Macronix — Interim / Quarterly Report 2016

Nov 16, 2016

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2016 and 2015 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ 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, 2016 and 2015 and the related consolidated statements of comprehensive income for the three months ended June 30, 2016 and 2015 and for the six months ended June 30, 2016 and 2015, and the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2016 and 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

Except as stated in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36 “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.

As disclosed in Note 12 to the consolidated financial statements, the financial statements of some insignificant subsidiaries included in the consolidated financial statements were not reviewed. As of June 30, 2016, the combined total assets of these insignificant subsidiaries was NT$4,056,575 thousand, representing 11.63% of the consolidated total assets, and the combined total liabilities of these subsidiaries was NT$784,570 thousand, representing 4.32% of the consolidated total liabilities, and for the three months ended June 30, 2016, the combined comprehensive loss of these subsidiaries amounted to NT$116,923 thousand, representing 14.17% of the consolidated total comprehensive loss, and for the six months ended June 2016, the combined comprehensive loss of these subsidiaries amounted to NT$182,896 thousand, representing 10.03% of the consolidated total comprehensive loss. As stated in Note 13 to the consolidated financial statements, we did not review the financial statements of equity-method investee as of and for the six months ended June 30, 2016. The carrying value of the related investment as of June 30, 2016 was NT$3,914 thousand, and the share of comprehensive loss of associate was NT$4,610 thousand for the three months ended June 30, 2016 and the share of comprehensive loss of associate was NT$8,378 thousand for the six months ended June 30, 2016. These amounts as well as the related financial information of the investee as disclosed in Note 38 to the financial statements were based on the subsidiaries’ and associates’ unreviewed financial statements for the same reporting periods as those of the Company.

• 1 -

Based on our reviews, except as discussed in the preceding paragraph that the carrying values of the investments in subsidiaries and associates as well as the related disclosures of the investment information were based on unreviewed financial statements of the subsidiaries and associates, and except for the effects of such adjustment, if any, as might have been made had we applied review procedures on the financial statements of the investees referred to in the preceding paragraph, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

July 27, 2016

Notice to Readers

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

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

• 2 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 6 and 33) Financial assets at fair value through profit or loss - current (Notes 7 and 33) Notes receivable and trade receivables, net (Notes 10 and 33) Receivables from related parties, net (Notes 33 and 34) Other receivables (Notes 10, 33 and 34) Inventories (Note 11) Other financial assets - current (Notes 17 and 33) Other current assets (Notes 16 and 18) Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Notes 8 and 33) Financial assets measured at cost - non-current (Notes 9 and 33) Investments accounted for using equity method (Note 13) Property, plant and equipment (Notes 14 and 35) Intangible assets (Note 15) Deferred tax assets (Notes 4 and 27) Other financial assets - non-current (Notes 17, 33 and 35) Other non-current assets (Notes 16 and 18) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 33) Financial liabilities at fair value through profit or loss - current (Notes 7 and 33) Notes payable and trade payables (Notes 20 and 33) Payables to related parties (Notes 33 and 34) Other payables (Notes 21 and 33) Other payables to related parties (Notes 33 and 34) Payables for purchase of equipment (Note 33) Current tax liabilities (Notes 4 and 27) Provisions - current (Note 22) Current portion of long-term borrowings (Notes 19 and 33) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 19 and 33) Net defined benefit liabilities (Notes 4 and 23) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT (Note 24) Share Capital Ordinary shares Capital stock to be cancelled Total share capital Capital surplus Retained earnings Accumulated deficit Other equity Treasury shares Equity attributable to shareholders of the parent NON-CONTROLLING INTERESTS (Note 24) Total equity TOTAL		June 30, 2016 (Reviewed) Amount % $ 5,408,777 16 - - 3,091,795 9 171,231 - 100,761 - 7,275,438 21 - - 376,682 1 16,424,684 47 983,149 3 93,357 - 3,914 - 16,198,176 47 77,316 - 911,484 3 153,831 - 21,653 - 18,442,880 53 $ 34,867,564 100 $ 1,710,157 5 - - 1,919,250 5 54,114 - 951,564 3 4,032 - 243,083 1 41,384 - 201,076 1 4,564,062 13 57,413 - 9,746,135 28 6,971,715 20 1,424,334 4 3,872 - 8,399,921 24 18,146,056 52 36,164,719 104 (7,551) - 36,157,168 104 75,005 - (19,883,310) (57) 528,451 1 (159,061) - 16,718,253 48 3,255 - 16,721,508 48 $ 34,867,564 100		December 31, 2015 (Audited) Amount % $ 5,592,548 15 - - 2,885,039 8 397,074 1 105,333 - 9,334,284 25 - - 210,862 - 18,525,140 49 1,199,468 3 93,951 - 12,345 - 16,596,123 44 109,017 - 909,230 3 153,511 1 28,877 - 19,102,522 51 $ 37,627,662 100 $ 1,540,028 4 717 - 1,724,139 5 27,131 - 1,300,335 3 355 - 206,227 1 183,212 1 180,202 - 4,683,784 12 66,308 - 9,912,438 26 7,861,990 21 1,420,235 4 4,159 - 9,286,384 25 19,198,822 51 36,178,489 96 (6,898) - 36,171,591 96 54,936 - (18,304,273) (49) 656,884 2 (159,061) - 18,420,077 49 8,763 - 18,428,840 49 $ 37,627,662 100		June 30, 2015 (Reviewed)
						Amount % $ 3,810,809 10 44 - 3,021,490 8 252,824 1 152,967 - 10,598,015 26 16,865 - 370,112 1 18,223,126 46 1,294,036 3 91,829 - 25,405 - 18,950,785 47 166,565 1 910,472 2 180,905 1 128,139 - 21,748,136 54 $ 39,971,262 100 $ 2,331,144 6 - - 1,960,968 5 63,188 - 1,044,506 3 4,654 - 188,339 1 186,099 - 173,100 - 3,317,918 8 67,992 - 9,337,908 23 8,323,432 21 1,116,767 3 4,592 - 9,444,791 24 18,782,699 47 35,587,740 89 (14,540) - 35,573,200 89 627,284 2 (15,392,564) (39) 525,768 1 (159,061) - 21,174,627 53 13,936 - 21,188,563 53 $ 39,971,262 100

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

(With Deloitte & Touche review report dated July 27, 2016)

• 3 -

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 25 and 34) OPERATING COSTS (Notes 11, 23, 26 and 34) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GAIN TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 23, 26 and 34) 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 (Note 26) Other gains and losses (Notes 26 and 31) Finance costs (Note 26) Share of loss of associates Total non-operating income and expenses LOSS BEFORE INCOME TAX INCOME TAX BENEFIT (EXPENSE) (Notes 4 and 27) NET LOSS FOR THE PERIOD OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 24) Unrealized (loss) gain on available-for-sale financial assets (Note 24) Share of the other comprehensive loss of associates accounted for using the equity method (Note 24) Other comprehensive income (loss) for the period, net of income tax TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		For the Three Mon	**ths **	Ended June 30		For the Six Mont	hs E	nded June 30
		2016		2015		2016		2015
		Amount % $ 5,181,168 100 4,474,255 86 706,913 14 (36 ) - - - 706,877 14 252,633 5 327,697 6 972,712 19 1,553,042 30 (846,165) (16) 47,766 1 52,523 1 (84,184 ) (2 ) (4,610) - 11,495 - (834,670 ) (16 ) 143,966 3 (690,704) (13) (5,285 ) - (129,309 ) (3 ) (11) - (134,605) (3) $ (825,309) (16)		Amount % $ 4,975,229 100 4,366,925 88 608,304 12 - - 6 - 608,310 12 244,314 5 381,346 8 1,154,002 23 1,779,662 36 (1,171,352) (24) 49,947 1 (15,591 ) - (73,312 ) (2 ) (6,958) - (45,914) (1) (1,217,266 ) (25 ) (5,201) - (1,222,467) (25) (16,924 ) - (185,762 ) (4 ) (18) - (202,704) (4) $ (1,425,171) (29)		Amount % $ 10,267,457 100 8,769,946 85 1,497,511 15 (14 ) - - - 1,497,497 15 499,997 5 652,619 6 1,996,370 20 3,148,986 31 (1,651,489) (16) 77,205 1 24,090 - (165,988 ) (2 ) (8,378) - (73,071) (1) (1,724,560 ) (17 ) 143,069 1 (1,581,491) (16) (27,475 ) - (215,199 ) (2 ) (39) - (242,713) (2) $ (1,824,204) (18)		Amount % $ 9,681,503 100 8,422,521 87 1,258,982 13 (35 ) - - - 1,258,947 13 490,257 5 748,842 8 2,438,645 25 3,677,744 38 (2,418,797) (25) 1,024,961 11 (25,631 ) - (138,374 ) (2 ) (13,121) - 847,835 9 (1,570,962 ) (16 ) (7,981) - (1,578,943) (16) (47,277 ) (1 ) 52,503 1 (37) - 5,189 - $ (1,573,754) (16) (Continued)

• 4 -

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 LOSS ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests LOSS PER SHARE (Note 28) Basic Diluted			For the Three Mon	**ths **	En	ded June 30			For the Six Mont	hs E	nd	ed June 30
			2016			2015			2016			2015
		$	Amount % (689,448 ) (13 ) (1,256) - (690,704) (13) (824,018 ) (16 ) (1,291) - (825,309) (16) $ (0.19) $ (0.19)		$	Amount % (1,220,566 ) (25 ) (1,901) - (1,222,467) (25) (1,423,218 ) (29 ) (1,953) - (1,425,171) (29) $ (0.35) $ (0.35)		$	Amount % (1,579,037 ) (16 ) (2,454) - (1,581,491) (16) (1,821,619 ) (18 ) (2,585) - (1,824,204) (18) $ (0.45) $ (0.45)		$	Amount % (1,575,284 ) (16 ) (3,659) - (1,578,943) (16) (1,569,980 ) (16 ) (3,774) - (1,573,754) (16) $ (0.45) $ (0.45)
		$			$			$			$
		$			$			$			$
		$			$			$			$

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

(With Deloitte & Touche review report dated July 27, 2016)

(Concluded)

• 5 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

BALANCE AT JANUARY 1, 2015 Net loss for the six months ended June 30, 2015 Other comprehensive income (loss) for the six months ended June 30, 2015, net of income tax Total comprehensive income (loss) for the six months ended June 30, 2015 Issue of restricted stock to employees Compensation cost of restricted stock for employees Retirement of restricted stock for employees Difference between purchase price and carrying amount arising from capital injection of subsidiaries Increase in non-controlling interests BALANCE AT JUNE 30, 2015 BALANCE AT JANUARY 1, 2016 Net loss for the six months ended June 30, 2016 Other comprehensive loss for the six months ended June 30, 2016, net of income tax Total comprehensive loss for the six months ended June 30, 2016 Compensation cost of restricted stock for employees Retirement of restricted stock for employees Increase (decrease) in non-controlling interests BALANCE AT JUNE 30, 2016			Equity	Equity	Attributable toShareholders of the Parent	Attributable toShareholders of the Parent	Attributable toShareholders of the Parent		Total Non-controlling Interests $ 22,592,429 $ 13,101 (1,575,284 ) (3,659 ) 5,304 (115) (1,569,980) (3,774) - - 156,674 - - - (4,531 ) 4,531 35 78 $ 21,174,627 $ 13,936 $ 18,420,077 $ 8,763 (1,579,037 ) (2,454 ) (242,582) (131) (1,821,619) (2,585) 116,744 - - - 3,051 (2,923) $ 16,718,253 $ 3,255	Total Equity $ 22,605,530 (1,578,943 ) 5,189 (1,573,754) - 156,674 - - 113 $ 21,188,563 $ 18,428,840 (1,581,491 ) (242,713) (1,824,204) 116,744 - 128 $ 16,721,508
			CapitalStock Share Capital Capital Stock to be Cancelled Capital Surplus $ 35,587,740 $ - $ 241,652 - - - - - - - - - - - 371,057 - - - - (14,540 ) 14,540 - - - - - 35 $ 35,587,740 $ (14,540) $ 627,284 $ 36,178,489 $ (6,898 ) $ 54,936 - - - - - - - - - - - 2,595 (13,770 ) (653 ) 14,423 - - 3,051 $ 36,164,719 $ (7,551) $ 75,005		Retained Earnings Accumulated Deficit $ (13,812,749 ) (1,575,284 ) - (1,575,284) - - - (4,531 ) - $ (15,392,564) $ (18,304,273 ) (1,579,037 ) - (1,579,037) - - - $ (19,883,310)		Other Equity	Employee Unearned Compensation Treasury Shares $ (209,813 ) $ (159,061 ) - - - - - - (371,057 ) - 156,674 - - - - - - - $ (424,196) $ (159,061) $ (263,407 ) $ (159,061 ) - - - - - - 114,149 - - - - - $ (149,258) $ (159,061)
							Exchange Differences on Unrealized Translating Gain (loss) from Foreign Operations Available-for-sale Financial Assets $ 27,223 $ 917,437 - - (47,199) 52,503 (47,199) 52,503 - - - - - - - - - - $ (19,976) $ 969,940 $ 48,923 $ 871,368 - - (27,383) (215,199) (27,383) (215,199) - - - - - - $ 21,540 $ 656,169
		Share (Thousands) 3,558,774 - - - - - - - - 3,558,774 3,617,849 - - - - (1,377 ) - 3,616,472

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

(With Deloitte & Touche review report dated July 27, 2016)

• 6 -

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 restricted shares Share of loss of associates Gain on disposal of property, plant and equipment Gain on disposal of investments Unrealized gain on the transactions with associates Net loss on foreign currency exchange Changes in operating assets and liabilities Decrease in financial assets held for trading Increase in notes receivable and trade receivables Decrease in receivables from related parties Decrease in other receivables Decrease (increase) in inventories Increase (decrease) in other current assets Decrease in financial liabilities held for trading Increase (decrease) in notes payable and trade payables Increase in payables to related parties Decrease in other payables Increase in other payables to related parties Increase in provisions Decrease in other current liabilities Increase in net defined benefit liabilities Cash generated from (used in) operations Interest received Dividend received Interest paid Income tax paid Net cash generated from (used in) operating activities		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ (1,724,560) 977,148 48,173 648 165,988 (10,493) (48,191) 116,744 8,378 (5,257) - 14 24,432 - (240,311) 215,587 4,755 2,058,846 (165,812) (717) 200,534 24,810 (351,307) 4,876 23,713 (8,694) 4,099 1,323,403 10,437 48,191 (161,774) (1,013) 1,219,244	2015 $ (1,570,962) 2,887,083 92,160 - 138,374 (18,418) (35,399) 156,674 13,121 (4,655) (7,491) 35 59,533 51 (386,858) 216,905 5,945 (1,296,372) 208,203 (7,113) (7,365) 1,805 (635,409) 4,654 22,483 (6,009) 259 (168,766) 19,661 35,398 (138,603) (122,559) (374,869) (Continued)

• 7 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from return of capital on financial assets measured at cost 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 (increase) 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 received Increase (decrease) in other non-current liabilities Increase in non-controlling interests Net cash 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		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ - (563,431) 5,647 (1,398) 134 (16,539) 1,109 7,224 (567,254) 2,360,037 (2,173,789) 3,100,000 (4,123,028) 50 - 179 128 (836,423) 662 (183,771) 5,592,548 $ 5,408,777	2015 $ 28,209 (1,011,856) 5,402 (16,004) 15,724 (20,546) (16,090) (2,054) (1,017,215) 5,434,900 (5,243,320) 8,872,827 (11,444,508) 36 (13,214) (194) 113 (2,393,360) (39,948) (3,825,392) 7,636,201 $ 3,810,809

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated July 27, 2016) (Concluded)

• 8 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated 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 consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollars.

Due to suffering from impacts of the global economic recovery was soft and overall demand was weak. As of June 30, 2016, the Company accumulated deficit was $19,883,310 thousand. The accumulated deficit incurred by the Company aggregated to one-half of its paid-in capital, but the Company considers that it will not affect the operation. The Company implements plans to improve the operating results and financial condition; the plan includes the following:

• a. Developing of the market aggressively: The Company is a leading manufacturer of non-volatile memory integrated components our products are widely applied in areas including consumer, communications, computers, automotive electronics, internet communications and more, with market share assuming a leading position in the world memory market. To satisfy the constantly increasing market demands for internet of things and intelligent wearable devices, the current demand for the automotive communications market. In response to the aerospace defense market’s strict requirement for high reliability, we successfully developed the world’s first high-efficiency products in succession. After years of comprehensive basic development in areas such as I/A/I (Industrial/automotive/ infrastructure), we have laid the groundwork for these to become main drivers for growth this year. It is exactly this commitment to the highest product quality and long-term reliable production that has won for Macronix the trust of customers around the world.

• b. Improving technology to reduce production costs: The NOR Flash process will advance from the 55 nm to 48 nm this year; in SLC NAND Flash, the 36 nm products are already in mass production and and we are pushing quickly towards to 19 nm. Above all the policy is to promote process technology and reduce product cost.

• c. Cost-controlling strategy: We implement strict control policy of costs and expenses. Streamlining human resources policy is one of the strategies for cost control.

• d. Improving financial liquidity by stock clearance: Drop down the amount of inventory by adjusting the policy of inventory control. By doing so, it will improve operational performance and generate sufficient net cash inflow.

Through carrying out the above plan, management believes that the Company can improve its performance. Thus, the Group prepares the consolidated financial statements as of and for the six months ended June 30, 2016 on a going concern basis.

• 9 -

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s Board of Directors and authorized for issue on July 27, 2016.

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

• a. International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC for application starting from 2017

Rule No. 1050026834 issued by the FSC endorsed the following IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) for application starting January 1, 2017.

New IFRSs Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle Amendments to IFRS 10, IFRS 12 and IAS 28 “'Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” Amendment to IAS 1 “Disclosure Initiative” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”

Effective Date Announced by IASB (Note 1)

July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 3) January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014

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

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

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

• 10 -

Except for the following, the initial application of the above New or amended IFRSs in 2017 would not have any material impact on the Group’s accounting policies:

• 1) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

The amendment clarifies that the recoverable amount of an asset or a cash-generating unit is disclosed only when an impairment loss on the asset has been recognized or reversed during the period. Furthermore, if the recoverable amount of an item of property, plant and equipment for which impairment loss has been recognized or reversed is fair value less costs of disposal, the Group is required to disclose the fair value hierarchy. If the fair value measurements are categorized within Level 2 or Level 3, the valuation technique and key assumptions used to measure the fair value are disclosed. The discount rate used is disclosed if such fair value less costs of disposal is measured by using present value technique. The amendment will be applied retrospectively.

• 2) Annual Improvements to IFRSs: 2010-2012 Cycle

Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement.

The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Group or another entity in the same group or the market price of the equity instruments of the Group or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Group as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Group, but also of other entities outside the Group. The share-based payment arrangements with market conditions, non-market conditions or non-vesting conditions will be accounted for differently, and the aforementioned amendment will be applied prospectively to those share-based payments granted on or after January 1, 2017.

IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss. The amendment will be applied prospectively to business combination with acquisition date on or after January 1, 2017.

The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker. The judgements made in applying aggregation criteria should be disclosed retrospectively upon initial application of the amendment in 2017.

When the amended IFRS 13 becomes effective in 2017, the short-term receivables and payables with no stated interest rate will be measured at their invoice amounts without discounting, if the effect of not discounting is immaterial.

IAS 24 was amended to clarify that a management entity providing key management personnel services to the Group is a related party of the Group. Consequently, the Group is required to disclose as related party transactions the amounts incurred for the service paid or payable to the

• 11 -

management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

• 3) Annual Improvements to IFRSs: 2011-2013 Cycle

Several standards, including IFRS 3, IFRS 13 and IAS 40 “Investment Property”, were amended in this annual improvement.

The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required to determine whether the investment property acquired is acquisition of an asset or a business combination. The amendment will be applied prospectively to acquisitions of investment property on or after January 1, 2017.

• 4) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization”

The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.

The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement.

The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances:

• a) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or

• b) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

An entity should apply the aforementioned amendments prospectively for annual periods beginning on or after the effective date.

• 5) Annual Improvements to IFRSs: 2012-2014 Cycle

Several standards including IFRS 5 “Non-current assets held for sale and discontinued operations”, IFRS 7, IAS 19 and IAS 34 were amended in this annual improvement.

IAS 19 was amended to clarify that the depth of the market for high quality corporate bonds used to estimate discount rate for post-employment benefits should be assessed by the market of the corporate bonds denominated in the same currency as the benefits to be paid, i.e. assessed at currency level (instead of country or regional level). The amendment will be applied from January 1, 2016, and any adjustment arising from the initial application of the amendment will be recognized in net defined benefit liabilities, deferred tax asset and retained earnings.

• 12 -

• 6) Amendments to IFRS 10, IFRS 12 and IAS 28 “'Investment Entities: Applying the Consolidation Exception”

The amendments clarified that when the Group (non-investment entity) applies the equity method to an associate or a joint venture that is an investment entity, the Group may retain the fair value measurements that the associate or joint venture used for its subsidiaries. Prior to the amendments, the associate or joint venture measures its interest in subsidiaries at fair value but the fair value is unwound, and instead, those subsidiaries are consolidated in the associate’s or joint venture’s result in order to be equity-accounted by the Group. When the amendments become effective, the Group will elect to retain the measurement applied by the associate or joint venture to its interest in subsidiaries.

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Group continues assessing other possible impacts that application of the aforementioned amendments will have on the Group’s financial position and financial performance, and will disclose these other impacts when the assessment is completed.

• b. New IFRSs in issue but not yet endorsed by the FSC

The Group has not applied the following IFRSs issued by the IASB but not yet endorsed by the FSC. The FSC announced that the Group should apply IFRS 15 starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new IFRSs.

New IFRSs Amendment to IFRS 2 “Classification and Measurement of Share-based Payment Transactions” IFRS 9 “Financial Instruments” Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 15 “Revenue from Contracts with Customers” Amendment to IFRS 15 “Clarification of IFRS 15” IFRS 16 “Leases” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12“Recognition of Deferred Tax Assets for Unrealized Losses”

Effective Date Announced by IASB (Note)

January 1, 2018 January 1, 2018 January 1, 2018 To be determined by IASB January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2017 January 1, 2017

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

• 1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

• 13 -

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

• a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

• b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for the above, all other financial assets are measured at fair value through profit or loss. 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. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

Impairment of financial assets

IFRS 9 requires impairment loss on financial assets to be recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

• 2) IFRS 15 “Revenue from Contracts with Customers” and related amendment

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations from January 1, 2017.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

• Identify the contract with the customer;

• Identify the performance obligations in the contract;

• Determine the transaction price;

• Allocate the transaction price to the performance obligations in the contract; and

• Recognize revenue when the entity satisfies a performance obligation.

• 14 -

When IFRS 15 and related amendment are effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

• 3) IFRS 16 “Leases”

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

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

• a. Statement of compliance

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

• b. Basis of consolidation

See Note 12 and Table 4 for the detailed information of subsidiaries (including the percentage of ownership and main business).

• c. Other important accounting policies

The accounting policies described in the consolidated financial statements were consistent with those applied in the consolidated financial statements for the year ended December 31, 2015, except for the following:

• 15 -

1) Employee benefits

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

• 2) Taxation

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The critical accounting judgments and key sources of estimation uncertainty described in the consolidated financial statements were consistent with those applied in the consolidated financial statements for the year ended December 31, 2015, except for the following:

• a. Useful lives of property, plant and equipment

Management determined that the useful lives of machinery equipment and R&D equipment, facility equipment and main buildings should be extended from 6 years to 11 years, 6 years to 15 years and 21 years to 31 years, respectively, from January 1, 2016.

The effect of this reassessment within the next 3 years is to decrease the consolidated depreciation expense described in the consolidated financial statements for the year ended December 31, 2015.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits	June 30, 2016 December 31, 2015 $ 547 $ 264 2,919,909 3,018,567 2,488,321 2,573,717 $ 5,408,777 $ 5,592,548	June 30, 2015 $ 320 1,844,016 1,966,473 $ 3,810,809

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts	June 30, 2016 December 31, 2015 $ - $ -	June 30, 2015 $ 44 (Continued)

• 16 -

Financial liabilities at FVTPL-current Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts	June 30, 2016 December 31, 2015 $ - $ 717	June 30, 2015 $ - (Concluded)

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)
December 31, 2015
Sell		USD/NTD	2016.01	USD11,000/NTD360,937
June	30, 2015
Sell		USD/NTD	2015.07	USD1,000/NTD30,960

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Non-current Domestic investments Listed shares Foreign investments Listed shares FINANCIAL ASSETS MEASURED AT COST Non-current Domestic unlisted common shares Overseas unlisted common shares	June 30, 2016 December 31, 2015 $ 717,437 $ 900,710 265,712 298,758 $ 983,149 $ 1,199,468 June 30, 2016 December 31, 2015 $ 58,500 $ 58,500 34,857 35,451 $ 93,357 $ 93,951	June 30, 2015 $ 997,729 296,307 $ 1,294,036 June 30, 2015 $ 58,500 33,329 $ 91,829 (Continued)

9. FINANCIAL ASSETS MEASURED AT COST

• 17 -

Classified according to financial asset measurement categories Available-for-sale financial assets	June 30, 2016 December 31, 2015 $ 93,357 $ 93,951	June 30, 2015 $ 91,829 (Concluded)

Management believed that the above unlisted equity investments held by the Group, whose fair value cannot be reliably measured due to the range of reasonable fair value estimates was so significant; 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 and Trade receivables Notes receivable Trade receivables Less: Allowance for impairment loss Other receivables Tax receivable Others	June 30, 2016 December 31, 2015 $ 41 $ 243 3,092,402 2,885,067 648 271 $ 3,091,795 $ 2,885,039 $ 88,306 $ 93,660 12,455 11,673 $ 100,761 $ 105,333	June 30, 2015 $ 268 3,021,493 271 $ 3,021,490 $ 102,377 50,590 $ 152,967

• 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 trading with any new customer, the Group assess the potential customer’s credit quality and defines credit limits uses an internal credit scoring system.

For the trade receivables balances that were past due at the end of the reporting period, the Group had not recognized an allowance for impairment loss, because there was not a significant change in credit quality and the amounts were still considered recoverable.

The aging of receivables was as follows:

Less than 60 days 61-120 days Over 121 days	June 30, 2016 December 31, 2015 $ 3,086,489 $ 2,884,079 5,265 70 648 918 $ 3,092,402 $ 2,885,067	June 30, 2015 $ 2,990,896 29,401 1,196 $ 3,021,493

• 18 -

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

Past due but not impaired Less than 60 days 61-120 days Over 121 days	June 30, 2016 December 31, 2015 $ 28,797 $ 22,109 5,265 70 - 647 $ 34,062 $ 22,826	June 30, 2015 $ 39,553 29,401 925 $ 69,879

The above aging schedule was based on the past due date.

As of June 30, 2016, the Group did not hold collateral for most of the receivables.

The movements of the allowance for doubtful trade receivables were as follows:

Individually Assessed for Impairment Assembly Assessed for Impairment Balance at January 1 and June 30, 2015 $ 271 $ - Balance at January 1, 2016 $ 271 $ - Add: Impairment losses recognized on receivables 648 - Less: Amounts written off during the period as uncollectible (271) - Balance at June 30, 2016 $ 648 $ -	Total $ 271 $ 271 648 (271) $ 648

The carrying amount of trade receivables pledged as collateral for borrowings was disclosed in Note 35.

• b. Notes Receivable and other receivables

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

11. INVENTORIES

Finished goods and merchandise Work in progress Raw materials	June 30, 2016 $ 1,147,487 5,798,398 329,553 $ 7,275,438	December 31, 2015 $ 1,321,168 7,618,542 394,574 $ 9,334,284	June 30, 2015 $ 1,426,354 8,693,289 478,372 $ 10,598,015

• 19 -

The cost of inventories recognized as cost of goods sold for the three months ended June 30, 2016 and 2015 included reversal of inventory write-downs of NT$395,539 thousand and inventory write-downs of NT$138,591 thousand, respectively, and the cost of inventories recognized as cost of goods sold for the six months ended June 30, 2016 and 2015 included reversal of inventory write-downs of NT$231,867 thousand and inventory write-downs of NT$286,745 thousand, respectively. Previous write-downs were reversed as a result of stock clearance.

12. SUBSIDIARIES

Subsidiary included in consolidated financial statements

As of June 30, 2016, the Company has direct and indirect majority ownership in the following subsidiaries: Run Hong Investment, Ltd. (“Run Hong”), Hui Ying Investment, Ltd. (“Hui Ying”), Mxtran Inc. (“Mxtran”), Infomax Communication Co., Ltd. (“INFOMAX”), Macronix America Inc. (“MXA”), Macronix (BVI) Co., Ltd. (“MXBVI”), 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”), 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 Nature of Activities The Company Run Hong Investment company The Company Hui Ying Investment company 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 MXA Sales and marketing The Company MXBVI Investment holding company Mxtran Mxtran Samoa Investment holding company Mxtran Samoa Mxtran HK Investment holding company Mxtran HK Maxtran Beijing Technical support of Combi-SIM IC INFOMAX Infomax Samoa Investment holding company Infomax Samoa Infomax HK Investment holding company Infomax HK Infomax SU Software, rendering and technical service MXBVI NTTI IC design MXBVI MX Asia Investment holding 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, 2016 December 31, 2015 June 30 2015 100.00 100.00 100.00 100.00 100.00 100.00 94.84 94.84 94.84 99.02 99.02 99.02 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Subsidiaries included in consolidated financial statements are immaterial, and its’ financial statements have not been reviewed.

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates

Associates MoDioTek Co., Ltd. (“MoDioTek”)	June 30, 2016 December 31, 2015 $ 3,914 $ 12,345	June 30, 2015 $ 25,405

• 20 -

Name of Associate Main Business Principal Place of Business MoDioTek Wi-Fi video transmission IC and smart security systems Hsinchu City	% of Ownership
	June 30, 2016 December 31, 2015 June 30, 2015 23.39 23.39 23.39

The investments accounted for using equity method and the share of profit or loss and other comprehensive income of those investments were based on unreviewed financial statements for the same reporting period.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at June 30, 2016				Six Months Ended June 30, 2016	Six Months Ended June 30, 2016
		Balance, Beginning of Period $ 1,320,487 23,709,538 82,541,070 5,168,722 30,285 43,850 1,163,014 1,425,924 115,402,890 407,984 19,142,362 74,541,409 3,575,569 25,177 30,126 1,084,140 98,806,767 $ 16,596,123	Additions $ - - - 3,629 - - 2,272 588,497 $ 594,398 $ - 171,097 655,478 119,216 1,713 3,113 26,531 $ 977,148	Disposals E $ - 11,323 158,395 4,571 5,152 - 2,958 - $ 182,399 $ - 11,323 158,366 4,242 5,152 - 2,926 $ 182,009	ffect of Foreign Currency Exchange Differences $ (12,104 ) (10,393 ) - (1,550 ) (68 ) (193 ) (2,397 ) 40 $ (26,665) $ (6,836 ) (1,965 ) - (1,044 ) (62 ) (33 ) (1,918) $ (11,858)	Reclassification Balance, End of Period $ - $ 1,308,383 624,674 24,312,496 205,829 82,588,504 331,303 5,497,533 - 25,065 - 43,657 261 1,160,192 (1,162,067) 852,394 $ - 115,788,224 $ - 401,148 - 19,300,171 1,459 75,039,980 (742 ) 3,688,757 - 21,676 - 33,206 (717) 1,105,110 $ - 99,590,048 $ 16,198,176

Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress				Six Months Ended June 30, 2015	Six Months Ended June 30, 2015
		Balance, Beginning of Period $ 1,294,628 23,088,007 80,734,087 6,322,265 30,323 41,247 1,198,945 1,804,262 114,513,764	Additions $ - - - 4,325 - - 5,468 715,117 $ 724,910	Disposals E $ - 12,655 182,329 7,044 900 2,419 8,547 - $ 213,894	ffect of Foreign Currency Exchange Differences $ (17,386 ) (6,168 ) - (895 ) (41 ) (1,103 ) (3,691 ) (55) $ (29,339)	Reclassification Balance, End of Period $ - $ 1,277,242 597,753 23,666,937 1,943,979 82,495,737 (1,225,068 ) 5,093,583 900 30,282 3,230 40,955 4,933 1,197,108 (1,325,727) 1,193,597 $ - 114,995,441 (Continued)

• 21 -

Accumulated depreciation Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amounts at June 30, 2015				Six Months Ended June 30, 2015	Six Months Ended June 30, 2015
		Balance, Beginning of Period $ 393,380 17,930,640 70,414,495 3,520,962 22,073 26,909 1,076,947 93,385,406 $ 21,128,358	Additions $ - 612,287 1,902,115 333,245 1,815 2,687 34,934 $ 2,887,083	Disposals E $ - 12,655 182,328 6,865 465 2,419 8,415 $ 213,147	ffect of Foreign Currency Exchange Differences $ (9,819) (915) - (548) (37) (750) (2,617) $ (14,686)	Reclassification Balance, End of Period $ - $ 383,561 - 18,529,357 597,284 72,731,566 (597,284 ) 3,249,510 - 23,386 - 26,427 - 1,100,849 $ - 96,044,656 $ 18,950,785 (Concluded)

The carrying amount of the freehold land in the U.S.A. which is unutilized by the Group as of June 30, 2016, December 31, 2015 and June 30, 2015 were US$9,579 thousand, respectively.

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

Buildings Main buildings 21-40 years Electronic equipment 11-20 years Facility equipment 6-15 years Landscape engineering 20 years Machinery equipment 4-11 years Research and development equipment 5-11 years Transportation equipment 5-6 years Leasehold improvements 3-16 years Miscellaneous equipment 2-16 years

Property, plant and equipment pledged as collateral for bank borrowings were set out in Note 35.

15. INTANGIBLE ASSETS

Cost Software Licenses Others Accumulated amortization and impairment Software Licenses Others Carrying amounts at June 30, 2016		Six Months Ended June 30,	Six Months Ended June 30,	2016
	Balance, Beginning of Period $ 309,702 58,407 18,691 386,800 232,616 31,926 13,241 277,783 $ 109,017	Additions $ 10,300 6,000 239 $ 16,539 $ 36,163 8,910 3,100 $ 48,173	Disposals $ 123,033 1,202 2,996 $ 127,231 $ 123,033 1,202 2,996 $ 127,231	Effect of Foreign Currency Exchange Differences Balance, End of Period $ (851) $ 196,118 - 63,205 (22) 15,912 $ (873) 275,235 $ (784) 144,962 - 39,634 (22) 13,323 $ (806) 197,919 $ 77,316

• 22 -

Six Months Ended June 30, 2015

Balance, Beginning of Period Cost Software $ 643,272 Licenses 58,913 Mask - Others 18,459 720,644 Accumulated amortization Software 455,190 Licenses 16,629 Mask - Others 10,482 482,301 Carrying amounts at June 30, 2015 $ 238,343	Additions $ 14,244 2,859 2,535 908 $ 20,546 $ 79,973 9,084 634 2,469 $ 92,160	Disposals $ 290,285 - - 253 $ 290,538 $ 290,285 - - 253 $ 290,538	Effect of Foreign Currency Exchange Differences Balance, End of Period $ (804) $ 366,427 - 61,772 - 2,535 (3) 19,111 $ (807) 449,845 $ (643) 244,235 - 25,713 - 634 - 12,698 $ (643) 283,280 $ 166,565

Intangible assets were amortized on a straight-line basis over the estimated useful lives as follows:

Software 1-6 years Licenses 1-3 years Mask 1-3 years Others 1-3 years

16. PREPAYMENTS FOR LEASE

Current asset (included in other current assets) Non-current asset (included in other non-current assets)	June 30, 2016 December 31, 2015 $ 548 $ 572 21,653 22,877 $ 22,201 $ 23,449	June 30, 2015 $ 571 23,130 $ 23,701

Prepaid lease payments include land use rights are located in Mainland China. The Group has obtained the land use right certificates.

17. OTHER FINANCIAL ASSETS

Current Refundable deposits	June 30, 2016 December 31, 2015 $ - $ -	June 30, 2015 $ 16,865 (Continued)

• 23 -

18.	Non-current Restricted time deposits (Note 35) Refundable deposits Long-term receivables OTHER ASSETS	June 30, 2016 December 31, 2015 $ 138,861 $ 139,970 12,543 11,435 2,427 2,106 $ 153,831 $ 153,511	June 30, 2015 $ 166,951 11,221 2,733 $ 180,905 (Concluded)

19.

June 30, 2016 December 31, 2015 June 30, 2015 Current Prepayments $ 343,585 $ 179,177 $ 339,170 Offset against business tax payable 31,448 31,092 30,371 Prepayments for lease 548 572 571 Others 1,101 21 - $ 376,682 $ 210,862 $ 370,112 Non-current Prepayments for lease $ 21,653 $ 22,877 $ 23,130 Prepayments - 6,000 105,009 $ 21,653 $ 28,877 $ 128,139 BORROWINGS a. Short-term borrowings June 30, 2016 December 31, 2015 June 30, 2015 Unsecured borrowings Import loans $ 460,157 $ 540,028 $ 333,144 Unsecured borrowings 1,250,000 1,000,000 1,998,000 $ 1,710,157 $ 1,540,028 $ 2,331,144 Interest rate 0.96%-2.10% 1.24%-2.02% 1.08%-1.98%

• 24 -

b. Long-term borrowings

June 30, 2016 Secured borrowings Loans from financial institution $ 9,841,246 Unsecured borrowings Loans from financial institution 1,720,000 11,561,246 Less: Current portion 4,564,062 Less: Arrangement fee 25,469 Long-term borrowings $ 6,971,715 Interest rate 1.59%-2.84% Repayment Terms June 30, 2016 Secured syndicated loan denominated in NT$ From June 2015 to June 2018. $ 6,885,000 Unsecured bank borrowing denominated in NT$ From September 2015 to March 2017. 1,000,000 Secured bank borrowing denominated in NT$ From December 2015 to September 2017. 800,000 Secured bank borrowing denominated in NT$ From September 2015 to September 2018. 560,000 Secured bank borrowing denominated in NT$ From October 2013 to October 2018. 500,000 Unsecured bank borrowing denominated in NT$ From March 2016 to January 2018. 500,000 Secured bank borrowing denominated in NT$ From December 2013 to December 2018. 410,848 Secured bank borrowing denominated in NT$ From January 2015 to January 2020. 236,156 Secured bank borrowing denominated in NT$ From September 2015 to September 2017. 160,000 Secured bank borrowing denominated in NT$ From July 2014 to July 2017. 140,000 Unsecured bank borrowing denominated in NT$ From October 2015 to December 2016. 120,000 Unsecured bank borrowing denominated in NT$ From September 2014 to September 2017. 100,000 Secured bank borrowing denominated in JPY From March 2014 to March 2019. 89,242	December 31, 2015 $ 10,671,943 1,913,333 12,585,276 4,683,784 39,502 $ 7,861,990 1.73%-2.91% December 31, 2015 $ 7,267,500 1,000,000 800,000 650,000 600,000 - 490,240 251,900 220,000 200,000 240,000 133,333 91,508	June 30, 2015 $ 9,585,569 2,086,667 11,672,236 3,317,918 30,886 $ 8,323,432 1.80%-2.52% June 30, 2015 $ 7,650,000 - - - 700,000 - 568,956 251,900 - 260,000 - 166,667 97,726 (Continued)

• 25 -

Repayment Terms Secured bank borrowing denominated in NT$ From August 2015 to February 2018. Secured bank borrowing denominated in NT$ From April 2001 to April 2016. Unsecured bank borrowing denominated in NT$ Pay off in March 2016. Unsecured bank borrowing denominated in NT$ Pay off in September 2015. Unsecured bank borrowing denominated in NT$ Pay off in September 2015. Less: Current portion Arrangement fee Total long-term borrowings	June 30, 2016 December 31, 2015 $ 60,000 $ 78,000 - 22,795 - 540,000 - - - - 4,564,062 4,683,784 25,469 39,502 $ 6,971,715 $ 7,861,990	June 30, 2015 $ - 56,987 720,000 1,000,000 200,000 3,317,918 30,886 $ 8,323,432 (Concluded)

To repay the vested liabilities, the Company has entered into a 3-year syndicated loan agreement with 15 financial institutions including Taiwan Cooperative Bank in June 2015. The total amount of 7.65 billion of the syndicated loan has been fully used as of June 30, 2016.

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 based on semi-annual and annual consolidated financial statements. The Group’s financial ratios during the first half of 2016 conform to the required ratios, except for the times interest earned. According to the loan contract agreement, the borrower will break the contract if occurs two times restrictions consecutively which aren’t in accordance with any of the above financial ratios. Therefore, the half of 2016 financial ratios didn’t meet the restrictions, was not considered as non-compliance. According to the contract agreed upon amount of compensation occurred, the Group is estimated and recorded, management considers operational or financial consolidation of the Group will not cause a significant impact.

The details of assets pledged as collaterals for long-term loans were set in Note 35.

20. NOTES PAYABLE AND TRADE PAYABLES

Notes payable Trade payables	June 30, 2016 December 31, 2015 $ 155 $ 4,815 1,919,095 1,719,324 $ 1,919,250 $ 1,724,139	June 30, 2015 $ 15 1,960,953 $ 1,960,968

• 26 -

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

21. OTHER PAYABLES

Payable for maintenance and repair Payable for bonus Payable for Insurance premium Payable for pension Payable for legal fees Others	June 30, 2016 December 31, 2015 $ 149,308 $ 189,336 141,288 264,690 59,995 156,560 56,000 57,531 51,753 57,240 493,220 574,978 $ 951,564 $ 1,300,335	June 30, 2015 $ 203,153 140,442 84,988 56,838 51,575 507,510 $ 1,044,506

22. PROVISIONS

Current Employee benefits (a) Customer returns and rebates (b) Balance at January 1, 2016 Additional provisions recognized Reversing un-usage balances/usage Net exchange differences Balance at June 30, 2016	June 30, 2016 December 31, 2015 $ 86,616 $ 79,009 114,460 101,193 $ 201,076 $ 180,202 Employee Benefits Customer Returns and Rebates $ 79,009 $ 101,193 76,584 150,341 (68,821) (133,986) (156) (3,088) $ 86,616 $ 114,460	June 30, 2015 $ 78,966 94,134 $ 173,100 Total $ 180,202 226,925 (202,807) (3,244) $ 201,076

• 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 years of the related goods sold.

• 27 -

23. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company, Mxtran and INFOMAX of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under 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.

b. Defined benefit plans

Employee benefit expenses in respect of the Group’s defined benefit retirement plans were $6,504 thousand and $9,821 thousand for the three months ended June 30, 2016 and 2015 and $13,007 thousand and $21,049 thousand for the six months ended June 30, 2016 and 2015, respectively, and were calculated using the actuarially determined pension cost discount rate as of December 31, 2015 and 2014.

The Group maintains a separate executive pension plan and the net periodic pension costs were $ 3,088 thousand and $3,943 thousand for the three months ended June 30, 2016 and 2015 and $6,177 thousand and $9,292 thousand for the six months ended June 30, 2016 and 2015.

24. EQUITY

• a. Share capital

Ordinary shares

Numbers of shares authorized (in thousands) Share authorized Numbers of shares issued and fully paid (in thousands) Shares issued	June 30, 2016 6,550,000 $ 65,500,000 3,616,472 $ 36,164,719	December 31, 2015 6,550,000 $ 65,500,000 3,617,849 $ 36,178,489	June 30, 2015 6,550,000 $ 65,500,000 3,558,774 $ 35,587,740

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.

• 28 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from issuance of common shares Arising from donations Arising from treasury share transactions May be used to offset a deficit only Arising from changes in percentage of ownership interest in subsidiaries (2) Arising from treasury share transactions May not be used for any purpose Arising from employee restricted shares	June 30, 2016 December 31, 2015 $ 209,730 $ 285,217 37 37 6,422 6,422 $ 216,189 $ 291,676 $ 4,302 $ 1,251 20,080 20,080 $ 24,382 $ 21,331 $ (165,566) $ (258,071)	June 30, 2015 $ 317,204 37 6,422 $ 323,663 $ 696 20,080 $ 20,776 $ 282,845

• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s paid-in capital and once a year).

• 2) Such capital surplus arises from changes in capital surplus of subsidiaries accounted for by using equity method.

• c. Retained earnings and dividend policy

In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The consequential amendments to the Company’s Articles of Incorporation and been approved by the annual shareholders’ meeting on June 18, 2015. Due to the net loss for the six months ended June 30, 2016 and 2015, there were no accrual for bonus to employees and remuneration to directors.

The Company’s Articles of Incorporation provide that any profit after annual closing should be used first to cover income tax and accumulated deficit and then make appropriation for legal reserve 10% of the remaining amount (until the amount of the legal reserve equals the amount of the Company’s paid-in capital) and special reserve in accordance with law. The remaining amount will be distributed in the following order:

• 1) Employees’ bonus - 15%;

• 2) Directors’ remuneration - 2%;

• 3) Shareholders’ dividends - any remaining amount will be added to the undistributed earnings from previous years.

• 29 -

The Company is classified as capital intensive industry. In accordance with the long-term financial program of the company, the above shareholders’ dividends can retain as undistributed earnings and distribute in future, as determined by the shareholders at Annual General Meeting.

Distributions 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.

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.

Information on the employees’ compensation and remuneration to directors and supervisors for 2015 resolved by the Company’s board of directors in 2016 is available on the Market Observation Post System website of the Taiwan Stock Exchange.

As of June 30, 2016, the accumulated loss incurred by the Company aggregates to one half of its paid-in capital. Under the Article 211 of the Company Act, the board of directors had made a report to a meeting of shareholders.

• d. Others equity items

• 1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Exchange differences arising on translating the financial statements of foreign operations Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 48,923 (27,383) $ 21,540	2015 $ 27,223 (47,199) $ (19,976)

2) Unrealized gain (loss) on available-for-sale financial assets

Balance at January 1 Unrealized (loss) gain arising on revaluation of available-for-sale financial assets Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 871,368 (215,199) $ 656,169	2015 $ 917,437 52,503 $ 969,940

• 30 -

3) Employee unearned benefit

In the meeting of shareholders on June 18, 2014, the shareholders approved a restricted share plan for employees. Refer to Note 29 for the information of restricted shares issued.

Balance at January 1 Issuance of shares Share-based payment expenses recognized Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ (263,407) - 114,149 $ (149,258)	2015 $ (209,813) (371,057) 156,674 $ (424,196)

e. Non-controlling interests

Balance at January 1 Attributable to non-controlling interests: Share of loss for the period Exchange difference arising on translation of foreign operations Non-controlling interest relating to outstanding vested share options held by the employees of subsidiaries Non-controlling interest arising from acquisition at a percentage different from its earlier ownership percentage of subsidiaries (Note 30) Balance at June 30		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 8,763 (2,454) (131) (2,923) - $ 3,255	2015 $ 13,101 (3,659) (115) 78 4,531 $ 13,936

• f. Treasury shares

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

		Number of
		Shares Held	Carrying
	Name of Subsidiary	(In Thousands)	Amount		Market Price
June 30, 2016
Hui Ying		3,899	$	159,061	$	11,035
December	31, 2015
Hui Ying		3,899		159,061		18,639
June 30, 2015
Hui Ying		3,899		159,061		23,279

The company’s shares held by subsidiaries are regarded as treasury shares; shareholder’s rights are retained, except the rights to participate in any share issuance for cash and to vote.

• 31 -

25. REVENUE

Revenue from the sale of goods Royalty income and others		For the Three Months Ended June 30 2016 2015 $ 5,176,597 $ 4,972,252 4,571 2,977 $ 5,181,168 $ 4,975,229		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 5,176,597 4,571 $ 5,181,168		2016 $ 10,261,700 5,757 $ 10,267,457	2015 $ 9,673,166 8,337 $ 9,681,503

The analysis of the Group’s revenue and main products was disclosed in Note 39.

26. NET LOSS AND OTHER COMPREHENSIVE INCOME (LOSS) FROM CONTINUING OPERATIONS

a. Other income

Dividend income Interest income Intellectual property rights income Others Other gains and losses Net foreign exchange gain (loss) Net gain arising on financial assets designated as at FVTPL Gain on disposal investment Others	For the Three Months Ended June 30 2016 2015 $ 37,362 $ 31,584 5,332 8,151 - - 5,072 10,212 $ 47,766 $ 49,947 For the Three Months Ended June 30 2016 2015 $ 54,761 $ (23,352) 145 695 - 7,491 (2,383) (425) $ 52,523 $ (15,591)	For the Three Months Ended June 30 2016 2015 $ 37,362 $ 31,584 5,332 8,151 - - 5,072 10,212 $ 47,766 $ 49,947 For the Three Months Ended June 30 2016 2015 $ 54,761 $ (23,352) 145 695 - 7,491 (2,383) (425) $ 52,523 $ (15,591)		For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
				2016 2015 $ 48,191 $ 35,399 10,493 18,418 - 951,300 18,521 19,844 $ 77,205 $ 1,024,961 For the Six Months Ended June 30
		2016 $ 54,761 145 - (2,383) $ 52,523			2016 $ 30,294 1,989 - (8,193) $ 24,090	2015 $ (32,373) 124 7,491 (873) $ (25,631)

b. Other gains and losses

• 32 -

c. Finance costs

Interest on loans Other interest expenses Less: Amounts included in the cost of qualifying assets	For the Three Months Ended June 30 2016 2015 $ 84,966 $ 74,542 5 - 787 1,230 $ 84,184 $ 73,312	For the Three Months Ended June 30 2016 2015 $ 84,966 $ 74,542 5 - 787 1,230 $ 84,184 $ 73,312		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 84,966 5 787 $ 84,184		2016 $ 167,016 22 1,050 $ 165,988	2015 $ 142,690 - 4,316 $ 138,374

Information about capitalized interest was as follows:

Capitalized interest Capitalization rate d. Depreciation and amortization Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Selling and marking expenses General administration expenses Research and development expenses		For the Three Months Ended June 30 2016 2015 $ 787 $ 1,230 1.29% 1.44% For the Three Months Ended June 30 2016 2015 $ 490,826 $ 1,446,021 22,178 42,232 $ 513,004 $ 1,488,253 $ 387,016 $ 1,254,167 103,810 191,854 $ 490,826 $ 1,446,021 $ 11,997 $ 27,674 151 145 2,323 5,985 7,707 8,428 $ 22,178 $ 42,232		For the Six Months Ended June 30	For the Six Months Ended June 30
				2016 2015 $ 1,050 $ 4,316 1.10% 1.72% For the Six Months Ended June 30
		2016 $ 490,826 22,178 $ 513,004 $ 387,016 103,810 $ 490,826 $ 11,997 151 2,323 7,707 $ 22,178		2016 $ 977,148 48,173 $ 1,025,321 $ 770,321 206,827 $ 977,148 $ 27,507 302 5,465 14,899 $ 48,173	2015 $ 2,887,083 92,160 $ 2,979,243 $ 2,496,732 390,351 $ 2,887,083 $ 60,583 296 14,710 16,571 $ 92,160

• 33 -

e. Employee benefits expense

Post-employment benefits (Note 23) Defined contribution plans Defined benefit plans Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended June 30	For the Three Months Ended June 30		For the Six Months Ended June 30
		2016 $ 62,793 9,592 72,385 40,857 1,361,766 $ 1,475,008 $ 649,802 825,206 $ 1,475,008	2015 $ 61,587 9,821 71,408 104,214 1,464,103 $ 1,639,725 $ 726,600 913,125 $ 1,639,725		2016 2015 $ 123,272 $ 124,191 19,184 21,049 142,456 145,240 116,744 156,674 2,723,224 2,837,331 $ 2,982,424 $ 3,139,245 $ 1,308,570 $ 1,455,738 1,673,854 1,683,507 $ 2,982,424 $ 3,139,245

27. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. The major components of tax expense recognized in profit or loss

For the Three Months Ended June 30 2016 2015 Current tax In respect of the current period $ 2,955 $ 3,573 Adjustments for prior period 2,085 - Deferred tax In respect of the current period (149,006) 1,628 Income tax expense recognized in profit or loss $ (143,966) $ 5,201 b. Integrated income tax June 30, 2016 Accumulated deficit Generated before January 1, 1998 $ - Generated on and after January 1, 1998 (19,883,310) $ (19,883,310) Imputation Credits Accounts $ 428,142	For the Three Months Ended June 30	For the Three Months Ended June 30	For the Six Months Ended June 30 2016 2015 $ 4,231 $ 6,273 (145,009) 1 (2,291) 1,707 $ (143,069) $ 7,981 December 31, 2015 June 30, 2015 $ - $ - (18,304,273) (15,392,564) $ (18,304,273) $ (15,392,564) $ 421,581 $ 410,771	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2015 $ 3,573 - 1,628 $ 5,201 June 30, 2016 $ - (19,883,310) $ (19,883,310) $ 428,142			$	2015 $ 6,273 1 1,707 $ 7,981 June 30, 2015 - (15,392,564) (15,392,564) 410,771
					$
					$

• 34 -

No tax creditable ratios were calculated for accumulated deficit as of June 30, 2016, December 31, 2015 and June 30, 2015, respectively.

• c. Income tax assessments

The Company’s tax returns through 2013 have been assessed by the tax authorities.

28. LOSS PER SHARE

Unit: NT$ Per Share

Basic and diluted loss per share	For the Three Months Ended June 30 2016 2015 $ (0.19) $ (0.35)	For the Three Months Ended June 30 2016 2015 $ (0.19) $ (0.35)	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ (0.19)		2016 $ (0.45)	2015 $ (0.45)

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

Net Loss for the Period

Loss for the period attributable to owners of the company		For the Three Months Ended June 30 2016 2015 $ (689,448) $ (1,220,566)		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ (689,448)		2016 $ (1,579,037)	2015 $ (1,575,284)

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 2016 2015 3,555,593 3,517,574		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 3,555,593		2016 3,545,811	2015 3,517,574

As disclosed in Note 29 to the financial statements in determining whether the share-based payments are potential ordinary shares. The aforementioned stock options were anti - dilutive and excluded from the computation of diluted loss per share for the six months ended June 30, 2016 and 2015.

29. SHARE-BASED PAYMENT ARRANGEMENTS

• a. Employee share option plan

Mxtran

Approved by the Board of Directors of Mxtran on August 12, 2011, Mxtran was authorized to issue employee stock options for 2,344 thousand units. 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.

• 35 -

Information on employee share options was as follows:

Balance at January 1 Options cancelled Balance at June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 1,181 $ 10.00 (191) - 990 10.00	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 1,309 $ 10.00 (52) - 1,257 10.00

As of June 30, 2016, information about Mxtran’s outstanding and exercisable option was as follows:

Range of Exercise Price (NT$) $ 10.00	Options Issued on or After August 12, 2011 and Outstanding Number Outstanding Options (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 990 1.11 $ 10.00	Options Exercisable
		Number Exercisable Options (Thousand) Exercise Price (NT$/Per Share) 990 $ 10.00

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as 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, 2016 and 2015, and the six months ended June 30, 2016 and 2015, the compensation cost recognized were NT$0, respectively. As of June 30, 2016 and 2015, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were 17.6% and 2.30%, respectively.

INFOMAX

Approved by the Board of Directors of INFOMAX on April 2, 2010 and January 26, 2011, INFOMAX was authorized to issue employee stock options for 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, 2010 and January 26, 2011 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 Taipei Exchange. 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 made capital deduction 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.

• 36 -

Information on employee share option was as follows:

Balance at January 1 Options cancelled Balance at June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
	2016 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 5,121 $ 31.87 (4,742) - 379 31.87	2015
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 7,116 $ 31.87 (35) - 7,081 31.87

As of June 30, 2016, information about INFOMAX’s outstanding and exercisable option was as follows:

Range of Exercise Price (NT$) $ 31.87	Options Issued on or After April 2, 2010 and Outstanding Number Outstanding Options (Thousand) Remaining Contractual Life (In Years) Exercise Price (NT$/Per Share) 379 0.57 $ 31.87	Options Exercisable
		Number Exercisable Options (Thousand) Exercise Price (NT$/Per Share) 379 $ 31.87

Options granted were priced using the Black-Scholes pricing model and the inputs to the model were as 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, 2016 and 2015, and the six months ended June 30, 2016 and 2015, the compensation cost weren’t recognized because of small. As of June 30, 2016 and 2015, the estimated percentages of forfeiture due to termination of employment over the remaining vesting period were both 3%.

• b. Restricted Stock Plan for employees

Information on Stock Plan for employees were as below:

		The Board of
		Directors			Issued
Approved	Grant Shares	Grant Shares			Shares
Date	(Thousand)	(Thousand)	Grant Date	Issued Date	(Thousand)	Fair	Value
2014/06/18	123,251	38,365	2014/08/28	2014/12/25	37,301	$	7.76
		62,213	2015/03/16	2015/07/22	61,279		6.82
2016/06/16	123,535	Note	Note	Note	Note		Note

Note: After the application is approved by the FSC and has become effective, the Company would issue the new shares on one or more times basis as needed.

• 37 -

To meet the vesting conditions, an employee has to meet performance and other conditions over the vesting period, as follows:

• 1) Remain employed by the Company within one year after the grant date; and has a current year’s performance rating of “successful” (or higher) - 40% of restricted shares will be vested;

• 2) Remain employed by the Company within two years after the grant date; and has a current year’s performance rating of “successful” (or higher) - 30% of restricted shares will be vested;

• 3) Remain employed by the Company within three years after grant date; and has a current year’s performance rating of “successful” (or higher) - 30% of restricted shares will be vested.

In addition to the vesting conditions, the limitations are as follows:

• 1) Employees, except for inheritance, should not sell, transfer, pledge, donate or in any other way dispose of the shares.

• 2) The shares should be held in stock trust.

• 3) Except for the above two paragraphs, other rights of restricted stock plan for employees, including but not limited to, dividends, bonuses, the distribution rights of legal reserve and capital surplus, share options of cash capital and voting rights of shareholders, etc. are the same as the Group’s issued ordinary shares.

• 4) The dividends of restricted stock plan for employees are not restricted by existing conditions.

When employees do not reach the vesting conditions of restricted stock plan for employees during the year, the Company will recover and cancel the shares.

Information on restricted stock plan for employees was as follows:

Balance at January 1 Granted (Note 1) Vested Forfeited (Notes 2 and 3) Balance at June 30		Number of Shares (In Thousands)	Number of Shares (In Thousands)
		For the Six Months Ended June 30
		2016 $ 81,407 - (23,740) (1,443) $ 56,224	2015 $ 37,301 62,213 - (1,454) $ 98,060

Note 1: The number of granted shares in this period is not equal to the actual issued shares.

• Note 2: The forfeited shares for the six months ended June 30, 2016 were consisted of 755 thousand shares which will be cancelled and 688 thousand shares were cancelled.

• Note 3: The forfeited shares for the six months ended June 30, 2015 were consisted of 1,454 thousand shares which will be cancelled.

For the three months ended June 30, 2016 and 2015, the compensation cost recognized were NT$40,857 thousand and NT$104,214 thousand, respectively. For the six months ended June 30, 2016 and 2015, the compensation cost recognized was NT$116,744 thousand and NT$156,674 thousand, respectively.

• 38 -

30. EQUITY TRANSACTIONS WITH NONCONTROLLING INTERESTS

On April 30, 2015, the Group subscribed for additional new shares of Mxtran at a percentage different from its exiting ownership percentage, raising its continuing interest from 94.15% to 94.84%.

The above transactions were accounted for as equity transactions since the Group did not cease to have control over the subsidiary.

Cash consideration paid The proportionate share of the carrying amount of the net assets of the subsidiary Difference arising from equity transactions Line items adjusted for equity transaction Accumulated deficits	Mxtran $ (89,995) 85,464 $ (4,531) $ (4,531)

31. 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 expiration of the lease periods.

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, 2016 December 31, 2015 $ 90,004 $ 65,630 325,725 219,824 900,884 551,786 $ 1,316,613 $ 837,240	June 30, 2015 $ 40,504 131,799 206,422
		$ 378,725

The lease payments recognized in profit or loss for the current period were as follows:

Minimum lease payment	For the Three Months Ended June 30 2016 2015 $ 35,270 $ 26,473	For the Three Months Ended June 30 2016 2015 $ 35,270 $ 26,473		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 35,270		2016 $ 70,108	2015 $ 53,791

b. The Group as lessor

Operating leases relate to the building owned by the Group with lease terms between 2 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 expiration of the lease period.

• 39 -

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	June 30, 2016 December 31, 2015 $ 2,876 $ 3,720 773 1,030 $ 3,649 $ 4,750	June 30, 2015 $ 4,136 2,662 $ 6,798

32. CAPITAL MANAGEMENT

The Group manages its capital to ensure that the Group will be able to operate under the premises of going concerns and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

The Group’s strategy for managing the capital structure is to lay out the plan of product development and expand the market share considering the growth and the magnitude of industry and further developing an integral plan founded on the required capacity, capital outlay, and magnitude of assets in long-term development. Ultimately, considering the risk factors such as the fluctuation of the industry cycle and the life cycle of products, the Group determines the optimal capital structure by estimating the profitability of products, operating profit ratio, and cash flow based on the competitiveness of products.

The management of the Group periodically examines the capital structure and contemplates on the potential costs and risks involved while exerting different financial tools. In general, the Group implements prudent strategy of risk management.

33. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments that are not measured 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.

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

• 1) Fair value hierarchy

June 30, 2016

Available-for-sale financial assets Securities listed in ROC Securities listed in other countries	Level 1 $ 717,437 265,712 $ 983,149	Level 2 $ - - $ -	Level 3 $ - - $ -	Total $ 717,437 265,712
				$ 983,149

• 40 -

December 31, 2015

Available-for-sale financial assets Securities listed in ROC Securities listed in other countries Financial liabilities at FVTPL Derivative financial instruments June 30, 2015 Financial assets at FVTPL Derivative financial instruments Available-for-sale financial assets Securities listed in ROC Securities listed in other countries	Level 1 $ 900,710 298,758 $ 1,199,468 $ - Level 1 $ - $ 997,729 296,307 $ 1,294,036	Level 2 $ - - $ - $ 717 Level 2 $ 44 $ - - $ -	Level 3 $ - - $ - $ - Level 3 $ - $ - - $ -	Total $ 900,710 298,758 $ 1,199,468 $ 717 Total $ 44 $ 997,729 296,307 $ 1,294,036

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

• 2) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivatives - foreign currency Future cash flows are estimated based on observable forward forward contracts exchange rates at the end of the reporting period and contract forward rates.

• c. Categories of financial instruments

		June 30,	December 31,	December 31,	June 30,
		2016		2015	2015
Financial assets
Fair value through profit or loss (FVTPL)
Held for trading	$	-	$	- $	44
Loans and receivables (i)		8,926,395		9,133,505	7,435,860
Available-for-sale financial assets (ii)		1,076,506		1,293,419	1,385,865
Financial liabilities
Fair value through profit or loss (FVTPL)
Held for trading		-		717	-
Measured at amortized cost (iii)		16,417,977		17,343,989	17,234,149

• 41 -

• 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).

• 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 (including other payables to related parties), payable for purchase of equipment and long-term loans (including current portion).

• d. 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

The Group 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.

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 end of each reporting period.

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.

Pre-tax loss increase	Currency USD Impact For the Six Months Ended June 30 2016 2015 $ 51,080 $ 32,022	Currency USD Impact For the Six Months Ended June 30 2016 2015 $ 51,080 $ 32,022	Currency JPY Impact	Currency JPY Impact	Currency JPY Impact
			For the Six Months Ended June 30
		2016 $ 51,080		2016 $ 2,951	2015 $ 10,947

• 42 -

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,	December 31,	June 30,
		2016		2015	2015
Fair value interest rate risk
Financial assets	$	2,583,550	$	2,636,746 $	2,019,198
Financial liabilities		2,069,331		1,924,119	2,179,258
Cash flow interest rate risk
Financial assets		2,963,541		3,095,509	1,958,242
Financial liabilities		11,176,603		12,161,683	11,793,235

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, 2016 and 2015 would increase/decrease by $27,942 thousand and $29,483 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.

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, 2016 and 2015 would have increased/decreased by $98,315 thousand and $129,404 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 a 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.

• 43 -

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, 2016, December 31, 2015 and June 30, 2015, the Group’s ten largest customers accounted for 45%, 48% and 42% 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, 2016, December 31, 2015 and June 30, 2015, the Group had available unutilized overdraft and short-term bank loan facilities of approximately $2,306,900 thousand, $2,504,580 thousand and $1,627,587 thousand, respectively.

Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows.

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

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

June 30, 2016

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 3,172,043 Variable interest rate liabilities 5,223,585 Fixed interest rate liabilities 1,271,613 $ 9,667,241	1-3 Years $ - 7,055,828 - $ 7,055,828	3-5 Years $ - 47,317 - $ 47,317	5+ Years $ - - - $ -	Total $ 3,172,043 12,326,730 1,271,613
				$ 16,770,386

• 44 -

December 31, 2015

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 3,258,187 Variable interest rate liabilities 5,458,910 Fixed interest rate liabilities 1,029,375 $ 9,746,472 June 30, 2015 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 3,261,655 Variable interest rate liabilities 3,695,844 Fixed interest rate liabilities 2,184,392 $ 9,141,891	1-3 Years $ - 8,002,062 - $ 8,002,062 1-3 Years $ - 8,299,378 - $ 8,299,378	3-5 Years $ - 86,192 - $ 86,192 3-5 Years $ - 315,979 - $ 315,979	5+ Years $ - - - $ - 5+ Years $ - - - $ -	Total $ 3,258,187 13,547,164 1,029,375
				$ 17,834,726
				Total $ 3,261,655 12,311,201 2,184,392
				$ 17,757,248

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

Liquidity and interest risk rate tables for derivative financial liabilities

The following table detailed the Group’s liquidity analysis for its derivative financial instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

December 31, 2015

	On Demand or	On Demand or
		Less than			3	Months to
		1 Month	1-3	Months		1 Year		1-5 Years			5+ Years
Gross settled
Foreign exchange forward contracts
Inflows	$	360,937	$	-	$	-	$		-	$		-
Outflows		361,654		-		-			-			-
June 30, 2015
	On Demand or
		Less than			3	Months to
		1 Month	1-3	Months		1 Year		1-5 Years			5+ Years
Gross settled
Foreign exchange forward contracts
Inflows	$	30,960	$	-	$	-	$		-	$		-
Outflows		30,916		-		-			-			-

• 45 -

• e. Transfers of financial assets

According to the contract of discounted trade receivables, if the trade receivables are not paid at maturity, the bank has the right to request the Group to pay the unsettled balance. As the Group has not transferred the significant risks and rewards relating to these trade receivables, it continues to recognize the full carrying amount of the receivables and has recognized the cash received on the transfer as a secured borrowing. As of June 30, 2016, the carrying amount of the trade receivables that have been transferred but have not been derecognized amounted to $236,237 thousand. As the Group has not discounted trade receivables to a bank for cash proceeds, any liabilities didn’t been recognized.

34. TRANSACTIONS WITH RELATED PARTIES

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

• a. Operating revenues

Related Parties Listed Account Categories Sales Key management personnel Others Associates		For the Three Months Ended June 30 2016 2015 $ 502,181 $ 490,037 990 536 181 433 $ 503,352 $ 491,006		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 502,181 990 181 $ 503,352		2016 $ 1,089,515 2,022 1,460 $ 1,092,997	2015 $ 1,057,450 1,447 1,022 $ 1,059,919

Sales prices to related parties were not comparable to those with external customers as the Group 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.

• b. Purchases

Related Parties Categories Key management personnel	For the Three Months Ended June 30 2016 2015 $ 1,501 $ 24,419	For the Three Months Ended June 30 2016 2015 $ 1,501 $ 24,419	For the Six Months Ended June 30	For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 1,501		2016 $ 1,501	2015 $ 24,419

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

c. Receivables from related parties

Line Items Related Parties Categories Receivables from Key management personnel related parties, Associates net Others	June 30, 2016 December 31, 2015 $ 170,133 $ 396,937 1,070 93 28 44 $ 171,231 $ 397,074	June 30, 2015 $ 252,742 82 - $ 252,824 (Continued)

• 46 -

Line Items Related Parties Categories Other receivables Associates The Group is its major management authority Others	June 30, 2016 December 31, 2015 $ 182 $ 327 - 2,388 - 32 $ 182 $ 2,747	June 30, 2015 $ 436 19 - $ 455

(Concluded)

The outstanding trade receivables from related parties are unsecured. For the six months ended June 30, 2016 and 2015, no impairment loss was recognized for trade receivables from related parties.

• d. Payables to related parties

Line Items Related Parties Categories Payables to related parties The Group is its major management authority Key management personnel Associates Other payables to Others related parties Associates	June 30, 2016 December 31, 2015 $ 35,617 $ 11,557 18,497 15,574 - - $ 54,114 $ 27,131 $ 3,942 $ - 90 355 $ 4,032 $ 355	June 30, 2015 $ 63,168 15 5 $ 63,188 $ 4,220 434 $ 4,654

The outstanding trade payables from related parties are unsecured and will be settled in cash.

e. Other transactions with related parties

Related Parties Line Items Categories Manufacturing expense The Group is its major management authority Operating expense Others Key management personnel Associates	For the Three Months Ended June 30 2016 2015 $ 30,051 $ 68,552 $ 5,442 $ 5,550 2,430 15 86 419 $ 7,958 $ 5,984	For the Three Months Ended June 30 2016 2015 $ 30,051 $ 68,552 $ 5,442 $ 5,550 2,430 15 86 419 $ 7,958 $ 5,984		For the Six Months Ended June 30
		2016 $ 30,051 $ 5,442 2,430 86 $ 7,958		2016 2015 $ 44,622 $ 120,953 $ 10,883 $ 11,100 2,430 2,727 303 831 $ 13,616 $ 14,658 (Continued)

• 47 -

Related Parties Line Items Categories Software and pattern revenue The Group is its major management authority Associates Key management personnel Rental revenue Associates	For the Three Months Ended June 30 2016 2015 $ 23 $ 210 190 451 4 - $ 217 $ 661 $ 1,142 $ 1,607	For the Three Months Ended June 30 2016 2015 $ 23 $ 210 190 451 4 - $ 217 $ 661 $ 1,142 $ 1,607		For the Six Months Ended June 30
		2016 $ 23 190 4 $ 217 $ 1,142		2016 2015 $ 1,951 $ 215 397 920 4 - $ 2,352 $ 1,135 $ 2,531 $ 3,214 (Concluded)

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

The Group leases offices to associates (rentals are classified under other gains and losses). The amount of lease payment was based on the office space leased by each related party and was collected on a monthly basis.

Under certain contracts, the Group authorized the above related parties to use the Group’s pattern and software. The specifically negotiated terms were not comparable to those with external customers.

f. Compensation of key management personnel

Short-term benefits Post-employment benefits Share-based payments Other long-term employee benefits	For the Three Months Ended June 30 2016 2015 $ 41,603 $ 36,258 3,115 3,970 4,444 10,147 303 193 $ 49,465 $ 50,568	For the Three Months Ended June 30 2016 2015 $ 41,603 $ 36,258 3,115 3,970 4,444 10,147 303 193 $ 49,465 $ 50,568		For the Six Months Ended June 30	For the Six Months Ended June 30
		2016 $ 41,603 3,115 4,444 303 $ 49,465		2016 $ 70,717 6,231 13,089 132 $ 90,169	2015 $ 63,325 7,940 15,724 175 $ 87,164

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

• 48 -

35. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

Property, plant and equipment, net Trade receivables Pledge deposits (classified as other financial assets - non-current)	June 30, 2016 $ 11,925,275 835,738 138,861 $ 12,899,874	December 31, 2015 $ 12,527,602 781,982 139,970 $ 13,449,554	June 30, 2015 $ 14,293,746 - 166,951 $ 14,460,697

36. 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, 2016 were as follows:

• a. As of June 30, 2016, December 31, 2015 and June 30, 2015, unused letters of credit amounted to approximately $5,325 thousand, $0 and $183,237 thousand, respectively.

• b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment	June 30, 2016 December 31, 2015 $ 241,110 $ 339,954	June 30, 2015 $ 626,283

• c. The Company entered into the Phase-change memory technology agreement with IBM Company in January 2010, and the agreement has been renewed in every three years. Under the agreement, both parties have to share the related expenditures of the technology development. The term of the second agreement is from January 2013 to January 2016. As of June 30, 2016, the Company has made all the payment for the second agreement. In addition, the Company entered into another Phase - change memory technology agreement with IBM Company in January 2016, and the term of the agreement is from January 2016 to January 2019. As of June 30, 2016, the unrecognized commitment is US$ 6,900 thousand.

• 49 -

37. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

June 30, 2016

Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 1,051,079 0.3143 USD 94,765 32.275 Financial liabilities Monetary items JPY 957,177 0.3143 USD 42,010 32.275 December 31, 2015 Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 1,841,746 0.2727 USD 80,628 32.825 Financial liabilities Monetary items JPY 678,724 0.2727 USD 44,712 32.825	Carrying Amount $ 330,354 3,058,540 $ 3,388,894 $ 300,841 1,355,873 $ 1,656,714 Carrying Amount $ 502,244 2,646,614 $ 3,148,858 $ 185,088 1,467,671 $ 1,652,759

• 50 -

June 30, 2015

Foreign Exchange Currencies Rate Financial assets Monetary items JPY $ 1,476,140 0.2524 USD 82,444 30.86 Financial liabilities Monetary items JPY $ 1,038,274 0.2524 USD 46,855 30.86	Carrying Amount $ 372,578 2,544,222 $ 2,916,800 $ 262,060 1,445,945 $ 1,708,005

For the three and the six months ended June 30, 2016, realized and unrealized net foreign exchange gains were $54,761 thousand, $30,294 thousand, respectively. For the three and the six months ended June 30, 2015, realized and unrealized net foreign exchange losses were $23,352 thousand and $32,373 thousand, respectively. It is impractical to disclose net foreign exchange losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

38. SEPARATELY DISCLOSED ITEMS

Information on significant transactions and information on investees:

• a. Financing provided to others: None

• b. Endorsements/guarantees provided: None

• c. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 1 (attached)

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

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

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

• g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 2 (attached)

• 51 -

• h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3 (attached)

• i. Trading in derivative instruments: Please see Note 7

• j. Intercompany relationships and significant intercompany transactions: Table 5 (attached)

• k. Information on investees: Table 4 (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 gains or losses, carrying amount of the investment at the end of the period, repatriated investment gains or losses, and limit on the amount of investment in the mainland China area: Table 6 (attached)

• 2) Any of the 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

39. 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 Segment” were as follows:

Memory products and wafer fabrication IC design

The Group’s reportable segments were separated according to the nature of its business activities. The accounting policies adopted by the reportable segments had no material difference from those disclosed in Note 4.

• a. Segment revenues and results

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

Memory products and wafer fabrication IC design Loss from operations Other income Other gains and losses Finance costs Share of loss of associates Loss before tax (continuing operations)		Segment Net Operating Revenue	Segment Net Operating Revenue	Segment Net Operating Revenue	Segment Net Operating Revenue	ths Ended 0 2015 $ 9,667,388 14,115 $ 9,681,503		Segment Loss from Operations and Net Los	Segment Loss from Operations and Net Los	Segment Loss from Operations and Net Los	Segment Loss from Operations and Net Los	s
		For the Three M June 3	onths Ended 0 2015 $ 4,969,794 5,435 $ 4,975,229		For the Six Mon June 3			For the Three M June 3	onths Ended 0 2015 $ (1,072,978 ) (98,374) (1,171,352 ) 49,947 (15,591 ) (73,312 ) (6,958) $ (1,217,266)		For the Six Mon June 3	ths Ended 0
		2016 $ 5,175,843 5,325 $ 5,181,168			2016 $ 10,261,640 5,817 $ 10,267,457			2016 $ (777,995 ) (68,170) (846,165 ) 47,766 52,323 (84,184 ) (4,610) $ (834,070)			2016 $ (1,509,843 ) (141,646) (1,651,489 ) 77,205 24,090 (165,988 ) (8,378) $ (1,724,560)	2015 $ (2,229,958 ) (188,839) (2,418,797 ) 1,024,961 (25,631 ) (138,374 ) (13,121) $ (1,570,962)

• 52 -

b. Segment total assets and liabilities

Segment assets Memory products and wafer fabrication IC design Consolidated total assets Segment liabilities Memory products and wafer fabrication IC design Consolidated total liabilities	June 30, 2016 $ 34,685,327 182,237 $ 34,867,564 $ 18,120,825 25,231 $ 18,146,056	December 31, 2015 $ 37,280,467 347,195 $ 37,627,662 $ 19,143,129 55,693 $ 19,198,822	June 30, 2015 $ 39,325,430 645,832 $ 39,971,262 $ 18,735,899 46,800 $ 18,782,699

• 53 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

MARKETABLE SECURITIES HELD JUNE 30, 2016

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		June 30, 2016	June 30, 2016		Note
				Shares/Units (In Thousands)	Carrying Amount	Percentage of Ownership	Fair Value (Note 3)
The Company MXBVI Hui Ying	Stock Ardentec Corporation United Industrial Gases Co., Ltd. Aetas Technology Inc. Zowie Technology Co., Ltd. Quality Test System Inc. Honbond Venture Capital Co., Ltd. Stock Chipbond Technology Corporation Key ASIC Bhd Tower Semiconductor Ltd. Global Strategic Investment Fund (Cayman) Global Strategic Investment Fund (Samoa) Stock Macronix International Co., Ltd. Raio Technology Co., Ltd.	The Company serves as member of its board of directors None None None None None None None None None None The Company None	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 Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current Financial assets measured at cost - non-current Available-for-sale financial assets - non-current Financial assets measured at cost - non-current	35,595,830 6,671,877 145,850 20,426 4,538,333 1,803,526 1,088,319 26,924,500 584,893 490,000 1,739,783 3,899,382 947,125	$ 672,761 58,500 - - - - 44,676 31,255 234,457 - 34,857 11,035 -	7.40 3.06 0.29 0.18 14.64 15.00 0.17 3.23 0.68 2.52 4.90 0.11 10.43	$ 672,761 137,388 - - - - 44,676 31,255 234,457 14,050 42,318 11,035 23,890	Note 1 Note 2 - Note 2 - - Note 1 Note 1 Note 1 Note 2 Note 2 Note 1 Note 2

Note 1: The market value was based on the closing price as of June 30, 2016.

Note 2: The calculation is based upon the most recent financial statements available to the Company.

Note 3: Active Market is market value; and no Market is net value, which calculated by closing rate.

• 54 -

TABLE 2

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2016

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Term	Ending Balance	% to Total
The Company MXHK MXA	MegaChips Corporation MXHK MXA The Company The Company	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary Indirect subsidiary Subsidiary	Sales Sales Sales Purchase Purchase	$ 1,089,515 1,687,736 358,528 US$ 51,591 US$ 10,959	11 16 3 100 100	30 days after monthly closing 45 days after monthly closing Net 60 days 45 days after monthly closing Net 60 days	Note 34 Note 34 Note 34 No material difference No material difference	Note 34 Note 34 Note 34 No material difference No material difference	$ 170,133 509,569 101,993 US$ 15,791 US$ 2,746	5 15 3 100 100	- - - - -

• 55 -

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, 2016

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Action Taken **
The Company	MegaChips Corporation MXHK MXA	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	$ 170,133 509,569 101,993	7.69 times 6.55 times 9.12 times	$ - - -	- - -	JPY 249,462 thousand US$ 8,715 thousand US$ 1,847 thousand	$ - - -

• 56 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTEES FOR THE SIX MONTHS ENDED JUNE 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as ofJune 30, 2016	Balance as ofJune 30, 2016	Balance as ofJune 30, 2016	Net Income (Loss) of the Investee (Note 3)	Share of Profit (Loss)	Note
				June 30, 2016 (Note 1)	December 31, 2015 (Note 1)	Shares	Percentage of Ownership	Carrying Amount (Note 2)
The Company MXBVI Run Hong Hui Ying INFOMAX Infomax Samoa Mxtran Mxtran Samoa	MXA MXBVI Hui Ying Run Hong INFOMAX Mxtran MoDioTek NTTI MXE MPL MXHK MX Asia INFOMAX Mxtran MoDioTek MoDioTek Infomax Samoa Infomax HK Mxtran Samoa Mxtran HK	San Jose, California, U.S.A. Tortola, British Virgin Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan San Jose, California, U.S.A. Belgium Singapore Hong Kong Cayman Island Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Hsinchu, Taiwan Samoa Hong Kong Samoa Hong Kong	Sales and marketing Investment holding company Investment Investment Baseband chip, analog baseband chip, and power management chip Combi-SIM IC and the related service Wi-Fi video transmission IC and smart security systems IC design After-sales service After-sales service Sales and marketing Investment holding company Baseband chip, analog baseband chip, and power management chip Combi-SIM IC and the related service Wi-Fi video transmission IC and smart security systems Wi-Fi video transmission IC and smart security systems Investment holding company Investment holding company Investment holding company Investment holding company	$ 2,640 6,977,791 500,000 984,432 1,502,711 697,374 59,944 866,796 2,106 3,291 378,427 23,035 27,423 34,271 4,241 4,241 306,036 97,521 35,979 23,880	$ 2,640 6,977,791 500,000 984,432 1,502,711 697,374 59,944 858,641 2,106 3,291 378,427 23,035 27,423 34,271 4,241 4,241 292,997 97,521 35,979 23,880	100,000 212,048,000 - - 150,271,240 69,627,323 5,994,371 26,350,000 999 174,000 89,700,000 700,000 2,742,506 3,393,200 403,245 403,245 9,870,000 23,352,500 1,170,000 6,152,000	100.00 100.00 100.00 100.00 97.25 90.43 20.61 100.00 100.00 100.00 100.00 100.00 1.77 4.41 1.39 1.39 100.00 100.00 100.00 100.00	$ 122,754 1,580,392 23,137 16,788 126,186 23,990 3,456 316,474 99,360 18,169 487,674 57,891 2,297 1,175 229 229 7,542 4,365 1,123 486	$ (36,534 ) 18,900 (411 ) (3,598 ) (107,047 ) (27,236 ) (35,843 ) (4,056 ) 3,737 460 5,097 1,772 (107,047 ) (27,236 ) (35,843 ) (35,843 ) (14,779 ) (1,437 ) (8 ) (8 )	$ (36,532 ) 18,900 (411 ) (3,598 ) (104,103 ) (24,630 ) (7,382 ) 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 unreviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2016

Note 3: The foreign currency amount was based on unreviewed 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, 2016.

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

• 57 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Counterparty	Relationship (Note 1)			Transaction Summary
			Account	Amount	Payment Terms	% to Total Revenues or Assets
MXIC	MXHK	2	Sales	$1,687,736	Note 2	16
			Notes receivable and trade receivables	509,569		1
	MXE	2	Operatingexpenses	64,488		1
			Otherpayables	32,162		-
	MXA	1	Sales	358,528	Note 2	3
			Operatingexpenses	68,789		1
			Notes receivable and trade receivables	101,993		-
			Otherpayables	47,830		-
	Mxtran	1	Rental revenue	1,649	Note3	-
	MX Asia	2	Operatingexpenses	49,187		-
			Otherpayables	20,576		-
	INFOMAX	1	Rental revenue	2,710	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.

• 58 -

TABLE 6

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2016 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (Note 3)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2016 (Note 3)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2016 (Note 3)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of June 30, 2016 (Note 3)	Net Income (Loss) of the Investee	% Ownership for Direct or Indirect Investment (Note 4)	Investment Gain (Loss) (Note 5)	Carrying Amount as of June 30, 2016 (Note 6)	Accumulated Inward Remittance of Investment Income as of June 30, 2016
							Outward (Note 3)	Inward
MXm Infomax SU Maxtran Beijing	Development of integrated circuit system and software Software, rendering and technical service Technical support of Combi-SIM IC		$ 296,160 82,415 23,435	(Note 1) (Note 2) (Note 2)		$ 296,160 82,415 23,435	$ - - -	$ - - -	$ 296,160 82,415 23,435	$ 3,549 (1,310 ) (8 )	100.00 99.02 94.84	$ 3,549 (1,297 ) (8 )	$ 361,157 5,015 13	$ - - -
Accumulated Investment in Mainland China as of June 30, 2016		Investment Amount Authorized by the Investment Commission, MOEA				Upper Limit on Investment
$ 402,010 (Note 3)		$ 402,010 (Note 3)				$ 10,030,952

Note 1: The Company invested in a company located in Mainland China indirectly through the existing company in the third country.

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

Note 3: The foreign currency amount was converted into New Taiwan dollars at the historical exchange rate.

Note 4: The percentage of ownership is based on the total holding percentage owned by the Company and its subsidiaries.

Note 5: The foreign currency amount was based on unreviewed 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, 2016.

Note 6: The foreign currency amount was based on unreviewed financial statements for the same reporting period; the amount was converted into New Taiwan dollars at the exchange rate on June 30, 2016.

• 59 -