Macronix - Interim / Quarterly Report 2013

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2013 and 2012 and Independent Accountants’ Review Report

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and the Stockholders Macronix International Co., Ltd.

We have reviewed the accompanying consolidated balance sheets of Macronix International Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 and the related consolidated statements of comprehensive income for the three months ended June 30, 2013 and 2012, six months ended June 30, 2013 and 2012, and changes in equity and cash flows for the six months ended June 30, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

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

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers issued by the Financial Supervisory Commission of the Republic of China, and International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

July 29, 2013

Notice to Readers

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

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Notes receivable and trade receivables, net (Note 10) Receivables from related parties, net (Notes 10 and 31) Other receivables (Note 10) Inventories (Note 11) Other financial assets - current (Notes 15 and 32) Other current assets (Notes 14 and 16) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Available-for-sale financial assets - non-current (Note 8) Financial assets measured at cost - non-current (Note 9) Property, plant and equipment (Notes 12 and 32) Intangible assets (Note 13) Deferred tax assets (Note 25) Other financial assets - non-current (Notes 15 and 32) Other non-current assets (Notes 14 and 16) Total non-current assets TOTAL		June 30, 2013		December 31, 2012		June 30, 2012		January 1, 2012 Amount % LIABILITIES AND EQUITY CURRENT LIABILITIES $ 19,727,097 29 Short-term borrowings (Note 17) Notes payable and trade payables (Note 18) - - Payables to related parties (Note 31) Other payables (Note 19) 2,901,450 4 Salary and bonus payable Payable for purchase of equipment 918,063 1 Current tax liabilities (Note 25) 121,198 - Provisions - current (Note 20) 6,468,003 10 Current portion of long-term borrowings (Notes 17 and 32) - - Other current liabilities 475,483 1 Total current liabilities 30,611,294 45 NON-CURRENT LIABILITIES Long-term borrowings (Notes 17 and 32) Accrued pension cost (Note 21) 39,357 - Others 879,392 1 Total non-current liabilities 154,491 - Total liabilities 35,496,832 52 EQUITY ATTRIBUTABLE TO OWNERS OF THE 148,475 - COMPANY (Note 22) 553,198 1 Ordinary shares Stock dividends to be distributed 201,741 1 Capital surplus 51,042 - Retained earnings Legal reserve 37,524,528 55 Unappropriated earnings (accumulated deficit) Other equity Treasury shares Equity attributable to owners of the Company NON-CONTROLLING INTERESTS (Note 22) Total equity $ 68,135,822 100 TOTAL		June 30, 2013		December 31, 2012		June 30, 2012		January 1, 2012
		Amount % $ 13,929,439 25 116 - 3,376,094 6 420,472 1 125,820 - 8,045,980 14 3,000 - 652,477 1 26,553,398 47 - - 841,163 2 82,698 - 27,325,313 48 374,225 1 911,620 2 186,126 - 77,335 - 29,798,480 53 $ 56,351,878 100		Amount % $ 19,096,662 30 6,199 - 2,911,980 5 427,453 1 106,203 - 6,859,892 11 41,106 - 479,392 1 29,928,887 48 - - 888,685 1 97,862 - 29,883,778 48 360,936 1 909,843 2 192,921 - 67,776 - 32,401,801 52 $ 62,330,688 100		Amount % $ 17,870,676 27 3,981 - 3,368,117 5 668,080 1 86,385 - 7,695,203 12 42,585 - 553,578 1 30,288,605 46 - - 932,307 2 134,510 - 32,900,961 50 338,699 1 530,886 1 180,452 - 43,994 - 35,061,809 54 $ 65,350,414 100				Amount % $ 220,454 - 1,865,623 3 457,141 1 2,077,717 4 - - 283,600 1 355,337 1 90,066 - 5,723,718 10 227,289 - 11,300,945 20 13,238,038 24 773,703 1 3,838 - 14,015,579 25 25,316,524 45 35,214,623 62 - - 344,016 1 - - (4,776,536 ) (9 ) 348,643 1 (159,061) - 30,971,685 55 63,669 - 31,035,354 55 $ 56,351,878 100		Amount % $ 88,406 - 1,834,141 3 136,005 - 2,619,846 4 - - 394,986 1 339,661 1 94,169 - 5,233,718 8 99,347 - 10,840,279 17 15,799,897 26 717,793 1 1,694 - 16,519,384 27 27,359,663 44 35,214,623 56 - - 343,869 - 2,695,275 4 (3,528,992 ) (5 ) 346,196 1 (159,061) - 34,911,910 56 59,115 - 34,971,025 56 $ 62,330,688 100		Amount % $ 215,173 - 2,098,324 3 104,274 - 1,893,471 3 506,621 1 561,167 1 69,016 - 90,689 - 3,607,718 6 1,425,244 2 10,571,697 16 16,067,756 25 657,767 1 3,125 - 16,728,648 26 27,300,345 42 33,923,020 52 1,288,408 2 342,713 - 2,695,275 4 (567,954 ) (1 ) 429,308 1 (159,061) - 37,951,709 58 98,360 - 38,050,069 58 $ 65,350,414 100		Amount % $ 1,800,488 3 2,154,754 3 82,244 - 2,176,649 3 530,775 1 875,833 1 348,966 1 88,488 - 1,527,718 2 85,504 - 9,671,419 14 16,078,614 24 622,566 1 3,766 - 16,704,946 25 26,376,365 39 33,847,486 50 - - 346,489 - 2,407,003 3 4,776,572 7 402,047 1 (159,061) - 41,620,536 61 138,921 - 41,759,457 61 $ 68,135,822 100

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

NET OPERATING REVENUE (Notes 23 and 31) OPERATING COSTS (Notes 11, 21, 24 and 31) GROSS PROFIT OPERATING EXPENSES (Notes 21, 24 and 31) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 24 and 30) Other gains and losses (Note 24) Finance costs (Note 24) Total non-operating income and expenses LOSS BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET LOSS OTHER COMPREHENSIVE INCOME Exchange differences on translating foreign operations (Note 22) Unrealized gain (loss) on available-for-sale financial assets (Note 22) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		For the Three Months EndedJune 30	For the Three Months EndedJune 30	For the Three Months EndedJune 30		For theSix Months	For theSix Months	EndedJune 30
		2013		2012		2013		2012
		Amount % $ 5,231,009 100 5,005,412 96 225,597 4 277,276 5 450,375 9 1,361,637 26 2,089,288 40 (1,863,691) (36) 53,639 1 43,355 1 (86,081) (2) 10,913 - (1,852,778 ) (36 ) 1,044 - (1,853,822) (36) 14,292 - (86,458) (1) (72,166) (1) $ (1,925,988) (37)		Amount % $ 5,882,908 100 5,302,526 90 580,382 10 290,712 5 429,733 7 1,340,535 23 2,060,980 35 (1,480,598) (25) 81,102 1 70,881 1 (74,811) (1) 77,172 1 (1,403,426 ) (24 ) 9,782 - (1,413,208) (24) 16,389 - (154,328) (2) (137,939) (2) $ (1,551,147) (26)		Amount % $ 9,635,798 100 9,595,662 100 40,136 - 528,835 5 854,373 9 2,616,882 27 4,000,090 41 (3,959,954) (41) 100,451 1 95,605 1 (173,252) (2) 22,804 - (3,937,150 ) (41 ) 2,089 - (3,939,239) (41) 56,017 1 (53,424) (1) 2,593 - $ (3,936,646) (41)		Amount % $ 11,026,384 100 9,690,832 88 1,335,552 12 569,827 5 818,210 7 2,393,880 22 3,781,917 34 (2,446,365) (22) 128,563 1 (54,788 ) (1 ) (132,196) (1) (58,421) (1) (2,504,786 ) (23 ) 16,033 - (2,520,819) (23) (28,133 ) - 55,344 - 27,211 - $ (2,493,608) (23) (Continued)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

For the Three Months EndedJune 30	For the Three Months EndedJune 30	For theSix Months	EndedJune 30
2013	2012	2013	2012
Amount % $ (1,839,563 ) (35 ) (14,259) - $ (1,853,822) (35) $ (1,911,783 ) (37 ) (14,205) - $ (1,925,988) (37) $ (0.52) $ (0.52)	Amount % $ (1,394,176 ) (24 ) (19,032) - $ (1,413,208) (24) $ (1,532,140 ) (26 ) (19,007) - $ (1,551,147) (26) $ (0.40) $ (0.40)	Amount % $ (3,908,258 ) (41 ) (30,981) - $ (3,939,239) (41) $ (3,905,811 ) (41 ) (30,835) - $ (3,936,646) (41) $ (1.11) $ (1.11)	Amount % $ (2,479,438 ) (23 ) (41,381) - $ (2,520,819) (23) $ (2,452,177 ) (22 ) (41,431) (1) $ (2,493,608) (23) $ (0.71) $ (0.71)

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

(Concluded)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

		Equity Attributable to Owners of	the Company
Stock Dividends Share Capital to be Distributed $ 33,847,486 $ - - - - - - 1,288,408 - - - - - - - - 75,534 - - - $ 33,923,020 $ 1,288,408 $ 35,214,623 $ - - - - - - - - - - - - - - - $ 35,214,623 $ -	Capital Surplus $ 346,489 - - - - - - - (3,776) - $ 342,713 $ 343,869 - 147 - - - - - $ 344,016	Retained Earnings Unappropriated Earnings (Accumulated Legal Reserve Deficit) $ 2,407,003 $ 4,776,572 288,272 (288,272) - (1,288,408) - (1,288,408) - (2,479,438) - - - (2,479,438) - - - - - - $ 2,695,275 $ (567,954) $ 2,695,275 $ (3,528,992) (2,695,275) 2,695,275 - (34,561) - (3,908,258) - - - (3,908,258) - - - - $ - $ (4,776,536)	Other Equity Exchange Unrealized Differences on Gain from Translating Available-for-sale Foreign Financial Operations Assets Treasury Shares $ (30,048) $ 432,095 $ (159,061) - - - - - - - - - - - - (28,083) 55,344 - (28,083) 55,344 - - - - - - - - - - $ (58,131) $ 487,439 $ (159,061) $ (102,785) $ 448,981 $ (159,061) - - - - - - - - - 55,871 (53,424) - 55,871 (53,424) - - - - - - - $ (46,914) $ 395,557 $ (159,061)

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Loss before income tax Adjustments for: Depreciation expense Amortization expense Impairment loss recognized on trade receivables Finance costs Interest income Dividend income Compensation cost of employee share options Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Gain on foreign currency exchange Changes in operating assets and liabilities Decrease (increase) in financial assets held for trading Increase in notes receivable and trade receivables Decrease in receivables from related parties Decrease in other receivables Increase in inventories Increase in other current assets Increase (decrease) in notes payable and trade payables Increase in payables to related parties Decrease in other payables Increase (decrease) in provisions Increase in other current liabilities Increase in accrued pension liabilities Decrease in other operating liabilities Cash used in operations Interest received Dividend received Interest paid Income tax paid Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets designated as at fair value through profit or loss Proceeds on sale of financial assets measured at cost Proceeds from return of capital by financial assets measured at cost Increase in prepayment for investments Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets		Six Months Ended June 30	Six Months Ended June 30
		2013 $ (3,937,150) 3,836,639 113,290 2,151 173,252 (72,682) (19,409) 338 (42) (3,000) (44,265) 6,083 (411,041) 6,627 8,570 (1,186,088) (172,779) 29,075 321,173 (571,546) (4,102) 127,743 55,910 - (1,741,253) 59,962 19,409 (147,226) (3,647) (1,812,755) - 9,600 8,775 (9,600) - -	2012 $ (2,504,786) 3,782,079 86,414 20,021 132,196 (82,909) (15,823) 443 85,598 (1,414) (87,927) (3,981) (489,912) 251,779 40,494 (1,227,200) (64,565) (48,623) 20,438 (271,491) 2,201 52,003 35,201 (24,154) (313,918) 77,373 15,823 (139,795) (273,671) (634,188) 40,042 - 19,500 - (150,000) 150,229 (Continued)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Decrease (increase) in other financial assets Decrease in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits Increase (decrease) in other non-current liabilities Proceeds from exercise of employee stock options Increase in non-controlling interests Net cash generated from (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		Six Months Ended June 30	Six Months Ended June 30
		2013 $ (1,367,724) 76 (241) 868 (126,329) 42,411 1,197 (1,440,967) 227,453 (93,015) - (2,071,859) 120 - 2,024 - 637 (1,934,640) 21,139 (5,167,223) 19,096,662 $ 13,929,439	2012 $ (1,611,288) 16,606 (22) 1,333 (290,572) (22,580) 6,950 (1,839,802) 392,187 (1,900,302) 2,170,000 (100,858) - (245) (322) 71,758 427 632,645 (15,076) (1,856,421) 19,727,097 $ 17,870,676

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

(Concluded)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2013 AND 2012 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Macronix International Co., Ltd. (the “Company”) was incorporated in the Republic of China (“ROC”) on December 9, 1989 and commenced business in December 1989. The Company operates principally as a designer, manufacturer and supplier of integrated circuits and memory chips. The Company also performs design, research and development, consultation and trade of relevant products.

The Company’s shares have been listed on the Taiwan Stock Exchange (TSE) since March 15, 1995. The Company listed a portion of its shares on the NASDAQ Stock Market in the form of American Depositary Shares (ADSs) in May 1996 but delisted on October 29, 2007.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were reported to the Board of Directors and issued on July 29, 2013.

APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

a. New and revised Standards, Amendments and Interpretations in issue but not yet effective

The Company and its subsidiaries (the “Group”) have not applied the following International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) issued by the IASB.

As of the date that the consolidated financial statements were approved and authorized for issue, the Financial Supervisory Commission (“FSC”) has not announced the effective dates for the following new and revised Standards, Amendments and Interpretations:

New, Revised Standards, Amendments and Interpretations Endorsed by the FSC Amendments to IFRSs Improvements to IFRSs (2009) - amendment to IAS 39 IFRS 9 (2009) Financial Instruments Amendment to IAS 39 Embedded Derivatives	Effective Date Announced by IASB (Note)
	January 1, 2009 and January 1, 2010, as appropriate January 1, 2015 Effective for annual periods ending on or after June 30, 2009 (Continued)

New, Revised Standards, Amendments and Interpretations

Effective Date Announced by IASB (Note)

New, Revised Stand	ards, Amendments and Interpretations	(Note)
Not yet endorsed by the
FSC
Amendments to IFRSs	Improvements to IFRSs (2010) - amendment	July 1, 2010 and January
	to IAS 39	1, 2011, as appropriate
Amendments to IFRSs	Annual Improvements to IFRSs 2009-2011	January 1, 2013
	Cycle
Amendments to IFRS 1	Limited Exemption from Comparative IFRS 7	July 1, 2010
	Disclosures for First-Time Adopters
Amendments to IFRS 1	Severe Hyperinflation and Removal of Fixed	July 1, 2011
	Dates for First-Time Adopters
Amendments to IFRS 1	Government Loans	January 1, 2013
Amendment to IFRS 7	Disclosures - Offsetting Financial Assets and	January 1, 2013
	Financial Liabilities
Amendments to IFRS 9	Mandatory Effective Date and Transition	January 1, 2015
and IFRS 7	Disclosures
Amendment to IFRS 7	Disclosure - Transfer of Financial Assets	July 1, 2011
Amendment to IFRS 9	Financial Instruments	January 1, 2015
IFRS 10	Consolidated Financial Statements	January 1, 2013
IFRS 11	Joint Arrangements	January 1, 2013
IFRS 12	Disclosure of Interests in Other Entities	January 1, 2013
Amendments to IFRS 10,	Consolidated Financial Statements, Joint	January 1, 2013
IFRS 11 and IFRS 12	Arrangements and Disclosure of Interests in
	Other Entities: Transition Guidance
Amendments to IFRS 10	Investment Entities	January 1, 2014
and IFRS 12 and IAS 27
IFRS 13	Fair Value Measurement	January 1, 2013
Amendment to IAS 1	Presentation of Other Comprehensive Income	July 1, 2012
Amendment to IAS 12	Deferred Tax: Recovery of Underlying	January 1, 2012
	Assets
Amendment to IAS 19	Employee Benefits	January 1, 2013
Amendment to IAS 27	Separate Financial Statements	January 1, 2013
Amendment to IAS 28	Investments in Associates and Joint Ventures	January 1, 2013
Amendment to IAS 32	Offsetting of Financial Assets and Financial	January 1, 2014
	Liabilities
Amendment to IAS 36	Impairment of Assets: Recoverable Amount	January 1, 2014
	Disclosures for Non-Financial Assets
Amendment to IAS 39	Novation of Derivatives and Continuation of	January 1, 2014
	Hedge Accounting
IFRIC 20	Stripping Costs in the Production Phase of a	January 1, 2013
	Surface Mine
IFRIC 21	Levies	January 1, 2014
		(Concluded)

Note: Unless stated otherwise, the above new and revised Standards, Amendments and Interpretations are effective for annual periods beginning on or after the respective effective dates.

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b. Significant changes in accounting policy resulted from new and revised Standards, Amendments and Interpretations in issue but not yet effective

Except for the following, the initial application of the above new and revised Standards, Amendments and Interpretations have not had any material impact on the Group’s accounting policies:

1) IFRS 9 “Financial Instruments”

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” to be subsequently measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are measured at their fair values at the balance sheet date. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss.

2) New and revised standards on consolidation, joint arrangement, and associates and disclosure
a) IFRS 10 “Consolidated Financial Statements”

IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation - Special Purpose Entities”. The Group considers its ability of control over other entities for consolidation. The Group has control over an investee if and only if it has a) power over the investee; b) exposure, or rights, to variable returns from its involvement with the investee and c) the ability to use its power over the investee to affect the amount of its returns. Additional guidance has been included in IFRS 10 to explain when an investor has control over an investee.

b) IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than in the current standards.

3) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

4) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 require items of other comprehensive income to be grouped into those that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified subsequently to profit or loss when specific conditions are met. Income taxes on related items of other comprehensive income are grouped on the same basis. Previously, there were no such requirements.

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5) Revision to IAS 19 “Employee Benefits”

The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the “corridor approach” permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The revision requires all actuarial gains and losses to be recognized immediately through other comprehensive income in order for the net pension asset or liability to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a “net interest” amount, which is calculated by applying the discount rate to the net defined benefit liability or asset.

6) Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made some consequential amendments to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that the disclosure of such recoverable amount is required during the period when an impairment loss has been recognized or reversed. Furthermore, the Group is required to disclose the discount rate used in current and previous measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

7) New issued IFRIC 21 “Levies”

IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government. It addresses the accounting for a liability whose timing and amount is certain and the accounting for a provision whose timing or amount is not certain. The Group accrues related liability when the transaction or activity that triggers the payment of the levy occurs. Therefore, if the obligating event occurs over a period of time (such as generation of revenue over a period of time), the liability is recognized progressively. If an obligation to pay a levy is triggered upon reaching a minimum threshold (such as a minimum amount of revenue or sales generated), the liability is recognized when that minimum threshold is reached.

c. Material impact on consolidated financial statements resulted from new and revised Standards, Amendments and Interpretations in issue but not yet effective

The Group is in the process of estimating the impact of the initial application of the Standards, Amendments and Interpretations on its financial position and results of operations. Disclosures will be provided until a detailed review of the impact has been completed and the consolidated financial statements have been approved and authorized for issuance.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, and the Interpretations approved by the FSC. The date of transition to IFRSs was January 1, 2012. Refer to Note 37 for the impact of IFRS conversion on the consolidated financial statements.

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a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, IFRS 1 “First-time Adoption of International Financial Reporting Standards” and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. Disclosure information included in interim financial reports is less than disclosures required in a full set of annual financial reports.

b. Basis of preparation

The consolidated financial statements have been prepared on the same basis as the consolidated financial statements as of March 31, 2013. Refer to the Note 4 to the consolidated financial statements as of March 31, 2013 for details.

1) Subsidiary included in consolidated financial statements

As of June 30, 2013, the Company has direct and indirect majority ownership in the following subsidiaries: Run Hong Investment, Ltd. (“Run Hong”), Hui Ying Investment, Ltd. (“Hui Ying”), Magic Pixel Inc. (“MPI”), Mxtran Inc. (“Mxtran”), Infomax Communication Co., Ltd. (“INFOMAX”), MoDioTek Co., Ltd. (“MoDioTek”), Macronix America Inc. (“MXA”), Macronix (BVI) Co., Ltd. (“MXBVI”), Magic Pixel Inc. (“MPI Samoa”), Magic Pixel Holding Company Limited (“MPI HK”), Magic Pixel (Shen Zhen) Co., Ltd. (“MPI SZ”), Mxtran Holding (Samoa) Co., Ltd. (“Mxtran Samoa”), Mxtran (H.K.) Holding Co., Limited (“Mxtran HK”), Maxtran Technology Co., Ltd. (“Maxtran Beijing”), Infomax Holding Co., Ltd. (“Infomax Samoa”), Infomax Holding Company Limited (“Infomax HK”), Infomax Communication (Suzhou) Co., Ltd. (“Infomax SU”), Mosatek Co., Ltd. (“Mosatek Samoa”), Mosatek (HK) Company Limited (“Mosatek HK”), Modiotek (Suzhou) Co., Ltd. (“Modiotek SU”), New Trend Technology Inc. (“NTTI”), Macronix (Asia) Limited (“MX Asia”), Macronix Pte. Ltd. (“MPL”), Macronix Europe NV. (“MXE”), Macronix (Hong Kong) Co., Ltd. (“MXHK”) and Macronix Microelectronics (Suzhou) Co., Ltd. (“MXm”).

Investor
Investee
Main Business
The Company
MXB Inc.
(“MXB”)
Sales and marketing
The Company
Run Hong
Investment company
The Company
Hui Ying
Investment company
The Company and Run
Hong
MPI
Fabless multimedia
system on chip
The Company and Run
Hong
Mxtran
Combi-SIM IC and the
related service
The Company and Run
Hong
INFOMAX
Baseband chip, analog
baseband chip, and
power management
chip
The Company, Run
Hong and Hui Ying
MoDioTek
Mobile audio platform
and smart remote
controller
The Company and Run
Hong
MaxRise Inc.
(“MaxRise”)
IC design, research,
development, design,
manufacturing and
sales of digital TV
receivable chips
The Company
MXA
Sales and marketing
The Company
MXBVI
Investment company
MPI
MPI Samoa
Investment company
MPI Samoa
MPI HK
Investment company
MPI HK
MPI SZ
Sales and technical
support of fabless
multimedia system
on chip
Mxtran
Mxtran Samoa
Investment company
Mxtran Samoa
Mxtran HK
Investment company
Mxtran HK
Maxtran Beijing
Technical support of
Combi-SIM IC

% of Ownership
June 30,
2013
December 31,
2012
June 30,
2012
January 1,
2012
Remark
-
-
50.00
50.00
Note 1
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
83.11
77.38
77.38
77.38
-
93.14
93.14
93.14
93.14
-
99.02
97.34
97.68
97.68
-
84.16
80.86
80.86
80.86
-
-
-
84.69
84.69
Note 2
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
(Continued)

12 -

Investor
Investee
Main Business
INFOMAX
Infomax Samoa
Investment company
Infomax Samoa
Infomax HK
Investment company
Infomax HK
Infomax SU
Software, rendering and
technical service
MoDioTek
Mosatek Samoa
Investment company
Mosatek Samoa
Mosatek HK
Investment company
Mosatek HK
Modiotek SU
Sales and technical
support of mobile
audio platform and
smart remote
controller
MXBVI
NTTI
IC design
MXBVI
MX Asia
Investment company
MXBVI
MPL
After-sales service
MXBVI
MXE
After-sales service
MXBVI
MXHK
Sales and marketing
MXHK
MXm
Development of
integrated circuit
system and software

% of Ownership
June 30,
2013
December 31,
2012
June 30,
2012
January 1,
2012
Remark
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
100.00
-

(Concluded)

Note 1: MXB was in the process of liquidation in 2011 and completed the liquidation in 2012.

Note 2: MaxRise merged with INFOMAX through share swap in December 2012, and INFOMAX continues to exist. MaxRise’s revenues and expenses before the merger were included in the consolidated financial statements of 2012.
2) Other significant accounting policies

The same accounting policies have been followed in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the three months ended March 31, 2013. Refer to Note 4 to the consolidated financial statements as of March 31, 2013 for the details of summary of significant accounting policy.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The same critical accounting judgments and key sources of estimation uncertainty of consolidated financial statements have been followed in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the three months ended March 31, 2013. Refer to the Note 5 to the consolidated financial statements as of March 31, 2013 for the details of critical accounting judgments and key sources of estimation uncertainty.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits Repurchase agreements collateralized by bonds	June 30, 2013 $ 580 1,266,279 12,662,580 - $ 13,929,439	December 31, 2012 $ 610 1,292,609 17,803,443 - $ 19,096,662	June 30, 2012 $ 522 1,209,316 16,610,629 50,209 $ 17,870,676	January 1, 2012 $ 863 3,201,151 16,275,083 250,000
				$ 19,727,097

13 -

Cash equivalents include time deposits and repurchase agreements collateralized by bonds that are readily convertible to a known amount of cash, and are subject to an insignificant risk of change in value; these were held for the purpose of meeting short-term cash commitments.

Refer to Note 6 to the consolidated financial statements as of March 31, 2013 for other related information on cash and cash equivalents.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts (a) Financial assets designated as at FVTPL Foreign publicly-traded convertible bonds (b) Financial assets at FVTPL Current Non-current	June 30, 2013 December 31, 2012 $ 116 $ 6,199 - - $ 116 $ 6,199 $ 116 $ 6,199 - - $ 116 $ 6,199	June 30, 2012 January 1, 2012 $ 3,981 $ - - 39,357 $ 3,981 $ 39,357 $ 3,981 $ - - 39,357 $ 3,981 $ 39,357

a. At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

				Contract Amount
	Contract	Currency	Maturity Date	(In Thousands)
June	30, 2013
Sell		USD/NTD	2013.07	USD3,000/NTD90,049
December 31, 2012
Sell		JPY/NTD	2013.01	JPY400,000/NTD141,800
Sell		USD/NTD	2013.01	USD10,000/NTD290,456
June	30, 2012
Sell		JPY/NTD	2012.07	JPY600,000/NTD230,118
Sell		USD/NTD	2012.07	USD6,000/NTD179,738

14 -

The Group entered into foreign exchange forward contracts during the six months ended June 30, 2013 and 2012 to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for by using hedge accounting.

b. The foreign publicly-traded convertible bonds with annual rate of 5% were matured and the amounts of principal and interest were received on January 12, 2012.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

June 30, 2013 December 31, 2012 Domestic investments Listed shares $ 733,010 $ 725,526 Foreign investments Listed shares 108,153 163,159 Available-for-sale financial assets $ 841,163 $ 888,685 Non-current $ 841,163 $ 888,685 FINANCIAL ASSETS MEASURED AT COST June 30, 2013 December 31, 2012 Domestic unlisted common shares $ 82,698 $ 91,473 Overseas unlisted common shares - 6,389 $ 82,698 $ 97,862 Non-current $ 82,698 $ 97,862	June 30, 2012 $ 722,535 209,772 $ 932,307 $ 932,307 June 30, 2012 $ 98,056 36,454 $ 134,510 $ 134,510	January 1, 2012 $ 678,663 200,729 $ 879,392 $ 879,392 January 1, 2012 $ 117,556 36,935 $ 154,491 $ 154,491

9. FINANCIAL ASSETS MEASURED AT COST

Management believed that the fair value of the above unlisted equity investments held by the Group cannot be reliably measured due to the significant range of reasonable fair value estimates, therefore, they were measured at cost less impairment at the end of the reporting period.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Notes receivable - operating	June 30, 2013 December 31, 2012 $ 672 $ 1,077	June 30, 2012 $ 555	January 1, 2012 $ 6,486 (Continued)

15 -

Trade receivables Trade receivables Less: Allowance for impairment loss Other receivables Tax receivable Others	June 30, 2013 December 31, 2012 $ 3,375,422 $ 2,910,921 - 18 3,375,422 2,910,903 $ 3,376,094 $ 2,911,980 $ 107,305 $ 89,485 18,515 16,718 $ 125,820 $ 106,203	June 30, 2012 $ 3,387,601 20,039 3,367,562 $ 3,368,117 $ 68,353 18,032 $ 86,385	January 1, 2012 $ 2,894,982 18 2,894,964 $ 2,901,450 $ 94,744 26,454 $ 121,198 (Concluded)

a. Trade Receivables

The average credit period for sales of goods was 60 days. In determining the recoverability of a trade receivable, the Group evaluates each customer’s credibility and financial position and considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period.

Before accepting any new customer, the Group uses an internal credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer.

Of the trade receivables balance (see aging analysis below) that are past due at the end of the reporting period, the Group had not recognized an allowance for impaired notes receivable and trade receivables for NT$334,167 thousand, NT$226,243 thousand, NT$125,355 thousand and NT$44,161 thousand as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, respectively, because there had not been a significant change in credit quality and the amounts were still considered recoverable.

Age of receivables that were past due but not impaired was as follows:

Neither past due nor impaired Past due but not impaired Less than 60days 61-120 days Over 121days	June 30, 2013 December 31, 2012 $ 3,041,255 $ 2,684,660 98,958 144,178 94,765 66,014 140,444 16,051 $ 3,375,422 $ 2,910,903	June 30, 2012 $ 3,242,207 67,026 55,694 2,635 $ 3,367,562	January 1, 2012 $ 2,850,803 44,161 - -
			$ 2,894,964

Above analysis was based on the past due date.

As of June 30, 2013, the Group did not hold collateral for most of the receivables.

16 -

Movements in the allowance for impairment loss recognized on trade receivables were as follows:

Balance at January 1 Add: Impairment losses recognized on receivables Less: Impairment losses reversed Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 18 - 18 $ -	2012 $ 18 20,021 - $ 20,039

b. Notes Receivable

No allowance for impairment loss of notes receivable was recognized since the notes receivable of the Group were not past due and no uncertainty of recoverability was assessed.

11. INVENTORIES

Finished goods Work in progress Raw materials	June 30, 2013 $ 1,101,868 6,656,325 287,787 $ 8,045,980	December 31, 2012 $ 1,004,290 5,511,200 344,402 $ 6,859,892	June 30, 2012 $ 1,049,394 6,097,370 548,439 $ 7,695,203	January 1, 2012 $ 1,045,265 5,002,956 419,782 $ 6,468,003

The cost of inventories recognized as cost of goods sold in the three months and the six months ended June 30, 2013 included inventory write-downs of NT$48,442 thousand and NT$406,513 thousand, respectively. The cost of inventories recognized as cost of goods sold in the three months and six months ended June 30, 2012 included inventory write-downs of NT$356,338 thousand and NT$507,759 thousand, respectively.

12. PROPERTY, PLANT AND EQUIPMENT

Carrying amount of each class Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress	June 30, 2013 $ 885,566 6,370,096 14,467,055 3,823,471 13,573 21,629 141,858 1,602,065 $ 27,325,313	December 31, 2012 $ 876,366 6,701,794 16,592,121 4,041,246 15,557 23,236 158,981 1,474,477 $ 29,883,778	June 30, 2012 $ 884,416 7,116,664 18,583,190 4,411,866 14,393 3,113 165,368 1,721,951 $ 32,900,961	January 1, 2012 $ 888,201 7,430,004 19,833,527 1,054,589 8,691 4,844 179,426 6,097,550
				$ 35,496,832

17 -

Cost Balance at January 1, 2012 Additions Disposals Effect of foreign currency exchange differences Reclassification Balance at June 30, 2012 Balance at January 1, 2013 Additions Disposals Effect of foreign currency exchange differences Reclassification Balance at June 30, 2013 Accumulated depreciation and impairment Balance at January 1, 2012 Disposals Depreciation expense Effect of foreign currency exchange differences Reclassification Balance at June 30, 2012 Balance at January 1, 2013 Disposals Depreciation expense Effect of foreign currency exchange differences Reclassification Balance at June 30, 2013	Freehold Land $ 1,264,367 - - (8,693 ) - $ 1,255,674 $ 1,237,187 - - 21,128 - $ 1,258,315 $ (376,166 ) - - 4,908 - $ (371,258) $ (360,821 ) - - (11,928 ) - $ (372,749)	Buildings $ 21,717,424 296,138 (1,352 ) (3,992 ) - $ 22,008,218 $ 22,209,968 277,008 - 11,642 (100) $ 22,498,518 $ (14,287,420 ) 1,352 (605,679 ) 193 - $ (14,891,554) $ (15,508,174 ) - (619,195 ) (1,056 ) 3 $ (16,128,422)	Machinery Equipment $ 75,224,281 1,737,075 (362,791 ) - (103,496) $ 76,495,069 $ 76,913,234 548,477 (68,097 ) - 40,897 $ 77,434,511 $ (55,390,754 ) 261,008 (2,802,259 ) - 20,126 $ (57,911,879) $ (60,321,113 ) 68,097 (2,710,334 ) - (4,106) $ (62,967,456)	Research and Development Equipment $ 2,381,513 3,596,240 (22,884 ) (331 ) 103,496 $ 6,058,034 $ 6,037,523 272,378 (65,030 ) 767 (40,797) $ 6,204,841 $ (1,326,924 ) 22,884 (322,151 ) 149 (20,126) $ (1,646,168) $ (1,996,277 ) 65,010 (453,765 ) (441 ) 4,103 $ (2,381,370)	Transportation Equipment $ 28,192 7,670 (4,662 ) (34 ) - $ 31,166 $ 32,155 - - 76 - $ 32,231 $ (19,501 ) 4,301 (1,604 ) 31 - $ (16,773) $ (16,598 ) - (1,991 ) (69 ) - $ (18,658)	Leasehold Improvements $ 26,553 87 - (504 ) - $ 26,136 $ 44,894 254 - 597 - $ 45,745 $ (21,709 ) - (1,700 ) 386 - $ (23,023) $ (21,658 ) - (2,641 ) 183 - $ (24,116)	Miscellaneous Equipment $ 1,096,751 35,081 (16,037 ) (1,342 ) (27) $ 1,114,426 $ 1,142,967 30,733 (10,690 ) 2,587 - $ 1,165,597 $ (917,325 ) 15,978 (48,686 ) 973 2 $ (949,058) $ (983,986 ) 10,676 (48,713 ) (1,716 ) - $ (1,023,739)	Advance Payments and Construction in Progress $ 6,097,550 (4,375,669 ) - 70 - $ 1,721,951 $ 1,474,477 127,122 - 466 - $ 1,602,065 $ - - - - - $ - $ - - - - - $ -	Total $ 107,836,631 1,296,622 (407,726 ) (14,826 ) (27) $ 108,710,674 $ 109,092,405 1,255,972 (143,817 ) 37,263 - $ 110,241,823 $ (72,339,799 ) 305,523 (3,782,079 ) 6,640 2 $ (75,809,713) $ (79,208,627 ) 143,783 (3,836,639 ) (15,027 ) - $ (82,916,510)

Impairment assessment was performed in the six months ended June 30, 2013 and 2012, but no impairment was recognized.

The carrying amount of the freehold land in the U.S.A. which is unutilized by the Group as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 was US$9,583 thousand.

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

following estimated useful life of the asset:
Buildings
Main buildings	20-40 years
Electronic equipment	11-20 years
Facility equipment	2-6 years
Landscape engineering	20 years
Machinery equipment	5-6 years
Research and development equipment	1-6 years
Transportation equipment	3-6 years
Leasehold improvements	3-16 years
Miscellaneous equipment	1-16 years

Refer to note 32 for the carrying amount of property, plant and equipment that had been pledged by the Group to secure long-term bank loans granted to the Group.

18 -

13. INTANGIBLE ASSETS

Carrying amount of each class Software Licenses Mask Others Cost Balance at January 1, 2012 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at June 30, 2012 Balance at January 1, 2013 Additions Disposals Effect of foreign currency exchange differences Balance at June 30, 2013 Accumulated amortization Balance at January 1, 2012 Amortization expense Disposal Reclassification Effect of foreign currency exchange differences Balance at June 30, 2012 Balance at January 1, 2013 Amortization expense Disposals Effect of foreign currency exchange differences Balance at June 30, 2013	June 30, 2013 $ 353,054 16,718 161 4,292 $ 374,225 Software $ 163,866 251,087 (18,934) 27 (253) $ 395,793 $ 480,358 122,407 (20,396) 703 $ 583,072 $ (87,174) (53,545) 18,934 (2) 215 $ (121,572) $ (157,305) (92,656) 20,396 (453) $ (230,018)	December 31, 2012 June 30, 2012 $ 323,053 $ 274,221 26,288 35,213 9,643 28,431 1,952 834 $ 360,936 $ 338,699 Licenses Mask Others $ 220,451 $ 161,324 $ 23,166 16,774 22,013 698 (4,743) - - (13,406) - (514) - - 5 $ 219,076 $ 183,337 $ 23,355 $ 58,339 $ 22,633 $ 9,185 - 80 3,842 (9,572) (20,216) (7,090) - - - $ 48,767 $ 2,497 $ 5,937 $ (172,129) $ (139,569) $ (21,460) (16,477) (15,337) (1,055) 4,743 - - - - - - - (6) $ (183,863) $ (154,906) $ (22,521) $ (32,051) $ (12,990) $ (7,233) (9,570) (9,562) (1,502) 9,572 20,216 7,090 - - - $ (32,049) $ (2,336) $ (1,645)	January 1, 2012 $ 76,692 48,322 21,755 1,706 $ 148,475 Total $ 568,807 290,572 (23,677) (13,893) (248) $ 821,561 $ 570,515 126,329 (57,274) 703 $ 640,273 $ (420,332) (86,414) 23,677 (2) 209 $ (482,862) $ (209,579) (113,290) 57,274 (453) $ (266,048)
			$

The above items of other intangible assets were amortized on a straight-line basis over the following estimated useful life of the asset:

estimated useful life of the asset:
Software	1-6	years
Licenses	1-3	years
Mask	1-3	years
Others	1-3	years

19 -

14. PREPAYMENTS FOR LEASE

Current asset (included in other current assets) Non-current asset (included in other non-current assets)	June 30, 2013 December 31, 2012 $ 549 $ 523 23,347 22,477 $ 23,896 $ 23,000	June 30, 2012 January 1, 2012 $ 535 $ 543 23,251 23,920 $ 23,786 $ 24,463

As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, prepaid lease payments include land use rights with carrying amounts of NT$23,896 thousand, NT$23,000 thousand, NT$23,786 thousand and NT$24,463 thousand, respectively, which are located in Mainland China. The Group has obtained the land use right certificates.

15. OTHER FINANCIAL ASSETS

Restricted time deposits Refundable deposits Long-term receivables Current Non-current	June 30, 2013 December 31, 2012 $ 170,077 $ 211,282 12,328 12,667 6,721 10,078 $ 189,126 $ 234,027 $ 3,000 $ 41,106 186,126 192,921 $ 189,126 $ 234,027	June 30, 2012 $ 209,762 13,275 - $ 223,037 $ 42,585 180,452 $ 223,037	January 1, 2012 $ 187,182 14,559 - $ 201,741 $ - 201,741 $ 201,741

16. OTHER ASSETS

Prepayments Supplies Prepayments for lease Offset against business tax payable Others Current Non-current	June 30, 2013 December 31, 2012 $ 326,057 $ 147,957 304,813 308,755 23,896 23,000 21,227 20,085 53,819 47,371 $ 729,812 $ 547,168 $ 652,477 $ 479,392 77,335 67,776 $ 729,812 $ 547,168	June 30, 2012 $ 223,933 312,556 23,786 18,004 19,293 $ 597,572 $ 553,578 43,994 $ 597,572	January 1, 2012 $ 135,140 326,961 24,463 17,043 22,918 $ 526,525 $ 475,483 51,042 $ 526,525

Other assets-others are the commitment fee of the syndicated loans and the drawdown fee of long-term bank loans, which are amortized monthly over five and three years respectively.

20 -

17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Letter of credit loan	June 30, 2013 December 31, 2012 $ 220,454 $ 88,406	June 30, 2012 $ 215,173	January 1, 2012 $ 1,800,488

The range of effective interest rate on the letter of credit loans was 0.81%-0.98%, 0.86%-1.06%, 0.88%-1.30%, and 0.84%-2.09% per annum as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, respectively.

b. Long-term borrowings

Secured borrowings Bank loans Unsecured borrowings Bank loans Less: Current portion Long-term borrowings: Non-current	June 30, 2013 $ 12,761,756 6,200,000 18,961,756 5,723,718 $ 13,238,038	December 31, 2012 $ 14,366,948 6,666,667 21,033,615 5,233,718 $ 15,799,897	June 30, 2012 $ 15,292,141 4,383,333 19,675,474 3,607,718 $ 16,067,756	January 1, 2012 $ 13,556,332 4,050,000
				17,606,332 1,527,718
				$ 16,078,614

Maturity Date Effective Interest Rate Floating rate borrowings Secured syndicated loan denominated in NT$ 2015.12.16 Repayable NT$1,571,000 thousand semi-annually from December 2012 to June 2015, and pay off NT$6,284,000 thousand in December 2015. 1.30%-1.58% Un-secured syndicated loan denominated in NT$ 2015.12.16 - 1.35%-1.58% Un-secured bank borrowing denominated in NT$ 2014.09.26 Repayable NT$200,000 thousand semi-annually from March 2013 to June 2014, and pay off NT$1,000,000 thousand in September 2014. 1.80%-1.85% Un-secured bank borrowing denominated in NT$ 2014.11.14 Repayable NT$100,000 thousand quarterly from February 2014 to August 2014, and pay off NT$700,000 thousand in November 2014. 1.69%-1.70% Un-secured bank borrowing denominated in NT$ 2013.09.26 - 1.84%-1.85% Un-secured bank borrowing denominated in NT$ 2014.09.26 Repayable NT$120,000 thousand quarterly from September 2013 to September 2014. 1.88%-2.08% Un-secured bank borrowing denominated in NT$ 2014.09.16 Repayable NT$75,000 thousand quarterly from March 2013 to June 2014, and pay off NT$50,000 thousand in September 2014. 1.65% Un-secured bank borrowing denominated in NT$ 2015.03.26 Repayable NT$50,000 thousand quarterly from June 2013 to March 2015. 1.62% Secured bank borrowing denominated in NT$ 2016.04.16 Repayable NT$5,699 thousand monthly from May 2003 to April 2016. 1.84%-2.12% Un-secured bank borrowing denominated in NT$ 2014.09.26 Repayable NT$66,667 thousand semi-annually from March 2012 to September 2014. 1.80%-1.85%	June 30, 2013 $ 12,568,000 1,500,000 1,400,000 1,000,000 800,000 600,000 350,000 350,000 193,756 200,000 $ 18,961,756	December 31, 2012 $ 14,139,000 1,500,000 1,600,000 1,000,000 800,000 600,000 500,000 400,000 227,948 266,667 $ 21,033,615	June 30, 2012 $ 15,030,000 1,500,000 1,600,000 - - 50,000 500,000 400,000 262,141 333,333 $ 19,675,474	January 1, 2012 $ 13,260,000 1,500,000 1,600,000 - - 50,000 500,000 - 296,332 400,000
				$ 17,606,332

21 -

The Group had provided notes used as refundable guarantees for borrowings that will be cancelled upon termination of the guarantee.

In addition, the Group’s interest bearing floating rate borrowing was reset every one to three months.

The loan agreement requires the maintenance of current ratio, debt ratio, and times interest earned ratio based on semi-annual and annual consolidated financial statements.

For the six months ended June 30, 2013, the Group’s times interest earned ratio was lower than the standard set by the bank; but it was not a breach of the contract. The Group’s operation and financial status remain stable and the financial ratio requirements are expected to be met in the year-end consolidated financial report.

The details of assets pledged as collaterals for long-term loans are shown in Note 32.

18. NOTES PAYABLE AND TRADE PAYABLES

Notes payable Notes payable - operating Trade payables Trade payables - operating	June 30, 2013 December 31, 2012 $ 15 $ 105 1,865,608 1,834,036 $ 1,865,623 $ 1,834,141	June 30, 2012 $ 750 2,097,574 $ 2,098,324	January 1, 2012 $ 5,412 2,149,342
			$ 2,154,754

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

19. OTHER PAYABLES

Other payables Payable for royalties Payable for rework fees Payable for maintenance and repair Bonus Payable for pension Others	June 30, 2013 $ 533,884 519,871 304,100 166,110 56,970 496,782 $ 2,077,717	December 31, 2012 $ 544,531 851,804 354,863 270,794 56,709 541,145 $ 2,619,846	June 30, 2012 $ 540,322 320,404 387,693 145,397 55,845 443,810 $ 1,893,471	January 1, 2012 $ 613,531 252,234 367,167 335,344 54,380 553,993
				$ 2,176,649

22 -

20. PROVISIONS

June 30,
2013
December 31,
2012
June 30,
2012

Employee benefits (a)
$ 70,394
$ 70,573
$ 66,950

Customer returns and rebates (b)

19,672

23,596

23,739

$ 90,066
$ 94,169
$ 90,689

Current
$ 90,066
$ 94,169
$ 90,689

Employee
Benefits
Customer
Returns and
Rebates
Balance at January 1, 2012
$ 63,967
$ 24,521

Additional provisions recognized
4,014
12,045
Reversing un-usage balances
(941)
(12,805)

Effect of foreign currency exchange differences

(90)

(22)

Balance at June 30, 2012
$ 66,950
$ 23,739

Balance at January 1, 2013
$ 70,573
$ 23,596

Additional provisions recognized
61,064
15,471
Reversing un-usage balances
(61,225)
(19,442)

Effect of foreign currency exchange differences

(18)

47

Balance at June 30, 2013
$ 70,394
$ 19,672

January 1,
2012
$ 63,967

24,521
$ 88,488
$ 88,488
Total
$ 88,488
16,059
(13,746)

(112)
$ 90,689
$ 94,169
76,535
(80,667)

29
$ 90,066

a. The provision for employee benefits represents vested long service leave entitlements accrued.
b. The provision of customer returns and rebates was based on historical experience, management's judgments and other known reasons estimated product returns and rebates may occur in the year. The provision was recognized as a reduction of operating income in the periods of the related goods sold.

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company, Magic Pixel Inc., Mxtran Inc., Infomax Communication Co., Ltd., MoDioTek Co., Ltd. and MaxRise Inc. of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Based on the LPA, the Group makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group's subsidiary in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

The total expense recognized in profit or loss for the three months ended June 30, 2013 and 2012 was NT$63,617 thousand and NT$66,947 thousand, respectively, and the total expense recognized in profit or loss for six months ended June 30, 2013 and 2012 was NT$127,275 thousand and NT$118,212 thousand, which represents contributions payable to these plans by the Group at rates specified in the rules of the plans.

23 -

b. Defined benefit plans

The Company and Magic Pixel Inc. of the Group adopted the defined benefit plan provided in the Labor Standard Law (the “LSL”). Under the LSL, pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company and Magic Pixel Inc. contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name.

For defined benefit plans, employee benefit expenses were calculated using the actuarially determined pension cost discount rate as of December 31, 2012 and January 1, 2012, and recognized in their respective periods. Refer to Note 21 to the consolidated financial statements as of March 31, 2013 for information on the Group’s retirement benefit plans.

The net periodic pension costs of the Company’s separate executive pension plan were NT$28,992 thousand, NT$21,212 thousand, NT$60,514 thousand and NT$42,424 thousand for the three months ended June 30, 2013 and 2012, and the six months ended June 30, 2013 and 2012, respectively.

Retirement related defined benefit plans were included in the following line items:

Operating cost Marketing expenses Administration expenses Research and development expenses	Three Months Ended June 30 2013 2012 $ 2,984 $ 1,963 $ 309 $ 176 $ 29,825 $ 21,840 $ 1,104 $ 897	Three Months Ended June 30 2013 2012 $ 2,984 $ 1,963 $ 309 $ 176 $ 29,825 $ 21,840 $ 1,104 $ 897	Six Months Ended June 30	Six Months Ended June 30	Six Months Ended June 30
		2013 $ 2,984 $ 309 $ 29,825 $ 1,104		2013 $ 5,987 $ 615 $ 62,211 $ 2,209	2012 $ 3,931 $ 354 $ 43,682 $ 1,786

22. EQUITY

a. Share capital

Share capital
Numbers of shares authorized Shares issued	June 30, 2013 $ 65,500,000 $ 35,214,623	December 31, 2012 $ 65,500,000 $ 35,214,623	June 30, 2012 $ 65,500,000 $ 33,923,620	January 1, 2012 $ 65,500,000
				$ 33,847,486

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

A total of 864,704 thousand shares and 650,000 thousand shares of the Company’s authorized shares were reserved for the issuance of convertible bonds and employee share options.

24 -

b. Capital surplus

Arising from treasury share transactions Arising from donations Arising from share of changes in capital surplus of associates Arising from employee share options	June 30, 2013 December 31, 2012 $ 26,502 $ 26,502 37 37 260 113 317,217 317,217 $ 344,016 $ 343,869	June 30, 2012 $ 25,075 37 - 317,601 $ 342,713	January 1, 2012 $ 25,075 37 - 321,377 $ 346,489

A reconciliation of the carrying amount at the beginning and at the end of the six months ended June 30, 2013 and 2012, for each class of capital surplus was as follows:

Treasury Share Transactions Balance at January 1, 2012 $ 25,075 Issue of ordinary shares under employee share options - Balance at June 30, 2012 $ 25,075 Balance at January 1, 2013 $ 26,502 share of changes in capital surplus of associates - Balance at June 30, 2013 $ 26,502	Donations Share of Changes in Capital Surplus of Associates Employee Share Options $ 37 $ - $ 321,377 - - (3,776) $ 37 $ - $ 317,601 $ 37 $ 113 $ 317,217 - 147 - $ 37 $ 260 $ 317,217

The capital surplus arising from shares issued in excess of par (treasury share transactions and employee share options) and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Company’s capital surplus and once a year).

The capital surplus from long-term investments may not be used for any purpose.

c. Retained earnings and dividend policy

The Company’s Articles of Incorporation provide that any profit after annual closing should be used first to cover income tax and accumulated deficit. Then appropriate for legal reserve 10% of the remaining amount (until the amount of the legal reserve equals the amount of the Company’s capital stock) and appropriate for (or reverse) special reserve in accordance with law. Appropriation for remuneration to directors and supervisors should be made at 2% of the remaining amount. Any remaining amount will be added to the undistributed earnings from previous years and distributed in the following manner: (a) shareholders’ dividends - 85%; (b) employees’ bonus - 15%. Employees’ bonus will be distributed in the same form as the distribution of dividends to shareholders on a proportionate basis.

25 -

Distributions, except for the remuneration to directors and supervisors, may be made in the form of cash dividend or stock dividend, as determined by the shareholders at an Annual General Meeting. Both the shareholders’ bonus and employees’ bonus take the form of cash dividend as the first choice. Nevertheless, it still depends on the Company’s financial, sales or operating condition. The Company’s Articles of Incorporation provide that no more than 50% of the current year’s total amount of distributable earnings can be distributed in the form of stock dividend.

Due to the net loss for the six months ended June 30, 2013 and 2012, there were no accrual for bonus to employees and remuneration to directors and supervisors.

Under Rule No. 100116 and Rule No. 0950000507 issued by the FSC, certain amounts shall be transferred from unappropriated earnings to a special reserve before any appropriation of earnings generated before January 1, 2012 shall be made. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance.

Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption of IFRSs, a company should appropriate to a special reserve.

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

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

The appropriations of earnings for 2011 had been approved in the shareholders’ meeting on June 6, 2012. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends Stock dividends	For the Year Ended 2011
	Appropriation of Earnings Dividends Per Share (NT$) $ 288,272 1,288,408 $ 0.38 1,288,408 0.38 $ 2,865,088

The above appropriation for stock dividends of NT$1,288,408 thousand from 2011 earnings will be adjusted when the outstanding shares at the ex-dividend date are increased due to exercise of stock options by the Company’s employees. The shareholders had authorized the chairman to adjust the cash and stock dividend per share when the outstanding shares at the ex-dividend date are increased. The above appropriation for stock dividends was approved by the Securities and the Futures Bureau of Financial Supervisory Commission, Executive Yuan on June 19, 2012 and had been officially registered with the Ministry of Economic Affairs, ROC.

26 -

The bonus to employees and remuneration to directors and supervisors for 2011 had been approved in the shareholders’ meeting on June 6, 2012. Details were stated as follows:

Amounts approved in shareholders’ meetings Amounts recognized in respective financial statements		For the Year Ended December 31, 2011
		Bonus to Employees Remuneration of Directors and Supervisors $ 454,732 $ 51,889 477,847 52,928 $ (23,115) $ (1,039)

The differences between the approved amounts of the bonus to employees and remuneration to directors and supervisors and the accrual amounts reflected in the financial statements for the years ended December 31, 2011 which were primarily due to changes in estimates (numbers of the outstanding shares and income tax expense) had been adjusted in profit and loss for the years ended December 31, 2012.

In their meeting on June 19, 2013, the Company’s shareholders resolved the proposal of the Board of Directors to use legal reserve to offset accumulated deficit in the amount of NT$2,695,275 thousand.

Information about the appropriations of earnings is available on the Market Observation Post System website of the Taiwan Stock Exchange.

d. Special reserves appropriated following first-time adoption of IFRSs

The Company had a decrease in retained earnings that resulted from all IFRSs adjustments; therefore, no special reserve was appropriated.

e. Others equity items

1) Foreign currency translation reserve

Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. New Taiwan dollars) were recognized directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve in respect of translating the net assets of foreign operations were reclassified to profit or loss on the disposal of the foreign operation.

2) Investments revaluation reserve

The investments revaluation reserve represents the cumulative gains and losses arising on the revaluation of available-for-sale financial assets that have been recognized in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of or are determined to be impaired.

27 -

f. Non-controlling interests

Balance at January 1 Attributable to non-controlling interests: Share of loss for the period Issue of employee share options by subsidiaries Adjustment relating to changes in capital surplus of associates accounted for using equity method Exchange difference arising on translation of foreign entities Non-controlling interest relating to outstanding vested share options held by the employees of subsidiaries Balance at June 30		Six Months Ended June 30	Six Months Ended June 30
		2013 $ 59,115 (30,981) 338 34,414 146 637 $ 63,669	2012 $ 138,921 (41,381) 443 - (50) 427 $ 98,360

g. Treasury shares

	Number of
	Shares,
	Beginning and
	End of Period
Purpose of Buy-back	(In Thousands)
Six months ended June 30, 2013
The Company’s shares held by its subsidiaries	3,899
Six months ended June 30, 2012
The Company’s shares held by its subsidiaries	3,757

The Company’s shares held by its subsidiaries at the end of the reporting periods were as follows:

	Number of
	Shares Held	Carrying
Name of Subsidiary	(In Thousands)	Amount	Market Price
June 30, 2013
Hui Ying Investment, Ltd.	3,899	$159,061	$ 27,101
December 31, 2012
Hui Ying Investment, Ltd.	3,899	159,061	33,808
June 30, 2012
Hui Ying Investment, Ltd.	3,757	159,061	35,200
January 1, 2012
Hui Ying Investment, Ltd.	3,757	159,061	45,456

28 -

The subsidiaries holding treasury shares, however, retain shareholders’ rights, except the rights to participate in any share issuance for cash and to vote.

23. REVENUE

REVENUE
Revenue from the sale of goods Others		For the Three Months Ended June 30 2013 2012 $ 5,228,380 $ 5,877,095 2,629 5,813 $ 5,231,009 $ 5,882,908		For the Six Months Ended June 30
		2013 $ 5,228,380 2,629 $ 5,231,009		2013 $ 9,629,358 6,440 $ 9,635,798	2012 $ 11,016,069 10,315 $ 11,026,384

The analysis of the Group's products and revenue is shown in Note 36.

24. NET LOSS

Net loss had been arrived at after crediting

a. Other income

Interest income Dividends Others	For the Three Months Ended June 30 2013 2012 $ 33,234 $ 41,379 19,409 15,823 996 23,900 $ 53,639 $ 81,102	For the Three Months Ended June 30 2013 2012 $ 33,234 $ 41,379 19,409 15,823 996 23,900 $ 53,639 $ 81,102		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 33,234 19,409 996 $ 53,639		2013 $ 72,682 19,409 8,360 $ 100,451	2012 $ 82,909 15,823 29,831 $ 128,563

b. Other gains and losses

Net foreign exchange gains/(losses) Net gains arising on financial assets classified as held for trading Gains/(losses) on disposal of investments Other losses	For the Three Months Ended June 30 2013 2012 $ 36,970 $ 88,271 3,948 2,799 2,975 (12,792) (538) (7,397) $ 43,355 $ 70,881	For the Three Months Ended June 30 2013 2012 $ 36,970 $ 88,271 3,948 2,799 2,975 (12,792) (538) (7,397) $ 43,355 $ 70,881		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 36,970 3,948 2,975 (538) $ 43,355		2013 $ 89,766 3,654 2,975 (790) $ 95,605	2012 $ (37,230) 3,981 (12,792) (8,747) $ (54,788)

29 -

c. Finance costs

Interest on loans Others Less: Amounts included in the cost of qualifying assets	For the Three Months Ended June 30 2013 2012 $ 86,081 $ 80,475 - - - (5,664) $ 86,081 $ 74,811	For the Three Months Ended June 30 2013 2012 $ 86,081 $ 80,475 - - - (5,664) $ 86,081 $ 74,811		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 86,081 - - $ 86,081		2013 $ 173,252 - - $ 173,252	2012 $ 156,665 18 (24,487) $ 132,196

Information about capitalized interest was as follows:

Capitalized interest Capitalization rate	For the Three Months Ended June 30 2013 2012 $ - $ 5,664 - 1.54%	For the Six Months Ended June 30
		2013 2012 $ - $ 24,487 - 1.51%

d. Impairment losses on financial assets

Trade receivables Other non-current financial assets	For the Three Months Ended June 30 2013 2012 $ - $ - - - $ - $ -	For the Three Months Ended June 30 2013 2012 $ - $ - - - $ - $ -		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ - - $ -		2013 $ - 2,151 $ 2,151	2012 $ 20,021 - $ 20,021

The above impairment loss of financial assets was included in bad debt expense under operating expenses.

e. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses		For the Three Months Ended June 30 2013 2012 $ 1,608,498 $ 1,663,504 308,439 295,996 $ 1,916,937 $ 1,959,500		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 1,608,498 308,439 $ 1,916,937		2013 $ 3,222,187 614,452 $ 3,836,639	2012 $ 3,290,135 491,944 $ 3,782,079 (Continued)

30 -

For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
2013 2012 $ 57,988 $ 22,983 55,302 63,431 $ 113,290 $ 86,414 (Concluded) For the Six Months Ended June 30
2013 2012 $ 127,275 $ 118,212 71,022 49,753 198,297 167,965 338 443 2,982,625 2,941,199 $ 3,181,260 $ 3,109,607 $ 1,484,024 $ 1,434,963 1,697,236 1,674,644 $ 3,181,260 $ 3,109,607 For the Six Months Ended June 30

	2013 $ 898,989 (809,223) $ 89,766	2012 $ 319,117 (356,347) $ (37,230)

f. Employee benefits expense

g. Gain or loss on foreign currency exchange

31 -

25. INCOME TAX

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Current tax In respect of the current period In respect of prior periods Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended June 30 2013 2012 $ 2,792 $ 1,892 29 (9,124) (1,777) 17,014 $ 1,044 $ 9,782	For the Three Months Ended June 30 2013 2012 $ 2,792 $ 1,892 29 (9,124) (1,777) 17,014 $ 1,044 $ 9,782		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 2,792 29 (1,777) $ 1,044		2013 $ 3,837 29 (1,777) $ 2,089	2012 $ 2,845 (9,124) 22,312 $ 16,033

A reconciliation of accounting loss and current income tax expenses is as follows:

Income tax expense at the statutory rate Tax effect of adjusting items: Nondeductible expenses in determining taxable income Temporary differences Unrecognized tax loss carryforwards Additional income tax on unappropriated earnings Loss carryforwards used Investment tax credits used Current income tax expense Deferred income tax expense Temporary differences Investment tax credits Loss carryforwards Adjustments for prior years’ tax Income tax expense recognized in profit or loss		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ (720,273) 45,031 (174,521) 853,600 - - - 3,837 168,345 (22,452) (147,670) 29 $ 2,089	2012 $ (416,390) 50,310 (22,094) 408,858 5,191 (17,839) (5,191) 2,845 38,020 38,602 (54,310) (9,124) $ 16,033

32 -

b. Integrated income tax

Unappropriated earnings (Accumulated deficit) Unappropriated earnings generated before January 1, 1998 Unappropriated earnings generated on and after January 1, 1998 Imputation credit accounts	June 30, 2013 December 31, 2012 $ - $ - (4,776,536) (3,528,992) $ (4,776,536) $ (3,528,992) $ 212,512 $ 207,924	June 30, 2012 $ - (567,954) $ (567,954) $ 466,828	January 1, 2012 $ - 4,776,572
			$ 4,776,572
			$ 184,671

No tax creditable ratio was calculated for accumulated deficit of 2012. The actual tax creditable ratio for distribution of earnings of 2011 was 9.15%.

c. Income tax assessments

The tax returns through 2009 have been assessed by the tax authorities. The Company disagreed with the tax authorities’ assessment of its 2009 and 2008 tax returns and had applied for re-examination. Nevertheless, the Company has provided for the income tax assessed by the tax authorities.

26. LOSS PER SHARE

LOSS PER SHARE
Basic and diluted loss per share	For the Three Months Ended June 30 2013 2012 $ (0.52) $ (0.40)		Unit: NT$ Per Share For the Six Months Ended June 30
		2013 $ (0.52)		2013 $ (1.11)	2012 $ (0.71)

The amount of loss and weighted average number of ordinary shares outstanding used in the computation of loss per share from continuing operations were as follows:

Net loss for the period

Net loss for the period
Loss for the period attributable to owners of the Company		For the Three Months Ended June 30 2013 2012 $ (1,839,563) $ (1,394,176)		For the Six Months Ended June 30
		2013 $ (1,839,563)		2013 $(3,908,258)	2012 $ (2,479,438)

33 -

Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic and diluted loss per share		For the Three Months Ended June 30 2013 2012 $ 3,517,563 $ 3,515,506		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 3,517,563		2013 $ 3,517,563	2012 $ 3,515,506

As disclosed in Note 27 to the financial statements, the Company conforms according to IAS 33 “Earnings per Share”, in determining whether the share-based payments are potential ordinary stocks. The aforementioned stock options were not included in the calculation of diluted loss per share because they were antidilutive for the six months ended June 30, 2013 and 2012.

27. SHARE-BASED PAYMENT ARRANGEMENTS

The Company

The Company has two employee stock option plans (“2005 Plan” and “2007 Plan”) approved by the ROC Securities and Futures Bureau (SFB) to grant options up to 200,000 thousand units and 120,000 thousand units, respectively. Each stock option may subscribe for one new share of common stock of the Company. The options are valid for six years subsequent to the grant dates and exercisable at certain percentages after the second anniversary from the grant date. The options were granted at the exercise price equal to the higher of closing price of the Company’s common shares listed on the TSE or the Company’s net asset value per common share on the grant date. For any subsequent changes in the Company’s capital surplus, the exercise price is adjusted accordingly.

Information on employee share options was as follows:

Unit: Option Numbers in Thousand and NT$ Per Share

For the six months ended June 30, 2013 Balance, beginning of period Options cancelled Balance, end of period	2007 Plan
	Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 42,078 $ 8.80 (84) - 41,994 8.80

34 -

For the six months ended June 30, 2012 Balance, beginning of period Options exercised Options cancelled Balance, end of period	2007 Plan Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 49,794 $ 9.50 (7,553) 9.50 (65) - 42,176 9.50	2005 Plan
		Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 37 $ 4.00 - - (37) - - -

The number and exercise prices of outstanding options had been adjusted to reflect the stock dividends and the cancellation of common stock.

As of June 30, 2013, information about the Company’s outstanding and exercisable options was as follows:

Range of Exercise Price (NT$) $8.80	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 41,994 0.49 $8.80	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 41,994 $8.80

MoDioTek

Approved by the Board of Directors of MoDioTek on April 2, 2007, December 3, 2007, August 18, 2008 and December 11, 2008, MoDioTek was authorized to issue employee stock options for 1,500 thousand units, 579 thousand units, 671 thousand units and 40 thousand units, respectively. Each stock option may subscribe for one new share of common stock of MoDioTek. The options are valid for six years and exercisable at certain percentages after the second anniversary from the grant date or the earlier of the first anniversary of the grant date or date of application for share listing on the TSE or GreTai Securities Market. For any subsequent changes in MoDioTek’s capital surplus, the exercise price is adjusted accordingly.

As of June 30, 2013, information about MoDioTek’s outstanding and exercisable options was as follows:

Balance, beginning of period Options cancelled Balance, end of period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2013 Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 1,989 $ 10.35 (1,166) - 823 10.78	2012
		Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 2,040 $ 10.35 (29) - 2,011 10.35

35 -

As of June 30, 2013, information about MoDioTek’s outstanding and exercisable option was as follows:

Options Issued on or After January 1, 2004 and

	Options Issued on or After January 1, 2004 and
Range of Exercise Price (NT$) $10.00 11.40 11.40	Outstanding Number Outstanding (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 364 0.42 $10.00 439 1.13 11.40 20 1.45 11.40 823	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 364 10.00 439 11.40 20 11.40 823

Mxtran

Approved by the Board of Directors of Mxtran on April 2, 2007, May 4, 2007, November 16, 2007, December 21, 2007 and August 12, 2011, Mxtran was authorized to issue employee stock options for 1,409 thousand units, 74 thousand units, 17 thousand units, 1,564 thousand units and 2,344 thousand units, respectively. Each stock option may subscribe for one new share of common stock of Mxtran. The options are valid for six years and exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in Mxtran’s capital surplus, the exercise price is adjusted accordingly.

Mxtran cancelled and increased its share capital by 12,000 thousand shares and 20,000 thousand shares on March 5, 2009 and March 9, 2009, respectively. Each stock option has subscribed for 0.4 common stock share and the exercise price was subject to adjustments for any change of capital structure.

As of June 30, 2013, information about Mxtran’s outstanding and exercisable options was as follows:

Balance, beginning of period Options cancelled Balance, end of period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2013 Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 2,270 $ 10.30 (310) - 1,960 10.20	2012
		Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 2,664 $ 10.31 (168) - 2,496 10.31

As of June 30, 2013, information about Mxtran’s outstanding and exercisable option was as follows:

Options Issued on or After January 1, 2004 and

	Options Issued on or After January 1, 2004 and
Range of Exercise Price (NT$) $12.55 12.55 10.00	Outstanding Number Outstanding (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 2 0.38 $12.55 153 0.48 12.55 1,805 4.11 10.00 1,960	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 2 $12.55 153 12.55 1,805 10.00 1,960

36 -

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

follows:
Grant-date share price (NT$)	$	3.23
Exercise price (NT$)		10.00
Expected volatility		44.82%
Expected life (years)	4.25 years
Expected dividend yield		-
Risk-free interest rate		1.11%

For the three months ended June 30, 2013 and 2012, the compensation cost recognized was NT$101 thousand and NT$78 thousand, respectively. For the six months ended June 30, 2013 and 2012, the compensation cost recognized was NT$150 thousand and NT$78 thousand, respectively. As of June 30, 2013 and 2012, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were both 6%.

INFOMAX

Approved by the Board of Directors of INFOMAX on April 2, 2007, November 16, 2007, December 21, 2007, April 2, 2010 and January 26, 2011, INFOMAX was authorized to issue employee stock options for 2,577 thousand units, 423 thousand units, 1,910 thousand units, 8,654 thousand units and 1,346 thousand units, respectively. Each stock option may subscribe for one new share of common stock of INFOMAX. The options authorized on April 2, 2007, November 16, 2007, December 21, 2007 and January 26, 2011 are valid for six years, eight years, eight years and six years, respectively. The options authorized on April 2, 2010 are valid for the earlier of six years to the grant dates or two months to the date of application for share listing on the TSE or GreTai Securities Market. The options granted are exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in INFOMAX’s capital surplus, the exercise price is adjusted accordingly.

INFOMAX cancelled and increased its share capital by 109,797 thousand shares and 100,000 thousand shares on December 1, 2012 and April 3, 2013, respectively. Each stock option has subscribed for 0.3 common stock share and the exercise price was subject to adjustments for any change of capital structure.

As of June 30, 2013, information about INFOMAX’s outstanding and exercisable option was as follows:

Balance, beginning of period Options cancelled Balance, end of period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2013 Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 3,059 $ 31.87 (642) - 2,417 31.87	2012
		Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 10,943 $ 10.00 (970) - 9,973 10.00

37 -

As of June 30, 2013, information about INFOMAX’s outstanding and exercisable option was as follows:

Range of Exercise Price (NT$) $31.87 31.87 31.87	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 47 0.35 $31.87 356 2.47 31.87 2,014 2.88 31.87 2,417	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 47 $31.87 356 31.87 2,014 31.87 2,417

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

follows:
Grant-date share price (NT$)	$	5.17
Exercise price (NT$)		10.00
Expected volatility		37.82%
Expected life (years)	4.25 years
Expected dividend yield		-
Risk-free interest rate		0.91%

For the three months ended June 30, 2013 and 2012, the compensation cost recognized was NT$7 thousand and NT$109 thousand, respectively. For the six months ended June 30, 2013 and 2012, the compensation cost recognized was NT$188 thousand and NT$365 thousand, respectively. As of June 30, 2013 and 2012, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were both 3%.

MaxRise

Approved by the Board of Directors of MaxRise on January 12, 2007, April 18, 2007, November 16, 2007, December 21, 2007, August 14, 2008, April 15, 2009, May 5, 2010 and January 3, 2011, MaxRise was authorized to issue employee stock options for 1,160 thousand units, 230 thousand units, 110 thousand units, 1,350 thousand units, 780 thousand units, 225 thousand units, 863 thousand units and 2,007 thousand units, respectively. Each stock option may subscribe for one new share of common stock of MaxRise. The options are valid for six years and exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in MaxRise’s capital surplus, the exercise price is adjusted accordingly.

As of June 30, 2013, information about MaxRise’s outstanding and exercisable options was as follows:

Balance, beginning of period Options cancelled Balance, end of period	For the Six Months Ended June 30, 2012
	Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 3,034 $ 10.70 (203) - 2,831 10.70

The weighted-average exercise prices of outstanding options had been adjusted to reflect the capital reduction making up for losses.

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As of December 31, 2012, there was no outstanding option of MaxRise due to the merger of MaxRise and INFOMAX.

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

follows:
Grant-date share price (NT$)	$1.55-$2.58
Exercise price (NT$)	10.00
Expected volatility	32.48%-34.84%
Expected life (years)	4.25 years
Expected dividend yield	-
Risk-free interest rate	0.84%-0.96%

The compensation cost for the six months ended June 30, 2012 was minor; thus, it was not recognized.

MPI

Approved by the Board of Directors of MPI on June 20, 2007 and May 1, 2012, MPI was authorized to issue employee stock options for 2,400 thousand units and 841 thousand units, respectively. Each stock option may subscribe for one new share of common stock of MPI. The options are valid for six years and exercisable at certain percentages after the second anniversary from the grant date. For any subsequent changes in MPI’s capital surplus, the exercise price is adjusted accordingly.

As of June 30, 2013, information about MPI’s outstanding and exercisable options was as follows:

Balance, beginning of period Options granted Options cancelled Balance, end of period	For the Six Months Ended June 30	For the Six Months Ended June 30
	2013 Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 915 $ 19.07 - - (199) - 716 10.00	2012
		Number of Options (In Thousands) Weighted-average Exercise Price (NT$) 167 $ 67.30 841 10.00 (38) - 970 18.80

As of June 30, 2013, information about MPI’s outstanding and exercisable options was as follows:

Options Issued on or After January 1, 2004 and

	Options Issued on or After January 1, 2004 and
Range of Exercise Price (NT$) $10.00	Outstanding Number Outstanding (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 716 4.83 $10.00	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 716 $10.00

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

follows:
Grant-date share price (NT$)	$6.93
Exercise price (NT$)	10.00
Expected volatility	48.23%
Expected life (years)	4.25 years
Expected dividend yield	-
Risk-free interest rate	1%

39 -

The compensation costs for the six months ended June 30, 2013 and 2012 were minor; thus, they were not recognized.

No share options were granted during the three months ended June 30, 2013 and 2012. Refer to Note 27 to the consolidated financial statements as of March 31, 2013 for the information on granted share options.

Information on employee share options was as follows:

Consolidated net loss attributable to shareholders of the parent: Net loss as reported Pro forma net loss Consolidated loss per share (LPS) - after income tax (NT$): Basic and diluted LPS as reported Pro forma basic and diluted LPS	$ (3,908,258) $ (3,908,258) $(1.11) $(1.11)	$ 2,479,438 $ 2,479,438 $(0.71) $(0.71)

28. OPERATING LEASE ARRANGEMENTS

a. The Group as lessee

Operating leases relate to leases of land, offices, employee dormitories and office equipment with lease terms between 1 and 50 years. The Group does not have a bargain purchase option to acquire the leased land, offices, employee dormitories and office equipment at the expiry of the lease periods.

As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, refundable deposits paid under operating leases amounted to NT$9,159 thousand, NT$8,523 thousand, NT$8,627 thousand and NT$8,781 thousand, respectively.

The future minimum lease payments for non-cancellable operating lease commitments were as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	June 30, 2013 December 31, 2012 $ 86,810 $ 89,938 167,148 159,256 188,297 189,339 $ 442,255 $ 438,533	June 30, 2012 $ 82,887 188,704 197,899 $ 469,490	January 1, 2012 $ 86,259 218,819 204,156 $ 509,234

The lease payments recognized as expenses were as follows:

Minimum lease payment	For the Three Months Ended June 30 2013 2012 $ 28,912 $ 21,870	For the Three Months Ended June 30 2013 2012 $ 28,912 $ 21,870		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 28,912		2013 $ 55,965	2012 $ 48,354

b. The Group as lessor

Operating leases relate to the building owned by the Group with lease terms between 1 to 5 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have a bargain purchase option to acquire the property at the expiry of the lease period.

40 -

As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, deposits received under operating leases amounted to NT$343 thousand, NT$326 thousand, NT$333 thousand and NT$144 thousand, respectively.

The future minimum lease revenue from non-cancellable operating leases was as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years	June 30, 2013 December 31, 2012 $ 3,894 $ 3,728 9,998 11,599 - - $ 13,892 $ 15,327	June 30, 2012 January 1, 2012 $ 3,956 $ 2,881 13,643 13,987 - 919 $ 17,599 $ 17,787

29. CAPITAL MANAGEMENT

Management followed the same objectives, policies and process for managing capital, and capital structures of consolidated financial statements in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the three months ended March 31, 2013. Refer to Note 29 to the consolidated financial statements as of March 31, 2013 for details.

30. FINANCIAL INSTRUMENTS

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

The management considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

2) Fair value measurements recognized in the consolidated balance sheets

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
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June 30, 2013

Financial assets at FVTPL - current Available-for-sale financial assets - non-current Securities listed in ROC Equity securities December 31, 2012 Financial assets at FVTPL - current Available-for-sale financial assets - non-current Securities listed in ROC Equity securities June 30, 2012 Financial assets at FVTPL - current Available-for-sale financial assets - non-current Securities listed in ROC Equity securities January 1, 2012 Financial assets at FVTPL - non-current Available-for-sale financial assets - non-current Securities listed in ROC Equity securities	Level 1 $ - $ 841,163 Level 1 $ - $ 888,685 Level 1 $ - $ 932,307 Level 1 $ 39,357 $ 879,392	Level 2 $ 116 $ - Level 2 $ 6,199 $ - Level 2 $ 3,981 $ - Level 2 $ - $ -	Level 3 $ - $ - Level 3 $ - $ - Level 3 $ - $ - Level 3 $ - $ -	Total $ 116 $ 841,163 Total $ 6,199 $ 888,685 Total $ 3,981 $ 932,307 Total $ 39,357 $ 879,392

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

3) Valuation techniques and assumptions applied for the purpose of measuring fair value

The fair values of financial assets and financial liabilities were determined as follows:

a) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices;
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b) The fair values of derivative instruments were calculated using quoted prices. Where such prices were not available, a discounted cash flow analysis was performed using the applicable yield curve for the duration of the instruments for non-optional derivatives. The estimates and assumptions used by the Group were consistent with those that market participants would use in setting a price for the financial instrument.
b. Categories of financial instruments

		June 30,	December	December	31,		June 30,		January 1,
		2013		2012			2012		2012
Financial assets
Fair value through profit or loss
(FVTPL)
Held for trading	$	116	$	6,199		$	3,981	$	-
Designated as at FVTPL		-			-		-		39,357
Loans and receivables (i)		18,040,951		22,776,325			22,216,295		23,869,549
Available-for-sale financial
assets (ii)		923,861		986,547			1,066,817		1,033,883
Financial liabilities
Amortized cost (iii)		23,866,291		26,107,000			24,547,883		24,696,300

i) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, notes receivable and trade receivables (including receivables from related parties), other receivables, and other financial assets (including current and non-current assets).
ii) The balances included the carrying amount of available-for-sale financial assets measured at cost.
iii) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, notes payable and trade payables (including payables to related parties), other payables, payable for purchase of equipment, and long-term loans (including current portion).
c. Financial risk management objectives and policies

The Group manages its exposure to risks relating to the operations through market risk, credit risk, and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by management in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Group must comply with certain treasury procedures that provide guiding principles for overall financial risk management.

1) Market risk

The Group's activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below), interest rates (see (b) below), and other price risk (see (c) below).

a) Foreign currency risk

Several subsidiaries of the Company had foreign currency sales and purchases, which exposed the Group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing forward foreign exchange contracts.

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Sensitivity analysis

The Group was mainly exposed to the USD and JPY.

Sensitivity analysis of rate is for the transactions in currencies other than the entity’s functional currency (foreign currencies) which are recognized at the rates of exchange prevailing at the dates of the transactions.

The following table details the Group’s sensitivity to a 3% and 10% increase in New Taiwan dollars (the functional currency) against the relevant foreign currencies, respectively. The sensitivity rates used are 3% and 10% when reporting foreign currency risk internally to key management personnel.

management personnel.
Pre-tax loss	Currency USD Impact For the Six Months EndedJune 30 2013 2012 $ 31,963 $ 62,701	Currency JPY Impact
		For the Six Months EndedJune 30
		2013 2012 $ (32,113) $ 45,799

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings.

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

	June 30,	December 31,	June 30,	January 1,
	2013	2012	2012	2012
Fair value interest rate risk
Financial assets	$ 12,614,817	$ 17,835,488	$ 16,428,090	$ 16,001,937
Financial liabilities	220,454	88,406	215,713	-
Cash flow interest rate risk
Financial assets	1,289,360	1,471,846	1,651,827	3,911,479
Financial liabilities	18,961,756	21,033,615	19,675,474	19,406,820

Sensitive analysis

Sensitivity analysis of interest is calculated based on the financial liabilities exposed to cash flow interest rate risk at the end of each reporting period.

If interest rates had been 50 basis points higher/lower, the Group’s pre-tax loss for the six months ended June 30, 2013 and 2012 would increase/decrease by NT$49,994 thousand and NT$48,853 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.

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Sensitive analysis

Sensitivity analysis of equity price is calculated based on the fair values of available-for-sale investments at the end of each reporting period.

If equity prices had been 10% higher/lower, equity for the six months ended June 30, 2013 and 2012 would have increased/decreased by NT$84,116 thousand and NT$93,231 thousand, respectively, as a result of the changes in fair value of available-for-sale investments.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s exposure to credit risk mainly arises from trade receivables - operating, bank deposits, and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

Business related credit risk

In order to maintain the credit quality of trade receivables, the Group has established procedures to monitor and limit exposure to credit risk on trade receivables.

Credit evaluation is performed in the consideration of the relevant factors which may affects the customer’s paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions. The Group holds some of the credit enhancements such as prepayments and collateral to mitigate its credit risks.

Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of trade receivables and, where appropriate, credit guarantee insurance cover is purchased.

As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the Group’s ten largest customers accounted for 45%, 47%, 49% and 50% of total trade receivables (including receivables from related parties), respectively. The Group believed the concentration of credit risk was relatively insignificant for the remaining trade receivables.

Financial credit risk

The Group’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Corporate Treasury function. The Group only deals with creditworthy counterparties and banks so that no significant credit risk was identified.

3) Liquidity risk

The objective of liquidity risk management is to ensure the Group has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

The Group relies on bank borrowings as a significant source of liquidity. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the Group had available unutilized overdraft and short-term bank loan facilities of approximately NT$6,803,445 thousand, NT$6,856,768 thousand, NT$12,051,288 thousand and NT$10,099,344 thousand, respectively.

Liquidity and interest rate risk tables

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the

45 -

undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows.

Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

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

June 30, 2013

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 4,684,081 Variable interest rate liabilities 6,011,436 Fixed interest rate liabilities 220,977 $ 10,916,494 December 31, 2012 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 4,984,978 Variable interest rate liabilities 5,559,431 Fixed interest rate liabilities 88,767 $ 10,633,176 June 30, 2012 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 4,657,236 Variable interest rate liabilities 3,916,208 Fixed interest rate liabilities 215,173 $ 8,788,617 January 1, 2012 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 5,289,480 Fixed interest rate liabilities 1,815,677 Variable interest rate liabilities 1,804,025 $ 8,909,182	1-3 Years $ - 13,501,888 - $ 13,501,888 1-3 Years $ - 16,174,602 - $ 16,174,602 1-3 Years $ - 8,934,620 - $ 8,934,620 1-3 Years $ - 8,308,774 - $ 8,308,774	3-5 Years $ - - - $ - 3-5 Years $ - 22,886 - $ 22,886 3-5 Years $ - 7,635,271 - $ 7,635,271 3-5 Years $ - 8,358,820 - $ 8,358,820	5+ Years $ - - - $ - 5+ Years $ - - - $ - 5+ Years $ - - - $ - 5+ Years $ - - - $ -	Total $ 4,684,081 19,513,324 220,977
				$ 24,418,382
				Total $ 4,984,978 21,756,919 88,767
				$ 26,830,664
				Total $ 4,657,236 20,486,099 215,173
				$ 25,358,508
				Total $ 5,289,480 18,483,271 1,804,025
				$ 25,576,776

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31. TRANSACTIONS WITH RELATED PARTIES

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

a. Trading transactions

For the Three Months Ended June 30 For the Six Months Ended June 30 2013 2012 2013 2012 Sales of Goods Key management personnel $ 1,078,234 $ 1,365,539 $ 1,942,774 $ 2,829,587 Others 425 804 1,292 978 $ 1,078,659 $ 1,366,343 $ 1,944,066 $ 2,830,565 Purchases of Goods Key management personnel $ 404,684 $ 22,094 $ 569,594 $ 22,094 Sales prices to related parties were not comparable to those with external customers as the Company was the sole provider for them. The sales terms to the related parties were between 30 to 60 days after monthly closing, similar to those with external customers. Materials purchased from related parties were for manufacturing process. The payment term was 30 days after monthly closing, similar to those with external vendors. For the Three Months Ended June 30 For the Six Months Ended June 30 2013 2012 2013 2012 Manufacturing Expense The Group is its major management authority $ 108,876 $ 91,452 $ 219,490 $ 186,113 Operating Expense The Group is its major management authority $ 522 $ 161 $ 810 $ 385 Key management personnel - - 2,581 - Others 6,250 6,250 12,500 12,500 $ 6,772 $ 6,411 $ 15,891 $ 12,885 Joint Development Revenue The Group is its major management authority $ - $ 5,769 $ - $ 5,769		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
			2013 $ 219,490 $ 810 2,581 12,500 $ 15,891 $ -	2012 $ 186,113 $ 385 - 12,500 $ 12,885 $ 5,769

Sales prices to related parties were not comparable to those with external customers as the Company was the sole provider for them. The sales terms to the related parties were between 30 to 60 days after monthly closing, similar to those with external customers.

Materials purchased from related parties were for manufacturing process. The payment term was 30 days after monthly closing, similar to those with external vendors.

The subcontract processing charges of related parties were comparable to those with other vendors. The payment term was 75 days after monthly closing.

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The following balances of trade receivables from related parties were outstanding at the end of the reporting period:

Key management personnel Others	June 30, 2013 December 31, 2012 $ 420,472 $ 427,401 - 52 $ 420,472 $ 427,453	June 30, 2012 $ 667,908 172 $ 668,080	January 1, 2012 $ 918,063 - $ 918,063

The following balances of trade payables from related parties were outstanding at the end of the reporting period:

Key management personnel The Group is its major management authority Others	June 30, 2013 December 31, 2012 $ 349,073 $ - 108,068 118,455 - 17,550 $ 457,141 $ 136,005	June 30, 2012 $ - 96,824 7,450 $ 104,274	January 1, 2012 $ - 82,244 - $ 82,244

The outstanding of trade receivables from related parties are unsecured and will be settled in cash. No guarantees had been given or received for trade payables to related parties. No expense had been recognized for the six months ended June 30, 2013 and 2012 for allowance for impairment of trade receivables in respect of the amounts owed by related parties.

b. Compensation of key management personnel

The remuneration of directors and other members of key management personnel for the six months ended June 30, 2013 and 2012 was as follows:

Short-term benefits Post-employment benefits	For the Three Months Ended June 30 2013 2012 $ 48,898 $ 49,056 29,126 34,301 $ 78,024 $ 83,357	For the Three Months Ended June 30 2013 2012 $ 48,898 $ 49,056 29,126 34,301 $ 78,024 $ 83,357		For the Six Months Ended June 30	For the Six Months Ended June 30
		2013 $ 48,898 29,126 $ 78,024		2013 $ 78,185 60,803 $ 138,988	2012 $ 80,563 55,646 $ 136,209

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

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32. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, the tariff of imported raw materials guarantees or the deposit for hiring foreign workers:

Pledge deposits (classified as other financial assets - current) Property, plant and equipment, net Pledge deposits (classified as other financial assets - non-current)	June 30, 2013 $ 3,000 16,914,456 167,077 $ 17,084,533	December 31, 2012 $ 41,106 18,773,742 170,176 $ 18,985,024	June 30, 2012 $ 42,585 19,535,029 167,177 $ 19,744,791	January 1, 2012 $ - 13,119,861 187,182
				$ 13,307,043

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of June 30, 2013 were as follows:

a. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, unused letters of credit amounted to approximately NT$632,843 thousand, NT$15,930 thousand, NT$211,797 thousand and NT$50,489 thousand, respectively.
b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment	June 30, 2013 December 31, 2012 $ 3,418,847 $ 812,424	June 30, 2012 $ 624,866	January 1, 2012 $ 716,395

c. The Company entered into a technology development and foundry service agreement with E Company in June 2006. The terms of the agreements are five and seven years, respectively, from the commencement date. The Company had paid off the entire technology development fees on December 31, 2007.
d. The Company entered into the Phase-change memory technology agreement with IBM Company in January 2010, and the term of the agreement is from January 2010 to January 2013. Under the agreement, both parties have to share in the related expenditures of the technology development, and the Group has completed the payment in January, 2013. The Company entered into another Phase-change memory technology agreement with IBM Company in January 2013, and the term of the agreement is from January 2013 to January 2016. As of June 30, 2013, the Group has paid US$1,400 thousand.
e. The Company entered into the Patents Cross-License Agreement with J Company in December 2009, and the term of the agreement is from December 2009 to December 2015. Under the agreement, the Company has to pay the royalty on the Patents Cross-License Agreement.
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34. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

June 30, 2013

	Exchange		Financial		Financial
	Rate		Assets		Liabilities
Monetary items
JPY	0.30	$	2,257,674	$	3,328,111
USD	30.00		95,654		60,140
December 31, 2012
	Exchange		Financial		Financial
	Rate		Assets		Liabilities
Monetary items
JPY	0.34	$	2,452,014	$	861,058
USD	29.04		89,627		50,585
June 30, 2012
	Exchange		Financial		Financial
	Rate		Assets		Liabilities
Monetary items
JPY	0.38	$	2,334,735	$	1,129,493
USD	29.88		101,383		31,435
January 1, 2012
	Exchange		Financial		Financial
	Rate		Assets		Liabilities
Monetary items
JPY	0.39	$	6,450,652	$	3,733,623
USD	30.28		94,522		58,094

35. SEPARATELY DISCLOSED ITEMS

Information on significant transactions and information on investees:

a. Lending funds to others: None
b. Providing endorsements or guarantees for others: None
c. Holding of securities at the end of the period: Table 1 (attached)
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d. Aggregate purchases or sales of the same securities reaching NT$100 million or 20 percent of paid-in capital or more: None
e. Acquisition of real estate reaching NT$100 million or 20 percent of paid-in capital or more: None
f. Disposal of real estate reaching NT$100 million or 20 percent of paid-in capital or more: None
g. Purchases or sales of goods from or to related parties reaching NT$100 million or 20 percent of paid-in capital or more: Table 2 (attached)
h. Trade receivables from related parties reaching NT$100 million or 20 percent of paid-in capital or more: Table 3 (attached)
i. Information on investees: Table 4 (attached)
j. Trading in derivative instruments: None
k. The business relationship between the parent and the subsidiaries and between each subsidiary, and the circumstances and amounts of any significant transactions between them: Table 5 (attached)
l. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gains, and limit on the amount of investment in the mainland China area: Table 6 (attached)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: None
3) Endorsements, guarantees or collateral directly or indirectly provided to the investees: None
4) Financing directly or indirectly provided to the investees: None
5) Other transactions that significantly impacted current period’s profit or loss or financial position: None

36. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group's reportable segments under IFRS 8 “Operating Segments” were as follows:

Memory products and wafer fabrication

IC design

The reported segments above were separated by the nature of the operation. The accounting policies adopted by the segments have no significant differences from summary of significant accounting policies stated in Note 4.

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a. Segment revenues and results

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

	Segment	Segment	venue				Segment	Loss
For the Three M June 3	onths En 0	ded For the Six Mon June 3 ~~2013~~ ,024 $ 9,606,142 ,884 29,656 ,908 $ 9,635,798 June 30, 2013 $ 54,818,385 1,533,493 $ 56,351,878	For the Six Mon June 3	t 0	For the Three M June 3		onths Ended 0 For the Six Months Ended June 30 ~~2012~~ ~~2013~~ ~~2012~~ $ (1,306,783 ) $ (3,612,436 ) $ (2,085,074 ) (173,815) (347,518) (361,291) (1,480,598 ) (3,959,954 ) (2,446,365 ) 81,102 100,451 128,563 70,881 95,605 (54,788 ) (74,811) (173,252) (132,196) $ (1,403,426) $ (3,937,150) $ (2,504,786) June 30, 2012 January 1, 2012 64,290,945 $ 66,726,569 1,059,469 1,409,253 65,350,414 $ 68,135,822	For the Six Mon June 3	ths Ended 0
	~~2012~~ $ 5,858 24			$
	$ 5,882			$

						$

b. Segment total assets

37. FIRST-TIME ADOPTION OF IFRSs

a. Basis of the preparation for financial information under IFRSs

The Group’s condensed consolidated financial statements for the six months ended June 30, 2013 not only follows the significant accounting policies stated in Note 4 but also applies the requirements under IFRS 1 “First-time Adoption of IFRS” as the basis for the preparation.

Except for the following additional information on the impact on the transition to IFRSs, refer to Note 37 to the consolidated financial statements as of March 31, 2013 for the impact on the Group’s consolidated balance sheets and consolidated statements of comprehensive income after transition to IFRSs.

After transition to IFRSs, the effect on the Group’s consolidated balance sheets and consolidated statements of comprehensive income is stated as follows:

1) Reconciliation of consolidated balance sheet as of June 30, 2012

ROC GAAP Item Amount Current assets Cash and cash equivalents $ 17,870,676 Financial assets at fair value through profit or loss - current 3,981 Notes and accounts receivable, net 3,356,910 Receivables from related parties, net 668,080	Effect of Transition to IFRSs Recognition and Measurement Presentation Difference Difference $ - $ - - - - 11,207 - -	IFRSs Amount Item Note Current assets $ 17,870,676 Cash and cash equivalents 3,981 Financial assets at fair value through profit or loss - current 3,368,117 Notes receivable and trade receivables, net a) 668,080 Receivables from related parties, net (Continued)

52 -

ROC GAAP	Amount $ 86,385 7,695,203 470,589 42,585 553,044 30,747,453 932,307 134,510 1,066,817 32,614,621 343,458 286,340 60,297 167,177 53,044 566,858 $ 65,339,207 $ 215,173 2,098,324 104,274 69,016 1,893,471 506,621 561,167 3,607,718 1,437,778 10,493,542 16,067,756 399,191 3,125 402,316 26,963,614 33,923,020 1,288,408 346,506 2,695,275 (259,617 ) 487,439 (58,068 ) (142,365) 38,280,598 94,995 38,375,593 $ 65,339,207		Effect of Transit	ion to IFRSs Presentation Difference $ - - (470,589 ) - 534 (458,848) - - - 286,340 (4,759) (286,340 ) 470,589 - 4,225 188,474 $ 11,207 $ - - - - - - - - 11,207 11,207 - - - - 11,207 - - - - - - - - - - - $ 11,207		IFRSs Amount Item Note $ 86,385 Other receivables 7,695,203 Inventories - - b) 42,585 Other financial assets - current 553,578 Other current assets c) 30,288,605 Total current assets Long-term investments 932,307 Available-for-sale financial assets - non-current 134,510 Financial assets carried at cost - non-current 1,066,817 Total non-current assets 32,900,961 Property, plant and equipment d) 338,699 Intangible assets c), e) Other assets - - d) 530,886 Deferred income tax assets b) 167,177 Other financial assets - noncurrent 57,269 Other non-current assets c), e) 755,332 $ 65,350,414 Total Current liabilities $ 215,173 Short-term borrowings 2,098,324 Notes payable and trade payables 104,274 Payables to related parties 69,016 Current tax liabilities 1,893,471 Other payables 506,621 Salary and bonus payable 561,167 Payable for purchase of equipment 3,607,718 Current portion of long-term borrowings 1,515,933 Other current liabilities a), g) 10,571,697 Total current liabilities 16,067,756 Total long-term liabilities Other liabilities 657,767 Accrued pension cost h) 3,125 Others 660,892 Total other liabilities 27,300,345 Total liabilities 33,923,020 Ordinary shares 1,288,408 Stock dividends to be distributed 342,713 Capital surplus f) 2,695,275 Legal reserve (567,954 ) Unappropriated earnings g), h), i) 487,439 Unrealized gain from available-for-sale financial assets (58,131 ) Cumulative translation adjustments g) (159,061) Treasury stock i) 37,951,709 Equity attributable to owners of the company 98,360 Non-controlling interests f), g), h) 38,050,069 Total equity $ 65,350,414 Total (Concluded)
			Recognition and Measurement Difference $ - - - - - - - - - - - - - - - - $ - $ - - - - - - - - 66,948 66,948 - 258,576 - 258,576 325,524 - - (3,793 ) - (308,337 ) - (63 ) (16,696) (328,889 ) 3,365 (325,524) $ -
Item Other receivables, net Inventories Deferred income tax assets - current Restricted assets - current Other current assets Total current assets Long-term investments Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total long-term investments Net property, plant and equipment Net intangible assets Other assets Idle assets, net Deferred income tax assets - noncurrent Restricted assets - noncurrent Other assets Total other assets Total Current liabilities Short-term bank loans Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees, directors and supervisors Payables for equipment Current portion of long-term bank loans Other current liabilities Total current liabilities Total long-term liabilities Other liabilities Accrued pension cost Others Total other liabilities Total liabilities Shareholders' equity Capital stock Stock dividends to be distributed Capital surplus Legal capital reserve Unappropriated earnings Unrealized gains on financial instruments Cumulative translation adjustments Treasury stock Total equity attributable to shareholders of the parent Minority interests Total shareholders' equity Total

53 -
2) Reconciliation of consolidated statement of comprehensive income for the six months ended June 30, 2012

30, 2012
		Effect of Transition to IFRSs
		Recognition
		and
ROC GAAP		Measurement				Presentation			IFRSs
Item	Amount	Difference				Difference		Amount	Item		Note
Net sales	$ 11,026,384	$		-		$	-	$ 11,026,384	Net operating revenue
Cost of sales	9,605,507	(1,338)				86,663		9,690,832	Operating costs	g),	h), j)
Gross profit	1,420,877	1,338				(86,663)		1,335,552	Gross profit
Operating expenses									Operating expenses
Sales and marketing	570,783		(972 )			16		569,827	Sales and marketing	g),	h), j)
									expenses
General and	817,225		586			399		818,210	General and	g),	h), j)
administrative									administrative expenses
Research and	2,394,336	1,024				(1,480 )		2,393,880	Research and	g),	h), j)
development									development expenses
Total operating expenses	3,782,344		638			(1,065)		3,781,917	Total operating expenses
Loss from operations	(2,361,467)		700			(85,598)		(2,446,365)	Loss from operations
Non-operating income and									Non-operating income and
gains									gains
Interest income	82,909			-			-	82,909	Interest income
Valuation gain on	3,981			-			-	3,981	Valuation gain arising on
financial assets									financial assets
									classified as held for
									trading
Others	45,654			-			-	45,654	Others
Total non-operating	132,544			-			-	132,544	Total non-operating
income and gains									income and gains
Non-operating expenses and									Non-operating expenses and
losses									losses
Interest expense	132,196			-			-	132,196	Interest expense
Loss on disposal of assets	85,598			-	(	85,598 )		-	-	j)
Foreign exchange losses,	37,230			-			-	37,230	Foreign exchange losses
net
Others	21,539			-			-	21,539	Others
Total non-operating	276,563			-	(	85,598 )		190,965	Total non-operating
expenses and losses									expenses and losses
Loss before income tax	(2,505,486 )		700				-	(2,504,786 )	Loss before income tax
Income tax expense	16,033			-			-	16,033	Income tax expense
Consolidated net loss	$ (2,521,519)	$	700			$	-	(2,520,819 )	Consolidated net loss
								(28,133 )	Exchange differences on
									translating foreign
									operations
								55,344	Unrealized gain on
									available-for-sale
									financial assets
								27,211	Other comprehensive
									income for the period, net
									of income tax
								$ (2,493,608)	Total comprehensive loss for
									the period

3) Reconciliation of consolidated statement of comprehensive income for the three months ended June 30, 2012

ROC GAAP	Amount $ 5,882,908 5,208,613 674,295 290,939 428,119 1,339,491 2,058,549 (1,384,254)		Effect of Transiti	on to IFRSs Presentation Difference $ - 92,397 (92,397) - 155 (1,480 ) (1,325) (91,072)		IFRSs Amount Item Note $ 5,882,908 Net operating revenue 5,302,526 Operating costs g), h), j) 580,382 Gross profit Operating expenses 290,712 Sales and marketing expenses g), h), j) 429,733 General and administrative expenses g), h), j) 1,340,535 Research and development expenses g), h), j) 2,060,980 Total operating expenses (1,480,598) Loss from operations (Continued)
			Recognition and Measurement Difference $ - 1,516 (1,516) (227 ) 1,459 2,524 3,756 (5,272)
Item Net sales Cost of sales Gross profit Operating expenses Sales and marketing General and administrative Research and development Total operating expenses Loss from operations

54 -

ROC GAAP	Amount $ 41,379 2,799 88,271 39,723 172,172 74,812 91,072 20,188 186,072 (1,398,154 ) 9,782 $ (1,407,936)		Effect of Transiti	on to IFRSs Presentation Difference $ - - - - - - (91,072 ) - (91,072 ) - - $ -		IFRSs Amount Item Note Non-operating income and gains $ 41,379 Interest income 2,799 Valuation gain arising on financial assets classified as held for trading 88,271 Foreign exchange gains, net 39,723 Others 172,172 Total non-operating income and gains Non-operating expenses and losses 74,812 Interest expense - - j) 20,188 Others 95,000 Total non-operating expenses and losses (1,403,426 ) Loss before income tax 9,782 Income tax expense (1,413,208) Consolidated net loss 16,389 Exchange differences on translating foreign operations (154,328 ) Unrealized gain on available-for-sale financial assets (137,939 ) Other comprehensive income for the period, net of tax $ (1,551,147) Total comprehensive loss for the period (Concluded)
			Recognition and Measurement Difference $ - - - - - - - - - (5,272 ) - $ (5,272)
Item Non-operating income and gains Interest income Valuation gain on financial assets Foreign exchange gains, net Others Total non-operating income and gains Non-operating expenses and losses Interest expense Loss on disposal of assets Others Total non-operating expenses and losses Loss before income tax Income tax expense Consolidated net loss

4) Exemptions from IFRS 1

The exemptions adopted by the Group on January 1, 2012 were the same as those indicated in the consolidated financial statements as of March 31, 2013. Refer to the Note 37 to the consolidated financial statements as of March 31, 2013 for detail information.

5) Explanations of significant reconciling items in the transition to IFRSs

Material differences between the accounting policies under ROC GAAP and the accounting policies adopted under IFRSs were as follows:

a) Allowance for sales returns and others

Under ROC GAAP, provisions for estimated sales returns and others are recognized as a reduction in revenue in the period the related revenue is recognized based on historical experience. Allowance for sales returns and others is recorded as a deduction in accounts receivable. Under IFRSs, the allowance for sales returns and others is a present obligation with uncertain timing and an amount that arises from past events; it is therefore reclassified as provisions (classified under current liabilities) accordingly.

As of June 30, 2012, the amounts reclassified from allowance for sales returns and others to provisions was NT$11,207 thousand.

55 -
b) Classifications of deferred income tax asset/liability and valuation allowance

Under ROC GAAP, valuation allowance is provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. Under IFRSs, deferred tax assets are only recognized to the extent that it is probable that there will be sufficient taxable profits and the valuation allowance account is no longer used.

In addition, under ROC GAAP, a deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred income tax asset or liability does not relate to an asset or liability in the financial statements, it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. Under IFRSs, a deferred tax asset or liability is classified as noncurrent asset or liability.

As of June 30, 2012, the amount reclassified from deferred income tax assets - current to deferred income tax assets - non-current was NT$470,589 thousand.

c) Reclassification of burgage

Under ROC GAAP, held burgage is classified under intangible assets. Under IFRSs, burgage is reclassified as lease prepayments in accordance with IAS No 17, “Leases”.

As of June 30, 2012, the amounts reclassified to lease prepayments - current and lease prepayments - non-current were NT$534 thousand and NT$23,251 thousand, respectively.

d) Reclassification of idle assets

Under ROC GAAP, idle assets are classified under other assets. After the adoption of IFRSs, idle assets are reclassified under property, plant and equipment in accordance with IAS No 16, “Property, Plant and Equipment”.

As of June 30, 2012, the amount reclassified from idle assets to property, plant and equipment was NT$286,340 thousand.

e) Reclassification of deferred assets

Under ROC GAAP, deferred assets are classified under other assets. Under IFRSs, deferred assets are reclassified under intangible assets.

As of June 30, 2012, the amount reclassified from deferred assets to intangible assets was NT$19,026 thousand.

f) Capital surplus of subsidiaries - employee stock options

Under ROC GAAP, employee stock options granted by a subsidiary are recognized by the parent company according to its ownership percentage as capital surplus - employee stock options under the equity attributable to shareholders of the parent in the consolidated financial statements. Under IFRSs, the equity not attributable, directly or indirectly, to a parent is non-controlling interest.

As of June 30, and January 1, 2012, the amounts reclassified to non-controlling interest were NT$3,793 thousand.

56 -

g) Employee benefits - short-term accumulating compensated absences

Short-term accumulating compensated absences are not specifically addressed under ROC GAAP and usually recognized as salary expense while distributed. Under IFRSs, accumulating compensated absences are recognized as salary expense when the employees render services that increase their entitlement to future compensated absences.

At the transition to IFRSs, the Company elected to recognize all the resulting accounting difference of compensated absences in retained earnings. As of June 30, 2012, other current liabilities increased by NT$66,948 thousand, non-controlling interests decreased by NT$659 thousand; cumulative translation adjustments decreased by NT$63 thousand. For the three months ended June 30, 2012, the cost of sales and operating expenses increased by NT$2,547 thousand and NT$4,573 thousand, respectively. For the six months ended June 30, 2012, cost of sales and operating expenses increase by NT$728 thousand and NT$2,328 thousand, respectively.

h) Employee benefits - corridor approach

Under ROC GAAP, unrecognized net transition obligation from first-adoption of SFAS No. 18, “Accounting for Pensions”, should be amortized over the expected average remaining service lives of the employees who are still in service and expected to receive pension benefits using the straight-line method and recorded in net pension cost. Transition to IFRSs, the Company is not subject to the transition requirements of IAS 19 “Employee Benefits.” Thus, unrecognized net transition obligation should be recognized immediately to unappropriated earnings.

Under ROC GAAP, actuarial gains and losses are accounted for under the corridor approach which resulted in the deferral of gains and losses. When using the corridor approach, actuarial gains and losses should be amortized over the expected average remaining working lives of the participating employees and be recognized directly to retained earnings. At the transition to IFRSs, the Company decided to adopt the corridor approach continuously in accordance with IAS No. 19, “Employee Benefits,” and as its accounting policy.

At the transition date, the Company performed actuarial valuation under IAS No. 19, “Employee Benefits,” and recognized the valuation difference directly to retained earnings under the requirement of IFRS 1, “First-time Adoption of International Financial Reporting Standards.” As of June 30, 2012, accrued pension cost was adjusted for an increase of NT$258,576 thousand and non-controlling interest adjusted for an increase of NT$231 thousand. Pension cost for the three months ended June 30, 2012 was adjusted for a decrease in cost of sales of NT$1,031 thousand and a decrease in operating expenses of NT$817 thousand. Pension cost for the six months ended June 30, 2012 was also adjusted for a decrease in cost of sales of NT$2,066 thousand and a decrease in operating expenses of NT$1,690 thousand.

i) Treasury stock transactions

Under ROC GAAP, the Company’s stocks held by subsidiaries were accounted for as treasury stock. For its first-time adoption of SFAS No. 30, ”Accounting for Treasury Stocks,” the recorded cost of the stock is based on its carrying amount as of January 1, 2002, which may not equal to its acquisition cost.

At the transition to IFRSs, treasury stock is stated at cost and shown as a deduction in shareholders’ equity. The Company is not subject to the transition requirement; thus, the amounts of the related accounts in the statements of changes in shareholders’ equity should be adjusted retrospectively.

As of June 30, 2012, the book value of treasury stock increased by NT$16,696 thousand.

57 -
j) The reclassification of line items in the consolidated statement of comprehensive loss

Under IFRSs, based on the nature of operating transactions, the Group reclassified net loss on disposal of property, plant and equipment of NT$91,072 thousand for the three months ended June 30, 2012 as an increase in cost of sales of NT$92,397 thousand and a decrease in operating expenses of NT$1,325 thousand. For the six months ended June 30, 2012, the Group also reclassified net loss on disposal of property, plant and equipment of NT$85,598 thousand as an increase in cost of sales of NT$86,663 thousand and an decrease in operating expenses of NT$1,065 thousand.

58 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

MARKETABLE SECURITIES HELD JUNE 30, 2013

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

Holding Company	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		June 30, 2013	June 30, 2013		Note
				Shares/Units (In Thousands)	Carrying Value (Note 5)	Percentage of Ownership	Market Value or Net Asset Value (Note 5)
The Company Macronix (BVI) Co., Ltd.	Stock Macronix America Inc. Macronix (BVI) Co., Ltd. Hui Ying Investment, Ltd. Run Hong Investment, Ltd. Infomax Communication Co., Ltd. MoDioTek Co., Ltd. Magic Pixel Inc. Mxtran Inc. Ardentec Corporation United Industrial Gases Co., Ltd. Zowie Technology Co., Ltd. Aetas Technology Inc. Honbond Venture Capital Co., Ltd. Stock New Trend Technology Inc. Macronix Europe NV. Macronix Pte Ltd. Macronix (Hong Kong) Co., Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary The Company serves as member of its board of directors None None None The Company serves as member of its board of directors Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	100,000 223,300,000 - - 150,271,240 43,023,160 30,651,523 51,127,000 34,551,224 6,671,877 105,981 145,850 4,972,500 25,850,000 999 174,000 89,700,000	$ 254,431 1,482,132 27,204 53,090 1,060,614 102,848 91,143 87,799 653,018 58,500 - - 24,198 300,350 85,804 15,317 611,187	100.00 100.00 100.00 100.00 97.25 74.18 78.27 88.15 7.48 3.06 0.30 0.29 15.00 100.00 100.00 100.00 100.00	$ 254,431 1,482,132 54,305 53,090 1,064,669 102,848 91,143 88,107 653,018 119,394 191 (175) 22,556 673,099 85,804 15,317 611,187	Note 1 Note 1 Notes 1 and 3 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 Note 4 Note 4 Note 4 Note 4 Note 1 Note 1 Note 1 Note 1

(Continued)

59 -

Holding Company	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		June 30, 2013	June 30, 2013		Note
				Shares/Units (In Thousands)	Carrying Value (Note 5)	Percentage of Ownership	Market Value or Net Asset Value (Note 5)
Macronix (BVI) Co., Ltd. Macronix (Hong Kong) Co., Ltd. Hui Ying Investment, Ltd. Run Hong Investment, Ltd. Infomax Communication Co., Ltd. Infomax Holding Co., Ltd. Infomax Holding Company Limited MoDioTek Co., Ltd.	Macronix (Asia) Limited Chipbond Technology Corporation Key ASIC Bhd Tower Semiconductor Ltd. Global Strategic Investment Fund Stock Macronix Microelectronics (Suzhou) Co., Ltd. Stock MoDioTek Co., Ltd. Macronix International Co., Ltd. Raio Technology Co., Ltd. Stock Infomax Communication Co., Ltd. MoDioTek Co., Ltd. Magic Pixel Inc. Mxtran Inc. Stock Infomax Holding Co., Ltd. Stock Infomax Holding Company Limited Stock Infomax Communication (Suzhou) Co., Ltd. Stock Mosatek Co., Ltd.	Indirect subsidiary None None None None Indirect subsidiary Subsidiary The Company None Subsidiary Subsidiary Subsidiary Subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary	Investments accounted for using equity method Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial assets carried at cost - non-current Investments accounted for using equity method Investments accounted for using equity method Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	800,000 1,088,319 26,924,500 584,893 680,000 - 2,894,200 3,899,382 738,189 2,742,506 2,894,200 1,895,440 2,894,000 6,620,000 22,962,500 - 3,090,000	$ 47,109 79,992 24,279 83,874 - 313,173 6,918 27,101 - 19,304 6,918 5,636 4,970 7,615 6,175 4,929 4,754	100.00 0.18 3.34 1.36 2.52 100.00 4.99 0.11 10.86 1.77 4.99 4.84 4.99 100.00 100.00 100.00 100.00	$ 47,109 79,992 24,279 83,874 13,470 313,173 6,918 27,101 17,420 19,378 6,918 5,636 4,988 7,615 6,175 4,929 4,754	Note 1 Note 2 Note 2 Note 2 Note 4 Note 1 Note 1 Note 2 Note 4 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

(Continued)

60 -

Holding Company	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		June 30, 2013	June 30, 2013		Note
				Shares/Units (In Thousands)	Carrying Value (Note 5)	Percentage of Ownership	Market Value or Net Asset Value (Note 5)
Mosatek Co., Ltd. Mosatek (H.K) Company Limited Magic Pixel Inc. Magic Pixel Inc. Magic Pixel Holding Company Limited Mxtran Inc. Mxtran Holding (Samoa) Co., Ltd. Mxtran (H.K.) Holding Co., Limited	Stock Mosatek (H.K) Company Limited Stock Modiotek (Suzhou) Co., Ltd. Stock Magic Pixel Inc. Stock Magic Pixel Holding Company Limited Stock Magic Pixel (Shen Zhen) Co., Ltd. Stock Mxtran Holding (Samoa) Co., Ltd. Stock Mxtran (H.K.) Holding Co., Limited Maxtran Technology Co., Ltd.	Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	12,905,100 - 2,450,000 14,820,000 - 920,000 6,152,000 -	$ 4,352 4,133 9,813 8,312 8,050 10,921 10,138 9,700	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 4,352 4,133 9,813 8,312 8,050 10,921 10,138 9,702	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

Note 1: Recognized based on the reviewed financial statements for the same period as the Company.

Note 2: The market value was based on the closing price as of June 30, 2013.

Note 3: The book value excluded $27,101 thousand, held by a subsidiary.

Note 4: The calculation is based upon the most recent financial statements available to the Company.

Note 5: The foreign currency amount is converted into New Taiwan dollars based on the exchange rate at June 30, 2013.

(Concluded)

61 -

TABLE 2

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2013

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

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details	Transaction Details	Non-arm’s Length Transaction	Non-arm’s Length Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Term	Ending Balance	% to Total
The Company Macronix (Hong Kong) Co., Ltd. Macronix America Inc.	MegaChips Corporation Macronix (Hong Kong) Co., Ltd. Macronix America Inc. MegaChips Corporation The Company The Company	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	Sales Sales Sales Purchase Purchase Purchase	$ 1,942,774 1,344,758 251,515 569,594 US$ 45,562,523 US$ 8,497,396	20 14 3 18 100 100	30 days after monthly closing 45 days after monthly closing Net 60 days 30 days after monthly closing 45 days after monthly closing Net 60 days	Note 31 Note 35 Note 35 Note 31 No material difference No material difference	Note 31 Note 35 Note 35 Note 31 No material difference No material difference	$ 420,472 376,903 74,857 349,073 US$ 12,637,865 US$ 2,495,193	11 10 2 15 100 100	- - - - - -

62 -

TABLE 3

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 2013

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

Company Name	Related Party	Nature of Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Doubtful Accounts
					Amounts	Action Taken
The Company	MegaChips Corporation Macronix (Hong Kong) Co., Ltd.	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary	$ 420,472 376,903	9.17 times 7.41 times	$ - -	- -	JPY - thousand US$ 6,953 thousand	$ - -

63 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE SIX MONTHS ENDED JUNE 30, 2013

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

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as ofJune 30, 2013	Balance as ofJune 30, 2013	Balance as ofJune 30, 2013	Net Income (Loss) of the Investee (Note 3)	Investment Income (Loss) Recognized	Note
				June 30, 2013 (Note 1)	December 31, 2012 (Note 1)	Shares	Percentage of Ownership	Carrying Amount (Note 2)
The Company Macronix (BVI) Co., Ltd. Macronix (Hong Kong) Co., Ltd. Hui Ying Investment, Ltd. Run Hong Investment, Ltd. Infomax Communication Co., Ltd. Infomax Holding Co., Ltd. Infomax Holding Company Limited MoDioTek Co., Ltd. Mosatek Co., Ltd. Mosatek (H.K.) Company Limited Magic Pixel Inc. Magic Pixel Inc. Magic Pixel Holding Company Limited Mxtran Inc. Mxtran Holding (Samoa) Co., Ltd. Mxtran (H.K.) Holding Co., Limited	Macronix America Inc. Macronix (BVI) Co., Ltd. Hui Ying Investment, Ltd. Run Hong Investment, Ltd. Infomax Communication Co., Ltd. MoDioTek Co., Ltd. Magic Pixel Inc. Mxtran Inc. New Trend Technology Inc. Macronix Europe NV. Macronix Pte Ltd. Macronix (Hong Kong) Co., Ltd. Macronix (Asia) Limited Macronix Microelectronics (Suzhou) Co., Ltd. MoDioTek Co., Ltd. Infomax Communication Co., Ltd. MoDioTek Co., Ltd. Magic Pixel Inc. Mxtran Inc. Infomax Holding Co., Ltd. Infomax Holding Company Limited Infomax Communication (Suzhou) Co., Ltd. Mosatek Co., Ltd. Mosatek (H.K) Company Limited Modiotek (Suzhou) Co., Ltd. Magic Pixel Inc. Magic Pixel Holding Company Limited Magic Pixel (Shen Zhen) Co., Ltd. Mxtran Holding (Samoa) Co., Ltd. Mxtran (H.K.) Holding Co., Limited. Maxtran Technology Co., Ltd.	San Jose, California, U.S.A. Tortola, British Virgin Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan San Jose, California, U.S.A. Belgium Singapore Hong Kong Cayman Island China Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Samoa Hong Kong China Samoa Hong Kong China Samoa Hong Kong China Samoa Hong Kong China	Marketing Investment holding company Investment Investment Baseband chip, analog baseband chip, and power management chip Mobile audio platform and smart remote controller Fabless multimedia system on chip Combi-SIM IC and the related service IC design After-sale service After-sale service Marketing Investment holding company Development of integrated circuit system and software Fabless multimedia system on chip Baseband chip, analog baseband chip, and power management chip Mobile audio platform and smart remote controller Fabless multimedia system on chip Combi-SIM IC and the related service Investment holding company Investment holding company Software, rendering and technical service Investment holding company Investment holding company Sales and technical support of mobile audio platform and smart remote controller Investment holding company Investment holding company Sales and technical support of fabless multimedia system on chip Investment holding company Investment holding company Technical support of Combi-SIM IC	$ 2,640 7,348,057 500,000 984,432 1,502,711 430,232 289,111 512,371 850,637 2,106 3,291 378,427 26,325 296,160 30,442 27,423 30,442 22,131 29,279 216,154 96,022 82,415 100,567 51,377 51,433 76,913 59,668 34,282 27,809 23,880 23,435	$ 2,640 7,348,057 500,000 984,432 520,117 340,212 194,133 512,371 850,637 2,106 3,291 378,427 26,325 296,160 25,452 28,879 25,452 17,286 29,279 195,457 94,516 82,415 91,644 51,377 51,433 65,050 50,771 25,385 27,809 23,880 23,435	100,000 223,300,000 - - 150,271,240 43,023,160 30,651,523 51,127,000 25,850,000 999 174,000 89,700,000 800,000 - 2,894,000 2,742,506 2,894,200 1,895,440 2,894,000 6,620,000 22,962,500 - 3,090,000 12,905,100 - 2,450,000 14,820,000 - 920,000 6,152,000 -	100.00 100.00 100.00 100.00 97.25 74.18 78.27 88.15 100.00 100.00 100.00 100.00 100.00 100.00 4.99 1.77 4.99 4.84 4.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 254,431 1,482,132 27,204 53,090 1,060,614 102,848 91,143 87,799 300,350 85,804 15,317 611,187 47,109 313,173 6,918 19,304 6,918 5,636 4,970 7,615 6,175 4,929 4,754 4,352 4,133 9,813 8,312 8,050 10,921 10,138 9,700	$ (4,527 ) (18,624 ) (2,985 ) (14,006 ) (150,083 ) (61,673 ) (65,548 ) (56,899 ) (3,720 ) 3,226 446 (23,814 ) 2,030 (8,573 ) (61,673 ) (150,083 ) (61,673 ) (65,548 ) (56,899 ) (21,390 ) (858 ) (426 ) (10,188 ) (1,261 ) (1,261 ) (4,546 ) (3,059 ) (3,066 ) (3,371 ) (283 ) (283 )	$ (4,527 ) (18,624 ) (2,985 ) (14,006 ) (142,498 ) (44,058 ) (49,408 ) (50,156 ) Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Note 1: The foreign currency amount was converted into New Taiwan dollars at the historical exchange rate.

Note 2: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2013.

Note 3: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the average exchange rate for the six months ended June 30, 2013.

Note 4: Under relevant regulations, no disclosure of investment gain (loss) is needed.

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TABLE 5

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

TRANSACTIONS AMONG CONSOLIDATED ENTITIES FOR THE SIX MONTHS ENDED JUNE 30, 2013 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Transaction Subject	Transaction Object	Relation (Note 1)			Transaction Summary
			Account	Amount	Term of Transaction	% to Total Assets or Total Revenue
MXIC	MXHK	2	Sales	$1,344,758	Note 2	14
			Notes receivable and trade receivables	376,903		1
	MXE	2	Operatingexpenses	39,181		-
			Tradepayables	16,086		-
	MXA	1	Sales	251,515	Note 2	3
			Operatingexpenses	77,283		1
			Notes receivable and trade receivables	74,857		-
			Tradepayables	42,512		-
	Mxtran	1	Rental revenue	2,806	Note3	-
	MoDioTek	1	Rental revenue	2,796	Note 3	-
	MX Asia	2	Operatingexpenses	57,383		1
			Tradepayables	13,571		-
	INFOMAX	1	Rental revenue	3,771	Note 3	-
	MPI	1	Rental revenue	2,184	Note3	-

Note 1: 1. Transaction was between the parent company and subsidiaries.

Transaction was between the parent company and indirect subsidiaries.

Note 2: The sale price referred to the product price to end customer.

Note 3: The Company leased office to related parties and collected rental revenue according to the floor space per month.

Note 4: The transaction terms with related parties were 30 to 60 days after monthly closing and were similar to those with third parties.

65 -

TABLE 6

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2013 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (Note 1 and 4)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2013 (Note 4)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of June 30, 2013 (Note 4)	Percentage of Ownership (Note 5)	Investment Income (Loss) (Note 6)	Carrying Amount as of June 30, 2013 (Note 7)	Accumulated Inward Remittance of Earnings as of June 30, 2013
						Outflow (Note 4)	Inflow
Macronix Microelectronics (Suzhou) Co., Ltd. Infomax Communication (Suzhou) Co., Ltd. Modiotek (Suzhou) Co., Ltd. Magic Pixel (Shen Zhen) Co., Ltd. Maxtran Technology Co., Ltd.	Development of integrated circuit system and software Software, rendering and technical service Sales and technical support of mobile audio platform and smart remote controller Sales and technical support of fabless multimedia system on chip Technical support of Combi-SIM IC		$ 296,160 82,415 51,433 34,282 23,435	(Note 2) (Note 3) (Note 3) (Note 3) (Note 3)	$ 296,160 82,415 51,433 25,385 23,435	$ - - - 8,897 -	$ - - - - -	$ 296,160 82,415 51,433 34,282 23,435	100.00 99.02 84.16 83.11 93.14	$ (8,574 ) (421 ) (1,061 ) (2,548 ) (264 )	$ 313,173 4,881 3,478 6,690 9,034	$ - - - - -

Accumulated Investment in Mainland China as of June 30, 2013		Investment Amount Authorized by the Investment Commission, MOEA		Upper Limit on Investment
$ 513,388 (Note 4)		$ 547,344 (Note 4)		$ 18,583,011

Note 1: The amount of paid in capital included prepaid investments.

Note 2: The Company invested in a company located in Mainland China indirectly through the existing company in the third country.

Note 3: The Company invested in a company located in Mainland China indirectly through the investing company in the third country.

Note 4: The foreign currency amount was converted into New Taiwan dollars at the historical exchange rate.

Note 5: The percentage of ownership is based on the total holding percentage owned by the Company and its subsidiaries.

Note 6: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2013.

Note 7: The foreign currency amount was based on reviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the average exchange rate for the six months ended June 30, 2013.

66 -

AI assistant

Macronix — Interim / Quarterly Report 2013

52013_rns_2013-11-13_1645d863-d38f-4837-825f-d90c20ee9d4d.pdf

Macronix International Co., Ltd. and Subsidiaries

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

Notice to Readers

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

(Reviewed, Not Audited)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

New, Revised Standards, Amendments and Interpretations

Effective Date Announced by IASB (Note)

1) IFRS 9 “Financial Instruments”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

a. Statement of compliance

b. Basis of preparation

1) Subsidiary included in consolidated financial statements

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

9. FINANCIAL ASSETS MEASURED AT COST

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

b. Notes Receivable

11. INVENTORIES

12. PROPERTY, PLANT AND EQUIPMENT

13. INTANGIBLE ASSETS

14. PREPAYMENTS FOR LEASE

15. OTHER FINANCIAL ASSETS

16. OTHER ASSETS

17. BORROWINGS

a. Short-term borrowings

18. NOTES PAYABLE AND TRADE PAYABLES

19. OTHER PAYABLES

20. PROVISIONS

21. RETIREMENT BENEFIT PLANS

b. Defined benefit plans

22. EQUITY

a. Share capital

b. Capital surplus

c. Retained earnings and dividend policy

d. Special reserves appropriated following first-time adoption of IFRSs

e. Others equity items

1) Foreign currency translation reserve

f. Non-controlling interests

23. REVENUE

24. NET LOSS

c. Finance costs

25. INCOME TAX

b. Integrated income tax

c. Income tax assessments

26. LOSS PER SHARE

Net loss for the period

27. SHARE-BASED PAYMENT ARRANGEMENTS

The Company

Unit: Option Numbers in Thousand and NT$ Per Share

Mxtran

Options Issued on or After January 1, 2004 and

INFOMAX

MaxRise

MPI

Options Issued on or After January 1, 2004 and

28. OPERATING LEASE ARRANGEMENTS

b. The Group as lessor

29. CAPITAL MANAGEMENT

30. FINANCIAL INSTRUMENTS

June 30, 2013

a) Foreign currency risk

Sensitivity analysis

b) Interest rate risk

Macronix Interim / Quarterly Report 2013