Stock Code: 2408

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese)

NANYA TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2017 and 2016 (With Independent Accountants' Review Report Thereon)

No.98, Nanlin Rd., Dake Vil., Taishan Dist., New Taipei City, Taiwan (R.O.C.) Address: Telephone: (02)2904-5858

The independent accountants' review report and the accompanying consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent accountants' review report and consolidated interim financial statements, the Chinese version shall prevail.

$\ddot{\phantom{a}}$

Table of contents

Contents	Page
1. Cover Page	1
2. Table of Contents	$\overline{2}$
3. Independent Accountants' Review Report	3
4. Consolidated Balance Sheets	4
5. Consolidated Statements of Comprehensive Income	5
6. Consolidated Statements of Changes in Equity	6
7. Consolidated Statements of Cash Flows	7
8. Notes to Consolidated Interim Financial Statements
Company history (1)	8
Approval date and procedures of the consolidated financial statements (2)	8
New standards, amendments and interpretations adopted (3)	$8 - 13$
Summary of significant accounting policies (4)	$13 - 15$
Significant accounting assumptions and judgments, and major sources (5) of estimation uncertainty	16
Explanation of significant accounts (6)	$16 - 42$
Related-party transactions (7)	$42 - 45$
(8) Pledged assets	46
Commitments and contingencies (9)	$46 - 47$
(10) Losses Due to Major Disasters	47
(11) Subsequent Events	47
$(12)$ Other	48
(13) Other disclosures
(a) Information on significant transactions	$49 - 50$
(b) Information on investees	50
(c) Information on investment in mainland China	51
(14) Segment information	$51 - 52$

要侯建業群合會計師事務府 KPMG

台北市11049信義路5段7號68樓(台北101大樓) 68F. TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City 11049, Taiwan (R.O.C.)

Telephone 電話 + 886 (2) 8101 6666 傳真 + 886 (2) 8101 6667 Fax Internet 網址 kpmg.com/tw

Independent Accountants' Review Report

To the Board of Directors Nanya Technology Corporation:

We have reviewed the accompanying consolidated balance sheets of Nanya Technology Corporation (the "Company") and its subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016, changes in equity and cash flows for the six-month periods ended June 30, 2017 and 2016. These consolidated interim financial statements are the responsibility of the Company's management. Our responsibility is to issue a report on these consolidated interim financial statements based on our reviews.

Except as described in the following paragraph, we conducted our reviews in accordance with Statement on Auditing Standard 36, "Engagements to Review Financial Statements". A review consists principally of inquiries of the Company's personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with the generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated interim financial statements taken as a whole. Accordingly, we do not express such an opinion.

As discussed in Note 4(b), the financial statements of certain subsidiaries under the equity methods as of and for the three-month and six-month periods ended June 30, 2017 and 2016 were not reviewed by independent accountants. The total assets of these subsidiaries amounted to NT\$2,927,834 thousand and NT\$2,374,889 thousand, representing 1.76% and 2.01%, of the Company's consolidated total assets as of June 30, 2017 and 2016, respectively; and the total liabilities amounted to NT\$433,095 thousand and NT\$632,208 thousand, representing 0.63% and 1.09% of the Company's consolidated total liabilities as of June 30, 2017 and 2016, respectively; and their comprehensive income (loss) amounted to a net income of NT\$29,150 thousand and a net loss of NT\$60,576 thousand, as well as a net income of NT\$45,008 thousand and a net loss of NT\$132.150 thousand, representing 0.66% and $(15.09)$ %; as well as 0.29% and $(5.87)$ % of the Company's consolidated total comprehensive income (loss) for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

Based on our reviews, except for the effects of the adjustments, if any, to the consolidated financial statements, as might have been determined to be necessary had the financial statements of certain subsidiaries under the equity method described above been reviewed by independent accountants, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to in the first paragraph in order 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.

KPMG

Taipei, Taiwan (Republic of China) August 11, 2017

Notes to Readers

The accompanying consolidated interim financial statements are intended only to present the financial position, financial performance and its cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (" IFRSs"), International Accounting Standards ("IASs"), interpretations as well as related guidance endorsed by the Financial Supervisory Commission of 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 accepted and applied in the Republic of China.

The independent accountants' review report and the accompanying consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language independent accountants' review report and consolidated interim financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese)
Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2017 and 201

Nanya Technology Corporation and Subsidiaries

Consolidated Balance Sheets

June 30, 2017, December 31, 2016, and June 30, 2016 (Expressed in Thousands of New Taiwan Dollars)

		June 30, 2017		December 31, 2016		une 30, 2016				June 30, 2017		December 31, 2016		June 30, 2016
	Assets	Amount	খ	Amount	৯∣	Amount	২		Liabilities and Equity	Amount	$\boldsymbol{s}^{\mathrm{e}}$	Amount	Š	Amount	\$
	Current assets:								Current liabilities:
$\frac{8}{100}$	Cash and cash equivalents (Note 6(a))	23,015,384 s	4	9,101,632	r	5,961,401	$\mathbf{r}$	2120	Current financial liabilities at fair value through	2,346,616 s,	N
$\Xi$	Current financial assets at fair value through profit or	41,639							profit or loss (Note 6(b))
	$\log(N$ ote $6(b)$							2170	Accounts payable	6,859,578		5,443,555	ᡆ	1,583,144
1125	Current available-for-sale financial assets (Note	ī		2,000,360	$\mathbf{\Omega}$	4,306,069	n	2180	Accounts payable to related parties (Note 7)	255,200		165,183		324,740
	6(c))							2200	Other payables	8,902,696		3,991,544		0,245,639	o۱
1170	Notes and accounts receivable, net (Note 6(e))	6,605,124		5,768,718		3,941,162		2220	Other payables to related parties (Note 7)	1.657,043		13,993,373	≘	23,172,703	ຂ
1200	Other receivables (Notes 6(e)(i) and 7)	2,121,937		1,973,908		1,354,590		230	Current tax liabilities	1.731,823		2,138,229	Σ	886,141
1210	Other receivables due from related parties (Notes	ï		,		271,101		2322	Long-term borrowings, current portion (Notes 6(j)	7,188,250		7,786,000	v	2,597,500	$\mathbf{\hat{c}}$
	$6(e)(i)$ and $7$								and $8$ )
1310	Inventories (Note 6(f))	5,215,293		4,849,492		6,182,713	s	2399	Other current liabilities (Notes 6(l) and 7)	1,739		192,023	ا،	192,095
1470	Other current assets	2,031.781		1517,576		1,782,528	ୗ		Total current liabilities	38,942,945	ମ୍ବ	33,709,907	ଧ୍ୟ	39,001,962	ျှ
	Total current assets	39,031 158	의	25.211,686		33 799,564	$\frac{29}{2}$		Non-Current liabilities:
	Non-current assets:							2530	Bonds payable (Note 6(k))	14,106,793	۰
1523	Non-current available-for-sale financial assets (Note	41,664,109	Z	40,950,942	g	80,604		2540	Long-term borrowings (Notes 6(j) and 8)	12,778,650	œ	15,174,000		17,555,600	⋍
	6(c))							2570	Deferred tax liabilities	2,835,675		1,631,924		703
1546 1543	Non-current investments in debt instrument without Non-current financial assets at cost (Note 6(d))					9,340 181,280		2613	Non-current lease obligations payable (Notes 6(I)	ï		265,093		269,573
	active market (Note 6(d))								and $7)$
1551	Investments accounted for using equity method					31,485,073	21	2640	Net defined benefit liability, non-current	448,303		453,513		752.474
	(Notes $6(g)$ and $7)$							2670	Other non-current liabilities	97,757		97,558		159,230
800	Property, plant and equipment (Notes 6(h), 7 and 8))	83,465,114	$\overline{5}$	67,917,337	S	9,718,878	42		Total non-current liabilities	30.267,178	위	17,622,088	$\overline{5}$	18,737.580	$\frac{16}{1}$
1780	Intangible assets	204,664		272,185		339,705			Total liabilities	69.210,123	$\frac{4}{2}$	51,331,995	$\Xi$	57,739 542	$\frac{6}{4}$
1840	Deferred tax assets	846,997		876,312		869,067			Equity (Notes 6(n)(o)):
1935	Long-term lease payments receivable (Notes 6(i) and	1,202,412		1,353,253		1,496,433		3110	Ordinary share	27,485,658	$\tilde{=}$	27,485,658	ន	27,485,658	$\mathbf{z}$
								3200	Capital surplus	11,752,794		11,523,007		15,848,122	ఇ
1990	Other non-current assets (Note 8)	332,760		395,427		406,308	٠	3310	Legal reserve	5,164,057		2,791,929		2,791,929
	Total non-current assets	127,716,056	77	111,765,456	5	84,586,688	$\overline{r}$	3320	Special reserve			4,570		4,570
								3350	Unappropriated retained earnings	39,570,645	24	36,296,086	27	14,744,512
								3400	Other equity interest	13,794,616	∞	7,789,101	Þ	(1,445)
								3500	Treasury shares	(347, 533)		(347, 533)		(347,533)
									Total equity attributable to owners of parent:	97420,237	Ş,	85,542,818	S	60,525.813	5
								36x	Non-controlling interests	116,854	ا،	102,329		120.897	₫
									Total equity	97.537.091	$\frac{3}{2}$	85,645,147	S	60,646,710	화
	Total assets	S 166,747,214	휇	136,977,142	릛	8,386,252	뤸		Total liabilities and equity	S 166.747.214	힄	136,977,142	$\frac{8}{10}$	118,386,252	힄

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

Nanya Technology Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

For the three-month and six-month periods ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

				June 30,	For the three-month periods ended			June 30,	For the six-month periods ended
			2017		2016		2017		2016
			Amount	%	Amount	℅	Amount	$\%$	Amount	%
4000	Operating revenue (Note 7)	S	12,625,502	100	8,933,094		100 \$24,856,076	100	19,330,649	100
5000	Operating costs (Notes $6(m)(p)(r)$ and 7)		7.081.576	56	6,396.376	72	14,411,633	58	13,395,105	69
	Gross profit from operations		5.543.926	44	2.536,718	28	10,444,443	42	5.935,544	$\overline{31}$
	Operating expenses (Notes $6(l)(m)(p)(r)$ and 7):
6100	Selling expenses		178,600	1	169,201	$\overline{2}$	352,060	1	325,369	2
6200	Administrative expenses		316,174	3	225,936	3	663,828	3	457,652	$\mathbf 2$
6300	Research and development expenses		882,360	7	490,924	5	1,409,123	6	869.051	4
	Total operating expenses		1,377,134	11	886,061	10	2.425.011	10	1.652,072	$\boldsymbol{\delta}$
	Net operating income		4,166,792	$\overline{33}$	1,650,657	18	8,019,432	32	4,283,472	$\frac{23}{2}$
	Non-operating income and expenses (Notes 6(g)(i)(l)(s)):
7010	Other income		94.959		67,291	$\mathbf{1}$	183,272	1	121,052	$\mathbf{1}$
7020	Other gains and losses, net		3,887,167	31	(23,046)	$\ddot{\phantom{0}}$	3,354,679	13	(311, 413)	(2)
7050	Finance costs		(147, 398)	$\blacksquare$	(185, 838)	(2)	(269, 395)	(1)	(359,770)	(2)
7060	Share of loss of associates accounted for using equity method, net				(457, 342)	(5)		$\bullet$	(836, 602)	(4)
7900	Total non-operating income and expenses		3,834,728 8,001,520	31 64	(598, 935) 1,051,722	(6) 12	3,268,556 11,287,988	13 45	(1,386,733) 2,896,739	(7) 16
7950	Profit before tax Tax expense (Note 6(n))		1.504.950	12	646.750	7	1,508,728	6	646,969	$\overline{3}$
	Profit		6,496,570	52	404,972	5	9,779,260	39	2,249,770	13
8300	Other comprehensive income (Note 6(t)):
8360	Items that may be reclassified to profit or loss
8361	Exchange differences on translation of foreign financial statements		5.020		7,138		(15, 384)	$\overline{a}$	9,738
			(2,523,145)	(20)	(10, 688)		7,253,602	29	(6, 613)
8362	Unrealized gains (losses) on valuation of available-for-sale financial assets
8399	Income tax related to items that may be reclassified to profit or loss (Note 6(n)		428,840	3			(1,232,703)	(5)
	Total amount of items that may be reclassified subsequently to profit or loss		(2,089.285)	(17)	(3,550)		6,005,515	24	3.125
8500	Total comprehensive income		4,407,285	35	401,422	5	15,784,775	63	2,252,895	13
	Profit, attributable to:
8610	Profit, attributable to owners of parent	S	6,489,667	52	396,620	5	9,764,965	39	2,245,562	13
8620	Profit, attributable to non-controlling interests		6,903		8,352		14,295		4,208	$\blacksquare$
			6,496,570	52	404,972	5	9,779,260	39	2,249,770	13
	Comprehensive income attributable to:
8710	Comprehensive income, attributable to owners of parent	S	4,400,382	35	393,070	5	15,770,480	63	2,248,687	13
8720	Comprehensive income, attributable to non-controlling interests		6,903	$\sim$	8,352		14,295	$\hat{\phantom{a}}$	4,208
			4,407,285	$\overline{35}$	401,422		15,784,775	63	2.252,895	13
	Earnings per share (Note 6(q))
9750	Basic earnings per share			2.36		0.14		3.55		0.82
9850	Diluted earnings per share	S		2.32				3.40

Nanya Technology Corporation and Subsidiaries

Consolidated Statements of Changes in Equity
For the six-month periods ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

		nrealized g	.
	ther co.
parer	otal othe.		i dia
	ű	I

					Unappropriated	translation of differences on Exchange	available-for- valuation of (losses) on		attributable to Total equity
	Ordinary				retained	foreign financial	sale financial		owners of	Non-controlling
	shares	Capital surplus Legal reserve	077.812	Special reserve	21.913.62 earnings	(11,588) statements	7.018 assets	347,533 Treasury shares	54.737,689 parent	116,686 interests	54.854.375 Total equity
Balance at January 1, 2016	24,285,658	1,812,701							2,245,562	4,208	2,249,770
Net profit for the six-month periods ended June 30, 2016					2,245,562	9.738	(6.613)		3,125		3.125
Other comprehensive income (loss)
Total comprehensive income (loss)					2,245,562	9.738	(6.613)		2,248,687	4,208	2,252,895
Appropriation and distribution of retained earnings:
Legal reserve appropriated			714,117		(1, 714, 117)
Cash dividends of ordinary share					(7,695,984)				(7,695,984)		(7,695,984)
Special reserve appropriated				4,570	(4,570)
Issuance of shares	3,200,000	8,475,000							11,675,000		1,675,000
Other changes in capital surplus:
Changes in equity of associates accounted for using equity		(512, 387)							(512,387)		(512,387)
method
Recognized compensation costs on employee stock options		72.808							72,808		72.81
Balance at June 30, 2016	27,485,658	15,848,122	2,791,929		14.744.512	(1,850)		(347, 533)	60,525,813	120,897	60,646,710
ø Balance at January 1, 2017	27,485,658	11.523.007	791,929 N	4,570	36.296.086	(16, 846)	7,805,947	(347, 533)	85,542,818	102,329	85,645,14
Net profit for the six-month periods ended June 30, 2017					9,764,965				9,764,965	14,295	9,79,26
Other comprehensive income (loss)						(15.384)	6,020,899		6,005,515		6,005,515
Total comprehensive income (loss)					9,764,965	15.384	6.020.899		15,770,480	14.295	15.784.775
Appropriation and distribution of retained earnings:
Legal reserve appropriated			2,372,128		(2,372,128)
Cash dividends of ordinary share					(4, 122, 848)				(4, 122, 848)		(4, 122, 848)
Reversal of special reserve				(4,570)	4,570
Other changes in capital surplus:											229,787
Recognized compensation costs on employee stock options		229.787							229,787		230
Changes in non-controlling interests
Balance at June 30, 2017	27,485,658	1.752.794	,164,057 ท์		39,570,645	32,230)	13,826,846	(347, 533)	97,420,237	16,854	97,537,091

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

Nanya Technology Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

	For the six-month periods ended June 30,
	2017	2016
Cash flows from operating activities:
Profit before tax	11,287,988 \$	2,896,739
Adjustments:
Adjustments to reconcile profit:
Depreciation expense	3,456,115	2,946,314
Amortization expense	80,011 1,127,334	73,342
Net loss on financial assets or liabilities at fair value through profit or loss Interest expense	269,395	359,770
Interest income	(183, 272)	(121, 052)
Share-based payments	229,787	72,811
Amortization costs of issuing bonds	(70, 684)
Share of loss of associates accounted for using equity method		836,602
Gain on disposal of property, plant and equipment	(45)	(819)
Gain on disposal of financial assets in available-for-sale	(4,819,443)
Gain on disposal of lease payable	(63, 542)
Impairment loss on non-financial assets	32,057
Unrealized foreign exchange (gain) loss	(604, 710) (546, 997)	56,510 4,223,478
Total adjustments to reconcile (loss) profit
Changes in operating assets and liabilities: (Increase) decrease in notes and accounts receivable	(779, 621)	1,505,593
(Increase) decrease in other receivable	(121, 391)	51,117
Increase in inventories	(365, 801)	(233, 373)
Increase in other current assets	(517, 435)	(205, 297)
Increase (decrease) in notes and accounts payable (including related parties)	1,540,141	(2,686)
Increase (decrease) in other payable (including related parties)	222,439	(2,146)
(Decrease) increase in other current liabilities	(231, 504)	9,276
Decrease in net defined benefit liability	(5,210) (15,379)	(3,386) 181,741
(Decrease) increase in other non-current liabilities	(273,761)	1,300,839
Total changes in operating assets and liabilities	10,467,230	8,421,056
Cash inflow generated from operations Interest received	92,810	115,465
Interest paid	(174,916)	(370, 499)
Income taxes paid	(1,873,914)	(373.559)
Net cash flows provided by operating activities	8,511,210	7,792,463
Cash flows from investing activities:
Acquisition of available-for-sale financial assets		(8,100,000)
Proceeds from disposal of available-for-sale financial assets	13,360,238	3,799,644
Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment	(18,311,088) 100	(2, 554, 932) 684
Increase in refundable deposits	(1,683)
Acquisition of intangible assets		(54, 102)
Decrease in lease receivables	214,665	214,665
Decrease (increase) in other non-current assets	61,990	(19, 555)
Net cash flows used in investing activities	(4,675,778)	(6.713.596)
Cash flows from financing activities:
Increase in short-term loans		6,000
Decrease in short-term loans		(3,312,000)
Proceeds from issuing convertible bonds	15,681,000	7,964,000
Proceeds from long-term debt Repayments of long-term debt	(3,000,000)	(1,000,000)
Increase in guarantee deposits received	15,873
Decrease in other payables to related parties	(2,689,243)	(3,501,867)
Decrease in lease payable	(4,138)	(4,102)
Proceeds from issuing shares		11,675,000
Change in non-controlling interests	230	$\bullet$
Net cash flows provided by financing activities	10.003,722	11,827,031
Effect of exchange rate changes on cash and cash equivalents	74,598	(48,202) 12,857,696
Net increase in cash and cash equivalents	13,913,752 9,101,632	3,103,705
Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	23,015,384 S.	15,961,401

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) AS OF JUNE 30, 2017 AND 2016 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING STANDARDS

NANYA TECHNOLOGY CORPORATION AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Nanya Technology Corporation (the "Company") was legally established with the approval of the Ministry of Economic Affairs on March 4, 1995, with registered address at No.98, Nanlin Road, Dake Vil., Taishan District, New Taipei City, Taiwan. The main operating activities of the Company and its subsidiary (the "Group") are researching, developing, manufacturing and selling semiconductor products, and the import and export of its machinery, equipment and raw materials.

(2) Approval date and procedures of the consolidated financial statements:

The consolidated interim financial statements as of and for the six months ended June 30, 2017 and 2016 were reported and issued by the Board of Directors on August 11, 2017.

New standards, amendments and interpretations adopted: $(3)$

The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial $(a)$ Supervisory Commission, R.O.C. ("FSC") which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2017:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment Entities: Applying the Consolidation Exception"	January 1, 2016
Amendments to IFRS 11 "Accounting for Acquisitions of Interests in Joint Operations"	January 1, 2016
IFRS 14 "Regulatory Deferral Accounts"	January 1, 2016
Amendment to IAS 1 "Presentation of Financial Statements-Disclosure Initiative"	January 1, 2016
Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization"	January 1, 2016
Amendments to IAS 16 and IAS 41 "Agriculture: Bearer Plants"	January 1, 2016
Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions"	July 1, 2014
Amendment to IAS 27 "Equity Method in Separate Financial Statements"	January 1, 2016
Amendments to IAS 36 " Impairment of Non-Financial assets- Recoverable Amount Disclosures for Non-Financial Assets"	January 1, 2014
Amendments to IAS 39 " Financial Instruments-Novation of Derivatives and Continuation of Hedge Accounting"	January 1, 2014
Annual Improvements to IFRSs 2010 2012 Cycle and 2011 2013 Cycle	July 1, 2014

	Effective date
New, Revised or Amended Standards and Interpretations	per LASB
Annual Improvements to IFRSs 2012-2014 Cycle	January $1,2016$
IFRIC 21 "Levies"	January 1, 2014

The Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated interim financial statements.

The impact of IFRS endorsed by FSC but not yet effective $(b)$

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018 in accordance with Ruling No. 1060025773 issued by the FSC on July 14, 2017:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendment to IFRS 2 "Classification and Measurement of Share based Payment Transactions"	January 1, 2018
Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts"	January 1, 2018
IFRS 9 "Financial Instruments"	January 1, 2018
IFRS 15 "Revenue from Contracts with Customers"	January 1, 2018
Amendment to IAS 7 "Statement of Cash Flows -Disclosure Initiative"	January 1, 2017
Amendment to IAS 12 "Income Taxes-Recognition of Deferred Tax Assets for Unrealized Losses"	January 1, 2017
Amendments to IAS 40 "Transfers of Investment Property"	January 1, 2018
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12	January 1, 2017
Amendments to IFRS 1 and Amendments to IAS 28	January 1, 2018
IFRIC 22 "Foreign Currency Transactions and Advance Consideration"	January 1, 2018

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated interim financial statements. The extent and impact of signification changes are as follows:

IFRS 9 "Financial Instruments" $(i)$

IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" which contains classification and measurement of financial instruments, impairment and hedge accounting. The actual impact of adopting IFRS 9 on the Group's consolidated financial statements in 2018 can only be determined and reliably estimated depending on the financial instruments that the Group holds and economic conditions at that time, as well as the accounting elections and judgments that it will make in the future. The new standard will require the Group to revise its accounting processes and internal controls related to reporting

financial instruments. However, the Group has performed a preliminary assessment of the potential impact of the adoption of IFRS 9 based on its positions at June 30, 2017 and hedging relationships designated under during the first half of 2017 under IAS 39.

Classification-Financial assets $1)$

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial assets in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification.

Based on its preliminary assessment, the Group does not believe that the new classification requirements, if applied at June 30, 2017, would have had a material impact on its accounting for trade receivables, loans, investments in debt securities and investments in equity securities that are managed on a fair value basis. At June 30, 2017, the Group had equity investments classified as available-for-sale with a fair value of \$41,664,109 that are held for long-term strategic purposes. If these investments continue to be held for the same purpose at initial application of IFRS 9, the Group may elect then to classify them as FVOCI or FVTPL. The Group has not yet made a decision in this regard. In the former case, all fair value gains and losses would be reported in other comprehensive income, no impairment losses would be recognized in profit or loss and no gains or losses would be reclassified to profit or loss on disposal. In the latter case, all fair value gains and losses would be recognized in profit or loss as they arise, increasing volatility in the Group's profits.

$2)$ Impairment-Financial assets

IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss' (ECL) model. This will require considerable judgment as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis.

The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments, and to contract assets.

Under IFRS 9, loss allowances will be measured on either of the following bases:

• 12-month ECLs. These are ECLs that result from possible default events within the 12 months after the reporting date; and
• lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument.

Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset's credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement always applies for trade receivables without a significant financing component; an entity may choose to apply this policy also for trade receivables with a significant financing component.

The Group's preliminary assessment that the adoption of IFRS 9 would not have any material impact.

Disclosures $3)$

IFRS 9 will require extensive new disclosures, in particular about hedge accounting, credit risk and expected credit losses. The Group's preliminary assessment included an analysis to identify data gaps against current processes and the Group plans to implement the system and controls changes that it believes will be necessary to capture the required data.

$4)$ Transition

Changes in accounting policies resulting from the adoption of IFRS 9 will generally be applied retrospectively, except as described below.

• The Group plans to take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 generally will be recognized in retained earnings and reserves as at 1 January 2018.
• The following assessments have to be made on the basis of the facts and circumstances that exist at the date of initial application.
• The determination of the business model within which a financial asset is held.
• The designation of certain investments in equity instruments not held for trading as at FVOCI.

(ii) IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether how much and when revenue is recognized. It replaces the existing revenue recognition guidance for IAS 18 "Revenue".

For the sale of semiconductor products, revenue is currently recognized based on individual terms of sales contract and the global movement insurance of goods and the related risks and rewards of ownership transfer. Revenue is recognized at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods. Under IFRS 15, revenue will be recognized when a customer obtains control of the goods. The Group has performed a preliminary assessment when the timing of the related risks and rewards of the goods ownership transferred is similar to the timing when control is transferred and the Group does not expect that there will be a significant impact on its consolidated financial statements.

(iii) Amendments to IAS 7 "Disclosure Initiative"

The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes.

To satisfy the new disclosure requirements, the Group intends to present a reconciliation between the opening and closing balances for liabilities with changes arising from financing activities.

(iv) Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized Loss"

The amendments clarify the accounting for deferred tax assets for unrealized losses on debt instruments measured at fair value.

The Group is assessing the potential impact on measuring its differed tax assets resulting from the amendments. The effects would be further analyzed.

The impact of IFRS issued by IASB but not yet endorsed by the FSC $(c)$

As of the date the following IFRSs that have been issued by the IASB, but not yet endorsed by the FSC:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture"	Effective date to be determined by IASB
IFRS 16 "Leases"	January 1, 2019
IFRS 17 "Insurance Contracts"	January 1, 2021
IFRIC 23 "Uncertainty over Income Tax Treatments"	January 1, 2019

(Continued)

Those which may be relevant to the Group are set out below:

Issuance / Release Dates	Standards or Interpretations	Content of amendment
January 13, 2016	IFRS 16 "Leases"	The new standard of accounting for lease is amended as follows:
		• For a contract that is, or contains, a lease, the lessee shall recognize a right of use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present interest expense on the lease liability separately from the depreciation charge for the right of-use asset during the lease term.
		• A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17.

The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

$(4)$ Summary of significant accounting policies:

Statement of compliance $\left( a\right)$

The consolidated interim financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the "Regulations") and IAS 34 "Interim Financial Reporting" which are endorsed by FSC and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to IFRS endorsed by the FSC) for full annual consolidated financial statements.

Except the described below, the significant accounting policies adopted in the consolidated interim financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2016. For the related information, please refer to note 4 of the consolidated financial statements for the year ended December 31, 2016.

Basis of consolidation $(b)$

Principle of preparing of the consolidated interim financial statements are the same as those of the consolidated financial statements for the year ended December 31, 2016. Please refer to Note 4(c) of the consolidated financial statements for the year ended December 31, 2016 for complete disclosures of significant accounting policies.

$(i)$ List of subsidiaries in the consolidated interim financial statements:

				Stockholder's Equity
Investor	The name of subsidiaries	Business activity	June 30, 2017	December 31. 2016	June 30. 2016	Note
The Company	NANYA TECHNOLOGY CORP. U.S.A	Sales of semiconductor products	100.00 %	100.00 %	100.00 %
The Company	NANYA TECHNOLOGY CORP. Delaware	Design of semiconductor products	100.00 %	100.00 %	100.00 %
The Company	NANYA TECHNOLOGY CORP. H.K.	Sales of semiconductor products	100.00 %	100.00 %	100.00 %
The Company	NANYA TECHNOLOGY CORP. Japan	Sales of semiconductor products	100.00 %	100.00%	100.00 %
The Company	PEI JEN Co., Ltd.	Investment in enterprise	100.00 %	100.00%	100.00 %
The Company	PIECEMAKERS TECHNOLOGY CORP	Product design and sells	53.57 %	53.57 %	55.26 %	Note 1
The Company	SUMPRO ELECTRONICS CORP.	Manufacture and sale of electronic components	% ۰	$\%$	100.00 %	Note 2
NANYA TECHNOLOGY CORP. H.K.	NANYA TECHNOLOGY CORP., Germany	Sales of semiconductor products	100.00 %	100.00%	100.00 %
NANYA TECHNOLOGY CORP. H.K.	NANYA TECHNOLOGY CORP. Shenzhen	Sales of semiconductor products	100.00 %	100.00 %	100.00 %

• Note 1: In June and September 2016, the board of directors of PIECEMAKERS TECHNOLOGY CORP. approved to distribute its shares as employee remuneration and increase the common shares arising from the exercise of stock options under the Employee Stock Option Plan. As a result, the shareholding decreased from 55.26% to 53.57%.
• Note 2: SUMPRO ELECTRONICS CORP. was no longer a subsidiary of the Group when it was liquidated progress on November 8, 2016.
• Note 3: The interim financial statements as of and for the six-month periods ended June 30, 2017 and 2016 of all the subsidiaries enumerated above were not reviewed by independent accountants.
• Subsidiaries not included in the consolidated interim financial statements: None. $(ii)$

Financial instruments $(c)$

$(i)$ Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are recognized initially at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss and included in other gains and losses of non-operating income and expenses. When the fair value of a derivative instrument is positive, it is classified as a financial asset, and when the fair value is negative, it is classified as a financial liability.

• The conversion rights included in the convertible bond, which were issued by the Group and $(ii)$ classified as derivative financial liabilities due to the settlement of shares are not exchanged to equity instruments through fixed amounts or other financial assets. The derivative financial assets of convertible bonds were measured at fair value; the initial amounts of non-derivative financial liabilities were measured after deducting the separate embedded derivatives. Subsequent to initial recognition, non-derivative financial liabilities are measured at amortized cost using the effective interest method; derivative financial liabilities are measured at fair value, and changes therein, in fair value are recognized in profit or loss.
• $(d)$ Income taxes

The Group evaluates and discloses the interim period income tax expense in accordance with paragraph B12 of IAS 34 "Interim Financial Reporting".

Income tax expense is best estimated by multiplying the pretax income for the interim reporting period by the effective annual tax rate as forecasted by management. This is recognized as current tax expense and deferred taxes in proportion with the estimated annual current tax expense and deferred tax expense.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases are measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled and recognized directly in equity or other comprehensive income as tax expense.

Employee benefits $(e)$

The 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 prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant onetime events.

$(5)$ Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated interim financial statements in conformity with the Regulations and IFRSs endorsed by the FSC, requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

In these consolidated interim financial statements, judgments and key sources of estimation uncertainty used by management in the application of critical accounting policies are expected to be consistent with those in Note 5 of the consolidated financial statements for the year ended December 31, 2016.

(6) Explanation of significant accounts:

Except as described below, the description of significant accounts in the accompanying consolidated interim financial statements is not materially different from those in the consolidated financial statements for the year ended December 31, 2016. Please refer to Note 6 of the consolidated financial statements for the year ended December 31, 2016 for more details.

• June 30. December 31. June 30. 2017 2016 2016 Cash on hand-pretty cash $\mathbf{\hat{S}}$ 150 208 239 Cash in bank-demand deposit account 2,386,400 2,327,842 2,188,172 Cash equivalents: Time deposits 5,829,667 17,446,239 13,020,145 Commercial paper 694,473 2,613,137 $\overline{a}$ Repurchase agreements collateralized by 569,400 249,500 corporate bonds 752,845 9,101,632 15,961,401 23,015,384 S
• Cash and cash equivalents $(a)$

Financial Assets and liabilities at fair value through profit or loss (b)

	June 30, 2017	December 31, 2016	June 30, 2016
Financial Assets held-for-trading:
Derivative instruments not used for hedging	41,639
	June 30, 2017	December 31, 2016	June 30, 2016
Hide-to-maturity Financial Liabilities:
Embedded derivative-convertible bonds	2.346,616 S

Re-measurement at fair value recognized in profit or loss is disclosed in Notes $6(k)(s)$ .

Derivatives financial instruments are used to hedge foreign currency and interest rate exposures. The Group holds the following derivative financial instruments, which were not applicable for hedge accounting and were accounted for as held-for-trading financial liabilities, were as follows:

						June 30, 2017
		Contract Amount	(in thousand)			Currency		Maturity dates
	Non-delivery forward purchased US\$			500,000		US\$ to TWD		2018.3.20~2018.3.22
(c)	Available-for-sale financial assets
				June 30, 2017		December 31, 2016		June 30, 2016
	Domestic money market fund		\$				2,000,360	4,306,069
	Foreign listed stock				41,593,061	40,882,664
	Domestic listed stock				71,048		68,278	80,604
			S		41,664,109	42,951,302		4,386,673
	Current		S				2,000,360	4,306,069
	Non-Current		S		41,664,109	40,950,942		80,604

Investment in debt securities with no active market / Financial assets carried at cost-non-current $(d)$

The Group purchased a two-year interest-free convertible bond of US\$6,000 thousand issued by Memoright in August 2015. The conversion rights embedded in the corporate bond are accounted for separately as the economic characteristics and risks are not specifically associated. On December 31, 2016, an impairment loss of \$190,620 was recognized because the management evaluated that it was not possible to collect the future cash flows of the convertible bond, with objective indications. The conversion rights of the corporate bond, which are linked to unlisted preference shares of \$0, \$0 and \$9,340 and the corporate bonds of \$0, \$0 and \$181,280, were accounted for as financial assets carried at cost-non-current and investment in debt securities with no active market-non-current, respectively, as of June 30, 2017, December 31, 2016 and June 30, 2016.

Notes and accounts receivable and other receivables $(e)$

		June 30, 2017	December 31, 2016	June 30, 2016
Notes receivable	S	5.090
Accounts receivable		6,609,117	5,778,002	3,951,681
Other receivables (including related parties)		2,121,937	1,973,908	1,625,691
Less : allowance for doubtful receivables		(9,083)	(9, 284)	(10, 519)
	S	8,727,061	7,742,626	5,566,853

The aging analysis of notes and accounts receivable and other receivables was as follows:

	Neither past		Past due but not impaired
	due nor impaired	Within 30 days	31 to 60 days	over 61 days	total
June 30, 2017	8,487,964	230,786	8,311		8,727,061
December 31, 2016	7,722,187	12.843	334	7,262	7,742,626
June 30, 2016	5,543,243	23,610	$\overline{\phantom{a}}$		5,566,853

The movements of the allowance for doubtful receivables was as follows:

\$ Balance as of January 1, 2017 Foreign exchange gain Balance as of June 30, 2017 \$ Balance as of January 1, 2016 Foreign exchange loss Balance as of June 30, 2016	Collectively assessed impairment loss
		9,284
		(201)
		9,083
		9,177
		1,342
		10,519

(f) Inventories

		June 30, 2017	December 31, 2016	June 30, 2016
Raw materials	\$	327,199	217,708	279,149
Work in progress		3,414,520	2,712,196	2,707,779
In-transit inventory		1,439,596	1,893,102	3,107,944
Merchandise		33,978	26,486	87,841
Total	S	5,215,293	4,849,492	6,182,713

The Group did not recognize any loss from devaluation of inventories or gain from recovery in the value of inventories for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

$(g)$ Investments accounted for using equity method

The components of the investments accounted for using equity method were as follows:

	June 30,	December 31,	June 30,
	2017	2016	2016
Associates	$\blacksquare$ ъĐ	$\blacksquare$	1,485,073 31

$(i)$ Associates

The Group's capital surplus—equity of associates accounted for using equity method increased by \$14,940 due to the recognition of the costs of employee stock options of Inotera Memories. Inc. for the six-month period ended June 30, 2016.

On February 23 and May 10, 2016 the Group's capital surplus—equity of associates accounted for using equity method decreased by $$77,861$ due to the increase in capital injection of 25,574 thousand shares of Inotera Memories, Inc., without purchasing in proportion to the original shareholding percentage.

On June 30, 2016, the Group's capital surplus—equity of associates accounted for using equity method decreased by \$449,466 due to the repurchasing of treasury shares of Inotera Memories, Inc. in accordance with the Business Merges and Acquisitions Act.

The information of the investments in a significant associate accounted for using equity method was as follows:

			Percentage of ownership
Associates	Relationship	Registration Country	June 30. 2017	December 31, 2016	June 30. 2016
Inotera	The main supplier for raw Memories, Inc. material of the Company. Its primary operating activity is producing and selling of semiconductor products.	Taiwan			24.24 %

The fair value of investments in publicly traded stocks of the significant associate was as follows:

Inotera Memories, Inc.

The Group's significant aggregate financial information for investments accounted for using the equity method was as follows:

The aggregate financial information of Inotera Memories Inc. were as follows:

					June 30, 2016
Current assets				\$	32,659,626
Non-current assets					124,046,584
Current liabilities					(17, 451, 326)
Non-current liabilities					(8,969,347)
Net asset				S	130,285,537
		2016	For the three- month period ended June 30,		For the six- month period ended June 30, 2016
Operating Revenue	\$		11,583,648		22,396,715
Loss	S		(1,887,132)		(3,447,860)
Other comprehensive income			2,012		1,844
Total comprehensive loss	S		(1,885,120)		(3,446,016)
Total comprehensive loss distributed to the Group	\$		(457, 342)		(836, 602)
					For the six- month period ended June 30, 2016
Share of the equity of the associate as of January 1,				$\overline{\mathbf{s}}$	32,833,967
Total comprehensive income allocated to the Group of investment in associate for the six-month period ended June 30,					(836, 602)
Share of the equity of the associate as of June 30,					31,997,365
Add: Realized profit on disposal of fixed assets					135
Recognition compensation costs of employee stock options					14,940
Less: Capital surplus due to acquisition of shares not proportionate to original holding ratio					(527, 326)
Others					(41)
Ending carrying amount of equity of a significant associate				S	31,485,073

In December 2016, Micron Semiconductor Co. (MST) completed its share swap with Inotera Memories, Inc. The Group disposed all shares of Inotera; therefore, it is no longer a related party of the Group starting December 6, 2016 (the date upon which the share swap was recorded).

(h) Property, plant and equipment

The movements of cost and accumulated depreciation and impairments of the property, plant and equipment were as follows:

		Land	Building	Machinery and equipment	Other equipment	Under construction	Total
Cost:
Balance as of January 1, 2017	\$	1,013,924	4.197,562	125,215,286	1,431,504	25,574,275	157,432,551
Additions				204,073	17,132	19,024.537	19.245,742
Disposals				(234, 444)	(21, 134)		(255, 578)
Derecognized lease assets					(345, 636)		(345, 636)
Reclassification				18,237,729	43,781	(18, 281, 510)
Effect of exchange rate change			(43)	(1, 368)	605		(1, 306)
Balance as of June 30, 2017		1,013.924	4.197,519	143,420.776	1,126,252	26,317,302	176.075,773
Balance as of January 1, 2016	ŝ	1,013,924	4.197,540	124,544,160	1,428,002	1,275,203	132,458,829
Additions				154,205	12,569	2,735,224	2,901,998
Disposals				(11, 898)	(21,079)		(32, 977)
Reclassification			673	104,567	4,483	(109, 723)
Effect of exchange rate change			302	13	(18)		297
Balance as of June 30, 2016		1,013.924	4,198,515	124,791,047	1,423,957	3,900,704	135,328,147
Accumulated depreciation / impairment:
Balance as of January 1, 2017	S		1,450,874	86,921,615	1,142,725		89,515,214
Depreciation for the period			80,049	3,355,089	20,977		3,456,115
Impairment loss				32,735	(678)		32,057
Disposals				(234, 445)	(21,078)		(255, 523)
Derecognized lease assets					(136, 693)		(136, 693)
Reclassification				(39, 390)	39,390
Effect of exchange rate change			(24)	(971)	434		(511)
Balance as of June 30, 2017	s		1,530,899	90,034,633	1,045,127		92.610,659
Balance as of January 1, 2016	Ŝ		1,290,719	80,274,330	1,130,254		82,695,303
Depreciation for the period			80,079	2,840,864	25,371		2,946,314
Disposals				(11, 898)	(21, 079)		(32, 977)
Reclassification			673	364	(1,037)
Effect of exchange rate change			156	(243)	716		629
Balance as of June 30, 2016			1,371,627	83,103,417	1,134,225		85,609,269
Carrying amounts:
Balance as of June 30, 2017	s	1,013.924	2,666,620	53,386,143	81,125	26,317,302	83,465,114
Balance as of December 31, 2016	S	1,013,924	2,746,688	38,293,671	288,779	25,574,275	67,917,337
Balance as of June 30, 2016	s	1,013.924	2,826,888	41,687.630	289,732	3,900,704	49,718,878

Property, plant and equipment under construction $(i)$

	June 30	For the three-month periods ended	For the six-month periods ended June 30
	2017	2016	2017	2016
Capitalized interest
amounts	44.325	-	108.730	-
Capitalized interest rates	1.97%		1.97%~1.98%	$\overline{\phantom{0}}$

(ii) Secured

Please refer to Note 8 for details of the long-term borrowings and the amount of the guarantee as of June 30, 2017, December 31, 2016 and June 30, 2016, respectively.

• Lease receivables $(i)$
• On June 18, 2009, the Group signed an amended long term lease agreement with Inotera $(i)$ Memories, Inc. and MeiYa Technology Corp. on the lease of building, facilities and land located on 348, 348-1 and 348-3, Hwa Ya Section, Kueishan District, Taoyuan City. This amended lease agreement, which took effect retroactively from January 1, 2009, includes the renewal term. Initial lease term is from January 1, 2009 to December 31, 2018. However Inotera Memories, Inc. is entitled to renew this amended lease agreement for an unlimited number of consecutive additional terms of five years each, by providing a written notice with the intention to renew the lease term commencing from January 1, 2019. In addition, Inotera Memories, Inc. has an exclusive option to purchase the leased assets for a total purchase price of US\$50,000 thousand on and after January 1, 2024. Also, the rental receivable for the entire year of 2009 has been waived. Initial yearly rentals for the leased building (including facilities and land) were US\$13,010 thousand and US\$1,990 thousand, respectively from January 1, 2010 to December 31, 2018; the first yearly renewal rentals for the leased building (including facilities and land) will be US\$8,010 thousand and US\$1,990 thousand, respectively, from January 1, 2019 to December 31, 2023; the subsequent yearly renewal rentals for the leased building (including facilities and land) will be US\$10 thousand and US\$1,990 thousand commencing from January 1, 2024. The amended lease agreement for the building (including facilities) is treated as a capital lease because (a) the present value of the periodic rental payments made since the inception date is at least 90% of the market value of the leased assets and (b) the lease term is equal to 75% or more of the total estimated economic life of the leased assets. The land is treated as an operating lease.
• The total lease receivable from the capital lease of the building (including facilities) was $(ii)$ \$5,185,620; the implicit interest rate was 10.56%. The cost of the leased assets at the beginning of the lease period was \$2,656,223. The difference was recognized as unrealized interest revenue of \$2,529,397. For the three-month and six-month periods ended June 30, 2017 and 2016, the Group recognized the interest revenue of \$38,493, \$45,307, \$78,756 and \$92,209, respectively, from the amortization of unrealized interest revenue.

The details of lease receivables were as follows:

			June 30, 2017,			December 31, 2016		June 30, 2016,
		Gross investment in the lease	Unearned finance income	Present value of minimum lease payments receivable	Gross investment in the lease	Uncarned finance income	Present value of minimum lease payments receivable	Gross investment in the lease	Unearned finance income	Present value of minimum lease payments receivable
Less than one year	5	429,330	135,308	294,022	429,330	150,240	279,090	429,330	164.413	264,917
Between one and five years		1,139,820	309,263	830,557	1,222,320	352,504	869,816	1.304.820	397,737	907,083
More than five years		396,495	24.640	371,855	528,660	45,223	483,437	660,825	71.475	589,350
Sub-total		\$1,965,645	469,211	1,496,434	2,180,310	547.967	1,632,343	2.394,975	633,625	1,761,350
Current			s	294,022			279,090			264,917
Non-current				1,202,412			1,353,253			1.496,433
				\$1,496,434			1.632.343			1,761,350

(j) Long-term borrowings

		June 30, 2017,
	Currency	Interest rate range	Expiration	Amount
Secured bank loans	TWD	1.7895%~2.1662%	2019~2020	19,966,900
Less: Current portion of long-term loans				(7,188,250)
Total				12,778,650
Unused long term of credit				1,600,000
		$D_{\text{model}}$ $L_{\text{eq}}$ . 21. 2016

		December 31, 2016,
	Currency	Interest rate range	Expiration		Amount
Secured bank loans	TWD	1.7895%~2.1668%	$2019 - 2020$	S.	22,960,000
Less: Current portion of long-term loans					(7,786,000)
Total					15,174,000
Unused long term of credit					1,300,000

		June 30, 2016,
	Currency	Interest rate range	Expiration		Amount
Unsecured bank loans	TWD	1.818%	2017	S	200,000
Secured bank loans	TWD	1.7895%~2.1924%	2019~2020		19,953,100
Less: Current portion of long-term loans					(2,597,500)
Total					17,555,600
Unused long term of credit					600,000

$(i)$ Issuance and redemption of loans

$\overline{1}$ The Company signed a syndicated loan agreement with Taiwan Cooperative Bank, the lead bank, and 15 other banks (hereinafter referred to as "the syndicate banks") for a syndicated loan with a credit line of \$12,000,000 on February 18, 2016, and applied for an appropriation of loans of \$11,000,000 as of June 30, 2017. In March 2017, the repayment in advance amounted to \$600,000. The interest rates would be adjusted depending on the profit-after-tax ratio and also takes into consideration the three-month or six-month TAIBOR rate 2 bank trading days before each of the accounts' drawdown dates or coupon reset dates released on the ROC Bankers Association website. Additionally, the first repayment of the principal is due on the 36 month after the first appropriation date, with the balance payable in 5 semi-annual installments.

Also, the Company is required to maintain certain financial ratios which should be based on the semi-annual and annual consolidated financial statements of the Company and calculated by the lead bank every 6 months starting from the end of year 2016 or when the lead bank deems necessary. If the borrower fails to comply with the above-mentioned financial covenants by the inspection date, it should be given a six-month grace period, commencing from the inspection date, to correct the situation by raising additional capital or other means necessary. Should the borrower successfully adhered to the stated financial covenants before the end of the grace period, it should be deemed as a nonviolation of the written agreement. The required financial ratios are as follows:

• Liability Ratio (total liabilities to total net equity and tangibles assets, plus, a) financing payables to related parties): not more than 200%.
• Tangible net equity, plus, other financing payables to related parties: not less than $b)$ \$50,000,000 for each year.

The Group was in compliance with all of the aforementioned covenants as of and for the six-month period ended June 30, 2017, as well as for the year ended December 31, 2016.

The Group signed a syndicated loan agreement with Bank of Taiwan, the lead bank, and $2)$ 14 other banks (hereinafter referred to as "the syndicate banks") for a syndicated loan with a credit line of \$12,000,000 on January 2, 2014, As of June 30, 2017, the application for the appropriation of loans amounted to \$12,000,000; and the Group repaid the amount of \$2,400,000 under the payment terms. This loan bears interest of 90 day commercial paper rate, plus, an annual interest rate of 1.1% in monthly payments. Additionally, the first installment payment of the principal is payable on due date, with the rest payable in 5 semiannual installments. According to the agreement, the borrower should maintain a balance of no less than 3% of the original credit limit in the specified bank account two months from the first credit approval date.

Also, the Group is required to maintain certain financial ratios which should be based on its semi-annual and annual consolidated financial statements and calculated by the lead bank every 6 months starting from the end of year 2013 or when the lead bank deems necessary. In the event that any of the financial covenants below is breached, the Group is required to submit a formal letter to the lead bank at least three months after submitting the semi-annual and annual consolidated financial statements to syndicated banks, so that the lead bank can convene a meeting of the Banks to discuss the aforesaid breach and to resolve whether a waiver of the breach will be granted. The required financial ratios are as follows:

• Financing payables to related parties: not less than \$35,000,000. In July 2015, the $a)$ Company signed a supplementary contract with a group of banks, agreeing to delete this financial covenant.
• Liability Ratio (total liabilities to total net equity and tangibles assets, plus, $b)$ financing payables to related parties): not more than 200%.
• Tangible net equity, plus, other financing payables to related parties: not less than $\mathbf{c}$ \$45,000,000 in the semi-annual and annual financial statements of 2013, and \$50,000,000 for each year beginning 2014.

The Group was in compliance with all of the aforementioned covenants as of and for the six-month periods ended June 30, 2017, as well as for the year ended December 31, 2016.

(ii) Collaterals for bank loans

Please refer to Note 8 for information on assets pledged as loan collateral by the Group.

(k) Bonds Payable

		June 30, 2017
Issuance of unsecured overseas convertible bonds		15,218,000 \$
Unamortized discount on bonds payable		(1,111,207)
Balance at end of period		14,106,793
	For the three- month period ended June 30, 2017	For the six- month period ended June 30, 2017
Embedded Derivatives-call and put options and conversion rights re- measured at fair value through loss (included other gain and losses)	1,013,349	1,168,973
Interest expense	58,072	101,045

Item	The first unsecured overseas convertible bond
1. Issue amount	US\$ 500,000 thousand
2.Issue par value	US\$ 200 thousand
3. Issue period	2017.1.24~2021.1.24
4.Bond expiration	5 years
5. Coupon rate	0%
6. Conversion price	TWD 52.47 dollars
7. Conversion period	The bondholder has the right to convert any bonds into shares that are subject to the terms set forth in the contract. The bonds are convertible anytime after 40 day from the issuance date (excluding the issuance date itself).
8. Put option of bond holders	(A) Each bondholder may require the Company to redeem, in whole or in part, the convertible bonds at an amount, hereinafter referred to as "Early Redemption Amount" (ERA), calculated at par value, plus, interest compensation, which is calculated semi- annually at the rate of 1.75% per annum, after 3 years from the issuance date (excluding the issuance date itself).
	(B) Each bondholder may redeem in advance, in whole or in part, the convertible bond if the Company is delisted from the Taiwan stock exchange.
	(C)Each bondholder may redeem in advance, in whole or in part, the convertible bonds if the Company meets all the conditions on the changes in its rights of control in the contract.
9. Call option of issuer	(A) The issuer may redeem, in whole or in part, the convertible bonds at the ERA if the closing price of the Company's shares which translated into US dollars at the prevailing rate for a period of 20 trading days in any period of 30 consecutive trading days is above 130 percent of the ERA multiplied the conversion ratio and divided by par value.
	(B) The issuer may redeem its outstanding convertible bonds at their Early Redemption Amount if more than 90 per cent, in principal, of the amount of the bonds have already been converted, redeemed, repurchased or cancelled.
	(C) The issuer may redeem, in whole or in part, or the convertible bonds at their Early Redemption Amount if the Company has become obliged to pay the additional interests and costs as a result of any changes in, or amendment to, the laws or regulations of the ROC.

The host contract debt instruments and derivative conversion rights instruments were included in convertible bond, the host contract are measured at an effective annual rate equal to 1.6593%; the derivative conversion rights instruments are measured at fair value recognized in profit or loss.

• $(1)$ Finance lease liabilities
• The Group signed a long-term lease agreement with Inotera Memories, Inc. to lease out a $(i)$ portion of the building and land (including supplemental equipment) located at No. 667, Fuhsing 3rd Road, Hwa-Ya Technology Park, Kueishan Dist., Taoyuan City. The lease term covers a total lease period of 354 months commencing from July 1, 2005, and will expire on December 31, 2034 (including the period when the lease is automatically extended). The monthly rentals for the lease of building and land (including supplemental equipment) were \$2,058 and \$310, respectively. The lease of the building is treated as a finance lease. However, the lease of the land is treated as an operating lease.
• $(ii)$ The lease of the building is treated as a finance lease with implicit interest rate of 5.88%. The net carrying value of leased assets and the initial total amount of lease payable for the finance lease of the building was \$345,637.
• (iii) The rental expenses from the lease of land which was treated as an operating lease amounted to \$0, \$929, \$620, and \$1,859 were fully paid and recognized for the three-month and sixmonth periods ended June 30, 2017 and 2016, respectively.
• (iv) The Company signed an agreement for termination on its lease with Inotera Memories Inc. in March 2017. The Company derecognized the lease obligation payables on the termination date and recognized a gain on disposal of lease payable amounting to \$63,542 for the difference between carrying amount and fair value of leased property.

			June 30, 2017			December 31, 2016		June 30, 2016
		Future minimum lease payments	Interest	Present value of minimum lease payments	Future minimum lease payments	Interest	Present value of minimum lease payments	Future minimum lease payments	Interest	Present value of minimum lease payments
Less than one vear	s			٠	24,698	15,868	8,830	24 698	16.123	8,575
Between one and five years		$\blacksquare$		۰	98,792	57,807	40,985	98.792	58.992	39,800
More than five years					321,071	96,963	224,108	333.421	103,648	229,773
Subtotal					444,561	170,638	273,923	456,911	178,763	278,148
Current				\$ ۰			8.830			8,575
Non-current							265 093			269,573
				s			273,923			278,148

The details of lease payable were as follows:

(m) Employee benefits

Defined benefit plan $(i)$

Subsequent to December 31, 2016, there is apparently no evidence of any material market volatility, material curtailment, reimbursement and settlement or other material onetime events. Therefore, the pension cost in these interim consolidated financial statements was measured and disclosed according to the respective actuarial report for the years ended December 31, 2016 and 2015.

The Company's pension costs recognized in period or loss were as follows:

For the three-month periods ended June 30,			For the six-month periods ended June 30.
		2017	2016	2017	2016
Cost of goods sold		1.901	2.950	3,844	5,858
Operating expenses		844	1.313	1,706	2,669
Total		2,745	4.263	5,550	8,527

(ii) Defined benefit plan

The Group's pension costs that were contributed to an account by local government were as follows:

		June 30,	For the three-month periods ended	For the six-month periods ended June 30.
		2017	2016	2017	2016
Cost of goods sold	S	19.604	17.659	38,699	34,539
Operating expenses		12.556	8.333	26,333	21,769
Total	D	32,160	25.992	65,032	56,308

Income tax $(n)$

The components of income tax were as follows:

		June 30,	For the three-month periods ended	For the six-month periods ended June 30.
		2017	2016	2017	2016
Current tax expense	S	1.504.950	647,101	1.508,728	646,827
Deferred tax (income) expense			(351)	$\overline{\phantom{m}}$	142
Tax expense	S	1,504,950	646,750	1,508,728	646,969

$(i)$ The Group's tax income recognized in other comprehensive income were as follows:

	For the three-month periods ended June 30,		For the six-month periods ended June 30,
	2017	2016	2017	2016
Subsequent items that may be reclassified to profit and loss.
Unrealized (losses) gains on available-for-sale
financial assets	(428, 840)	$\overline{\phantom{0}}$	1,232,703

• The Company's income tax returns have been examined by the ROC tax authority through $(ii)$ 2014.
• (iii) Information related to the integrated income tax were as follows:

	June 30, 2017	December 31, 2016	June 30, 2016
Unappropriated retained earnings in 1998 and thereafter S	39,570,645	36,296,086	14,744,512
Imputation credit account balance S	1,721,050	240,380	401,954
Tax deduction ratio for earnings distribution to ROC residents		2016(estimated) $5.77 \%$	$2015$ (actual) 1.83 %

Under the integrated income tax system, the above imputation credit account and creditable ratio were calculated according to the formal interpretation No.10204562810 issued by Taxation Administration, Ministry of Finance, R.O.C. on October 17, 2013.

(o) Capital and other equity

Except as described below, there was no material change in equity for the six-month periods ended June 30, 2017 and 2016. Please refer to Note $6(n)$ of the consolidated financial statements as of and for the year ended December 31, 2016 for the related detail disclosures on equity.

$(i)$ Common stock

On January 14, 2016 the Company increase common shares through the issuance of 320,000 thousand common shares of stock, the price of \$36.5 per share, respectively, with the total values amounting to \$11,675,000 respectively. All issued shares were paid up upon issuance. Also, the process for the registration thereof was completed.

On March 22, 2012 and October 24, 2012, the Company's board of directors approved to increase the Company's capital though carrying out a private placement of common shares with the issuance of 3,800,000 thousand common shares and 5,294,118 thousand common shares after reducing the Company's capital to 380,319 thousand common shares and 529,856 thousand common shares, respectively, at a discounted issuance price of \$1.7 per share. This capital increase was approved by the Securities and Futures Bureau (SFB). Also, the process for the registration thereof was completed. According to the Securities and Exchange Act, the transfer of such privately placed common shares within three years from the delivery date is forbidden, except when the transferees conform to Article 43-8 of the Securities and Exchange Act.

(ii) Capital surplus

	June 30, 2017	December 31, 2016	June 30, 2016
Change in recognized shares of associates S accounted for using equity method			4,549,259
Employee stock option plans	1,897,248	1,667,461	1,445,243
Premium from exercise of employee stock options	9.852,246	9,852,246	9,852,246
Other	3,300	3,300	1,374
S	11,752,794	11,523,007	15,848,122

(iii) Retain earning

According to the Company's Articles of Incorporation, the Company's annual net profit, after providing for income tax and covering the losses of previous years, is first set aside for legal reserve at the rate of 10% thereof until the accumulated balance of legal reserve equals the total issued capital and any special reserves pursuant to relevant laws and regulations. The remainder, plus the undistributed earnings of the previous years, are distributed or left undistributed for business purposes according to the resolution of the stockholders' dividend distribution plan, which are initially proposed by the board of directors and adopted by the shareholders in the annual stockholders' meeting.

As it belongs to a highly capital intensive industry with strong growth potential, the Company adopts a dividend distribution policy which is in line with its plans for product line expansion and the demand of fund. This policy requires that the distribution of cash dividends shall be equal to at least fifty percent (50%) of the Company's total dividend distribution every year.

$1)$ Capital surplus

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders' equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as

special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

Earrings distribution $2)$

Earnings distribution for 2016 and 2015 was approved in stockholders' meeting of shareholders on May 26, 2017 and June 22, 2016, respectively. The relevant dividend distributions to shareholders were as follows:

	For the year ended December 31, 2016
		Dividends per share	Amount
Dividends attributable to ordinary shareholders:
Cash dividends	S	1.50	4,122,848
		2015	For the year ended December 31,
	Dividends per share		Amount
Dividends attributable to ordinary shareholders:
Cash dividends	\$	2.80	7,695,984

(iv) Treasury shares

The Group's shares of stock held by subsidiaries were as follows:

	June 30, 2017	December 31, 2016	June 30, 2017
Numbers of shares at January 1 and December 31,	687	687	687
Ending balance as of June 30,	347,533	347,533	347,533
Book value per share	505.46	505.46	505.46
Price per share (dollars)	54.80	48.30	39.40

As of June 30, 2017, December 31 and June 30, 2016, none of the Group's common shares of stock held by its subsidiary, Pei Jen Co., Ltd. has been sold.

According to the Securities and Exchange Act, treasury shares of stock cannot be pledged and, do not hold any shareholder rights before their transfer.

$(v)$ Other equity (net of tax)

		Exchange differences on translation of foreign financial statements	Unrealized gains on available-for- sale financial assets
Balance at January 1, 2017	S	(16, 846)	7,805,947
Exchange differences on translation of foreign financial statements, net of tax
The Company		(15, 384)
Unrealized gains on available-for-sale financial assets:
The Company			6,018,129
The Subsidiaries			2,770
Balance at June 30, 2017		(32, 230)	13,826,846
Balance at January 1, 2016	\$	(11, 588)	7,018
Exchange differences on translation of foreign financial statements, net of tax:
The Company		9.738
Unrealized gains Company on available for sale financial assets:
The subsidiaries			5,713
The Associates			(12, 326)
Balance at June 30, 2016		(1, 850)	405

(p) Share-based payment

Except as described below, there was no material change on the share-based payment transactions for the six-month periods ended June 30, 2017 and 2016. Please refer to Note 6(o) of the consolidated financial statements as of and for the year ended December 31, 2016 for related disclosures on share-based payment transactions.

Relevant information of employee stock option plans $(i)$

The details of these employee stock option plans were as follows:

The Company:

	For the six-month periods ended June 30,
	2017		2016
	Weighted- average exercise (price NTD)	Number of options (Units)	Weighted- average exercise (price NTD)	Number of options (Units)
Outstanding at January 1,	36.37	162,030	42.79	71,846
Options granted			38.00	97,500
Options forfeited	36.24	(3,400)
Options expired			41.98	(258)
Outstanding at June 30,	36.37	158,630	39.71	169,088
Options exercisable at June 30,	38.00	61,799	42.04	71,588

(Continued)

(ii) Compensation cost

Expenses were incurred from share options granted to employees as follows:

			For the three-month periods ended June 30,		For the six-month periods ended June 30,
			2017	2016	2017	2016
	Compensation cost arising from share options granted to employees S		114,894	72,767	229,787	72,811
(q)	Earnings per share
			June 30,	For the three-month periods ended	For the six-month periods ended June 30,
			2017	2016	2017	2016
	Basic earnings per share:
	Net income attributable to the Company	S	6,489,667	396,620	9,764,965	2,245,562
	Weighted-average number of ordinary shares outstanding (basic)		2,747,878	2,747,878	2,747,878	2,725,021
	Basic earnings per share (dollars) \$		2.36	0.14	3.55	0.82
	Diluted earnings per share:
	Net income attributable to the Company (basic)	\$	6,489,667		9,764,965
	Effect of interest expense of convertible bonds and other gain or loss after taxes				705,506
	Net income attributable to the Company (diluted)	S	6,489,667		10,470,471
	Effect of potentially dilutive ordinary shares
	Weighted-average number of ordinary shares (basic)		2,747,878		2,747,878
	Effect of employee stock option		45,085		41,013
	Effect of conversion of convertible bonds				271,526
	Effect of employee remuneration		6,751		15,394
	Weighted-average number of ordinary shares (diluted)		2,799,714		3,075,811
	Diluted earnings per share (dollars)	\$	2.32		3.40

Because of the convertible bonds for the three-month period ended June 30, 2017 were anti-dilutive, no diluted earnings per share were calculated.

Because the average market price of the shares of stock if the employee stock options are exercised during the six-month ended June 30, 2016 was lower than the exercise price of the employee stock options issued by the Company the diluted earnings per share need not be disclosed.

Remuneration to employees $(r)$

According to the Company's articles of incorporation, if the Company makes a profit, it should appropriate for employee remuneration to employees which is calculated based on 1% to 12% of the Company's net income before tax before deduction of employee remuneration to employees and after offsetting accumulated deficits, if any, should be distributed as employee remuneration to employees. Employees who are entitled to receive the above mentioned employee remuneration to employees, in shares or cash, include the employees of the subsidiaries of the Company who meet certain specific requirements. The estimated employee remuneration to employees which was charged to profit or loss under operating costs or expense amounted to \$369,961, \$25,959, \$643,175 and \$91,821 for the three-month and six-month periods ended June 30, 2017 and 2016, respectively. This employee remuneration to employees was estimated based on the Company's net income before tax before deducting any employee remuneration to employees according to the earnings allocation method as stated under the Company's articles of association, If there is any difference between the actual amounts and the estimated amounts of employee remuneration to employees after the financial reports are issued, the management of the Company is expecting that the differences will be treated as a changes in accounting estimates and recognized through profit or Shares distributed to employees as employees' remuneration are loss in the following year. calculated based on the closing price of the Company's shares on the day before the approval by the Board of Directors.

The estimated employee remuneration to employees which was charged to profit or loss under operating costs or expense amounted to \$418,481 and \$634,408 for the years ended 2016 and 2015. The Company's board of directors approved to increase its employee remuneration. The differences between the estimated amounts in the financial statements for the year ended December 31, 2016 and 2015 and the actual amounts of \$41,866 and \$36,620 were charged to profit or loss in 2017 and 2016, respectively. The related information can be obtained from the Market Observation Post System website.

• Non-operating income and expenses $(s)$
• Other income $(i)$

		For the three-month periods ended June 30.			For the six-month periods ended June 30,
		2017	2016	2017	2016
Bank deposits and short- term notes		56,466	21,984	104.516	28,843
Financial leases		38,493	45,307	78,756	92,209
	S	94,959	67,291	183,272	121,052

(ii) Other gains and losses

	For the three-month periods ended June 30.		For the six-month periods ended June 30,
	2017	2016	2017	2016
Foreign exchange losses	\$ (85, 575)	(69, 600)	(660, 389)	(404,711)
Financial liabilities at fair value through profit or loss, net loss	(865, 176)		(1, 127, 334)
Gain on disposal of lease payable			63.542
Impairment loss on non- financial assets	(20, 380)		(32,057)
Gain on disposal of available-for-sale financial assets	4,818,673		4,819,443
Gain on disposals of property, plant and equipment	21	1,132	45	819
Others	39,604	45,422	291,429	92,479
	\$ 3,887,167	(23, 046)	3,354,679	(311, 413)

(iii) Finance costs

	For the three-month periods ended June 30.		For the six-month periods ended June 30,
	2017	2016	2017	2016
Bank loans	\$ 98.238	102,776	201,581	186,691
Financial from entities with significant influence over the Group	28.088	28,598	55,886	59,139
Financing interest from other related parties	7,171	50,200	16,752	105,499
Lease payments		4,109	2,700	8,247
Amortization interest of overseas convertible bond	58,072		101,045
Less: Capitalization of interest	(44, 325)		(108, 730)
Others	154	155	161	194
	147,398	185,838	269,395	359,770

Reclassification adjustment of other comprehensive income $(t)$

The reclassification adjustment of other comprehensive profit and loss was as follows:

	For the three- month period ended June30, 2017	For the six- month period ended June30, 2017
Available-for-sale financial assets
Net change in fair value	\$ (6.912.978)	1,201,456
Net change in fair value reclassified to profit or loss	4.818.673	4,819,443
Net change in fair value recognized in other comprehensive income	(2,094,305)	6,020,899

(u) Financial instruments

Liquidity risk $(i)$

The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including estimated interest payments but excluding the impact of netting agreements:

		Carrying amount	Contractual cash flow	Within 6 months	6-12months	1-2vears	2-Syears	Over 5 years
June 30, 2017
Derivative financial liabilities	s	2,346,616
Non-derivative financial liabilities
Secured bank toans		19,966,900	20,569,809	4,962,377	2,526,149	9,853,043	3,228,240
Notes and accounts payable (including related parties)		7.114.778	7,114,778	7,114,778
Other payable (inducing related parties)		10,506,710	10,506,710	10,506,710
Entities with significant influence over the Group		8,000,000	8,121.944	60,972	8,060,972
Financing from other related parties		2,053,029	2.084.413	15,692	2,068,721
Bonds payable		14, 106, 793	15,955,418				15,955,418
		64,094,826	64,353,072	22,660,529	12,655,842	9, 353, 043	19,183,658
December 31, 2016
Non-derivative financial liabilities
Secured bank loans	s	22,960,000	24,154,481	5,656,595	2,613,300	10.965.450	4,919,136
Notes and accounts payable (including related parties)		5,608,738	5,608,738	5,608,738
Other payable (inducing related parties)		5,233,815	5,233,815	5,233,815
Entities with significant influence over the Group		8,000,000	8,116,112		8,116,112
Financing from other related parties		4,742,272	4,811.269		4,811,269
Finance lease liabilities		273,923	444,561	12,349	12,349	24,693	74,093	321,072
		46,818,748	48,368,976	16,511,497	15,553,030	10,990,148	4,993,229	321,072

		Carrying amount	Contractual cash flow	Within 6 months	6-12months	1-2years	2-Syears	Over 5 years
June 30, 2016
Non-derivative financial liabilities
Secure bank loans	\$	19.953,100	20,000,000	٠	2,400,000	6,400.000	11,200,000
Unsecured bank loans		200,000	202,710	201,793	917	۰	٠
Notes and accounts payable (including related parties)		1,907,884	1,907,884	1,907,884			$\bullet$
Other payable inducing related parties		11,383,693	11,383,693	11,383,693
Entities with significant influence over the Group		8,000,000	8,117.212	$\blacksquare$	8,117,212
Financing from other related parties		14.026.074	14,231,816	٠	14,231,816	٠	٠
Finance lease liabilities		278,148	456.911	12,349	12,349	24.698	74,095	333,420
	s	55,748,899	56,300,226	13,505,719	24,762,294	6, 124, 698	11,274,095	333,420

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

Market risk $(ii)$

1) Exposure to currency

The Group's significant exposure to foreign currency risk was as follows:

			June 30, 2017		December 31, 2016			June 30, 2016
Financial assets:		Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars	Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars	Foreign currency (in thousands)	Exchange rate	New Taiwan Dollars
Monetary items
USD	s	825,787	30.436	25, 133, 653	410,185	32.279	13,240,362	212.314	32.286	6,854,770
JРY		2,577,690	0.2708	698,038	2,000,329	0.2768	553,691	1,999,023	0.3136	526.894
EUR		17	34.7536	591	85	33,846	2,877	177	35,8710	6,349
Financial liabilities:
Monetary items
USD		566,317	30.436	17,236,424	126,394	32.279	4.079,872	86.640	32.236	2,797,259
JPY		8,538,426	0.2708	2,312,206	4 127 546	0.2768	1.142,505	199.355	0.3136	62.518
EUR		15,513	34,7536	539.133	3,884	33.846	131,458	2,765	35.8710	99,183

The Group's exposure to foreign currency risk arises from the foreign currency exchange fluctuations on cash and cash equivalents, accounts receivable, accounts payable and other payable which are denominated in different foreign currencies. A 1% depreciation of the TWD against the USD, EUR, and JPY as of June 30, 2017 and 2016 would have increased the net income before tax by \$57,445 and \$45,291 for the six-month periods ended June 30, 2017 and 2016, respectively. This analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis as prior year.

Since the Group has many kinds of functional currency, the information on foreign exchange loss on monetary items is disclosed by total amount. For the six-month periods ended June 30, 2017 and 2016, foreign exchange loss (including realized and unrealized portions) amounted to \$660,389 and \$404,711, respectively.

$2)$ Interest risk

The Group's exposure to interest rate risk arising from financial assets and liabilities is discussed further in the management of liquidity risk.

The following sensitivity analysis is based on the risk exposure to interest rates of the derivative and non-derivative financial instruments on the reporting date. For variable rate instruments, the sensitivity analysis assumes the liabilities bearing variable interest rates are outstanding for the whole year. A 1% increase in interest rate is assessed by management to be a reasonably possible change in interest rate.

An increase of 1% in interest rates mainly from loans with floating interest rates at the reporting date would have decreased net income before tax by \$300,199 and \$421,792 for the six-month periods ended June 30, 2017 and 2016, respectively.

$3)$ Other price risk

For the six-month periods ended June 30, 2017 and 2016, respectively, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

		June 30,	For the six-month periods ended
	2017 Other comprehensive		2016
			Other comprehensive
Prices of securities at the reporting date		income after tax	income after tax
increase 1%	S	345,933	43,867
decrease 1%		(345,933)	(43, 867)

(iii) Fair value of financial instruments

Types and fair value of financial instruments $1)$

The financial assets and liabilities at fair value through profit or loss and available-forsale financial assets were measured at recurring fair value.

The carrying amount and fair value of the Group's financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

			June 30, 2017
			Fair Value
Financial assets at fair value through	Book Value	Level 1	Level 2	Level 3	Total
profit or loss: Derivative financial assets	41,639 s		41,639		41,639
Available-for-sale financial assets:
Foreign listed stock	41,593,061	41,593,061			41,593,061
Domestic listed stock	71.048	71,048			71.048
Subtotal	41,664,109	41,664,109			41,664,109
Loans and receivables:
Cash and cash equivalents	23,015,384
Notes and account receivables, net	6,605,124
Other receivables	1,827,915
Lease payments receivable (including current portion)	1,496,433
Subtotal	32,944,856
Total	74,650,604	41,664,109	41,639		41,705,748
Financial liabilities measured at amortized cost:
Derivative financial liabilities	S 2.346,616		2,346,616		2,346,616
Accounts payable (including related parties)	7,114,778
Other payables (including related parties)	20,559,739
Bonds payable	14,106,793		15,087,125		15,087,125
Long-term borrowings (including current portion)	19,966,900
Total	64.094,826		17,433,741		17,433,741

	December 31, 2016
					Fair Value
		Book Value	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets:
Domestic money market fund	\$	2,000,360		2,000,360		2,000,360
Foreign listed stock		40,882,664	40,882,664			40,882,664
Domestic listed stock		68,278	68,278			68,278
Subtotal		42,951,302	40,950,942	2,000,360		42,951,302
Loans and receivables
Cash and cash equivalents		9,101,654
Account receivables, net		5,768,718
Other receivables		1,694,818
Lease payments receivable (including current portion)		1.632.343
Subtotal		18,197,533
Total		\$61,148,835	40,950,942	2,000,360		42,951,302
Financial liabilities measured at amortized cost:
Accounts payable (including related parties)	\$	5,608,738
Other payables (including related parties)		17,976,087
Long-term borrowings (including current portion)		22,960,000
Lease obligations payable (including current portion)		273,923
Total		\$46,818.748

		Fair Value
	Book Value	Level 1	Level 2	Level 3	Total
Available-for-sale financial assets:
Listed stocks	\$ 80,604	80.604			80,604
Domestic money market fund	4,306,069		4,306,069		4,306,069
Financial assets carried at cost	9,340			9,340	9,340
Subtotal	4,396,013	80.604	4,306,069	9,340	4,396,013
Loans and receivables:
Cash and cash equivalents	15.961,401
Account receivables, net (including) related parties)	3.941.162
Other receivables (including related partics)	1,360,774
Investment in debt instruments without active markets	181,280			181,280	181,280
Lease payments receivable (including current portion)	1,761,350
Subtotal	23,205,967			181.280	181,280
Total	27,601,980	80,604	4,306,069	190,620	4,577,293

l,

June 30, 2016

(Continued)

			June 30, 2016
		Fair Value
	Book Value	Level 1	Level 2	Level 3	Total
Financial liabilities measured at amortized cost:
Accounts payables (including related parties)	S 1.907.884
Other account payable (including related parties)	33.409,767
Long-term loans (including current portion)	20,153,100
Lease obligations payable (including) current portion)	278,148
Total	55.748,899 S

Valuation techniques not used in fair value determination of financial instruments 2)

Investment in debt securities with no active market and financial liabilities measured at amortized cost:

The fair value of financial liabilities traded in active markets or market maker is based on quoted market prices. When quoted prices are unavailable, the fair value is determined by discounted cash flows, using estimation and assumptions under existing market conditions which are obtainable by the Group.

• Valuation techniques used in fair value determination of financial instruments 3)
• If the quoted price is available on an active market, the market price is used as the a) fair value.

Fair value of the Group's financial instruments with no active market is determined as follows:

The fair value of investment in debt securities with no active market and financial assets carried at cost was estimated by Cox-Ross-Rubinstein of convertible bond and Binomial model of European call option. The key assumption for stock volatility was estimated by evaluating the stock volatility of same industry.

Derivative financial instruments $b)$

Is based on the evaluation model accepted by the market users, such as the revised constitution and the option model. Forward foreign exchange contracts are usually based on the current forward exchange rate evaluation.

There were no transfers from financial assets for the six-month periods ended June 30, 4) 2017 and 2016, respectively.

(v) Financial risk management

The policies and the objectives of the Group's financial risk management are consistent with those disclosed in Note 6(t) of the consolidated financial statements for the year ended December 31, 2016.

(w) Capital management

The objectives, policies, and procedures are the same as those stated in the consolidated financial statement for the year ended December 31, 2016. There were no material changes from January 1, 2017 to June 30, 2017 for similar quantitative information adopted for capital management in the Note 6(t) consolidated financial statements for the year ended December 31, 2016.

(7) Related-party transactions:

(a) Names and relationship with related parties

The following are entities that have had transactions with related party during the periods covered in the consolidated interim financial statements.

Name of related party	Relationship with the Group
Nan Ya Printed Circuit Board Corp.	The Group's other related parties
Mai Laio Harbor Administration Corp.	The Group's other related parties
Formosa Heavy Industries Corporation	The Group's other related parties
Formosa Sumco Technology Corporation	The Group's other related parties
Formosa Advanced Technologies Co., Ltd.	The Group's other related parties
Formosa Technologies Corporation	The Group's other related parties
Formosa Biomedical Technology Corp.	The Group's other related parties
Formosa FCFC Carpet Corporation	The Group's other related parties
Nan Ya Plastics Corporation	The entity with significant influence over the Group
Inotera Memories, Inc.	A former associate (which was no longer a related-party of the Group since December 6, 2016. Its name was changed to Micron Technology Taiwan in March 2017.)

(b) Key management personnel compensation

	For the three-month periods ended June 30.		For the six-month periods ended June 30.
	2017	2016	2017	2016
Short-term employee benefits	\$ 10.449	10,136	22,367	22,642
Share-based payment	3.001	3.881	6.002	3,881
	13.450	14,017	28.369	26,523

Please refer to Note 6(p) for the details of share-based payment.

Significant transactions with related-parties $(c)$

$(i)$ Sales to related parties

			Sales
		ended June 30,	For the three-months periods	For the six-months periods ended June 30,
	2017		2016	2017	2016
Associates		$\overline{\phantom{0}}$	428		1,269
Other related parties			$\blacksquare$	6.023
Total			428	6,023	1,269

The selling prices and collection terms for the sales to related parties and other related parties are not significantly different from those third party customers, and the normal credit term with the related parties above is the account is due for collection on the 15th day of the month following the month of delivery of goods sold.

(ii) Purchase from related parties

		Purchases
	For the three-month periods ended June 30.		For the six-month periods ended June 30,			Accounts payable to related parties
	2017	2016	2017	2016	June 30. 2017	December 31. 2016	June 30, 2016
Entities with significant influence over the Group	12.239	136.004	24,553	177.469	3.371	17,626	75,119
Other related parties:
Formosa Sumco Technology Corporation	354,040	236,836	623,602	492,177	250,956	147,136	233,120
Other related parties	3.931	16,500	12,181	17,143	373	421	16.501
Total	370,210	389,340	660.336	686,789	255,200	165,183	324,740

The purchase price and payment terms for the purchase from related parties are not significantly different from those with third party vendors, and the average payment period for notes and accounts payable pertaining to such purchase transactions ranged from one to two months, which was similar to that of other normal vendors. Purchase price with associates is calculated using the transfer pricing formula in accordance with the agreement.

(iii) Consigned out for processing and other payable

		For the six-month periods ended June 30.		Other payables to related parties
2017	2016	2017	2016	June 30. 2017	December 31. 2016	June 30, 2016
	-
1,368,551	1.389.987	2,757,270	2,879,204	706,049	931,862	931,145
1,368,551	1,389.987	2,757,270	2,879.211	706,049	931,862	931,145
		For the three-month periods ended June 30.	Amount

The term of transactions with the related parties above is 60 days after the end of each month when processed consigned goods are received.

(iv) The Group's other receivables from related parties arising from transactions such as providing power, equipment and receivables from payment on behalf of related parties were as follows:

		Other receivables due from related parties
	June 30, 2017	December 31, 2016	June 30, 2016
Associates	c $\overline{\phantom{0}}$ ъD	$\overline{\phantom{a}}$

(v) Financing to related parties

			Other payables to related parties
		June 30, 2017	December 31, 2016	June 30, 2016
Entities with significant influence over the Group	S	8,000,000	8,000,000	8,000,000
Other related parties		2,053,029	4,742,272	14,026,074
	S	10,053,029	12,742,272	22,026,074

Interest payables under other payables—related parties as of June 30, 2017, December 31, 2016 and June 30, 2016 amounted to \$11,677, \$25,239 and \$26,125, respectively. Please refer to Note 6(s) for details on related interest expenses.

• (vi) Property transactions
• The Group sold land and machinery equipment to its affiliates. The downstream a) unrealized sales profit is realized based on the depreciation of machinery equipment over its useful life. The realized profit on disposal of assets amounted to \$67 and \$135 as of the three-month and six-month periods ended June 30, 2016; and the unrealized profit on disposal of assets, which is a deduction of investment under equity method, amounted to \$101,003 as of June 30, 2016.
• Acquisition of equipment $\mathbf{b}$

$\ddot{\phantom{a}}$

		Acquisition price For the six-month periods ended June 30.			Other payables to related parties
		2017	2016	June 30. 2017	December 31, 2016	June 30. 2016
Other related parties:			۰	$\bullet$	-
Entities with significant influence over the Group	\$	727,713	۰	724.068	-
Other related parties		99,878	292,751	162,220	295,485	180.784
Total	s	827,591	292,751	886.288	295,485	180.784

(vii) Lease contracts

• Please refer to Note $6(i)$ and $6(1)$ for the details of the Group's long-term lease contracts $\vert$ with associates.
• The Group's rental expenses paid to related parties were as follows: $2)$

	For the three-month periods ended June 30.		For the six-month periods ended June 30.
	2017	2016	2017	2016
Entities with significant influence over the
Group	49,982	50,318	99.964	100,148

The rentals charged to the entities with significant influence over the Group are determined based on the local market prices, and rents are paid monthly.

• (viii) Contracts with related parties
• a) The Company signed a Service Agreement with IMI. Under this agreement, the Company provides including the management of facility, human resources, finance, purchasing, engineering, and so on. The service fee is calculated based on the actual time spent and the hourly rates. This Service Agreement took effect on July 15, 2003, and will remain effective until it has been mutually agreed to be terminated by both parties.
• On November 6, 2014, Nanya Technology Corporation, U.S.A., the Company's $b)$ subsidiary, signed a Consulting Agreement with Inotera Memories, Inc., U.S.A., a subsidiary of IMI. Under this Agreement, Nanya Technology Corporation, U.S.A. provides human resource and bookkeeping services to Inotera Memories, Inc., USA. This Consulting Agreement took effect on November 6, 2014, and will remain effective until a party has notified the other party to terminate the Consulting Agreement in accordance with the conditions stipulated in the aforementioned Agreement. Nanya Technology Corporation, U.S.A., a subsidiary of the Company, signed a contract for the Termination of its consulting Agreement with Inotera Memories, Inc., U.S.A. on February 7, 2017; the contract has been terminated by both parties on December 31, 2016.
• On July 1, 2005, the Company signed a Lease Agreement with IMI for the use of its $c)$ headquarters office. The Lease covers a period up to December 31, 2034. On August 22, 2016, the Company decided to sign an agreement with IMI for the termination of the said Lease effective December 31, 2016. However, the Company could notify IMI to extend its lease agreement before the termination date, the termination date shall not be extended beyond February 28, 2017. The contract has been terminated by both parties on March 1, 2017.

(8) Pledged assets:

The Group's assets pledged to secure loans are as follows:

	Pledged assets	Object		June 30, 2017	December 31, 2016	June 30, 2016
	Property, plant and equipment	Guarantee for bank loans	S	32,255,455	34,402,371	29,064,408
	Other non-current assets	Guarantee for bank loans. importation of materials and research and development's plan	S.	314,289	376,630	391,737
(9)	Commitments and contingencies:
	(a)	Significant commitments
				June 30, 2017	December 31, 2016	June 30, 2016
		Guarantees for importation goods provided by
	bank		\$	585,000	585,000	585,000
		Guarantees for project plan being undertaken
		with the Ministry of Economic Affairs
	provided by bank			28,430	39,700
	Unused letters of credit			2,574,296	2,031,545	103,139
	Total		S	3,187,726	2,656,245	688,139

• $(b)$ Contingent liabilities
• In 2002, Nanya Technology Corporation and its subsidiary, Nanya Technology Corporation, $(i)$ U.S.A. (collectively "Nanya"), and other major Dynamic Random Access Memory ("DRAM") manufacturers, were alleged to collusively manipulate DRAM's market prices in the U.S.A. which violates the Antitrust Law. Currently, the aforementioned antitrust litigation is still pending in the U.S.A. Federal Court and State Court, and the Group has engaged counsels to properly handle it to ensure the Group's rights.

• In 2000, the Company was charged by Brazil's Ministry of Justice as being involved in the $(ii)$ International Monopolies, which influences Brazil's DRAM market. Consequently, the Company, other large international companies and individuals are investigated at the same time. The Company has engaged counsels to properly handle it to ensure the Company's rights.

• (iii) In November 2015, North Star Innovations Inc. accused Nanya Technology Corporation and its subsidiary in U.S District Court of Delaware for patent infringement. The lawsuit has been settled in February 2017 and there were no any significant impacts on the Group's operation under the settlement conditions.

• (iv) In February 2016, PLL Technologies Inc. accused Nanya Technology Corporation and its 2 subsidiaries (Nanya Technology Corporation, U.S.A and Nanya Technology Corporation, Delaware), in U.S District Court of Delaware for patent infringement. The lawsuit was been settled in February 2017 and there were no any significant impacts on the Group's operation under the settlement conditions.
• In October 2016, Lone Star Silicon Innovations LLC. accused Nanya Technology Corporation $(v)$ and its 2 subsidiaries (Nanya Technology Corporation, U.S.A and Nanya Technology Corporation, Delaware), in U.S District Court of East Texas for patent infringement. The Company has engaged counsels to properly handle it to ensure the Group's rights.
• (vi) The original Joint Venture agreement signed by the Company, Micron Technology, Inc. and its related parties was terminated after Micron Semiconductor Co. completed its share-swap with Inotera Memories, Inc. (IMI). Both parties had mutually agreed to sign a cooperation agreement, the details of the agreement were as follows:
• The estimated cost for improving specific environmental safety and factory facilities in $1)$ mutually operating period of joint venture agreement amounted to US\$5,403 ten thousands; the Company agreed to share the 50% portion of the total costs and accrued it as expense of \$850,000 (US\$27,015 thousands) to other payable. The Company will share the cost based on the actual amounts at the appointed time.
• The Company agreed to share the 50% portion of the total losses for penalty, improving $2)$ costs and suspending operation before the date of share-swap in the following two to five vears due to an existing event of environmental safety and factory facilities which violated the laws.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events:

For the repayment of its loan, the board of directors of PEI JEN Co., Ltd. approved to increase its common stock through issuance of shares with the amount of \$105,000.

$(12)$ Other:

(a) A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

		For the three-month periods ended June 30, 2017		For the six-month periods ended June 30, 2016
	Cost of goods sold	Operating expenses	Total	Cost of goods sold	Operating expenses	Total
Employee benefits
Salaries	887,606	480,396	1,368,002	563,171	344,645	907,816
Labor and health insurance	38,685	28,533	67,218	34,504	26,527	61,031
Pension expenses	21,505	13,400	34,905	20,609	9,646	30,255
Other personnel expenses	14,899	4,940	19,839	14,266	4,734	19,000
Depreciation expenses	1,909,862	11,388	1,921,250	1,462,972	14,075	1,477,047
Amortization expenses	13,055		13,055	37,011		37,011

		For the six-month periods ended June 30, 2017			For the six-month periods ended June 30, 2016
	Cost of goods sold	Operating expenses	Total	Cost of goods sold	Operating expenses	Total
Employee benefits
Salaries	1,680,213	928,753	2,608,966	1,067,977	680,406	1,748,383
Labor and health insurance	76.587	58,123	134,710	67.450	52,532	119,982
Pension expenses	42,543	28,039	70,582	40.397	24,438	64,835
Other personnel expenses	29,532	9,876	39,408	27,955	9,472	37,427
Depreciation expenses	3,430,991	25,124	3,456,115	2,918,235	28,079	2,946,314
Amortization expenses	80,011		80,011	73,342		73,342

(b) Seasonality of operations

The operations of the Group is not influenced by seasonality and periodicity.

(13) Other disclosures:

Information on significant transactions: $(a)$

The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Group for the six-month periods ended June 30, 2017.

• Loans to other parties: None $(i)$
• (ii) Guarantees and endorsements for other parties: None
• (iii) Securities held as of June 30, 2017 (excluding investment in subsidiaries, associates and joint ventures):

	Category and				Endine balance
Name of holder	name of security	Relationship with company	Account title	Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Note
Pei Jen Co., Ltd.	Nanya Printed Circuit	Other related	Non-current available-for-	2.770	71,048	0.43%	71,048
	Board Co.	parties	sale financial assets
The Company	Micron Technology,		Non-current available-for-	45.766	41,593,061	4.14 %	41,593,061
	linc.		sale financial assets
The Company	Memoright (Cayman)		Investment in debt
	Co., LTD		securities with no active
			market and Financial
			lassets carried at cost

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of \$300,000 or 20% of the capital stock:

	Category and		Name of	Relationship with the	Beginning Balance			Purchases		Sales			Ending Balance
Name of company	name of security	Account name	counter-party	company	Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
	The Company Yuanta Wan Tai	Current available-l			133,262	2,000,360			133,262	2,000,770	2,000,000	770
	Money Market	for-sale financial
		lassets
	The Company Micron Technology, Non-current				57,780	40,882,664			12,014	11,359,468	6,540,795	4.818.673		45.766 1.593.06
	Inc.	available-for-sale
		lfinancial assets

• (v) Acquisition of individual real estate with amount exceeding the lower of \$300,000 or 20% of the capital stock: None
• (vi) Disposal of individual real estate with amount exceeding the lower of \$300,000 or 20% of the capital stock: None
• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of \$100,000 or 20% of the capital stock:

									Transactions with terms different Notes/Accounts receivable (payable)
					Transaction details			from others
Name of company	Related party	Nature of relationship	Purchase /Salc	Amount	Percentage of total purchases/sales	Payment terms	Unit price		Payment terms Ending balance	Percentage of total notes/accounts receivable (pavable)	Note
The Company Nanya	Technology Corp., U.S.A.	Parent company	(Salc)	(1,636,998)	$(6.72)$ %	O/A.60-90Days			619,372	9.03%	(Note)
The Company Nanya	Technology Corp., H.K.	Parent company	(Sale)	(149, 176)	(0.61)%	O/A, 60-90Days			71,671	1.04%	(Note)
The Company Nanya	Technology Согр., Јарап	Parent company	(Sale)	(1,723,734)	(7.07%	O/A, 180ays			660,309	9.63%	(Note)
The Company	Nanya Technology Corp., Germany	Parent company	(Sale)	(1, 368, 492)	(5.62)%	O/A, 60~90Days	٠		599.733	8.74%	(Note)
The Company	Piece Makers Technology, lnc.	Parent company	(Salc)	(136, 072)	$(0.56)\%$	O/A, 60-100Days			100.212	1.46%	(Note)
The Company	Technology Corp.	Formosa Sunco Other related parties	Purchase	623,602	14.91%	O/A60Days	٠		(250, 956)	$(3.56)\%$

Note: the transactions were written off in the consolidated interim financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of \$100,000 or 20% of the capital stock:

Name of		Nature of	Ending		Overdue		Amounts received in	Allowance
company	Counter-party	relationship	balance	Turnover	Amount	Action taken	subscauent period	for bad debts
The Company	Nanya Technology Corp., U.S.A.	Parent company	Account receivable 619,372	6.47			331,603
The Company	Nanya Technology Corp., Japan	Parent company	Account reccivable 660,309	6.21			208,559
The Company	Nanya Technology Corp., Germany	Parent company	Account reccivable 599.733	5.47			129,252
The Company	Piece Makers Technology, Inc.	Parent company	Account receivable 100.212	2.27			33,778

Note: the transactions were written off in the consolidated interim financial statements

(ix) Trading in derivative instruments: Please refer to Note 6(b).

(x) Business relationships and significant intercompany transactions:

			Nature of			Intercompany transactions
No.	Name of company	Name of counter-party	relationship	Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0		Nanya Technology Corp Nanya Technology Corp., U.S.A		Sales		1,636,998 On the basis of general konditions	6.59%
0		Nanya Technology Corp., U.S.A		lAccount receivable		619,372 On the basis of general konditions	0.37%
0	n	Nanya Technology Corp., Germany		Sales		1,368,492 On the basis of general conditions	5.51%
0	n	Nanya Technology Corp., Germany		Account receivable		599,733 On the basis of general konditions	0.36%
0	л	Nanya Technology Corp., Japan		Sales		1,723,734 On the basis of general conditions	6.93%
0	n	Nanya Technology Corp., Japan		Account receivable		660,309 On the basis of general konditions	0.40%

Note 1: Assigned numbers represent the following:

• 1. 0 represents the parent company.
• 1. The subsidiaries are represented numerically starting from 1.
• Note 2: The terms of transactions are defined as follows:
• 1. Represents the parent company having transaction with a subsidiary.
• 1. Represents a subsidiary having transaction with the parent company.
• 1. Represents a subsidiary having transaction with a subsidiary.
• Note 3: The business relationship and significant transactions between the parent company and the subsidiary only disclose the importations of sales and account receivable, did not repeat about the purchase and account payable.

(b) Information on investees:

The following is the information on investees for the six-month periods ended June 30, 2017 (excluding information on investees in Mainland China):

			Main		Original investment amount		Balance as of June 30, 2017		Net income	Share of
Name of investor	Name of investee		businesses and products	June 30,	December 31,	Shares	Percentage of	Canvine	(losses)	profits/losses of
		Location		2017	2016	(thousands)	ownership	value	of investee	investee	Note
The Company	Nanya Technology Corp., U.S.A.	U.S.A	Sales of semiconductor products	20,392	20.392		100.00%	121,252	2,072	2,072	(Note)
The Company	Nanya Technology Corp.,	U.S.A	Design of semiconductor	36,005	36,005		100.00%	130,637	7,038	7,038	(Note)
	Delaware		products
The Company	Pei Jen Co., Ltd.	li sipe.	Import/export business	175,348	175,348	480	100.00%		(742)	(742)	(Note)
The Company	Nanya Technology Corp., HK	Hong Kong	Safes of semiconductor products	66,271	66.271	20	100.00%	43.922	2,312	2.312	(Note)
The Company	Nanya Technology Corp., Japan	Japan	Sales of semiconductor products	20,161	20,161		100.00%	135,665	3,539	3,539	(Note)
The Company	Piece Makers Technology, Inc.	Hsinchu	Design of semiconductor	21,246	21,246	7,918	53.57%	81,775	30,789	16.495	(Note)
			products
Nanya Technology	Nanya Technology Corp.,	fCermany	Import/export business	30,056	30,056		100.00%	56,344	1,537	1,537	(Note)
Corp., HK	Germany

Note: The transactions were written off in the consolidated interim financial statement.

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

					Accumulated			Accumulated	Net
		Main	Total		outflow of		Investment flows	outflow of	income				Accumulated
		businesses	amount	Method	' investment from i			investment from	( osses)	Percentage	Investment		remittance of
	Name of	and	of paid-in	of	Taiwan as of			Taiwan as of	of the	of	meome	Book	carnings in
	investee	products	capital	investment	January 1, 2016	Outflow	Inflow	June 30, 2017	investoe	ownership	(lesses)	value	current period
Nanya		Sales of	29.979	(۱	29,979			29.979	(249)	100,00%	(249)	15,404
Technology		semiconductor	AUSS 985		(US\$ 985			russ 985 l
	Corp., Shenzhen products		thousand)		thousand)			thousand)

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of June 30, 2017	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
29.979	29,979	58,452,142
(US\$ 985 thousand)	(US\$ 985 thousand)

Note 1: Indirect investment in Nanya Technology Corp., Shenzhen through Nanya Technology Corp., HK. Note 2: The exchange rate of New Taiwan dollars to US dollars on June 30, 2017 was USD1: TWD 30.436. Note 3:60% of net equity.

(iii) Significant transactions: None

(14) Segment information:

The Group's operating segments information and reconciliation are as follows:

			For the three-month periods ended June 30, 2017
		Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	S.	996.944	9,538,961	2,089,597		12,625,502
From sales among intersegments		661	2,839,371	85,821	(2,925,853)
Total revenue		997,605	12,378,332	2,175,418	(2,925,853)	12,625,502
Reportable segment profit or loss	s	7,968	7,991,924	23,876	(22, 248)	8,001,520
			For the three-month periods ended June 30, 2016
		Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	\$	687,826	7,186,811	1,058,457		8,933,094
From sales among intersegments			1,633,618	93,702	(1,727,320)
Total revenue		687,826	8,820,429	1,152,159	(1,727,320)	8,933,094
Reportable segment profit or loss		(85, 946)	1,041,778	26,963	68,927	1,051,722
			For the six-month periods ended June 30, 2017
		Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	S	1,773,006	19,351,464	3,731,606		24,856,076
From sales among intersegments		661	5,014,471	159,229	(5,174,361)
Total revenue	S	1,773,667	24,365,935	3,890,835	(5,174,361)	24,856,076
Reportable segment profit or loss	S	3,538	11,267,222	47,941	(30, 713)	11,287,988

$\sim 10^7$

	For the six-month periods ended June 30, 2016
	Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Revenue:
From external customers	\$ 1,442,882	15,906,523	1,981,244		19,330,649
From sales among intersegments		3,209,643	164,940	(3,374,583)
Total revenue	1,442,882 s	19,116,166	2,146,184	(3,374,583)	19,330,649
Reportable segment profit or loss	(142, 935) s	2,890,720	12,597	136,357	2,896,739
	Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Reportable segment assets
June 30, 2017	807,493 S	166,391,252	2,243,968	(2,695,499)	166,747,214
December 31, 2016	599,033	136,709,336	1,758,911	(2,090,138)	136,977,142
June 30, 2016	690,257 s	117,901,852	1,820,077	(2,025,934)	118,386,252
	Japanese division	Manufacturing division	Others divisions	Adjustments and eliminated	Total
Reportable segment liabilities
June 30, 2017	661,332	68,971,015	1,826,594	(2, 248, 818)	69,210,123
December 31, 2016	453,227 S	51,166,518	1,378,046	(1,665,796)	51,331,995
June 30, 2016	635,181 s	57,376,035	1,440,885	(1,712,559)	57,739,542