If the retained profits are distributed to the shareholders in the following fiscal year, the surtax can be avoided. Under ROC GAAP, surtax is recorded in the statement of income in the following fiscal year if the earnings are not distributed to the shareholders.	US GAAP
		a broader definition of a derivative instrument. Embedded derivatives include certain contracts for the purchase or sale of commodities and if determined to be a derivative would be required to be recorded on the books and adjusted to fair value at each period end. Under U.S. GAAP, start-up costs are expensed as incurred. Under U.S. GAAP, current tax liabilities are recognized for estimated taxes payable for the current period. U.S. SFAS 109 requires that all material temporary differences between the carrying values of assets and liabilities and their respective tax bases be recognized as deferred tax liabilities or assets. A valuation allowance is provided on deferred tax assets to the extent that it is not “more likely than not” that such deferred tax assets will be realized. A change in tax rate or law requires an adjustment to such deferred tax assets and liabilities in the period of enactment, and is reported as a part of results of operations. Under U.S. GAAP, income tax expense relating to the 10% retained profit tax is recorded on the statement of income in the year that the profits were earned.

Subject Comprehensive Income Stock Options Compensated Absences Classification Earnings Per Share	ROC GAAP There is no requirement to present comprehensive income. ROC GAAP has no specific accounting practice regarding stock options or the disclosures of stock options. Effective beginning 2004, all companies in Taiwan are required to adopt the same accounting treatment under US GAAP. ROC GAAP has no specific accounting practice regarding compensated absences. Under ROC GAAP, there are no specific rules with respect to account presentation on the statement of income as cost of goods sold, operating expenses and non-operating expenses such as scrap income, inventory allowance, restructuring expenses, impairment loss of fixed assets and earthquake losses. Also, under ROC GAAP, the unrealized gross profit generated from downstream inter-company transactions is eliminated and presented as a reconciling item of gross profit in the statement of income. A corresponding liability is recorded for the amount of the unrealized gross profit in the balance sheet. Under ROC GAAP, when a simple capital structure exists, basic earnings per share are based on the weighted average number of shares outstanding. When a complex capital structure exists, diluted earning per share is	US GAAP
		Comprehensive income and its components (revenues, expenses, gains and losses) must be presented in a full set of financial statements under U.S. GAAP. Comprehensive income includes all changes in stockholders’ equity during a period, except changes resulting from investments by or distributions to owners, including certain items not included in the current results of operations. Under US GAAP, APB Opinion No. 25 “Accounting for Stock Issued to Employees” and SFAS No. 123 “Accounting for Stock-Based Compensation” have outlined detail principles on how to account for the accounting and reporting of stock-based compensation plans. In general, either the intrinsic value or fair value of stock options granted must be recognized as compensation expenses over the service period. Compensated absences must be accrued based on the liability for employees’ rights to receive compensation for future absences when the benefits can be accumulated or vested over the service period. Under U.S. GAAP, the presentation of scrap income, inventory allowance, restructuring expenses, impairment loss of fixed assets and earthquake losses are generally recorded under income from continuing operations, not as nonoperating expenses. Also, under U.S. GAAP, the unrealized gross profit generated from downstream transactions is generally charged against cost of sales and credited the investment account. Basic and diluted earnings per share calculations are not retroactively adjusted for new common stock issued through unappropriated earnings and capital surplus.

Subject Depreciation Lives of Fixed Assets Segment Reporting Disclosure of New Accounting Pronouncements	ROC GAAP based on the weighted average number of shares outstanding plus the number of additional shares that would have been outstanding if dilutive potential common shares had been issued, with appropriate adjustment to income or loss that would result from the assumed conversions of potential common shares. The materiality of the dilutive effect is not considered. A company computes earnings per share based on the weighted average number of outstanding shares, retroactively adjusted for stock dividends issued through unappropriated earning and capital surplus. In practice, depreciation is generally provided using the guideline service lived as prescribed by ROC Internal Revenue Code plus one additional year as salvage value. ROC Securities and Futures Commission regulations applicable to public companies require that when fixed assets have been fully depreciated over the prescribed service life and the underlying asset continues to be used, the remaining unamortized value (i.e., the salvage value portion) is depreciated over the asset’s remaining economic life. The estimated life of buildings under ROC GAAP can be depreciated over a period of 55 years. ROC SFAS No.20 “Disclosure of Segment Information” establishes standards for reporting information about industry and foreign operating segments, and information on export sales and sales to major customers. ROC SFAS No.20 defines industry segment as a revenue generating unit of an enterprise which sells certain products or provides services, or a group of related products or services to customers and a foreign operating segment as a revenue generating unit. Under ROC GAAP, disclosure of recently issued accounting standards not yet effective as of the balance date is required.	US GAAP
		Depreciation is provided over the asset’s estimated useful life which is based on economic and operational consideration, rather than tax or legal consideration. No additional depreciation is provided on fully depreciated assets which continue to be used in the business. In general, 55 years would be considered too long a period over which to depreciate fixed assets. Under U.S. SFAS 131, a public business enterprise is required to present segment information based on operating segments. Several operating segments may, provided aggregation criteria are met, be aggregated to reportable segments for which the required information is disclosed. Disclosure is based on the management’s approach for reporting segments information to the company’s chief operating decision- makers. U.S. GAAP required disclosure of the impact that recently issued accounting standards will have on the financial statements when adopted in the future.

The information set forth above does not in any way attempt to qualify the effects of the aforementioned differences between ROC GAAP and U.S. GAAP and the impact such differences would have on net income or shareholder’s equity under U.S. GAAP.

SUBSCRIPTION AND SALE

Taiwan Securities (Hong Kong), Co., Ltd. and Taiwan Securities Co., Ltd. (the "Managers") have, pursuant to a Subscription Agreement dated July 5, 2004 (the "Subscription Agreement"), agreed with the Company to subscribe and pay for the Bonds at the issue price of 101 percent of their principal amount. The Subscription Agreement provides that the Company will indemnify the Managers against certain liabilities. In addition, the Company has agreed to reimburse certain expenses of the Managers in connection with the issue of the Bonds. The Subscription Agreement further provides that the obligations of the Managers are subject to certain conditions precedent, and entitles the Managers to terminate it in certain circumstances prior to payment being made to the Company. The Managers or its affiliates may subscribe to a portion of the Bonds.

Offers of Similar Securities

The Company has agreed in the Subscription Agreement that neither the Company, nor any person acting on its behalf, will issue, offer, sell, contract to sell or otherwise dispose of any Shares or securities of the same class as the Shares (other than pursuant to (i) employee benefits plans or distributions of dividends from retained earnings and capital reserve or employee bonuses in the form of Shares or (ii) conversion of the Bonds or of other convertible bonds issued prior to the date of the Subscription Agreement) or any securities convertible into, exchangeable for or which carry rights to subscribe or purchase Bonds, Shares, or securities of the same class as the Bonds, Shares or other instruments representing interests in Bonds, Shares or securities of the same class as the Bonds, Shares (other than the Bonds and other than as aforesaid), or announce plans or otherwise make public an intention to do any of the foregoing (other than as aforesaid), in any such case without the prior written consent of the Managers between the date of the Subscription Agreement and the date which is 120 days after the Closing Date (both dates inclusive).

General

No action has been or will be taken in any jurisdiction that would permit a public offering of the Bonds or the Shares issuable upon conversion of the Bonds, or the possession, circulation or distribution of this Offering Circular or any other material relating to the Company, the Bonds or the Shares issuable upon conversion of the Bonds, in any jurisdiction where action for the purpose is required. Accordingly, neither the Bonds nor any Shares issuable upon conversion of the Bonds may be offered or sold, directly or indirectly, and neither this Offering Circular nor any other offering material or advertisements in connection with the Bonds or Shares issuable upon conversion of the Bonds may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.

United States

The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act ("Regulation S").

Each Manager has agreed that, except as permitted by the Subscription Agreement, it will not offer or sell the Bonds or the Shares to be issued upon conversion of the Bonds (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, within the United States or to, or for the account or benefit of, U.S. persons, and it will have sent to each dealer to which it sells the Bonds or the Shares to be issued upon conversion of the Bonds, during the distribution compliance period, a confirmation or other notice setting forth the restrictions on offers and sales of the Bonds or the Shares to be issued upon conversion of the Bonds, as the case may be, within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S.

The Bonds are being offered and sold outside of the United States to non-U.S. persons in reliance on Regulation S.

In addition, until 40 days after the later of the commencement of the offering of the Bonds and the latest closing date for an issue of Bonds, an offer or sale of the Bonds or the Shares to be issued upon conversion of the Bonds within the United States by a dealer that is not participating in the offering may violate the registration

requirements of the Securities Act.

United Kingdom

Each of the Managers has represented and agreed that:

(1) it has not offered or sold and, prior to the expiry of a period of six months after the issue of the Bonds, will not offer or sell any Bonds to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offer of Securities Regulations 1995;
(2) it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the "FSMA") with respect to anything done by it in relation to the Bonds or Shares in, from or otherwise involving the United Kingdom; and
(3) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Company.

The ROC

The Bonds may not be offered, sold or delivered, directly or indirectly, in the ROC, as part of the distribution of the Bonds.

Hong Kong

Each of the Managers has represented and agreed that (1) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong; and (2) it has not issued and will not issue any advertisement, invitation or document relating to the Bonds, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Bonds which are or intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

Singapore

This Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act 2001 (2002 Revised Edition) of Singapore (the "Securities and Futures Act"). Accordingly, the Bonds may not be offered or sold or made the subject of an invitation for subscription or purchase nor may this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase of such Bonds be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (1) to an institutional investor or other person falling within Section 274 of the Securities and Futures Act, (2) to a sophisticated investor (as defined in Section 275 of the Securities and Futures Act) and in accordance with the conditions specified in Section 275 of the Securities and Futures Act or (3) otherwise than pursuant to, and in accordance with the conditions of, any other applicable provisions of the Securities and Futures Act.

Japan

Each Manager has represented and agreed that the Bonds have not and will not be registered under the Securities and Exchange Law of Japan (the "Securities and Exchange Law") and that the Bonds, which it subscribes, will be subscribed by it as principal. Each Manager has also represented and agreed that, in connection with the initial offering of the Bonds, it will not directly or indirectly offer or sell any Bonds in

Japan, or to, or for the benefit of any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and other applicable laws and regulations of Japan.

GENERAL INFORMATION

Listing : Application has been made to list the Bonds on the Luxembourg Stock Exchange. The legal notice relating to the issue of the Bonds and the Articles of Incorporation of the Company will be registered prior to the listing with the Trade and Companies Register (Registre de Commerce et des Sociétés) in Luxembourg, where such documents are available for inspection and copies thereof can be obtained upon request. As long as the Bonds are listed on the Luxembourg Stock Exchange, an Agent for making payments on, transfers and conversions of, the Bonds will be maintained in Luxembourg.

The listing of the Bonds on the Luxembourg Stock Exchange may subject the Company to the EU Transparency Obligations Directive, which may be implemented in a manner which is unduly burdensome for the Company. In particular, the Company may be required to prepare its financial statements in accordance with International Financial Reporting Standards for accounting periods beginning on or after January 1, 2005. Pursuant to the Trust Deed, in those circumstances, the Company would be entitled to seek an alternative listing for the Bonds on a stock exchange outside the European Union approved in writing by the Trustee , provided that the Trustee is satisfied that the interest of the Bondholders would not thereby be materially prejudiced.

Authorizations : The Company has obtained all necessary consents, approvals and authorizations in connection with the issue of the Bonds. The issue of the Bonds was authorized by a resolution of the Board of Directors of the Company passed on April 30, 2004.

Material Change : Except as disclosed in this Offering Circular, there has been no material adverse change in the financial position or prospects of the Company since December 31, 2003.

Litigation : Save as disclosed in the section "Business of the Company - Litigation", neither the Company nor any of its subsidiaries is involved in any litigation or arbitration proceedings which may have, or have had during the 12 months preceding the date of this Offering Circular, a significant effect on the financial position of the Company and its Subsidiaries, nor, so far as any of them is aware, are any such proceedings pending or threatened.

Independent Accountants : The audited consolidated and non-consolidated financial statements of the Company as of December 31, 2001, 2002 and 2003 and for the years then ended, included herein have been audited by Deloitte & Touche, independent certified public accountants as indicated in their report appearing herein. The Company's annual financial statements are prepared on a consolidated and non-consolidated basis. With respect to the unaudited interim non-consolidated financial statements for the three months ended March 31 of 2003 and 2004, included herein, the independent accountants have reported that they applied limited procedures in accordance with professional standards for a review of such information in accordance with ROC Statement on Auditing Standards No. 36, "Review of Financial Statements". However, their separate review report included in this Offering Circular, states that they did not audit and they do not express an opinion on those financial statements. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.

Indemnification of the Trustee: The Trustee is entitled under the Trust Deed to rely without liability to the Bondholders on any certificate prepared by the directors or authorized officers of the Company and accompanied by a certificate or report prepared by the auditors or an internationally recognized firm of accountants, whether or not addressed to the Trustee, and whether or not to the same are subject to any limitation on the liability of that internationally recognized firm of accountants and whether by reference to a monetary cap or otherwise limited or excluded.

Documents Available : Copies (and certified English translations where the documents are not in English) of the following documents may be inspected and freely obtainable during normal business hours at the specified office of the Paying and Conversion Agent in Luxembourg for as long as the Bonds are listed on the Luxembourg Stock Exchange:

the Articles of Incorporation of the Company;
a copy of the reports of the independent accountants, the audited consolidated and non-consolidated financial statements of the Company as at and for the years ended December 31, 2001, 2002 and 2003 and the unaudited non-consolidated financial statements of the Company as at and for the nine months ended March 31, 2003 and 2004;
the Subscription Agreement relating to the Bonds; and
the Trust Deed constituting the Bonds (which includes the form of the Global Certificate and the

definitive Certificates) and the Agency Agreement.

In addition, copies of the most recent audited consolidated and non-consolidated annual financial statements, audited non-consolidated semi-annual financial statements and unaudited non-consolidated quarterly financial statements (in each case in English), will be available at the specified office of the Paying, Conversion and Transfer Agent in Luxembourg free of charge for as long as the Bonds are listed on the Luxembourg Stock Exchange. The Company publishes non-consolidated intermediary financial statements and is not required to publish consolidated intermediary financial statements.

Clearing Systems : The Bonds have been accepted for clearance through the facilities of Euroclear and Clearstream, Luxembourg. Relevant trading information for the Bonds is set forth below:

Common Code ISIN

019626253 XS0196262538

HEAD OFFICE OF THE COMPANY

Ichia Technologies, Inc.

268, Hwa-Ya Second Road Hwa-Ya Technology Park Gueishen, Taoyuan, Taiwan ROC

TRUSTEE

J .P. Morgan Corporate Trustee Services Limited Trinity Tower, 9 Thomas More Street London E1W 1YT England

REGISTRAR

J.P. Morgan Bank Luxembourg S.A. 5 rue Plaetis L-2338 Luxembourg Grund

PRINCIPAL PAYING, TRANSFER AND CONVERSION AGENT

JPMorgan Chase Bank

Trinity Tower, 9 Thomas More Street London E1W 1YT England

LUXEMBOURG LISTING, PAYING, TRANSFER AND CONVERSION AGENT

J.P. Morgan Bank Luxembourg S.A. 5 rue Plaetis L-2338 Luxembourg Grund

LEGAL ADVISERS

To the Trustee To the Managers as to English law as to ROC law Linklaters LCS & PARTNERS 10th Floor 11th Floor Alexandra House 102 Kuang Fu South Road Chater Road Taipei, Taiwan Hong Kong ROC

To the Company as to ROC law

Taian Legal Service Center 8th Floor No. 59, Kwantsien Road Taipei, Taiwan ROC

AUDITORS

Deloitte & Touche

12th Floor, 156, Min Sheng E. Road Sec. 3 Taipei, Taiwan ROC

AI assistant

ICHIA — Capital/Financing Update 2014

52057_rns_2014-08-25_46f39eb6-3667-4a34-b373-ad375e2d8ab8.pdf

Ichia Technologies, Inc.

US$70,000,000

Zero Coupon Convertible Bonds due 2009

Issue Price: 101 percent

Investing in the Bonds involves certain risks. See the section on "Risk Factors".

Taiwan Securities Co., Ltd. Taiwan Securities (Hong Kong) Co., Ltd.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE ROC

TABLE OF CONTENTS

SUMMARY

The Company

Corporate and Other Information

USE OF PROCEEDS

RISK FACTORS

Risks Relating to the Company's Business

The Company may not be able to protect its intellectual property.

affected.

RISKS RELATING TO THE BONDS AND THE SHARES

RISKS RELATING TO THE ROC

Risks relating to the ROC Securities Market

The political status and international relations of the ROC may affect the Company and the Bonds

Political uncertainty may influence the TSE index

Foreign exchange approvals may be required

Financial reporting and accounting standards in the ROC differ from other countries

Future natural disasters and disruptive events may occur

Risks relating to the PRC

CAPITALIZATION

BUSINESS OF THE COMPANY

Overview

History and Organization of the Company

Competitive Strengths

Experienced management team

Strong engineering, manufacturing and mold making expertise

Close relationships with key industry leaders

Highly vertically-integrated production process

Strong research and development programs

Strategy

Expand production capacity and diversity product lines

Products

Keypads

Flexible printed circuit products

Production Process

Keypad products

FPC products

Raw Materials

Sales and Marketing

Customers

Quality Control

Production Facilities

Research and Development

Intellectual Property

Competition

Environmental Matters

Litigation

Insurance

Employees

Subsidiaries and Investments

Related Party Transactions

MANAGEMENT

Directors

Supervisors

Executive Officers

Biographies of Directors. Supervisors and Executive Officers

Share Ownership and Compensation

PRINCIPAL SHAREHOLDERS

RECENT DEVELOPMENTS AND OUTLOOK

Results of Operations in 2003

Results of Operations in the first Three Months of 2004

Financial Resources and Capital Expenditure

DIVIDENDS

MARKET PRICE INFORMATION

CHANGES IN ISSUED SHARE CAPITAL

TERMS AND CONDITIONS OF THE BONDS

1. Status

2. Form, Denomination and Title

(B) Title

3. Negative Pledge

ICHIA Capital/Financing Update 2014