NTC — AGM Information 2016

Jul 5, 2016

Stock Code: 2408

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2016 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

(SUMMARY)

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

June 22, 2016

Table of Contents

Meeting Procedure …………………………………… Page 1 Meeting Agenda …………………..…..……………… Page 2 Discussion Items (I) …………………..……………… Page 3 Reporting Items …….………………………………… Page 7 Ratification Items …………………….………………. Page 14 Election Items ......…………………….………………. Page 16 Discussion Items (II) ………………….……………… Page 20 Appendices .…………………………………………... Page 30

NANYA TECHNOLOGY CORP.

2016 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

1. Call Meeting to Order

2. Chairman’s Address

3. Discussion Items (I)

4. Reporting Items

5. Ratification Items

6. Election Items

7. Discussion Items (II)

8. Extraordinary Motions

9. Meeting Adjourned

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NANYA TECHNOLOGY CORP.

2016 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time: 10:00 a.m., Wednesday, June 22, 2016

Venue: Jin-Xing-Factory-Area Movie Theater, No.336, Sec. 1, Nankan Rd., Luzhu Dist., Taoyuan City, Taiwan (R.O.C.)

1. Discussion Items (I)

To amend the Articles of Incorporation of the Company, the corresponding comparison table for the current and amended articles is attached. Please discuss and resolve.

1. Reporting Items

2. (1) Business Report for 2015

3. (2) Supervisors’ Review Report for 2015

4. (3) Report of Distribution of Employees Compensation for 2015

5. (4) Execution Status Report of Business Operation Enchancement Plan for the Company’s Capital Reduction in 2015

3. Ratification Items

• (1) To Ratify the Business Report and Financial Statements for 2015

• (2) To Ratify the Proposal for Distribution of 2015 Profits

• Election Items

The term of office of the Company’s Directors has expired. Please elect the new Directors pursuant to the applicable laws.

1. Discussion Items (II)

Appropriateness of releasing the newly elected Directors and the juristic person shareholder whose authorized

representatives are elected as Directors, from non-competition restrictions. Please discuss and resolve.

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Discussion Items (I)

Item 1

To amend the Articles of Incorporation of the Company, the corresponding comparison table for the current and amended articles is attached. Please discuss and resolve.

Pr the Board of Directors oposed by

Article	Article before Amendment	Article	Article after Amendment	Reason for Amendment
	(New article added)	Article 19	The Company shall appropriate 1% to 12% for employees’ compensation from its profit, if any, before tax. However,	The Company amends employees compensation related articles in accordance with the revision of Article 235-1 of the Company Law.
			the Company’s accumulated losses shall have been covered. The Company may have the profit distributable as employees’ compensation distributed in the form of shares or in cash, and the qualification requirements of employees, including
			the employees of subsidiaries of the Company meeting certain specific requirements,

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	Article	Article before Amendment	Article	Article after Amendment	Reason for Amendment
				entitled to receive compensation shall be determined by the
				Board of Directors. The resolution of employees’ compensation shall be made in accordance with Article 235-1 of the Company Law of ROC.
	Article 19	Whenever there are profits of the Company, it shall be used torecover any past losses, pay all outstanding taxes , and set aside 10% thereof in a legal reserve. Thereafter, the remaining profit, if any, after set aside a special reserve or reserves for certain undistributed earnings for business purposes, shall collectively with any undistributed surplus earnings from previous fiscal years, be included in a surplus earning distributionplan	Article 20	Whenever there are profits of the Company, it shall be used topay all outstanding taxes, recover the Company’s accumulated losses , and set aside 10% thereof in a legal reserve. Thereafter, the remaining profit, if any, after set aside a special reserve or reserves for certain undistributed earnings for business purposes, shall collectively with any undistributed surplus earnings from previous fiscal years, be included in a	To amend employees compensation related articles, the Company deletes paragraph 2 of Article 19 and adjusts the Article order.

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Article	Article before Amendment	Article	Article after Amendment	Reason for Amendment
	submitted by the Board of Directors for approval at a shareholders’ meeting. The Company shall set aside 1%~15% from the remaining profit for distribution as employees bonus and this amount shall be regarded as an expense of such appropriative year. The Company may issue stock bonuses to		surplus earning distribution plan submitted by the Board of Directors for approval at a shareholders’ meeting. The Company belongs to a high-technology and capital intensive industry and its operations are still experiencing significant growth. To accommodate the long-term financial projection of the Company, the Company adopts the policy that dividends shall be distributed appropriately in accordance with the Company's budget of capital expenditures. In principle, the stock dividends distributed by the Company shall not exceed 50% of the total distributable dividends of that year.
	employees of an affiliated company meeting the certain requirements set by the Board of Directors. The Company belongs to a high-technology and capital intensive industry and its operations are still experiencing significant growth. To accommodate the long-term financial projection of the Company, the Companyadopts the

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	Article	Article before Amendment		Article	Article after Amendment	Reason for Amendment
		policy that dividends shall be distributed appropriately in accordance with the Company's budget of capital expenditures. In principle, the stock dividends distributed by the Company shall not exceed 50% of the total distributable dividends of thatyear.
	Article 20	Any matter not provided in these Articles of Incorporation shall be handled in accordance with the Company Law.		Article 21	Any matter not provided in these Articles of Incorporation shall be handled in accordance with the Company Lawand other relevant regulations .	To fulfill the Actual circumstances, amend this Article and the Article No. is adjusted accordingly.
	Article 21	(Omitted)		Article 22	Add ”The 23rd amendment was made on June 22, 2016. ” to the exsiting Artcle.	In compliance with the amendments, the Article No. is adjusted accordingly and the date of amendment in this Article is added.

Resolution:

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Reporting Items

1. About the Company’s business operation condition of 2015, please refer to Business Report for further details (on Page 8 through Page 10 of the Handbook.)

2. The Company’s Supervisors had reviewed the 2015 Business Report and Financial Statements and issued their Review Report in accordance with the applicable laws. Please refer to Supervisors’ Review Report (on Page 11 of the Handbook.)

3. Report of Distribution of Employees Compensation for 2015 Explanation:

Pursuant to newly amended Article 19 of the Articles of Incorporation of the Company, the Board of Directors approved to set aside 3.7% of the 2015 pre-tax profit prior to

deducting employees compensation distributable as employees compensation on March 15, 2016. The form of employees compensation will be in cash, i.e. a total amount of NT $671,028,000.

1. Execution Status Report of Business Operation Enchancement Plan for the Company’s Capital Reduction in 2015

Explanation:

The Company’s capital reduction plan was approved by Financial Supervisory Commission in 2014. Please refer to Page 12 through Page 13 of the Handbook for the Execution Status Report of Business Operation Enchancement Plan.

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NANYA TECHNOLOGY CORP. Business Report for 2015

Year 2015 Financial Performance

Due to global economy weakness, DRAM market was slowing down and ASP (average selling price) continued to decline from Q2’15. We optimized product portfolio for premium DRAM in specialty market to maintain stable profitability. NTC reported consolidated revenue of NT$43.87 billion in 2015. Net income was NT$17.13 billion, EPS NT$7.07.

In 2015, NTC further enhanced production efficiency to reduce manufacturing cost for improving competitiveness. Monthly wafer output increased from 56 thousand in January to 60 thousand in December. 30nm design shrink also exceeded 50% output in Q4’15.

As a key supplier in specialty DRAM market, NTC established strategic alliance relationships with customers and controller suppliers by offering excellent customer service for the launch of next-generation consumer electronic products collaboratively. In product development area, we strengthened low power product design and related engineering capabilities. To fulfill the needs from mobile customers, we developed multi-chip –package solutions. By seamless cross-department cooperation, we demonstrated successful penetrations in premium market segments including automotive, industrial, networking,

SiP(System-in-Package) and customized products.

Year 2016 Business Outlook

The focus areas of operation for 2016 are to deeply-root in specialty market and customized product to increase wafer value, improve production efficiency to reinforce cost effectiveness and

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20nm technology conversion. Major tasks include:

1. Continuously concentrate on consumer & low power markets, develop customized products for diversification and increase market share in specialty DRAM field. Greater than 85% of total revenue from consumer & low power markets is our target.

2. Continuously drive manufacturing cost reduction through improving the production efficiency of front- end and back-end processes. 30nm design shrink product will surpass 70% of total output in 2016. Annual bit output growth is expected to reach 10%.

3. To enable 20nm technology conversion, the new facility will be equipped with advanced tools in Q4’16. The development of next-generation DRAM products including DDR4/LPDDR4 is at full pace to provide full product lineup for fulfilling the requirements from new-generation consumer electronic products.

Future Development Strategy

NTC has entered into agreements with Micron Technology in December 2015 to support Micron Semiconductor Taiwan Corp. to acquire Inotera memories Inc. as a solely owned subsidiary of Micron Taiwan for NT$ 30 per share through Share Swap Transaction, invest up to NT$ 31.5 billion to acquire Micron’s private placement shares and have option rights to license its 1x and 1y DRAM technology nodes. The acquisition deal has been approved by Inotera’s shareholders and is still subject to certain conditions, including governmental approvals. NTC and Micron have entered into a new era of strategic alliance relationships. By becoming one of its major share ownerships in Micron, and entering cooperation in future technology nodes, will create

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Win-Win situation for both NTC and Micron. The deployment will further strengthen NTC’s position as a key supplier in specialty DRAM market.

DRAM market will still encounter headwind in 2016. In supply side, top 3 suppliers continue to ramp the production of advanced 20nm and 1xnm technology nodes and new capacity will come online. According to the forecast by market intelligence, 2016 worldwide bit growth rate will be higher than 2015. DRAM industry consolidation resulted in more disciplined supply growth. In consideration of profitability, the total supply growth is expected to be rational.

The demand side growth rate is projected at the same level as 2015 due to the uncertainty of global economy outlook and the stalled momentum of smart phone and tablet markets. Positively, 2016 Summer Olympics will energize DRAM demand from consumer electronic devices like high-resolution DTV, set-top-box.

We appreciate the continuous support by all of our shareholders. We will make the best effort to deliver great operation performance and increase the company’s value to maximize returns to our shareholders.

Chairman: Chia Chau, Wu President: Pei-Ing Lee

Accountant Officer: Hung Chi Kuo

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NANYA TECHNOLOGY CORP. Supervisors’ Review Report

The Board of Directors has prepared the Company’s 2015 Business Report, Proposal for Profits Distribution, and Financial Statements audited by the CPA. We as the Supervisors of the Company have examined the aforementioned documents and found no unconformities. According to Article 219 of Company Act, we hereby submit this report. Please be advised accordingly.

Submitted to:

The Company’s 2016 Annual Shareholders’ Meeting

Supervisors: Shih-Ming Hsie Ming-Jong Yeh Ming-Long Huang

March 15, 2016

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NANYA TECHNOLOGY CORP.

Execution Status Report of Business Operation Enhancement Plan for the Company’s Capital Reduction in 2015

1. In accordance with No. 1030022998 document of Financial Supervisory Commission on June 24, 2014 and No. 1041000458 document of Securities and Futures Investors Protection Center on March 10, 2015 report the execution status of business operation enhancement plan for the Company’s capital reduction in 2014.

2. The Company’s capital reduction plan to offset company losses was approved by 2014 annual shareholders’meeting on June 6, 2014. The summary is as following:

3. (1) Reason for capital reduction: For the purposes of strengthening financial structure, the Company proposed a capital reduction plan to offset accumulated deficit.

4. (2) Total capital reduction amount: NT$215,649,072,890.

5. (3) The shares of capital reduction: 21,564,907,289 shares (including 2,734,665,392 shares of listed common stocks and 18,830,241,897 shares of common stocks of private placement).

6. (4) The ratio of capital reduction: 89.991606%.

7. (5) Common capital after reduction: NT$23,983,358,100 (including 304,135,157 shares of listed common stocks and 2,094,200,653 shares of common stocks of private placement).

8. The execution status of capital reduction plan:

9. (1) The capital reduction plan was approved by the Financial

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Supervisory Commission on June 24, 2014 with the document number 1030022998.

• (2) The record date of the capital reduction is June 27, 2014. The Company got the approval for the capital amendment registration from the Ministry of Economic Affairs, R.O.C. with the document number 10301137240 on July 9, 2014.

• Execution result of the business operation enhancement plan: Year 2015 profit attributable to owners of the Company NT$17,141,167K is better than target NT$12,664,555K.

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Ratification Items

Item 1

For approval of the 2015 Business Report and Financial Statements as required by the Company Act.

Proposed by the Board of Directors

Explanation:

1. The preparation of the Company’s 2015 Consolidated and Individual Financial Statements were completed and the same were approved at the 1st meeting of the Board in 2016 and audited by independent auditors, Ms. Delphi Chen and Ms. Isabel Lee, of KPMG. The aforesaid Financial Statements together with the Business Report were reviewed by the supervisors, which the Supervisors’ Review Report is presented.

2. For the aforementioned Business Report, please refer to Page 8 through Page 10 of the Handbook. As for the Financial Statements, please refer to Page 21 through Page 28 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

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Ratification Items

Item 2

For approval of the Proposal for Distribution of 2015 Profits as required by the Company Act.

Proposed by the Board of Directors

Attachment:

Please refer to Page 29 of the Handbook for the Statement of Profits Distribution.

Resolution:

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Election Items

Item 1

The term of office of the Company’s Directors has expired. Please elect the new Directors pursuant to the applicable laws.

Proposed by the Board of Directors

Explanation:

1. The Company’s current Directors and Supervisors have their term of office expired on June 20, 2016. To conform to the provision promulgated by the securities competent authority, which requires the Company shall establish an Audit Committee to substitute the supervisors, it is proposed to elect 12 Directors (including 3 independent directors). The term of office of the new Directors (including independent directors) shall be three years, starting from June 22, 2016 to June 21, 2019.

2. The election of Directors (including independent directors) shall adopt the candidate nomination system in accordance with Article 192-1 of the Company Act and Article 13 of the Company’s Articles of Incorporation. The Company has examined and approved the qualification of 12 candidates in the Board of Directors Meeting on May 10, 2016. The names of the 9 Director Candidates are listed below:

Name	Education	Major Experience	Shareholding (Share)
Chia Chau, Wu Representative of NPC	Bachelor in Business Administration, National Chengchi University	Current Appointment: Chairman of NPC Chairman of Nan Ya PCB Corp. Chairman of Nanya Technology Corp. Experiences: President ofNPC	907,303,769

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Name	Education	Major Experience	Shareholding (Share)
Wen Yuan, Wong	Master in Industrial Engineering, University of Houston	Current Appointment: Chairman of FCFC Chairman of Formosa Taffeta Corp. Chairman of Formosa Advanced Technologies Corp. Experiences: President of FCFC	4,000
Susan Wang	Barnard College, U.S.	Current Appointment: Executive Director of FPC Executive Director of FPCC Chairman of Formosa Environmental Technology Corp. Experiences: Executive Vice President of FPC-USA	0
Ming Jen, Tzou Representative of NPC	Associate Degree in Department of Chemical Engineering, Provincial Taipei Institute of Technology	Current Appointment: President of NPC Experiences: Executive Vice President of NPC	907,303,769
Wen-Yao Wang Representative of NPC	Pitzer College	Current Appointment: Senior Vice President of NPC Experiences: Assistant Vice President of NPC	907,303,769
Lin-Chin Su Representative of NPC	Ph.D. in Materials Science and Engineering, the University ofUtah	Current Appointment: Senior Vice President of Nanya Technology Corp. Experiences: Vice President of Nanya Technology Corp.	907,303,769

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Name	Education	Major Experience	Shareholding (Share)
Shih-Ming Hsie Representative of Formosa Taffeta Corp.	National Taipei University of Technology	Current Appointment: Vice Chairman of Formosa Advanced Technologies Corp. President of Formosa Taffeta Corp. Experiences: Chairman of Yu Yuang Textile Corp.	15,421,010
Pei-Ing Lee	Ph.D. in Chemical Engineering, Syracuse University	Current Appointment: Chairman of Inotera Memories, Inc. President of Nanya Technology Corp. Experiences: Senior Vice President of Nanya TechnologyCorp.	263,098
Otto Chang	Bachelor in Automatic Control Engineering, Feng Chia University	Current Appointment: President of Nan Ya PCB Corp. Experiences: Manager of NPC	59,839

The names of the 3 Independent Director Candidates are listed below:

below:
Name	Education	Major Experience	Shareholding (Share)
Ching-Chyi Lai	Master in Department of Public Finance, National Chengchi University	Current Appointment: Chair Professor of Chung Hua University Experiences: Chief Secretary of Council for Economic Planning and Development, Executive Yuan Deputy Secretary-general of Executive Yuan Chairman of Chunghwa Post Corp.	0

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Name	Education	Major Experience	Shareholding (Share)
Tsai-Feng Hou	Master in Public Policy Program, National Sun Yat-sen University	Current Appointment: Independent Director of King’s Town Bank Corp. Experiences: President of Ta Chong Securities Corp.	0
Shu-Po Hsu	Master in Graduate Institute of Criminology, National Chung Cheng University	Current Appointment: Vice Chairman of General Chamber of Commerce of the Republic of China Vice Chairman of Taiwan Life Insurance Corp. Experiences: Vice Chairman of Taiwan Financial Services Roundtable Corp.	0

Resolution:

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Discussion Items (II)

Item 1

Appropriateness of releasing the newly elected Directors and the juristic person shareholder whose authorized representatives are elected as Directors, from non-competition restrictions. Please discuss and resolve.

Proposed by the Board of Directors

Explanation:

1. According to Article 209 of the Company Act, any Director conducting business for himself/herself or on another’s behalf, and the scope of which coincides with the Company’s business scope, shall explain at the Shareholders’ Meeting the essential contents of such conduct and obtain approval from shareholders in the Meeting.

2. Meanwhile, according to Explanation Letter No.89206938 on Article 209 of the Company Act, announced by the Ministry of Economic Affairs dated April 24, 2000, where the juristic person shareholder's authorized representatives are elected as directors according to Article 27-2 of the Company Act, both the juristic person shareholder and the authorized representatives shall be subject to the non-competition restrictions under Article 209 of the Company Act.

3. If the newly-elected Directors and the juristic person shareholder whose authorized representatives are elected as directors in this Annual Shareholders’ Meeting conduct competitive businesses that are subject to the non-competition restrictions under Article 209 of the Company Act and the interest of the Company is not impaired, it is proposed to release the Directors and juristic person shareholders whose authorized representatives are elected as directors from such non-competition restrictions after having assumed office.

(Proclaim the information of engaging in competitive businesses conducted by the Directors and the juristic person shareholders)

Resolution:

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NANYA TECHNOLOGY CORPORATION Statement of Profits Distribution For the year of 2015 Unit: NTD	Explanation	1. The Company plans to distribute cash dividends of NT$2.8 per share for current year. 2. The Company distributes dividends for a total of NT$7,695,984,268, all of which are from net profit after tax of 2015. 3. The proposed distribution of cash dividends is based on total outstanding shares of 2,748,565,810 shares and it may be changed by the Company’s employees exercise their stock options. It is proposed that the Board of Directors be authorized to adjust the ultimate cash dividend per share accordingly. 4. While the distribution of cash dividends to each individual shareholder is less than 1 dollar, the distribution will be rounded to the nearest dollar. 5. Adjustment: adjust unappropriated retained earnings in accordance with the 2013 version of IFRS required by Financial Supervisory Commission. 6. Other comprehensive income reclassified to unappropriated retained earnings of current year: adjust the actuarial pension valuation. 7. Special reserve of NT$4,570,407 is appropriated from the net amount of exchange differences losses on translation of foreign financial statements NT$11,588,649 and unrealized gains on available-for-sale financial assets NT$7,018,242.	1. The Company plans to distribute cash dividends of NT$2.8 per share for current year. 2. The Company distributes dividends for a total of NT$7,695,984,268, all of which are from net profit after tax of 2015. 3. The proposed distribution of cash dividends is based on total outstanding shares of 2,748,565,810 shares and it may be changed by the Company’s employees exercise their stock options. It is proposed that the Board of Directors be authorized to adjust the ultimate cash dividend per share accordingly. 4. While the distribution of cash dividends to each individual shareholder is less than 1 dollar, the distribution will be rounded to the nearest dollar. 5. Adjustment: adjust unappropriated retained earnings in accordance with the 2013 version of IFRS required by Financial Supervisory Commission. 6. Other comprehensive income reclassified to unappropriated retained earnings of current year: adjust the actuarial pension valuation. 7. Special reserve of NT$4,570,407 is appropriated from the net amount of exchange differences losses on translation of foreign financial statements NT$11,588,649 and unrealized gains on available-for-sale financial assets NT$7,018,242.	- 29 -
	Amount	1,714,116,739 4,570,407 7,695,984,268 12,498,949,297	21,913,620,711
	Items	Distribution Items: 1. Appropriation of legal reserve (10% of the after-tax profit) 2. Appropriation of special reserve 3. Distribution of cash dividends (NT$2.8 per share 4. Unappropriated retained earnings carried forward to next year	Total
	Amount	4,846,914,297 38,145,874 (112,606,845) 17,141,167,385	21,913,620,711
	Items	Available for Distribution: 1. Unappropriated retained earnings of previous years 2. Adjustment 3. Other comprehensive income reclassified to unappropriated retained earnings of current year 4. Net profit after tax of current year	Total

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Information regarding the Proposed Employees’ Compensation and Compensation to Directors and Supervisors Adopted by the Board of Directors of the Company:

1. Amounts of employees’ cash compensation, stock compensation, and cash com ensation to Directors and Su ervisors: p p

Employees’ cash compensation NT$ 671,028,000 Employees’ stock compensation NT$ 0 Cash Compensation to Directors and Supervisors NT$ 0

1. Share amount of the employees’ stock compensation and the percentage of the share amount to that of all stock dividend: Share amount of em lo ees’ stock com ensation 0 share p y p

Percentage of the share amount to that of all 0%

stock dividends

Effect upon Business Performance and Earnings Per Share of the Company by the Stock Dividend Distribution Proposed at the 2016 Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend distribution at the 2016 Annual Shareholders’ Meeting and does not required to prepare financial forecast information.

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