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-1- Annual Report 2012
I. Spokesperson and Acting Spokesperson Contact Information
Spokesperson
Name: Daniel Chien
Title: Senior Vice President & CFO
Tel: 886-3-5646600
Email: [email protected]
Acting spokesperson
Name: Joanne Chi
Title: Senior Manager, Investor Relations Department
Tel: 886-3-5646600
Email: [email protected]
II. GUC Address and Telephone Number
Address: No. 10, Li-Hsin 6th Rd., Hsinchu Science Park, Taiwan, R.O.C.
Tel: 886-3-5646600
III. Common Share Transfer Agent and Registrar
Company: the Transfer Agency Department of Chinatrust Commercial Bank
Address: 5F, 83, Sec. 1, Chung-Ching S. Rd., Taipei, Taiwan 100, R.O.C.
Website: http://www.chinatrust.com.tw
Tel: 886-2-21811911
IV. Auditors
Auditors: Hung-Peng Lin、Shu-Chieh Huang
Company: Deloitte & Touche
Address: 6F, 2, Prosperity Rd. I, Hsinchu Science Park, Taiwan, R.O.C.
Website: http://www.deloitte.com.tw
Tel: 886-3-5780899
V. Company Website
Website: http://www.guc-asic.com
-2- Annual Report 2013
Table of Content
Letter to Shareholders ····························································· 3
Company Profile ······································································ 6
Corporate Governance ·························································· 17
Operation Report··································································· 24
Consolidated Financial Highlights ······································· 37
Consolidated Financial Statements ···································· 39
-3- Annual Report 2013
Dear Shareholders,
The past year 2013 was a year of customers’ portfolio changed, orders reduced, and
revenues declined for GUC. However, our excellent advanced technology
development and the best design services are able to not only sufficiently support our
customers to launch the leading products but also improve our gross margin reaching
25.9% was the record high since our listing.
Based on the technology development trend analysis in 2013, the applications with
28-nanometer technology were in preposterous demands. GUC successfully achieved
a 28-nanometer System-on-chip (SoC) that combines CPUs and GPUs on single
technology platform. With more than 30 million gates, this test chip is the first “big”
28 nanometer device. Furthermore, GUC successfully taped-out a 20-nanometer test
chip on a TSMC process is a direct result of close collaboration with the major IC
design tooling supplier. This 20-nanometer test chip will be able to reduce risks of
double patterning and process variations that customers are faced with, expand GUC’s
customer base, and secure GUC’s leading position.
Financial Performance
Total revenue for 2013 was NT$6,118 million, down 31 percent compared to
NT$9,014 million in 2012. Net income was NT$289 million, down 53 percent
compared to the previous year. 2013 EPS was NT$2.16, down 53 percent compared to
2012 EPS of NT$4.58. Among other highlights in 2013, GUC achieved gross
margin of 25.9%, operating margin of 5.1% and ROE of 8.4%.
Technology Leadership
In 2013, we continued to pioneer the industry in developing 16-nanometer FinFET
IPs and test chips. We taped-out the first 16-nanometer FinFET IP for DDR4 in
November of the same year. With continued technical breakthrough, completed IPs
portfolio to enable our customers to launch their most advanced products early in the
market and also secured our leading position in the advanced process design service
sector. The advanced process technologies, including 90-nanometer, 65-nanometer,
40-nanometer, and 28-nanometer accounted for 52% of total revenue in 2013.
Moreover, revenue contributed from advanced process technologies accounted for
80% of revenue in NRE segment.
GUC’s remarkable technology breakthrough and innovative achievement in 2013 are
Letter to Shareholders
-4- Annual Report 2013
as follows:
1. Successful unveiled the USB 3.0 IP solution which available on 65/55- nanometer,
40-nanometer, and 28-nanometer process technologies.
2. Successfully taped-out a 20-nanometer SoC test chip.
3. Successfully launched a new family of silicon proven analog-to-digital (ADC) and
digital-to-analog (DAC) converters IP targeting TSMC’s 28-nanometer HPM
process technology.
4. Successfully achieved test chip validation results for a complete 28-nanometer SoC
that combines CPUs, GPUs, DDR, Ethernet, and Video output function on single
technology platform.
Corporate Developments
1. The supply chain’s integrator: We position ourselves as “Flexible ASIC Services”,
in which, with closer collaboration between TSMC’s advanced technology
process and major design tooling services suppliers in order to continuously
provide the best one-stop complete solutions to our customers. This innovative
model not only may reduce the funding investment and advanced technology
barrier of the small and medium scale IC design companies but also fulfills the
system companies pursing to the differentiation, beginning to design their own key
chips, shortening time-to-market, and creating the more value-added to their
products.
2. The advanced technology’s enabler: It is foreseen that the smart phone and tablet
devices will grow rapidly in the next few years. GUC launched the16-nanometer
FinFET technology plat form, aiming to keep our leading position in design
services industry.
The Impact of External Competiveness, Regulatory,
Environment, and Macroeconomics
The increased investment and capital expenditure in advanced technology production,
more and more IDMs (integrated device manufacturers) in Japan and the United
States are focusing on the business and reduce capital expenditure and intend to
transit to the fab-lite trend. Moreover, the ASIC customers are outsourcing their
design services business to fabless ASIC companies; those are the great opportunities
to GUC. GUC’s “Flexible ASIC Services” model may reduce not only the entry
barrier for SoC development, shortening time-to-market but also the risk of migration
-5- Annual Report 2013
to 28-nanometer and 16-nanometer advanced technology. Thanks to the
semiconductor cluster in Taiwan, we are able to provide the complete one-stop IP
solutions, chip implementation, and ASIC manufacturing services, the advantage of
closer collaboration with TSMC aiming to keep our leading position. We will triumph
in competitive environments and endure the challenges of environment factors.
Prospect
Looking ahead, GUC will continue to utilize core competence and strive to run its
operation with honestly and integrity. GUC will persist in strengthening its corporate
governance, corporate social responsibility and sustainable business performance to
maximize the benefit of corporate value to employees, customers, and shareholders.
Global Unichip Corporat ion
F. C. Tseng
Chairman
Jim Lai
President
-6- Annual Report 2013
Company Overview
GLOBAL UNICHIP CORP. (GUC) is the Flexible ASIC LeaderTM whose customers
target IC devices to leading edge computing, communications and consumer
applications. Based in Hsin-chu, Taiwan GUC has developed a global reputation
with a presence in China, Europe, Japan, Korea, and North America. GUC is
publicly traded on the Taiwan Stock Exchange under the symbol 3443.
Organization
Company Profile
-7- Annual Report 2013
Board Member
Dr. F.C. Tseng
Chairman; Vice Chairman of TSMC
Dr. F.C. Tseng is the Vice Chairman of TSMC and Chairman of Global Unichip Corp.
Prior to this post, Dr. Tseng served as Deputy Chief Executive Officer, President, and
Senior Vice President of Operations of TSMC. Dr. Tseng spent two years as President
of Vanguard International Semiconductor Corporation (VIS), which was derived from
the Industrial Technology Research Institute's (ITRI) Sub-micron Process Technology
Development Project and was Taiwan's first eight-inch IC facility.
Dr. Tseng led 110 specialists to spin off from ITRI's Electronics Research & Service
Organization (ERSO), and in 1987 he co-founded TSMC as a pioneer specializing in
the "foundry only" semiconductor manufacturing business. Dr. Tseng established a
solid technical base for TSMC's six-inch and eight-inch fabs.
From 1973 to 1986, Dr. Tseng served at ITRI-ERSO, where in 1976 he was one of the
pioneers in setting up the IC project in Taiwan. He was responsible for installing the
7.5 mm metal-gate CMOS process into the 3-inch line, which later was converted
smoothly to 4-inch under his management. In 1978, Dr. Tseng was promoted to plant
manager of the IC demonstration plant, where he was responsible for the production
and development of silicon-gate CMOS from 5 mm to 1.2. Under his supervision, he
established the capability to develop an advanced CMOS process.
He holds a Ph.D. in Electrical Engineering from National Cheng Kung University in
Taiwan. Dr. Tseng was named as one of the "Outstanding Alumni" by National
Cheng Kung University in 2000, and one of the "Ten Outstanding Engineers" in 1991
and "The Excellent Engineers" in 1982 respectively by the Chinese Institute of
Engineers and by Electronic Buyer's News as one of the Hot 25-Industry Executives
who made a difference in 1999.
-8- Annual Report 2013
Mr. K.C. Shih
Founder
K.C. Shih has more than 30 years of experience working in the high-tech industry. Mr.
Shih observed the emergence of the post-PC era when the demand for IC is migrating
from ASIC to SoC. In 1998, he founded Global Unichip Corp. with Dr. Nicky Lu and
Dr. Steve Lin, to be the world's first dedicated SoC Design Foundry. In recognition of
its leading market position and successful business model, TSMC invested and took
partnership with Global Unichip Corp. in 2003. Global Unichip Corp. has
successfully demonstrated its leadership in advanced SoC designs (i.e. 90nm, 65nm,
40nm and 28nm) and has listed on the Taiwan Stock Exchange in 2006.
In 1990, Mr. Shih was the President of Cadence Design Systems Inc. Mr. Shih then
founded Faraday Technology Corporation in partnership with UMC and served as the
Vice Chairman and CEO. Faraday is the first IC Design Service Company in the
world. Based on its ASIC expertise, Faraday provides ASIC technology and design
service to customers in Taiwan, the USA and other countries. In 1998, Faraday
successfully went public in Taiwan, its stock price was once the highest on the
Taiwan stock-exchange board.
In 1983, Mr. Shih founded Suntek to develop under-$1,000 UNIX PC with NS32000,
targeting college students on the college local area network. Evaluating from revenue
figures, one may say that Suntek did not make the grade; however, it has indeed made
a profound impact on Acer.
While at M.I.T., Mr. Shih was an original member of the MULTICS team. MULTICS
was the first multi-processing, multi-programming, network operating system running
on ARPAnet. It was later re-written to become UNIX at Bell Labs. He then worked at
DEC involving in the design of the famous VAX computer. In 1980, he joined
National Semiconductor as Director of the MESA project, in charge of the NS32000
32bit microprocessor development.
-9- Annual Report 2013
Mr. Shih earned his Bachelor of Science degree in Physics from Chung Yuan
Christian University, Taiwan, his Master of Science degree from University of
Massachusetts, and Ph.D. studies in Electrical Engineering at M.I.T.
Mr. Jim Lai
President
Jim Lai has 27 years of experience in semiconductor and ASIC industries. Jim
currently serves as president of Global Unichip Corp.
Mr. Lai was promoted from TSMC North America to GUC in 2003 when TSMC
became the major shareholder of GUC. From 1992 to 2003, Jim served various
positions at TSMC North America, including director of emerging account, director
of design services and business manager responsible for the ASIC business unit.
Prior to TSMC, Mr. Lai co-founded ASICtronics, one of the earliest design service
companies to provide ASIC design consultation and libraries in the USA. Prior to
ASICtronics, Mr. Lai worked at Toshiba America, Knights Technology and LSI
Logic in various engineering positions in ASIC and CAD groups.
Mr. Lai received his Master of Science degree in Electrical Engineering from
University of California, Santa Barbara in 1984 and his Bachelor of Science degree in
Electrical Engineering from National Taiwan University in 1981.
-10- Annual Report 2013
Ms. Lora Ho
SVP, CFO, and Spokesperson of TSMC
Lora Ho is Senior Vice President of Taiwan Semiconductor Manufacturing Company
Limited (TSMC), Chief Financial Officer and Spokesperson.
Prior to joining TSMC in 1999, Ms. Ho served as Vice President of Finance and Chief
Financial Officer at Acer Semiconductor Manufacturing, Inc. (formerly known as
TI-Acer Inc.) from 1990 to 1999. Before that, Ms. Ho held various positions in the
accounting and finance fields that included Financial Controller at Thomas & Betts
Industries, Deputy Manager of Finance at Wyse Technology Taiwan Ltd., and Cost
Accounting Manager for Cyanamid Taiwan Corporation.
Ms. Ho was awarded "The Outstanding Financial Executive" in1993, in view of her
outstanding contribution to Financial Management during her service at TI- Acer Inc.
Ms. Ho received her EMBA from National Taiwan University in 2003 and her B.A.
degree from National Chengchi University in 1978.
Dr. Cliff Hou
Vice President, Research & Development of TSMC
Dr. Cliff Hou is Vice President and Head of Design and Technology Platform of
TSMC. Prior to this post, he was the Senior Director of Design Technology Division
and Director of Design Methodology Division at TSMC. Dr. Hou established
TSMC’s Technology Design Kits Development Teams and Reference Flow
-11- Annual Report 2013
Development Teams. He also leads Design-for-Manufacturability (DFM) task force at
TSMC.
Dr. Hou received his B. S. degree in 1983 from National Chiao-Tung University, and
his Ph.D. degree in Electrical and Computer Engineering from Syracuse University in
1992.
Prior to joining TSMC in 1997, Dr. Hou was an Associate Professor at Kaohsiung
Polytechnic Institute in 1992, and prior to that, he worked at ITRI/CCL for front-end
design environment development and integration from 1993 to 1995 and at a local
consulting company for 0.5um and 0.35um physical verification methodology and
flow development from 1995 to 1997.
Dr. Hou has 15 U.S. patents and also serves as Technical Committee Member of
VLSI Symposium.
Mr. Benson W. C. Liu
Independent Director; Former Chairman and CEO of Bristol-Myers
Squibb (Taiwan) Ltd
Mr. Benson W.C. Liu, Independent Director, was the Chairman and General Manager
of Bristol-Myers Squibb Taiwan (BMST) from Jan.1999 through March 2005. Mr.
Liu joined BMST in 1978 as Accounting Manager and he progressed within the
Company through Finance Manager, Controller, Finance Director, VP Finance and
Administration and finally Chairman and General Manager.
Mr. Liu retired from BMST in March 2005 after 28 years of dedicated services to this
leading global Pharmaceutical and Health Care Company. Prior to joining BMST, Mr.
Liu was an auditor of Deloitte, Taiwan for 5 years. He holds a bachelor degree in
Accounting from Soochow University, a master degree in International Business
Administration from Northrop University, USA.
-12- Annual Report 2013
Mr. Liu is active in participating public services through NPO organizations like
Chinese Corporate Governance Association and Chinese Professional Manager
Association. In August 2011, He was appointed by the Board of Vanguard
International Semiconductor Corporation as a board member of Compensation
Committee during the period from September 2011 to June 2012. He was awarded
Financial Manager of the Year by the Chinese Professional Manager Association in
1985, Outstanding Alumni of the Accounting Department of Soochow University in
1986 and Financial Manager of The Year of Bristol-Myers Squibb Company
International Group in 1989.
Dr. Chein-Wei Jen
Independent Director; Former Dean of Institute of Electronics at
National Chiao Tung University, Taiwan
Dr. Chein-Wei Jen has retired from the Department of Electronics Engineering,
National Chiao Tung University, Taiwan since 2004. During his academic career he
also served as the Chairman of the Department of Electronics Engineering, from 1989
to 1991 and the Director of the Institute of Electronics from 1991 to 1994 at the same
university.
He has supervised over 25 PhD students and many Master students in the area of
System-on-Chip design, processor architecture, and multimedia signal processing.
Most of his students are now working in the academic and IC Design industry in
Taiwan. He holds seven patents and published over 50 journal papers and 100
conference papers in these areas. He has also received numerous research paper
awards and service awards from technical societies.
From 2004 to 2007 he was invited to join ITRI which is a government-sponsored
R&D organization in Taiwan and served as the Director of SoC Technology Center in
ITRI. From 2002 to 2007 he also served as one of the Coordinators of the National
SoC Program in Taiwan.
Dr. Jen received his B.S. degree from National Chiao Tung University in 1970, his
-13- Annual Report 2013
M.S. degree from Stanford University in 1977, and his Ph. D. degree from National
Chiao Tung University in 1983.
Dr. Wen-Yeu Wang
Independent Director; Ph. D., Stanford Law School, Professor of
College of Law at National Taiwan University
Dr. Wang is professor of law and director, Center for Corporate and Financial Law,
College of Law, National Taiwan University. He received law degrees from NTU,
Columbia (LL.M.) and Stanford (J.S.D.), respectively. During his tenure, he visited
and taught at well known law schools, including National University of Singapore and
PRC’s Peking University. In addition, he was a visiting professor of law at Stanford
from 1995-96, teaching a seminar on financial transactions; in fall 2007 he taught
“Corporate Governance in Greater China” seminar at Columbia. Principal research
subjects include business associations, financial regulations, and law and economics.
Before pursuing an academic career, professor Wang had practiced commercial law at
the international law firms of Lee and Li, Taipei (from 1985-1989), and Sullivan &
Cromwell, a Wall Street firm in New York City (1989-1991), respectively. Areas of
specialty include corporate law and business transactions.
From 2004 to 2006, professor Wang served as a commissioner at the Fair Trade
Commission. In addition, he has served in many important public and private
functions, i.e., as director or supervisor of the Taiwan Stock Exchange, Taiwan
Futures Exchange, and Taiwan Cooperative Bank. He also served as independent
director or reorganization supervisor for Taiwanese public companies; as arbitrators or
mediators in various commercial disputes. He has also participated in the drafting or
amendment of major economic and financial legislation, such as the Company Law
and the Securities and Exchange Law.
-14- Annual Report 2013
Dr. Chung-Yu Wu
Independent Director; Former President of National Chiao Tung
University, Taiwan
Dr. Chung-Yu Wu is Professor of Electronics Engineering Department of National
Chiao Tung University. He has served different roles at National Chiao Tung
University, including President of National Chiao Tung University, Dean of College
of Electric Engineering and Computer Science, Dean and Vice for Research and
Development, Funding Director of Division of Engineering and Applied Science,
Director of Institute of Electronics and Department of Electronics Engineering,
Chairman of Department of Electronics Engineering.
Dr. Wu received his B.S. degree from National Chiao Tung University in 1972, his
M.S. degree from National Chiao Tung University in 1976, and his Ph. D. degree
from National Chiao Tung University in 1980. He did his post-doctor research at
EECS from the University of California, Berkeley in 2002.
-15- Annual Report 2013
Management Team
Mr. CJ Liang
Senior Vice President
CJ currently serves as Senior Vice President in Research and Development.
Prior to joining GUC in 2013, Mr. Liang served as President of Grain-Media and
Executive Vice President of Socle Technology.
Mr. Liang received his Master degree in Department of Electronics Engineering from
National Chiao Tung University.
Mr. Daniel Chien
Senior Vice President & CFO
Daniel currently serves as Senior Vice President and CFO in GUC.
Prior to joining GUC in 2006, Mr. Chien served as CFO in ALi Corp.
Mr. Chien received his MBA degree from the University of Texas at Arlington, USA.
Mr. Chiang Fu
Vice President
C. Fu currently serves as Operations Vice President in GUC.
Prior to joining GUC in 2008, Mr. Fu has over 15 years of experience in TSMC 12
inch Fab Product and Process Engineering.
Mr. Fu received his master degree in Electronics Engineering from National Tsing
Hua University in 1993 and EMBA degree from National Taiwan University in 2008.
Mr. Louis Lin
Vice President
Louis currently serves as Vice President in Design Service.
Louis joined GUC in 1998 and has over 15 years of experience in various ASIC
design fields including design methodology development, low power design, SoC
chip implementation, program management, etc.
Mr. Lin received his Ph. D degree in Electronics Engineering from National Chiao
Tung University in 1998.
Mr. Lung Chu
Vice President
Lung currently serves as Corp VP and President of China Operations at GUC. Prior
to GUC in 2009, Mr. Chu was the President of Cadence Asia Pacific and Corporate
-16- Annual Report 2013
VP of Cadence Design System Inc., responsible for field operations throughout Asia
Pacific. Chu has over 25 years of experience in the semiconductor industry and in
the Asia Pacific and China market. He held various executive management positions,
including VP of Magma Design Automation Inc. in charge of Asia Pacific Operations,
VP/GM at KLA-Tencor Corporations, and which went IPO and later merged into
Avanti! Corporations. Prior to TMA, Lung also worked at Cadence Design System,
Apple Computer, and Philips Semiconductor (Signetics).
Mr. Chu holds a bachelor degree in engineering from National Taiwan University in
Taipei, Taiwan and a master degree in engineering from Case Western Reserve
University, Cleveland, USA. He also holds MSEE and MBA degrees from California
State University.
Mr. Yawlin Hwang
Vice President
Yawlin currently serves as Sales and Marketing Vice President in GUC. Prior to
joining GUC in 2009, he worked for TSMC Marketing and Business Development
Division as Senior Manager.
Dr. Hwang received his doctor degree of Material Science and Engineering from
North Carolina State University, Raleigh, North Carolina, USA, in 1992, majoring in
III-V Compound and solid state devices. Since then, he has been working in
semiconductor related filed for more than 20 years. During the period, he worked for
LSI, Logic, MXIC, and TSMC, mainly in the process technology, manufacturing,
sales, and marketing field.
Ms. Amy Yang
Accounting Director
Amy currently serves as Accounting Director in GUC.
Prior to joining GUC in 2005, Mrs. Yang served as Senior Accounting Manager in
Altek Corp.
Ms. Yang received her Bachelor of Science degree in Accounting from Providence
University, Taiwan.
-17- Annual Report 2013
Global Unichip Corporation Statement of Internal Control System
Date: February 13, 2014
Based on the finding of a self-assessment, Global Unichip Corporation (GUC) states the following with regard to its internal control system during the year of 2013:
1. GUC’s Board of Directors and Management are responsible for
establishing, implementing, and maintaining an adequate internal control
system. Our internal control is a process designed to provide reasonable
assurance over the effectiveness and efficiency of our operations
(including profitability, performance, and safeguarding of assets),
reliability of our financial reporting, and compliance with applicable laws
and regulations.
2. An internal control system has inherent limitations. No matter how
perfectly designed, an effective internal control system can provide only
reasonable assurance of accomplishing its stated objectives. Moreover, the
effectiveness of an internal control system may be subject to changes due to
extenuating circumstances beyond our control. Nevertheless, our internal
control system contains self-monitoring mechanisms, and GUC takes immediate
remedial actions in response to any identified deficiencies. ; It should be noted
that any internal control system has its limits, no matter how well designed.
An effective internal control system serves to provide reasonable
assurance of the above-mentioned three objectives, yet the effectiveness
may be subject to changes of environment or circumstances. To counter
such limits, GUC has adopted an internal control system with
self-surveillance mechanism. Thus GUC is able to rectify as soon as a
deficiency is identified.
3. GUC evaluates the design and operating effectiveness of its internal control
system based on the criteria provided in the Regulations Governing the
Establishment of Internal Control Systems by Public Companies (herein below,
the “Regulations”). The criteria adopted by the Regulations identify five key
components of managerial internal control: (1) control environment, (2) risk
assessment and reaction, (3) control activities, (4) information and
communication, and (5) monitoring.
4. GUC has evaluated the design and operating effectiveness of its internal control
system according to the aforesaid Regulations.
5. Based on the findings of such evaluation, GUC believes that, on December 31,
2012, we have maintained, in all material respects, an effective internal control
system (that includes the supervision and management of our subsidiaries), to
provide reasonable assurance over our operational effectiveness and efficiency,
Corporate Governance
-18- Annual Report 2013
reliability of financial reporting, and compliance with applicable laws and
regulations.
6. This Statement will be an integral part of GUC’s Annual Report for the year
2013 and Prospectus, and will be made public. Any falsehood, concealment, or
other illegality in the content made public will entail legal liability under
Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
7. This Statement has been passed by the Board of Directors in their meeting held
on February 13, 2014, with none of the nine attending directors expressing
dissenting opinions, and the remainder all affirming the content of this
Statement.
Global Unichip Corporat ion
F. C. Tseng
Chairman
Jim Lai
President
-19- Annual Report 2013
Board and Audit Committee Meeting Status
Five regular board meetings were convened in 2013. The status of attendance by
board members was as following:
Four regular audit committee meetings were convened in 2013. The status of
attendance by committee members was as follows:
Title Name Attendance in person By proxy Attendance rate (%)Independent
DirectorBenson Liu 4 0 100%
Independent
DirectorDr. Chein-Wei Jen 4 0 100%
Independent
DirectorDr. Wen-Yeu Wang 4 0 100%
Independent
DirectorDr. Chung-Yu Wu 4 0 100%
Title Name Attendance in person By proxy Attendance rate (%)
ChairmanDr. F.C. Tseng
Representative of TSMC5 0 100%
DirectorJim Lai
Representative of TSMC5 0 100%
DirectorLora Ho
Representative of TSMC3 2 60%
DirectorDr. Cliff Hou
Representative of TSMC4 1 80%
Director
K.C. Shih
Representative of
Global On Investment Corp.
5 0 100%
Independent
DirectorBenson Liu 5 0 100%
Independent
DirectorDr. Chein-Wei Jen 5 0 100%
Independent
DirectorDr. Wen-Yeu Wang 5 0 100%
Independent
DirectorDr. Chung-Yu Wu 5 0 100%
-20- Annual Report 2013
Corporate Social Responsibility As a world-class design and turnkey services company and a good corporate citizen, GUC has always sought to fulfill its corporate social responsibilities (CSR). This is the right thing to do because we believe our success is deeply entwined with our stewardship of the natural environment, efficient use of resources and meeting the expectations of our shareholders.
We would like to share with the public our progress made in social commitment,
employee health enhancement, environment protection, and our environmental awards
over the past few years.
Social Commitment
� Donation to St-Francis Children’s Home.
-21- Annual Report 2013
� Donation to Taiwan Fund for Children and Families.
Safety and Health-related Management
In terms of safety and health-related activities, GUC considers environmental
protection, safety and health agenda as important corporate cornerstone. GUC
continues to enhance quality of service and product to achieve “zero accident” and
“sustainable environmental development” and to become a world-class benchmarking
company of environmental protection, safety and health. To provide a working
environment which can improve welfare of all employees, GUC complies with
Taiwan’s related regulations and is aggressively geared to international standards,
including accident prevention, safety and health improvement for employees and
corporate asset protection. We have implemented the following policies:
1. Offer educational training programs to improve employees’ awareness of safety,
health and environmental protection issues.
2. Continue to improve environment quality to reduce risks of safety and health.
3. Map out every health enhancement plan to ensure employees’ physical and
psychological wellness.
4. Regularly conduct safety and environment educational program to increase
-22- Annual Report 2013
employees’ awareness of safety and health issues.
5. Ensure our operation and service to meet or exceed applicable regulations and
standards of environment protection, safety and health.
6. Conduct our operation in an environmentally-sound way, so as to achieve green
design and provide green products and green services.
7. Establish a safe working environment, prevent occupational injury and illness, and
keep employees healthy.
8. Stay abreast of global issues of environment protection, safety and health,
evaluate risks and take effective risk management measures.
9. Enhance employees’ awareness on issues of environment protection, safety and
health and sense of accountability for these issues, and build a friendly culture of
environment protection, safety and health.
10. Establish a green supply chain and enhance performance of environment
protection, safety and health with suppliers through experience sharing and
collaboration.
11. Aggressively communicate with shareholders, actively disclose and share
experience and information of safety and health, and encourage improvement in
the industry and society.
Environmental protection
GUC believes its environmental protection should not only comply with domestic
legal requirements, but also implement governmental plans for resource recycling,
waste disposal and garbage separation. In addition, GUC reduces the usage of paper
cups and disposable plastic tableware for environmental protection and the best use of
resources. GUC has been committed to prevent pollution, ensure efficient use of
resources, prevent accidents, improve employee safety and health and protect property.
The aim is to create a work environment that upholds the well-beings of our
employees and communities.
GUC was recognized by the “Outstanding Achievement in Environmental Protection”
offered by the Hsinchu Science Park Administrations Bureau, and was certified as
“SONY Green Partner” and QC080000. Our commitments and implementations are
as follows:
1. Execute the standards of “Green Energy-saving Design” and provide
energy-saving products that comply with environmental protection regulations
and customers’ requirements.
2. Use package materials that comply with environmental protection regulations for
waste reduction and resource recycling.
3. Increase employees’ fundamental responsibility and awareness of environmental
-23- Annual Report 2013
protection, source recycling and energy saving through educational training and
propaganda.
4. Continue to execute energy-saving management and resource recycling.
5. Comply with governmental environmental protection regulations and fully assist
the authorities in carrying out environmental protection affairs.
-24- Annual Report 2013
1. Business
1-1. Major Business
1-1.1. Main business activities of GUC:
(A) Engage in research & development, production, testing and sales of: � Embedded memory, logic, and analog components for various application ICs; � Cell libraries for various application ICs; and
� EDA tools for various application ICs.
(B) Provide technological support and consulting services related to the aforementioned products.
1-1.2. Revenues mix
Unit: NT$ Thousand, except %
Sales breakdown 2012 2013
Amount % Amount %
ASIC& Wafers 7,055,314 78.27% 4,577,406 74.11%
NRE 1,870,378 20.75% 1486,868 24.07%
Others 88,068 0.98% 112,467 0.98%
Total 9,013,760 100% 6,176,741 100%
1-1.3. Main products and services:
(A) ASIC & wafers: Provide complete services from design, wafer
manufacturing to packaging and testing.
(B) NRE (Non-Recurring Engineering): Provide circuit design cell library
and various IPs required in the process of product design; provide
circuit layouts needed for mask making; subcontract mask making,
wafer manufacturing, dicing and packaging to vendors; conduct final
testing to get prototype samples for customers.
(C) MPW (Multiple-Project Wafer): MPW integrates multiple design
projects of different customers on one single mask and by one wafer
engineer run. It is an effective and fast time-to-market chip
Operation Report
-25- Annual Report 2013
verification service with cost-sharing in masking and wafer
engineering run. Design engineers, before the phase of mass
production, are able to timely verify their prototype designs with
advanced process technologies and much lower costs.
(D) IP (IP, Intellectual Property): These are silicon-verified reusable IC
designs with specific functions. With the rapid advancement of
semiconductor processing technologies, the design industry is
trending toward multi-functional chips and SoC (System on a Chip).
Reusable IP help customers avoid redundant designs and resources.
1-1.4. New product development plan
For the future demands of high-speed interface IP, GUC keeps develop high-end and high-in-demand IPs in 28nm, 20nm, and 16nm technologies: high speed interface like 10G-KR SerDes, PCIe Gen2/3, USB 3.0, LVDS, DDR3/4 Memory Controller/PHY, Voltage Regulator, Power Management Solution, ADC/DAC Data Converter, Clock Generator, etc. In the mean time, GUC expects to offer complete silicon IPs, SoC integration and design platform solution for applications of networking, mobile devices which include networking and multimedia portable devices, and digital television.
1-2. Industry Brief
1-2.1. Current status of the industry and future development
Taiwan IC design companies’ total sales contribution was ranking in the world No.2 just behind the United States recently. As more and more design houses adopt high-end process technologies to heighten the performance of their design products and the complexity increased has brought about various challenges for design service providers in the fields of IP synthesis and verification, and in DFT/DFM. Furthermore, the fees for their non-recurring engineering services, companies have to focus on their core design competence.
In addition, IDM ASIC customers will adopt fabless ASIC companies while more and more IDMs are going fab-lite and the system companies’ differentiation is becoming a trend, those are design services providers committed to find commercial opportunities from these in the future.
In order to fulfill different customers’ requirements, we position ourselves as “Flexible ASIC Services”, in which, we help customer from concepts, spec definition, product design & development, verification, and to mass production. Depends on different engagement model, we can engage with customers from different stage and help them to time-to-market.
-26- Annual Report 2013
Flexible ASIC Services include three core competences: IP Solution, Chip Implementation, and ASIC Manufacturing. The high-performance IP Solution will be able to reduce customers’ design timeframe and cost and satisfy the customized demands. And in chip implementation, GUC works closely with TSMC for advanced technologies which help customers move to mass production in an efficient timetable and with the competitive yield. Besides, GUC offers ASIC Manufacturing, since we are the best coordinator between customers and foundry/testing/package vendors.
1-2.2. The supply chain of Taiwan semiconductor industry
The top-down supply chain of Taiwan’s semiconductor industry is divided into design, wafer manufacturing, packaging and testing.
The up, mid, and down stream of Taiwan semiconductor industry:
1-2.3. Product development trend and competition
IC design used to be a simple task without the application of complex design methodologies. The picture has been changed along with the industry trending toward miniaturization and the convergence of SoC. To cope with the development of the technology changes, it is important for design service providers to exercise internal Design Reuse and apply abundant external IP to develop SoC.
Thanks to the semiconductor cluster in Taiwan with thorough supply chain of booming IC design houses, foundries, and packaging and testing support, design service providers have expanded significantly. As most Taiwanese IC design companies have alliance either with TSMC or with UMC, however, Global Foundry, Samsung, and even SMIC are gaining market share in recent years. Competition is getting intensively and customers may have more choices.
IC designIC
manufacturingSubstrate Lead frame
IC packaging
IC testingChemical
Materials
IC design services
(IPs ; EDA tools)
: core industry
: related industry
Up stream Mid stream Down stream
-27- Annual Report 2013
Along with the global IC projects migrate from 40nm to 28nm or even more advanced process technology in 20 nm, wafer foundries must place significant emphasis on design services which have evolved from purely providing placement & routing toward Synthesis and executing register transfer level (RTL) and developing synthesis. That trend signals closer collaboration between foundries and design service providers. In the future, it will be the service providers who have the know-how and capabilities to develop IP platform for SoC applications and to synthesize process services, to stand out competition and take the lead.
1-3. Technological Research and Development
1-3.1. R&D expenditures
Unit: NT$ Thousand
Note: 1Q 2014 figures have not been audited.
1-3.2. Latest technologies and new products
2013 � Unveiled the first IPD ASIC services.
� Successfully validated a 28nm GPU/CPU platform.
� Unveiled new 28nm data converter IP family which includes ADC/DAC
and a new thermal sensor macro.
� Cooperated with Cadence, taped out successfully for 20nm SoC test
chip.
� Cooperated with M31 for USB 3.0 controller and PHY total solution in
65/55nm, 40nm, and 28nm.
� Developed DDR3/4 IP in 16nm FinFET process with controller and
PHY.
� Developed EMC (Enterprise Multi-Standard) PHY and tape out
successfully in 28nm.
� Successfully unveiled the 10G-KR IP in 40nm and 28nm.
� Successfully developed in 40nm and 40nmLP+process DDR3 PHY IP.
� Successfully developed PCIe3 PHY IP in 40nm.
1-4. Long Term and Short Term Business Development Plan
1-4.1 Short-term
Year
Item 2013 1Q 2014 (Note)
R&D expenditures 827,450 210,585
-28- Annual Report 2013
(A) Promote advanced technology MPW projects to lower customers’
risk.
(B) Raise entry barriers by developing advanced know-how and
product differentiation. Provide support services for the 40nm and
28nm below process technologies.
(C) Continuously provide quality service to existing customers to retain
long term collaboration.
(D) Enhance cooperation with upstream and downstream partners.
(E) Provide complete IP solutions and SoC development according to
product applications.
1-4.1 Long-term
(A) Establish offices in global market to promote brand name and
worldwide market share.
(B) Enhance new business opportunities when more and more IDMs
are going fab-lite.
(C) Develop leading-edge process flow and products via closer
cooperation with foundries.
(D) Focus on core technologies and seek technological cooperation
with domestic and foreign system integrators.
(E) Strengthen strategic alliance and cooperation with IP suppliers.
(F) Strengthen frontend SoC design capability and develop all kinds of
application platform structures.
(G) Development CoWoS (Chip on Wafer on Substrate), work closely
with TSMC, and expects to offer a completely total solution on
design services.
2. Market and Sales Distribution
2-1. Market Analysis
2-1.1 Sales by region:
Revenues by geographic region are allocated to individual countries based on
-29- Annual Report 2013
the location to which the products are initially billed even if our customers’
revenues attributable to end customers that are located in a different location.
The following table summarized information pertaining to our revenues from
customers based on invoicing address in different geographic regions:
Region 2013
Asia 49%
North America 42%
Europe 9%
Total 100%
2-1.2 Market share and growth potential
(A) Market share
Currently there are around 10 design service firms in Taiwan, creating total
revenue of NT$20.0 billion in 2013. With a revenue of NT$6.2 billion in 2013,
GUC had a market share of 31%.
(B) Future market supply and demand situation
According to forecasts made by IEK, global semiconductor industry will be
slightly increase 2.1% in 2013 and estimated to continue to a upside trend with
the growth rate of 4.7% in 2014.
Figures of 2013 Taiwan IC Industry Revenues (table 1)
Unit: NT$ 100 Million
1Q13 2Q13 3Q13 4Q13 2013 Annual
Growth
Rate
IC Industry
Total Rev.
4,108 4,800 5,075 4,820 18,803 15.1%
IC Design 1,012 1,216 1,291 1,220 4,739 15.2%
IC
Manufacturin
g
2,174 2,538 2,702 2,540 9,954 20.0%
Foundry 1,701 1,973 2,060 1,847 7,581 16.9%
DRAM 473 565 642 693 2,373 31.2%
IC Package 635 724 750 735 2,844 4.6%
IC Test 287 322 332 325 1,266 4.2%
IC Product 1,485 1,781 1,933 1,913 7,112 20.1%
Global Semi
Growth
- - - 2.1%
-30- Annual Report 2013
Rate
Source:TSIA ;IEK(2013/12)
(C) Potential growth
With IP and SoC become the main stream in the IC design industry,
traditional IC manufacturers and designers have been constantly facing the
pressures from the gap between IC design productivity versus process
advancement and long verification time caused by increasing complexity due to
different logic and physical flow related parameter adjustment. These problems
can be overcome via partnership with design service vendors who have the
know-how of integrating different SIP. Furthermore, in an effort to improve
time-to-market efficiency and to maximize cost-saving, some large-scale IC
design firms and IDMs have turned to the option of outsourcing design services,
taking fab-less or fab-lite models. All indicate the growing demand for design
foundry service. The design service providers will play a central role in the
landscape of semiconductor supply chain.
It is foreseen that the industry will keep growth momentum. Our company
has been committed in the research and development of the design flow and
technologies in the advanced 28nm, 20nm, and 16nm process nodes Furthermore,
GUC will focus on providing more complete system application solution for
networking PON, smartphone, tablet and DTV. Besides, the company’s another
focus of research lies on the ultra-high-speed interface IP such as SerDes, PCIe,
SATA, and LVDS which are widely applied in high value-added
telecommunication equipments and will also develop 2.5D/3D/IPD design flow
and assembly & testing technology. By way of developing and launching
above-mentioned new technologies and new applications, GUC is confident of
continuing the leading-edge technologies in the year of 2014.
2-1.3. Competitiveness, strength, weaknesses and counter strategies
(A) Competitive advantages
a. Abundant experience in IPs development and integration
GUC has successfully developed a series of IPs in accordance with
design reuse guidelines. GUC not only licenses its self-developed IP
to IC design houses and system houses at home and abroad, but also
provide services in integrating IPs into customer projects.
-31- Annual Report 2013
b. Mature and complete design and verification flow
GUC’s design and verification flow has been proven by numerous
customer projects. Such flow serves to shorten the time needed for
IC verification, hence reducing risks. Customers are able to complete
product design within the shortest timeframe.
c. Keep hold on advanced process design technology
GUC has been committed in conducting advanced process
technology projects and has successfully completed many 40nm and
28nm projects. This year, we are proud to get several advanced
projects and to work on advance designs together with important
clients and strategic partners. Our abundant hands-on experiences
will support and guarantee the realization of our customers’ advanced
technology projects.
d. Technology-oriented R&D team
GUC has always been putting emphasis on developing its own
technologies. Over the past years, GUC has formed an
experience-rich R&D team with reliable design resources and
know-how. Customers are well-supported by our R&D force to
develop international-standard products.
e. Complete SIP partnership
In order to increase the quantity and types of SIP available for
customers, GUC in addition to developing home-grown SIP, also
collaborates closely with leading worldwide SIP vendors such as
ARM, Synopsys, TCI, AnalogBits, Cadence, and TSMC. GUC
guarantees to provide complete IP solutions for customers’ projects.
f. Multiple service model
GUC provides one-stop shopping service to customers with thorough
SoC solutions, and supports customers from design phase to mass
production phase. GUC has built up all the important service links in
the IC manufacturing flow. Customers are free to choose different
services and deliveries based on their technology capacity and needs.
-32- Annual Report 2013
g. Providing IP trading service through IP Mall
GUC offers a IP trading platform for our IP providers and users.
Customers therefore have accesses to information and services of
certain IP, as well as the verification information and quality
assurance of these IPs through a single contact window.
(B) Strength, weaknesses and counter strategy for long-term
development
a. Strength
a-1. Specialized division of work in the semiconductor industry
Taiwan’s IC industry has a unique infrastructure of vertical
disintegration, characterized by a cluster of IC design, advanced IC
foundry and back-end packaging and testing firms. The infrastructure
creates an extremely favorable environment for the development of
design services. For example, newly developed SIP can be rapidly
verified by the two world-class IC foundries to minimize failures and
risks. With the closely-tied cooperation between IC foundries and
service foundries, Taiwanese design service firms are able to offer
process-verified SIP to foreign customers who are accordingly very
likely to become the clients of the two IC foundries in Taiwan.
Taiwan has a good chance to become the international ISP trading
center.
a-2. Abundant system companies
There are a huge number of Taiwanese system manufacturers
engaged in ICT applications and consumer electronics. Whether these
system manufacturers are OEM vendors or own brand-name
developers, their systems in line with technology trend require
multiple and powerful functions integrated on one single chip. The
cooperation between design service firms and system integrators
plays a critical role in enhancing Taiwan’s SoC industry.
a-3. IDM Fablite
In order to keep core-competence and save large-scale capacity
investment in advanced process nodes, we aware the world-wide
IDMs’ Fablite trend. They start to outsource projects to design
services providers.
-33- Annual Report 2013
b. Weaknesses and counter measures
b-1. The fewer new IC design houses
In order to enhance competitive advantages, there are more and more
merger and acquisition between mid/small IC design houses, it
impacts to our customer base and increase higher competition.
Counter measures:
Due to the merger and acquisition of IC design houses, the chip
solution selection of system houses is also getting more limited,
therefore, it would be more attractive for system house to work with
design services vendor in order to make the differentiation. As a
reuslt, GUC will have more focus in developing system house
customers.
b-2. Growth prospect causes fierce competition
As design service becomes the future to be, the industry has attracted
a great deal of new entries into competition.
Counter measures:
Develop niche and high value-added SIP to differentiate GUC from
competitors and to avoid price-cut competition.
2-2. Product Application and Production Flow
The company’s production flow includes two major steps: front-end design
service and mass production.
Step 1: The process of front end design:
Product specification
evaluation and signoff
Front-end
Design service
Circuit layout and
verification
Customer design
check
Sample
manufacturing
Sample
delivery
-34- Annual Report 2013
Step 2: Once the sample has been verified by customer, mass production process
starts:
2-3. Raw Material Supply
GUC products are mainly based on wafer supplied mainly by TSMC, the world’s
leading silicon foundry as well as GUC’s largest shareholder and long-term
strategic partner. It goes without saying that upstream supply for GUC is solid
and stable.
2-4. Major Customers Contributing More Than 10% of Gross Sales, Years
2011~2012
2-4.1. Major customers contributing more than 10% of gross sales in years 2012
and 2013
Unit: NT$ Thousand
No.
2012 2013
Customer
name
Sales
amount
% of annual
total sales
Connection
with
company
Customer
name
Sales
amount
% of annual
total sales
Connection
with
company
1. AM
(Note) NA NA NA AM 1,364,295 22% None
2. M 3,168,496 35% None M
(Note) NA NA NA
Note: Revenues from significant customers those representing not exceed 10% of gross sales in fiscal year of 2012 and 2013.
2-4.2. Name of suppliers taking 10% or more total purchase share in years 2012
and 2013
Unit: NT$ Thousand
No.
2012 2013
Supplier
name Amount Percentage
Connection with
company
Supplier
name Amount Percentage
Connection with
company
Wafer
manufacturing
Chip Probe IC
Packaging
IC Testing Final
Product
-35- Annual Report 2013
1 TSMC 3,552,778 88.45%
TSMC , prior to
July 2011,
TSMC was a
parent company.
Since July 2011,
TSMC has no
controlling
interest in GUC
and accounts for
its investment in
GUC using the
equity method.
TSMC 1,585,961 50.33%
TSMC , prior to
July 2011, TSMC
was a parent
company. Since
July 2011, TSMC
has no
controlling
interest in GUC
and accounts for
its investment in
GUC using the
equity method.
2 NA (Note) NA NA NA TSMC, NA 1,540,088 48.87%
TSMC’s
ownership
percentage to
TSMC, NA is
100%.
Note: The supplier took less than 10% of total purchase share in 2012.
Explanation: GUC buys mainly silicon wafers and mainly from IC foundries.
2-5. Production Output in 2012 and 2013
Units: Chip/Piece and NT$ Thousand
Major products 2012 2013
Quantity Amount Quantity Amount
ASIC & Wafers 32,695,542 4,703,033 27,311,361 2,874,261
NRE 0 1,145,513 0 851,955
Others 2,820 47,197 4,380 41,736
Total NA. 5,895,743 NA. 3,767,952
2-6. Sales Amount in 2012 and 2013
Units: Chip/piece and NT$ Thousand
Year 2012 2013
Sales Volume
& Value/
Major
Products
Domestic Sales Export Sales Domestic Sales Export Sales
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
-36- Annual Report 2013
ASIC & Wafers 7,590,919 2,627,503 26,188,485 4,427,811 4,320,084 554,465 21,463,588 4,022,941
NRE 0 220,461 0 1,649,917 0 196,840 0 1,290,028
Others 240 28,598 2,580 59,470 800 20,879 3,580 91,588
Total 7,591,159 2,876,562 26,191,065 6,137,198 4,320,884 772,184 21,467,168 5,404,557
3. GUC Worldwide Employees
Period 2012 2013 As of 03/31/2014
Function Managers 6 7 7
Professionals 475 449 442
Total employees 481 456 449
Average age 36.93 37.78 38.04
Average years of seniority 4.19 5.32 5.34
Education level
Ph. D 3% 4% 4%
Master 65% 65% 65%
Bachelor 32% 31% 31%
High School 0% 0% 0%
-37- Annual Report 2013
Note: R.O.C. GAAP (2011 and before); TIFRS (2012 and after).
Note: R.O.C. GAAP (2011 and before); TIFRS (2012 and after).
Consolidated Financial Highlights
-38- Annual Report 2013
Note: R.O.C. GAAP (2011 and before); TIFRS (2012 and after).
Note: R.O.C. GAAP (2011 and before); TIFRS (2012 and after).
- 39 -
Global Unichip Corp. and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2013 and 2012 and Independent Auditors’ Report
- 40 -
REPRESENTATION LETTER
The companies required to be included in the consolidated financial statements of affiliates in
accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business
Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended
December 31, 2013 are the same as the companies required to be included in the consolidated
financial statements of parent and subsidiary companies as provided in International Accounting
Standard 27 “Consolidated and Separate Financial Statements.” Relevant information that should
be disclosed in the consolidated financial statements of affiliates has all been disclosed in the
consolidated financial statements of parent and subsidiary companies. Consequently, Global
Unichip Corp. and Subsidiaries do not prepare a separate set of consolidated financial statements.
Very truly yours,
GLOBAL UNICHIP CORP.
By
DR. F. C. TSENG
Chairman
February 13, 2014
- 41 -
INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders Global Unichip Corp. We have audited the accompanying consolidated balance sheets of Global Unichip Corp. and subsidiaries (the “Company”) as of December 31, 2013 and 2012 and January 1, 2012 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Unichip Corp. and subsidiaries as of December 31, 2013 and 2012, and January 1, 2012, and their consolidated financial performance and their consolidated cash flows for the years ended 2013 and 2012, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance translated by Accounting Research and Development Foundation endorsed by the Financial Supervisory Commission of the Republic of China. We have also audited, in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China, the parent company only financial statements of Global Unichip Corp. as of and for the years ended December 31, 2013 and 2012 on which we have issued an unqualified opinion.
February 13, 2014
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial
position, results of operations and cash flows in accordance with accounting principles and practices generally
accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and
practices to audit such consolidated financial statements are those generally accepted and applied in the
Republic of China.
For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements
have been translated into English from the original Chinese version prepared and used in the Republic of China.
If there is any conflict between the English version and the original Chinese version or any difference in the
interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements
shall prevail.
- 42 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
December 31, 2013 December 31, 2012 January 1, 2012 December 31, 2013 December 31, 2012 January 1, 2012
ASSETS Amount % Amount % Amount % LIABILITIES AND EQUITY Amount % Amount % Amount %
CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents $ 2,136,080 47 $ 2,384,588 49 $ 1,706,126 35 Accounts payable $ 175,236 4 $ 440,889 9 $ 593,324 12
Notes and accounts receivable, net (Note 6) 787,583 18 1,037,793 21 1,367,608 28 Payables to related parties (Note 24) 174,595 4 273,359 6 157,184 3
Receivables from related parties (Note 24) - - 26,528 1 - - Accrued profit sharing to employees and bonus to Inventories (Note 7) 689,411 15 556,573 11 822,792 17 directors (Note 13) 37,188 1 73,795 2 64,367 1
Other financial assets 2,483 - 941 - 531 - Payable on machinery and equipment 4,909 - 15,450 - 14,726 - Other current assets (Notes 10 and 24) 235,077 5 267,543 5 268,760 5 Current tax liabilities (Note 19) 73,833 1 83,948 2 37,673 1
Customer advances 309,684 7 217,481 4 332,052 7
Total current assets 3,850,634 85 4,273,966 87 4,165,817 85 Accrued expenses and other current liabilities (Note 11) 248,819 5 243,714 5 328,334 7
NONCURRENT ASSETS Total current liabilities 1,024,264 22 1,348,636 28 1,527,660 31
Property, plant and equipment (Note 8) 332,064 7 369,004 8 367,209 8 Intangible assets (Note 9) 241,532 5 172,979 4 264,996 6 NONCURRENT LIABILITIES
Deferred income tax assets (Note 19) 77,794 2 57,027 1 61,507 1 Deferred income tax liabilities (Note 19) 8,095 - 7,071 - 6,214 -
Refundable deposits 10,753 - 9,390 - 11,236 - Other long-term payables (Note 11) 68,407 1 16,981 - 29,872 1 Pledged time deposits (Note 25) 20,000 1 20,000 - 20,000 - Accrued pension liabilities (Note 12) 27,140 1 28,201 1 23,640 1
Guarantee deposits 17,646 1 2,904 - 3,027 -
Total noncurrent assets 682,143 15 628,400 13 724,948 15 Total noncurrent liabilities 121,288 3 55,157 1 62,753 2
Total liabilities 1,145,552 25 1,403,793 29 1,590,413 33
EQUITY (Note 13)
Share capital 1,340,119 30 1,340,119 27 1,340,119 27 Capital surplus 167,587 4 569,623 11 569,623 12
Retained earnings
Appropriated as legal reserve 401,115 9 339,878 7 287,137 6 Appropriated as special reserve 10,338 - 393 - 5,163 -
Unappropriated earnings 1,474,429 32 1,256,364 26 1,098,703 22
Others (6,363 ) - (7,804 ) - (393 ) -
Total equity 3,387,225 75 3,498,573 71 3,300,352 67
TOTAL $ 4,532,777 100 $ 4,902,366 100 $ 4,890,765 100 TOTAL $ 4,532,777 100 $ 4,902,366 100 $ 4,890,765 100
The accompanying notes are an integral part of the consolidated financial statements.
- 43 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Years Ended December 31
2013 2012
Amount % Amount %
OPERATING REVENUES (Notes 15 and 24) $ 6,176,741 100 $ 9,013,760 100
OPERATING COSTS (Notes 21 and 24) 4,576,406 74 6,942,459 77
GROSS PROFIT 1,600,335 26 2,071,301 23
OPERATING EXPENSES (Note 21)
Sales and marketing 234,203 4 265,832 3
General and administrative 221,634 4 225,349 2
Research and development 827,450 13 870,368 10
Total operating expenses 1,283,287 21 1,361,549 15
INCOME FROM OPERATIONS 317,048 5 709,752 8
NON-OPERATING INCOME AND EXPENSES
Other income (Note 16) 20,118 1 13,994 -
Other gains and losses (Note 17) 11,497 - (17,351) -
Finance costs (Note 18) (281) - (234) -
Total non-operating income and expenses 31,334 1 (3,591) -
INCOME BEFORE INCOME TAX 348,382 6 706,161 8
INCOME TAX EXPENSE (Note 19) 59,178 1 92,776 1
NET INCOME 289,204 5 613,385 7
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign
operations (Note 13) 1,441 - (7,411) -
Actuarial gains (losses) on defined benefit plans
(Note 12) 43 - (5,717) -
Other Comprehensive income (loss) for the
year, net of income tax 1,484 - (13,128) -
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR $ 290,688 5 $ 600,257 7
Earnings Per Share (Note 20)
Basic earnings per share $ 2.16 $ 4.58
Diluted earnings per share $ 2.15 $ 4.55
The accompanying notes are an integral part of the consolidated financial statements.
- 44 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Others
Foreign
Share Capital - Common Stock Retained Earnings Currency
Share Legal Special Unappropriated Translation
(In Thousands) Amount Capital Surplus Reserve Reserve Earnings Total Reserve Total Equity
BALANCE, JANUARY 1, 2012 134,011 $ 1,340,119 $ 569,623 $ 287,137 $ 5,163 $ 1,098,703 $ 1,391,003 $ (393) $ 3,300,352
Appropriation and distribution of prior year's earnings
Legal reserve - - - 52,741 - (52,741) - - -
Reversal of special reserve - - - - (4,770) 4,770 - - -
Cash dividends to share holders - NT$3.00 per share - - - - - (402,036) (402,036) - (402,036)
Total - - - 52,741 (4,770) (450,007) (402,036) - (402,036)
Net income in 2012 - - - - - 613,385 613,385 - 613,385
Other comprehensive loss in 2012, net of income tax - - - - - (5,717) (5,717) (7,411) (13,128)
Total comprehensive income in 2012 - - - - - 607,668 607,668 (7,411) 600,257
BALANCE, DECEMBER 31, 2012 134,011 1,340,119 569,623 339,878 393 1,256,364 1,596,635 (7,804) 3,498,573
Appropriation of prior year's earnings
Legal reserve - - - 61,237 - (61,237) - - -
Special reserve - - - - 9,945 (9,945) - - -
Total - - - 61,237 9,945 (71,182) - - -
Cash dividends from capital surplus - NT$3.00 per share - - (402,036) - - - - - (402,036)
Net income in 2013 - - - - - 289,204 289,204 - 289,204
Other comprehensive income in 2013, net of income tax - - - - - 43 43 1,441 1,484
Total comprehensive income in 2013 - - - - - 289,247 289,247 1,441 290,688
BALANCE, DECEMBER 31, 2013 134,011 $ 1,340,119 $ 167,587 $ 401,115 $ 10,338 $ 1,474,429 $ 1,885,882 $ (6,363) $ 3,387,225
The accompanying notes are an integral part of the consolidated financial statements.
- 45 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
Years Ended December 31
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $ 348,382 $ 706,161
Adjustments for:
Depreciation 71,144 80,188
Amortization 153,937 153,393
Provision for doubtful receivables 1,977 19,405
Finance costs 281 234
Interest income (14,446) (11,243)
Loss on foreign exchange, net 1,647 1,305
Loss (gain) on disposal of property, plant and equipment, net 1,182 (363)
Gain on disposal of available-for-sale financial assets (3,279) (3,379)
Changes in operating assets and liabilities:
Notes and accounts receivable 248,233 310,410
Receivables from related parties 26,528 (26,528)
Inventories (132,838) 266,219
Other financial assets (1,696) (8)
Other current assets 28,045 1,217
Accounts payable (265,653) (152,435)
Payables to related parties (98,764) 116,175
Accrued profit sharing to employees and bonus to directors (36,607) 9,428
Customer advances 92,203 (114,571)
Accrued expenses and other current liabilities (34,882) (36,990)
Accrued pension liabilities (1,018) (1,156)
Cash provided by operations 384,376 1,317,462
Income tax paid (84,352) (41,064)
Net cash provided by operating activities 300,024 1,276,398
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 14,450 10,991
Acquisitions of:
Available-for-sale financial assets (3,170,000) (3,305,000)
Property, plant and equipment (47,385) (81,738)
Intangible assets (132,668) (123,299)
Proceeds from disposal of:
Available-for-sale financial assets 3,173,279 3,308,379
Property, plant and equipment 1,569 286
Refundable deposits paid (3,266) (3,141)
Refundable deposits refunded 1,609 4,460
Net cash used in investing activities (162,412) (189,062)
(Continued)
- 46 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
Years Ended December 31
2013 2012
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid $ (281) $ (234)
Guarantee deposits received 27,628 24,430
Guarantee deposits refunded (13,273) (24,430)
Cash dividends paid (402,036) (402,036)
Net cash used in financing activities (387,962) (402,270)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 1,842 (6,604)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (248,508) 678,462
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,384,588 1,706,126
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,136,080 $ 2,384,588
The accompanying notes are an integral part of the consolidated financial statements. (Concluded)
- 47 -
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
Global Unichip Corp. (GUC), a Republic of China (R.O.C.) corporation, was incorporated on January 22,
1998. GUC is engaged mainly in researching, developing, producing, testing and selling of embedded
memory and logic components for various application ICs, cell libraries for various application ICs, and
EDA tools for various application ICs. On November 3, 2006, GUC’s shares were listed on the Taiwan
Stock Exchange (TWSE). The address of its registered office and principal place of business is No. 10
Li-Hsin 6th
Rd., Hsinchu Science Park, Taiwan. GUC together with its consolidated subsidiaries are
hereinafter referred to collectively as the “Company”.
2. THE AUTHORIZATION OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Audit Committee and authorized by the board
of directors for issue on February 13, 2014.
3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRSs)
As of the date that the accompanying consolidated financial statements were authorized for issue, the new,
revised or amended IFRSs, International Accounting Standards (IASs), interpretations and related guidance
in issue but not yet adopted by the Company as well as the effective dates issued by the International
Accounting Standards Board (IASB) are stated as follows; however, the initial adoption of the following
standards and interpretations is still subject to the effective date to be published by the Financial
Supervisory Commission (FSC) except that the standards and interpretations included in the 2013 IFRSs
version should be adopted by the Company starting 2015.
New, Revised or Amended Standards and Interpretations
Effective Date Issued
by IASB (Note 1)
Included in the 2013 IFRSs version
Amendments to IFRSs Improvements to IFRSs 2009 - Amendment to IAS
39
January 1, 2009 or
January 1, 2010
Amendment to IAS 39 Embedded Derivatives Effective for fiscal years
ended on or after
June 30, 2009
Improvements to IFRSs 2010 July 1, 2010 or January 1,
2011
Annual Improvements to IFRSs 2009 - 2011 Cycle January 1, 2013
Amendments to IFRS 1 Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters
July 1, 2010
Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates
for First-time Adopters
July 1, 2011
(Continued)
- 48 -
New, Revised or Amended Standards and Interpretations
Effective Date Issued
by IASB (Note 1)
Amendments to IFRS 1 Government Loans January 1, 2013
Amendment to IFRS 7 Disclosures - Offsetting Financial Assets and
Financial Liabilities
January 1, 2013
Amendment to IFRS 7 Disclosures - Transfers of Financial Assets July 1, 2011
IFRS 10 Consolidated Financial Statements January 1, 2013
IFRS 11 Joint Arrangements January 1, 2013
IFRS 12 Disclosure of Interests in Other Entities January 1, 2013
Amendments to IFRS 10, IFRS 11 and IFRS 12 Consolidated Financial
Statements, Joint Arrangements, and Disclosure of Interests in Other
Entities: Transition Guidance
January 1, 2013
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities January 1, 2014
IFRS 13 Fair Value Measurement January 1, 2013
Amendment to IAS 1 Presentation of Items of Other Comprehensive
Income
July 1, 2012
Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets January 1, 2012
Amendment to IAS 19 Employee Benefits January 1, 2013
Amendment to IAS 27 Separate Financial Statements January 1, 2013
Amendment to IAS 28 Investments in Associates and Joint Ventures January 1, 2013
Amendment to IAS 32 Offsetting of Financial Assets and Financial
Liabilities
January 1, 2014
IFRIC 20 Stripping Costs in the Production Phase of A Surface Mine January 1, 2013
Not included in the 2013 IFRSs version
Annual Improvements to IFRSs 2010 - 2012 Cycle July 1, 2014 (Note 2)
Annual Improvements to IFRSs 2011 - 2013 Cycle July 1, 2014
IFRS 9 Financial Instruments Not yet determined
Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date and
Transition Disclosure
Not yet determined
Amendment to IAS 19 Defined Benefit Plans: Employee Contributions July 1, 2014
Amendment to IAS 36 Recoverable Amount Disclosures for Non-Financial
Assets
January 1, 2014
Amendment to IAS 39 Novation of Derivatives and Continuation of Hedge
Accounting
January 1, 2014
IFRIC 21 Levies January 1, 2014
(Concluded)
Note 1: The aforementioned new, revised or amended standards or interpretations are effective after fiscal
year beginning on or after the effective dates, unless specified otherwise.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions for which the grant date is
on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations for which the
acquisition date is on or after July 1, 2014; the amendment to IFRS 13 is effective immediately;
the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Except for the following items, the Company believes that the adoption of aforementioned new, revised or
amended standards or interpretations will not have a significant effect on the Company’s accounting
policies.
- 49 -
a. IFRS 9 “Financial Instruments”
Under IFRS 9, financial assets will be subsequently measured at either the amortized cost or the fair
value. If the objective of the Company’s business model is to hold the financial asset to collect the
contractual cash flows which are solely for payments of principal and interest on the principal amount
outstanding, such assets are measured at the amortized cost. All other financial assets must be
measured at the fair value through profit or loss as of the balance sheet date.
b. IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 is a standard that requires a broader disclosure of an entity’s interests in subsidiaries, joint
arrangements, associates and unconsolidated entities that enables the users of financial statements to
evaluate the nature of, and risks associated with, the interests in other entities and the effects of those
interests on the entity’s financial assets and liabilities, as well as the involvement of the owners of
noncontrolling interests towards the entity. The Company expects the application of IFRS 12 will
result in more extensive disclosures of interests in other entities in the financial statements.
c. IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair
value measurements.
d. Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendments to IAS 1 introduce a new disclosure terminology for other comprehensive income,
which require additional disclosures in other comprehensive income. The items of other
comprehensive income will be grouped into two categories: (a) items that will not be reclassified
subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when
specific conditions are met. In addition, income tax on items of other comprehensive income is also
required to be allocated on the same basis. The Company expects the aforementioned amendments
will change the Company’s presentation on the statement of comprehensive income.
e. Amendments to IAS 19 “Employee Benefits”
The amendments to IAS 19 change the accounting for defined benefit plans, which require the
Company to recognize changes in defined benefit obligations or assets, to disclose the components of
the defined benefit costs, to eliminate the corridor approach and to accelerate the recognition of past
service cost. According to the amendments, all actuarial gains and losses will be recognized
immediately through other comprehensive income; the past service cost, on the other hand, will be
expensed immediately when it is incurred and no longer amortized over the average period before
becoming vested on a straight-line basis. In addition, the amendment also requires a broader
disclosure in defined benefit plans.
f. Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”
The amendments to IAS 36 clarify that the Company is only required to disclose the recoverable
amount in the year of impairment accrual or reversal. Moreover, if the recoverable amount of
impaired assets is based on fair value less costs of disposal, the Company should also disclose the
discount rate used. The Company expects the aforementioned amendments will result in a broader
disclosure of recoverable amount for non-financial assets.
As of the date that the consolidated financial statements were authorized for issue, the Company
continues in evaluating the impact on its financial position and financial performance as a result of the
initial adoption of the above standards or interpretations. The related impact will be disclosed when
the Company completes the evaluation.
- 50 -
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by Companies in the
ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or
traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their
consolidated financial statements in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers and IFRSs endorsed approved by the FSC. The Company’s
transition to IFRSs was effective on January 1, 2012. Summary for the effect of applying IFRSs to the
consolidated financial statement refers to Note 30.
For the convenience of readers, the accompanying consolidated financial statements have been translated
into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict
between the English version and the original Chinese version or any difference in the interpretation of the
two versions, the Chinese-language consolidated financial statements shall prevail.
Significant accounting policies are summarized as follows:
Statement of Compliance
The accompanying consolidated financial statements have been prepared in conformity with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers, the IFRSs, IASs, interpretations as
well as related guidance translated by the Accounting Research and Development Foundation (ARDF)
endorsed by the FSC with the effective dates.
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial
instruments that are measured at fair values, as explained in the accounting policies below. Historical cost
is generally based on the fair value of the consideration given in exchange for assets.
The opening balance sheet at the date of transition is prepared in accordance with the recognition and
measurement required by First-time Adoption of International Financial Reporting Standards (IFRS 1).
According to IFRS 1, the Company is required to apply each effective IFRS retrospectively in its opening
balance sheet at the date of transition to IFRSs; except for optional exemptions and mandatory exceptions
to such retrospective application provided under IFRS 1. The main optional exemptions the Company
adopted are described in Note 30.
Basis of Consolidation
The basis for the consolidated financial statements
The consolidated financial statements incorporate the financial statements of GUC and entities controlled
by GUC (its subsidiaries). Control is achieved where the Company has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies accord with those used by the Company.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
- 51 -
The subsidiaries in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:
Name of
Investor
Name of Investee
Main Businesses and Products
Establishment
and Operating
Location
Percentage of Ownership
December 31,
2013
December 31,
2012
January 1,
2012
GUC Global Unichip Corp.-NA (GUC-NA) Products consulting, design and
technical support service
U.S.A. 100% 100% 100%
Global Unichip Japan Co., Ltd.
(GUC-Japan)
Products consulting service Japan 100% 100% 100%
Global Unichip Corp. Europe B.V.
(GUC-Europe)
Products consulting service Netherlands 100% 100% 100%
Global Unichip (BVI) Corp.
(GUC-BVI)
Investing activities British Virgin
Islands
100% 100% 100%
GUC-BVI Global Unichip (Shanghai) Company,
Limited (GUC-Shanghai)
Products consulting service Shanghai, China 100% 100% 100%
Foreign Currencies
The financial statements of each individual consolidated entity were expressed in the currency, which
reflected its primary economic environment (functional currency). The functional currency of GUC and
presentation currency of the consolidated financial statements are both New Taiwan Dollars (NT$). In
preparing the consolidated financial statement, the operating results and financial positions of each
consolidated entity are translated into NT$.
In preparing the financial statements of each individual consolidated entity, transactions in currencies other
than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing
at the dates of the transactions. At the end of each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that date. Such exchange differences are
recognized in profit or loss in the year in which they arise. Non-monetary items measured at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair
value was determined. Exchange differences on the retranslation of non-monetary items are included in
profit or loss for the year except for exchange differences on the retranslation of non-monetary items in
respect of which gains and losses are recognized directly in other comprehensive income, in which case, the
exchange differences are also recognized directly in other comprehensive income. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not retranslated.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company’s
foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting
period. Income and expense items are translated at the average exchange rates for the year. Exchange
differences arising, if any, are recognized in other comprehensive income and accumulated in equity.
Classification of Current and Noncurrent Assets and Liabilities
Current assets include cash and assets expected to be converted to cash, sold or consumed within one year
from the balance sheet date. Current liabilities are obligations expected to be settled within one year from
the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and
liabilities, respectively.
Cash Equivalents
Cash equivalents consist of highly liquid’s short term investments that are readily convertible to known
amounts of cash and are subjected to an insignificant risk of changes in value.
Financial Instruments
Financial assets and liabilities shall be recognized when the Company becomes a party to the contractual
provisions of the instruments.
- 52 -
Financial assets and liabilities are initially recognized at fair values. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognized immediately in profit or loss.
Financial Assets
Financial assets are classified as available-for-sale financial assets and loans and receivables. Thus are
depended at the time of initial recognition’s characteristic and purpose. Convention trading of financial
assets are recognized and derecognized on a settlement date basis. Convention trading purchases or sales
of financial assets require delivery of assets within the time frame established by regulation or convention
in the marketplace.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives financial assets that are either designated as
available-for-sale or not classified as (a) loans and receivables, (b) held-to-maturity financial assets or (c)
financial assets at fair value through profit or loss (FVTPL).
Open-end mutual funds held by the Company that are traded in an active market are classified as
available-for-sale financial assets and are stated at fair value at the end of each reporting period. When the
investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized
in other comprehensive income is reclassified to profit or loss.
Fair value of open-end mutual funds is determined by the financial institution using the net assets value at
the balance sheet date.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables including cash and cash equivalents, notes and
accounts receivable (including related parties) and other receivables are measured at amortized cost using
the effective interest method less any impairment, except for those receivables with immaterial discounted
effect.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been affected.
For financial assets carried at amortized cost, such as trade receivables, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. The Company
assesses the collectability of receivables by evaluating the current financial condition of customers,
historical experience and by performing account aging analysis. In the aging analysis, poor credit quality
customers with balances past due for over 90 days should all be recognized an allowance for doubtful
receivable.
- 53 -
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced by using an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the allowance
account.
Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the
financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity.
On derecognition of a financial asset in its entirety, the difference between the financial asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss that had
been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.
Inventories
Inventories consist of raw materials, supplies, finished goods and work-in-process. Inventories are stated
at the lower of cost or net realizable value. Inventory write-downs are made on an item-by-item basis,
except where it may be appropriate to group similar or related items. Net realizable value is the estimated
selling price of inventories less all estimated costs of completion and necessary selling costs. Inventories
are recorded at weighted-average cost on the balance sheet date.
Property, Plant and Equipment and Assets Leased to Others
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment. Costs include any incremental costs that are directly attributable to the construction or
acquisition of the item of property, plant and equipment.
Depreciation is recognized so as to write off the cost of the assets less their residual values over their useful
lives, and it is computed using the straight-line method over the following estimated useful lives:
Buildings 50 years
Machinery and equipment 4 to 7 years
Research and development equipment 3 to 5 years
Transportation equipment 5 years
Office equipment 3 to 5 years
Miscellaneous equipment 2 to 10 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimates accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal
or retirement of an item of property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognized in profit or loss.
Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee, other than finance leases are classified as operating lease.
Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease.
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
- 54 -
Intangible Assets
Intangible assets are limited in a certain useful life. The initial book value is recorded on the purchasing
cost itself. After that the subsequent book value is measured by cost less accumulated amortization and
accumulated impairment losses. Amortization is recognized using the straight-line method over the
following estimated useful lives:
Software 2 to 5 years
Technology license fees The term of the technology transfer contract
Patents Economic lives of the patents
The estimated useful life and amortization method are reviewed at the end of each reporting period, with
the effect of any changes in estimate being accounted for on a prospective basis.
Expenditure on research activities is recognized as an expense when incurred. An internally-generated
intangible asset arising from development activities is capitalized and then amortized on a straight-line
basis over its useful life if the recognition criteria for an intangible asset have been met; otherwise, the
development expenditure is recognized as an expense when incurred.
Impairment of Tangible and Intangible Assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an
individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are
also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell or value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount,
the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An
impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognized immediately in profit or loss.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is also reduced
for estimated customer returns, rebates and other similar allowances.
- 55 -
Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which
time all the following conditions are satisfied:
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Company retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the Company; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of Non-Recurring Engineering (NRE) services
Revenue from a contract to provide NRE services is recognized by reference to the stage of completion of
the contract.
Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow
to the Company and the amount of income can be measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at the effective interest rate applicable.
Retirement Benefits
For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense
when the employees have rendered service entitling them to the contribution. For defined benefit
retirement plans, the cost of providing benefit is recognized based on actuarial calculations.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected
unit credit method, with actuarial valuations being carried out at the year end. Actuarial gains and losses
are recognized as other comprehensive income in the year.
Share-based Payment Arrangements
The Company elected to take the optional exemption under IFRS 1 for the share-based payment
transactions granted and vested before the date of transition to IFRSs. There were no stock options
granted prior to but unvested at the date of transition. Please refer to the description in Note 30 b.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries) at a rate
of 10% is expensed in the year the shareholders approved the appropriation of earnings which is the year
subsequent to the year the earnings are generated.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
- 56 -
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities
in the consolidated financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible temporary differences, net operating loss carry
forwards and unused R&D tax credits to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences in subsidiaries, except where the
Company is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognized to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered. The deferred tax assets which originally not recognized is also reviewed at the
end of each reporting period and increased to the extent that it is probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the manner in which the Company expects, at
the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax
are also recognized in other comprehensive income or directly in equity, respectively.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND
UNCERTAINTY
In the application of the Company’s accounting policies, which are described in Note 4, the directors are
required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that year,
or in the period of the revision and future periods if the revision affects both current and future years.
The following are the critical judgments, apart from those involving estimations, that the directors have
made in the process of applying the Company’s accounting policies and that have the most significant
effect on the amounts recognized in the consolidated financial statements.
- 57 -
Impairment of Account Receivable
Account receivables are considered to be impaired when there is objective evidence of uncollectability; the
Company will consider the estimated future cash flows to determine the impairment. The Company
assesses the collectability of receivables by evaluating the current financial condition of customers,
historical experience and by performing account aging analysis; the amount of impairment loss is the
difference between the assets carrying amount and the present value of estimated future cash flows,
discounted at the financial assets original effective interest rate. It might be a critical impairment loss if
the actual future cash flows are less than estimated future cash flows. In the aging analysis, poor credit
quality customers with balances past due for over 90 days should all be recognized an allowance for
doubtful receivable.
Realization of Deferred Income Tax Assets
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be
available against which those deferred tax assets can be utilized. Assessment of the realization of the
deferred tax assets requires the Company’s subjective judgment and estimation, including the future
revenue growth and profitability, tax holidays, the amount of tax credits that can be utilized and feasible tax
planning strategies. Any changes in the global economic environment, the industry trends and relevant
laws and regulations could result in significant adjustments to deferred tax assets.
Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Company has to determine and
estimate to the net realizable value of inventory at the end of each reporting period.
Due to the rapid technological changes, the Company estimates the net realizable value of inventory for
obsolescence and unmarketable items at the end of reporting period and then writes down the cost of
inventories to net realizable value. The net realizable value of the inventory is mainly determined based
on assumptions of future demand within a specific time horizon.
6. NOTES AND ACCOUNTS RECEIVABLE, NET
December 31,
2013
December 31,
2012
January 1,
2012
Notes and accounts receivable $ 808,965 $ 1,057,198 $ 1,367,608
Allowance for doubtful receivables (21,382) (19,405) -
Notes and accounts receivable, net $ 787,583 $ 1,037,793 $ 1,367,608
In principle, the payment term granted to customers is due 30 days from the invoice date or 30 days from
the end of the month the invoice is issued. The Company assesses the collectability of receivables by
evaluating the current financial condition of customers, historical experience and by performing account
aging analysis. In the aging analysis, poor credit quality customers with balances past due for over 90
days, should all be recognized an allowance for doubtful receivable.
Except for those impaired, notes and accounts receivable, aging analysis at the end of the reporting period is
summarized in the following table. Notes and accounts receivable include amounts that are past due but
for which the Company has not recognized an allowance for doubtful receivables after the assessment since
there has not been a significant change in the credit quality of its customers and the amounts are still
considered recoverable.
- 58 -
Aging analysis of notes and accounts receivable, net
December 31,
2013
December 31,
2012
January 1,
2012
Neither past due nor impaired $ 507,885 $ 762,242 $ 1,150,986
Past due but not impaired
Past due within 1-30 days 80,138 197,580 133,742
Past due within 31-60 days 80,832 77,971 71,574
Past due within 61-90 days 9,965 - 9,075
Past due over 91 days 108,763 - 2,231
$ 787,583 $ 1,037,793 $ 1,367,608
Movements of the allowance for doubtful receivables
Years Ended December 31
2013 2012
Balance, beginning of year $ 19,405 $ -
Provision 1,977 19,405
Balance, end of the year $ 21,382 $ 19,405
Aging analysis of accounts receivable that is individually determined to be impaired
December 31,
2013
December 31,
2012
January 1,
2012
Past due 121-150 days $ - $ 2,499 $ -
Past due 151-180 days 4,952 - -
Past due over 181 days 16,430 16,906 -
$ 21,382 $ 19,405 $ -
7. INVENTORIES
December 31,
2013
December 31,
2012
January 1,
2012
Finished goods $ 42,767 $ 77,887 $ 292,693
Work in process 483,493 363,454 376,858
Raw materials 163,151 115,232 153,241
$ 689,411 $ 556,573 $ 822,792
As of December 31, 2013 and 2012 and January 1, 2012, the allowance for loss on inventory was
NT$101,795 thousand and NT$93,349 thousand and NT$32,306 thousand, respectively.
- 59 -
Inventories in related to income and expenses were included in the operating cost as follows:
Years Ended December 31
2013 2012
Write-down of inventory $ (31,617) $ (65,507)
Revenue from sale of scraps $ 2,508 $ 5,244
8. PROPERTY, PLANT AND EQUIPMENT
December 31,
2013
December 31,
2012
January 1,
2012
Buildings $ 198,190 $ 202,956 $ 207,722
Machinery and equipment 1,041 1,306 1,264
Research and development equipment 76,852 87,467 78,975
Transportation equipment 2,010 3,275 4,984
Office equipment 1,737 2,746 2,541
Miscellaneous equipment 52,234 71,254 71,420
Unfinished construction and equipment under
acceptance
- - 303
$ 332,064 $ 369,004 $ 367,209
Year Ended December 31, 2013
Buildings
Machinery and
Equipment
Research and
Development
Equipment
Transportation
Equipment
Office
Equipment
Miscellaneous
Equipment Total
Cost
Balance, beginning of year $ 242,923 $ 19,416 $ 426,761 $ 11,376 $ 20,097 $ 230,235 $ 950,808
Additions - - 28,237 2,180 - 6,370 36,787
Disposals - - (2,233 ) (4,120 ) - (1,735 ) (8,088 )
Effect of exchange rate changes - - 36 - 113 (134 ) 15
Balance, end of year 242,923 19,416 452,801 9,436 20,210 234,736 979,522
Accumulated depreciation
Balance, beginning of year 39,967 18,110 339,294 8,101 17,351 158,981 581,804
Additions 4,766 265 38,881 1,321 1,053 24,858 71,144
Disposals - - (2,233 ) (1,996 ) - (1,258 ) (5,487 )
Effect of exchange rate changes - - 7 - 69 (79 ) (3 )
Balance, end of year 44,733 18,375 375,949 7,426 18,473 182,502 647,458
Net book value, end of year $ 198,190 $ 1,041 $ 76,852 $ 2,010 $ 1,737 $ 52,234 $ 332,064
Year Ended December 31, 2012
Buildings
Machinery and
Equipment
Research and
Development
Equipment
Transportation
Equipment
Office
Equipment
Miscellaneous
Equipment
Unfinished
construction
and equipment
under
acceptance Total
Cost
Balance, beginning of
year
$ 242,923
$ 19,113
$ 375,672
$ 11,376
$ 19,776
$ 209,403 $ 303
$ 878,566
Additions - 303 52,236 - 1,246 28,177 387 82,349
Disposals - - (1,513 ) - (1,127 ) (6,690 ) - (9,330 )
Reclassification - - 387 - 296 - (683 ) -
Effect of exchange rate
changes
-
-
(21 )
-
(94 )
(655 ) (7 )
(777 )
Balance, end of year 242,923 19,416 426,761 11,376 20,097 230,235 - 950,808
Accumulated depreciation
Balance, beginning of
year
35,201
17,849
296,697
6,392
17,235
137,983 -
511,357
Additions 4,766 261 44,113 1,709 1,288 28,051 - 80,188
Disposals - - (1,513 ) - (1,124 ) (6,620 ) - (9,257 )
Effect of exchange rate
changes
-
-
(3 )
-
(48 )
(433 ) -
(484 )
Balance, end of year 39,967 18,110 339,294 8,101 17,351 158,981 - 581,804
Net book value, end of year $ 202,956 $ 1,306 $ 87,467 $ 3,275 $ 2,746 $ 71,254 $ - $ 369,004
The significant part of the Company’s buildings includes main plants, mechanical and electrical power
equipment. The related depreciation is calculated using the estimated useful lives of 50 years.
- 60 -
9. INTANGIBLE ASSETS
December 31,
2013
December 31,
2012
January 1,
2012
Software $ 219,004 $ 138,898 $ 208,597
Technology license fees 22,292 33,816 56,106
Patents 236 265 293
$ 241,532 $ 172,979 $ 264,996
Year Ended December 31, 2013
Software
Technology
License Fees Patents Total
Cost
Balance, beginning of year $ 478,028 $ 140,876 $ 519 $ 619,423
Additions 212,260 10,230 - 222,490
Disposals (200,191) (6,000) - (206,191)
Balance, end of year 490,097 145,106 519 635,722
Accumulated amortization
Balance, beginning of year 339,130 107,060 254 446,444
Additions 132,154 21,754 29 153,937
Disposals (200,191) (6,000) - (206,191)
Balance, end of year 271,093 122,814 283 394,190
$ 219,004 $ 22,292 $ 236 $ 241,532
Year Ended December 31, 2012
Software
Technology
License Fees Patents Total
Cost
Balance, beginning of year $ 457,025 $ 234,266 $ 519 $ 691,810
Additions 61,376 - - 61,376
Disposals (40,373) (93,390) - (133,763)
Balance, end of year 478,028 140,876 519 619,423
Accumulated amortization
Balance, beginning of year 248,428 178,160 226 426,814
Additions 131,075 22,290 28 153,393
Disposals (40,373) (93,390) - (133,763)
Balance, end of year 339,130 107,060 254 446,444
$ 138,898 $ 33,816 $ 265 $ 172,979
- 61 -
10. OTHER CURRENT ASSETS
December 31,
2013
December 31,
2012
January 1,
2012
Prepaid license fees $ 147,643 $ 180,960 $ 195,367
Tax receivable 48,456 40,048 27,414
Prepaid expenses 18,208 27,093 24,968
Temporary payments 12,022 13,867 17,891
Prepaid income tax 8,748 5,575 3,120
$ 235,077 $ 267,543 $ 268,760
11. OTHER LONG-TERM PAYABLES
December 31,
2013
December 31,
2012
January 1,
2012
License fees payable $ 154,075 $ 62,662 $ 123,183
Current portion (classified under accrued
expenses and other current liabilities)
$ 85,668 $ 45,681 $ 93,311
Noncurrent portion 68,407 16,981 29,872
$ 154,075 $ 62,662 $ 123,183
The payables were primarily attributable to several agreements that GUC entered into for certain
technology license and software.
12. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant
to the Act, GUC makes monthly contributions equal to 6% of each employee’s monthly salary to
employees’ pension accounts. Furthermore, GUC-Shanghai is required by local regulations to make
monthly contributions at certain percentages of the salary of their employees. GUC-Japan makes
yearly contributions as pension cost. Accordingly, the Company recognized expenses of NT$29,752
thousand and NT$28,961 thousand in the consolidated statements of comprehensive income for the
years ended December 31, 2013 and 2012, respectively.
b. Defined benefit plans
GUC has a defined benefit plan under the Labor Standards Act, which provides benefits based on an
employee’s length of service and average monthly salary of the last six months prior to retirement.
GUC contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund),
which is administered by the Labor Pension Fund Supervisory Committee (the Committee) and
deposited in the Committee’s name in the Bank of Taiwan.
GUC adopted projected unit credit method to measure the present value of the defined benefit
obligation, current service costs and prior service costs.
- 62 -
GUC adopted the pension cost rate from the actuarial valuation as of December 31, 2012 and January 1,
2012 to determine and recognize pension expenses in General and administrative expenses of NT$823
thousand and NT$710 thousand in the consolidated statements of comprehensive income for the year
ended December 31, 2013 and 2012, respectively.
The principal assumptions of the actuarial valuation were as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Discount rate 2.00% 1.50% 1.75%
Expected rate of future salary increase 3.00% 3.00% 3.00%
Expected rate of return on plan assets 1.75% 1.75% 2.00%
The pension cost of the defined benefit plans recognized in comprehensive income statement of GUC
was as follows:
Years Ended December 31
2013 2012
Recognized in profit or loss
Current service cost $ 487 $ 382
Interest cost 830 851
Expected return on plan assets (494) (523)
$ 823 $ 710
For the years ended December 31, 2013 and 2012, the actuarial gains and losses recognized in other
comprehensive income were NT$43 thousand and losses NT$5,717 thousand, respectively. As of
December 31, 2013 and 2012, the accumulated actuarial losses recognized in other comprehensive
income were NT$5,674 thousand and NT$5,717 thousand, respectively.
The amounts arising from the defined benefit obligation of GUC under GUC’s financial position were
as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Present value of defined benefit obligation $ 55,468 $ 55,402 $ 48,691
Fair value of plan assets (28,328) (27,201) (25,051)
Present value of unfunded defined benefit
obligation
$ 27,140 $ 28,201 $ 23,640
Movements in the present value of the defined benefit obligation were as follows:
Years Ended December 31
2013 2012
Balance, beginning of year $ 55,402 $ 48,691
Current service cost 487 382
Interest cost 830 851
Benefits paid (1,079) -
Actuarial losses (gains) (172) 5,478
Balance, end of year $ 55,468 $ 55,402
- 63 -
Movements in the fair value of the plan assets were as follows:
Years Ended December 31
2013 2012
Balance, beginning of year $ 27,201 $ 25,051
Expected return on plan assets 494 523
Contributions from employer 1,841 1,866
Benefits paid (1,079) -
Actuarial losses (129) (239)
Balance, end of year $ 28,328 $ 27,201
The percentages of the fair value of the plan assets by major categories at the end of reporting period
were as follows:
Fair Value of Plan Assets (%)
December 31,
2013
December 31,
2012
January 1,
2012
Cash 23 25 24
Equity instruments 45 38 41
Debt instruments 32 37 35
100 100 100
The overall expected rate of return on plan assets was based on the historical return trends, analysts’
predictions of the market over the life of related obligation, reference to the performance of the Funds
operated by the Committee and the consideration of the effect of the provision that the minimum return
should not be less than the average interest rate of a two-year time deposit published by the local banks.
GUC elects to disclose the historical information of experience adjustments from the adoption of IFRSs,
which is as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Present value of defined benefit obligation $ 55,468 $ 55,402 $ 48,691
Fair value of plan assets (28,328) (27,201) (25,051)
Present value of unfunded defined benefit
obligation
$ 27,140 $ 28,201 $ 23,640
Experience adjustments on plan liabilities $ (83) $ (1,462) $ -
Experience adjustments on plan assets $ (129) $ (239) $ -
GUC expects to make contributions of NT$1,910 thousand and NT$1,841 thousand to the defined
benefit plans in the next year from December 31, 2013 and 2012, respectively.
- 64 -
13. EQUITY
a. Share capital
December 31,
2013
December 31,
2012
January 1,
2012
Authorized $ 1,500,000 $ 1,500,000 $ 1,500,000
Issued $ 1,340,119 $ 1,340,119 $ 1,340,119
As of December 31, 2013, December 31, 2012 and January 1, 2012, the authorized shares are 150,000
thousand shares, with par value of $10 per share is entitled the right to vote and to receive dividends;
issued and paid shares were 134,011 thousand shares.
b. Capital surplus
December 31,
2013
December 31,
2012
January 1,
2012
Additional paid-in capital $ 101,945 $ 503,981 $ 503,981
Donations 49,021 49,021 49,021
From merger 16,621 16,621 16,621
$ 167,587 $ 569,623 $ 569,623
Under the Company Law, the capital surplus generated from donations and the excess of the issuance
price over the par value of capital stock (including the stock issued for new capital and mergers) may be
used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be
appropriated as cash dividends or stock dividends, which are limited to a certain percentage of GUC’s
paid-in capital under capital surplus.
c. Retained earnings and dividend policy
GUC’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, GUC
shall first offset its losses in previous years and then set aside the following items accordingly:
1) Legal reserve at 10% of the remaining profit;
2) Special reserve in accordance with the resolution in the shareholders’ meeting;
3) Bonus to directors of not more than 2% of the remainder after setting aside 1) and 2) above.
Directors who also serve as executive officers of GUC are not entitled to receive the bonus to
directors;
4) Bonus to employees of not less than 2% of the remainder after setting aside 1) and 2) above. GUC
may issue stock bonuses to employees of an affiliated company upon meeting the conditions set by
the Board of Directors;
5) Any balance remaining shall be allocated according to the resolution in the shareholders’ meeting.
GUC at present is in a business growing stage. The proportion of dividends that will be paid in cash
will depend on future expansion plans and cash needs. For profit distribution, the proportion of cash
dividends shall not be lower than 10% of the total dividends.
- 65 -
The profit sharing to employees, which represents both 11.25% of net income, and the bonus to
directors, which represents 0.44% and 0.91% of net income (after deducting the legal reserve and
special reserve) were recognized for the years ended December 31, 2013 and 2012, respectively. If the
actual amounts subsequently resolved by the shareholders differ from the proposed amounts, the
differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If
bonus shares are resolved to be distributed to employees, the number of shares is determined by
dividing the amount of profit sharing by the closing price (after considering the effect of cash and stock
dividends) of the shares of the day preceding the shareholders’ meeting.
The appropriation for legal reserve shall be made until the reserve equals GUC’s paid-in capital. The
reserve may be used to offset a deficit, or be distributed as dividends and bonuses to the extent of the
portion in excess of 25% of the paid-in capital if GUC incurs no loss.
A special reserve equivalent to the net debit balance of other components of shareholders’ equity such
as exchange differences on translation of foreign operations, shall be made from unappropriated
earnings. Any special reserve appropriated may be reversed to the extent that the net debit balance
reverses.
The appropriations of earnings for 2012 and 2011 had been approved in GUC’s shareholders’ meetings
held on June 20, 2013 and May 17, 2012, respectively. The appropriations and dividends per share
were as follows:
Appropriation of Earnings
Dividends Per Share
(NT$)
For Fiscal For Fiscal For Fiscal For Fiscal
Year 2012 Year 2011 Year 2012 Year 2011
Legal reserve $ 61,237 $ 52,741
Provision (reversal) of special reserve 9,945 (4,770)
Cash dividends to shareholders - 402,036 $ - $3.00
$ 71,182 $ 450,007
GUC’s Board of Directors resolved to appropriate cash dividend of NT$3 per share by using additional
paid-in capital under capital surplus, for a total amount of NT$402,036 thousand on June 20, 2013.
GUC’s profit sharing to employees and bonus to directors that were all paid in cash in the amounts of
NT$68,889 thousand and NT$4,906 thousand, respectively, for 2012, and GUC’s profit sharing to
employees and bonus to directors that were all paid in cash in the amounts of NT$59,328 thousand and
NT$5,039 thousand, respectively, for 2011 had been approved in the shareholders’ meeting held on
June 20, 2013 and May 17, 2012, respectively. The resolved amounts of profit sharing to employees
to be paid in cash and bonus to directors were consistent with the resolutions in the meeting of the
Board of Directors held on February 7, 2013 and February 16, 2012, respectively, and same amounts
had been charged against earnings of 2012 and 2011, respectively.
The appropriations of earnings, payment of profit sharing to employees and bonus to members of the
Board of Directors for the year ended December 31, 2012 approved by Shareholders of GUC were
based on the financial statements for the year ended December 31, 2012 prepared under the R.O.C.
GAAP and in accordance with the Guidelines Governing the Preparation of Financial Reports by
Securities Issuers issued by the FSC before amendment.
- 66 -
GUC’s appropriations of earnings for 2013 had been approved in the meeting of the Board of Directors
held on February 13, 2014. The appropriations and dividends per share were as follows:
Appropriation of
Earnings
For Fiscal Year 2013
Legal reserve $ 28,920
Reversal of special reserve (3,975)
Cash dividends to shareholders (Dividends NT$1.97222 per share) 264,302
$ 289,247
GUC’s Board of Directors resolved to appropriate cash dividends NT$1.02778 per share by using
additional paid-in capital and donations of capital surplus for a total amount of NT$137,734 thousand.
GUC’s Board of Directors also resolved to appropriate profit sharing to employees and bonus to
directors which were all paid in cash in the amounts of NT$32,528 thousand and NT$1,166 thousand
for 2013, respectively. There is no difference between the aforementioned resolved amounts and the
amounts charged against earnings of 2013.
The appropriations of earnings, profit sharing to employees and bonus to directors for 2013 are to be
resolved in the GUC shareholders meeting which is expected to be held on May 29, 2014.
The information about appropriations of GUC’s profit sharing to employees and bonus to directors is
available at the Market Observation Post System website.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Company.
d. Others
Changes in foreign currency translation reserve were as follows:
Years Ended December 31
2013 2012
Balance, beginning of year $ (7,804) $ (393)
Exchange differences on translation of foreign operations 1,441 (7,411)
Balance, end of period $ (6,363) $ (7,804)
The exchange differences arising from the translation of foreign operation’s net assets from its
functional currency to the Company’s presentation currency are recognized directly in other
comprehensive income and also accumulated in the foreign currency translation reserve.
- 67 -
14. SHARE-BASED PAYMENT
GUC elected to take the optional exemption from applying IFRS 2 retrospectively for shared-based
payment transactions granted and vested before January 1, 2012. The plans are described as follows.
GUC’s 2007 Employee Stock Option Plan was approved by the SFB on November 28, 2007 to grant a
maximum of 1,999 options with each option eligible to subscribe for one thousand common shares when
exercisable. The options may be granted to qualified employees of GUC or any of its subsidiaries. The
options of the GUC 2007 Plan are valid for six years and are exercisable at certain percentages subsequent
to the second anniversary of the grant date. Stock options of the plans that had never been granted or had
been granted but subsequently canceled had expired as of December 31, 2013.
Information about GUC’s outstanding options was as follows:
Weighted-
average
Number of Exercise Price
Options (NT$)
Year ended December 31, 2013
Balance, beginning of year 1,053 $175.00
Options canceled (1,053) 175.00
Balance, end of year - -
Year ended December 31, 2012
Balance, beginning of year 1,124 $175.00
Options canceled (71) 175.00
Balance, end of year 1,053 175.00
The number of outstanding options and the exercise prices had been adjusted to reflect the distribution of
earnings by GUC in accordance with the plans.
Information about GUC’s outstanding and exercisable options was as follows:
December 31, 2013 December 31, 2012 January 1, 2012
Weighted-average Weighted-average Weighted-average
Range of
Exercise Price
Remaining
Contractual Life
Range of
Exercise Price
Remaining
Contractual Life
Range of
Exercise Price
Remaining
Contractual Life
(NT$) (Years) (NT$) (Years) (NT$) (Years)
$175.00 - $175.00 1.00 $175.00 2.00
15. OPERATING REVENUE
The analysis of the Company’s operating revenue was as follows:
Years Ended December 31
2013 2012
Operating revenue from sale of goods $ 4,577,406 $ 7,055,314
Operating revenue from NRE service 1,599,335 1,958,446
$ 6,176,741 $ 9,013,760
- 68 -
16. OTHER INCOME
Years Ended December 31
2013 2012
Interest income
Bank deposits $ 14,446 $ 11,243
Government grants 1,513 727
Past due advance receipts transferred to income 885 648
Tax refunds income 701 -
Income (expenses) of rental assets
Rental income 639 663
Depreciation of rental assets (4) (4)
Insurance claims income 536 -
Other income 1,402 717
$ 20,118 $ 13,994
17. OTHER GAINS AND LOSSES
Years Ended December 31
2013 2012
Foreign exchange gain (loss), net $ 9,400 $ (17,600)
Gain on disposal of available-for-sale financial assets 3,279 3,379
Gain (loss) on disposal of property, plant and equipment, net (1,182) 363
Other losses - (3,493)
$ 11,497 $ (17,351)
18. FINANCE COSTS
Years Ended December 31
2013 2012
Interest expense
Bank loans $ (281) $ (234)
19. INCOME TAX
a. Income tax expense recognized in profit or loss
Income tax expense consisted of the following:
Year Ended December 31
2013 2012
Current income tax
Current tax expense recognized for the current period $ 79,745 $ 86,129
Income tax adjustments on prior years (944) 1,310
78,801 87,439
(Continued)
- 69 -
Year Ended December 31
2013 2012
Temporary differences $ (44,894) $ (19,060)
Income tax credits 25,271 24,397
(19,623) 5,337
Income tax expense recognized in profit or loss $ 59,178 $ 92,776
(Concluded)
A reconciliation of income before income tax and income tax expense recognized in profit or loss was
as follows:
Years Ended December 31
2013 2012
Income before tax $ 348,382 $ 706,161
Income tax expense at the statutory rate $ 62,848 $ 122,958
Tax effect of adjusting items:
Nondeductible items in determining taxable income 2,588 171
Investment tax credits used (46,259) (43,266)
Additional income tax on unappropriated earnings 54,119 7,740
Remeasurement of investment tax credits (12,714) 5,314
Remeasurement of operating loss carry forwards (460) (1,451)
Income tax adjustments on prior years (944) 1,310
Income tax expense recognized in profit or loss $ 59,178 $ 92,776
The Company applied a tax rate of 17% for entities subject to the Income Tax Law of the Republic of
China; for other jurisdictions, the Company measures taxes by using the applicable tax rate for each
individual jurisdiction.
b. Deferred income tax balance
The analysis of deferred income tax assets and liabilities in the consolidated balance sheets was as
follows:
December 31,
2013
December 31,
2012
January 1,
2012
Deferred income tax assets
Investment tax credits $ - $ 25,169 $ 51,017
Temporary differences
Allowance for sales discounts 32,769 470 -
Write-down of inventory 21,244 15,869 5,880
Share of loss of subsidiaries accounted for
using equity method
15,552 6,817 1,729
Unrealized foreign exchange loss (gain) 3,661 4,716 2,245
Allowance for doubtful receivables 1,932 1,452 -
Others 1,195 1,083 636
Operating loss carry forwards 1,441 1,451 -
$ 77,794 $ 57,027 $ 61,507
(Continued)
- 70 -
December 31,
2013
December 31,
2012
January 1,
2012
Deferred income tax liabilities
Temporary differences
Share of profit of subsidiaries accounted
for using equity method
$ (8,095) $ (7,071) $ (6,214)
(Concluded)
Movements of deferred income tax assets and deferred tax liabilities were as follows:
Year ended December 31, 2013
Balance,
Beginning
of Year
Recognized in
Profit or Loss
Effect of
Exchange Rate
Changes Balance,
End of Year
Deferred income tax assets
Investment tax credits $ 25,169 $ (25,169) $ - $ -
Temporary differences
Allowance for sales
discounts
470 32,299 - 32,769
Write-down of inventory 15,869 5,375 - 21,244
Share of loss of subsidiaries
accounted for using equity
method
6,817 8,735 - 15,552
Unrealized foreign exchange
loss (gain)
4,716 (1,055) - 3,661
Allowance for doubtful
receivables
1,452 480 - 1,932
Others 1,083 83 29 1,195
Operating loss carry forwards 1,451 (101) 91 1,441
$ 57,027 $ 20,647 $ 120 $ 77,794
Year ended December 31, 2012
Balance,
Beginning
of Year
Recognized in
Profit or Loss Balance,
End of Year
Deferred income tax assets
Investment tax credits $ 51,017 $ (25,848) $ 25,169
Temporary differences
Allowance for sales discounts - 470 470
Write-down of inventory 5,880 9,989 15,869
Share of loss of subsidiaries accounted for
using equity method
1,729 5,088 6,817
Unrealized foreign exchange loss (gain) 2,245 2,471 4,716
Allowance for doubtful receivables - 1,452 1,452
Others 636 447 1,083
Operating loss carry forwards - 1,451 1,451
$ 61,507 $ (4,480) $ 57,027
- 71 -
Year ended December 31, 2013
Balance,
Beginning
of Year
Recognized in
Profit or Loss Balance,
End of Year
Deferred income tax liabilities
Temporary differences
Share of profit of subsidiaries accounted
for using equity method
$ (7,071) $ (1,024) $ (8,095)
Year ended December 31, 2012
Balance,
Beginning
of Year
Recognized in
Profit or Loss Balance,
End of Year
Deferred income tax liabilities
Temporary differences
Share of profit of subsidiaries accounted
for using equity method
$ (6,214) $ (857) $ (7,071)
c. The information of unrecognized deferred income tax assets
December 31,
2013
December 31,
2012
January 1,
2012
Investment tax credits - Research and
Development expenditures
$ - $ 126,440 $ 263,706
Deductible temporary differences
Related to investments in subsidiaries $ 1,082 $ 1,525 $ 673
d. Information about unused loss carry forwards and tax exemption
As of December 31, 2013, the profits generated from the following projects of GUC are exempt from
income tax for a five-year period:
Tax-exemption Period
Construction and expansion of 2005 and 2006 2013 to 2017
Construction and expansion of 2007 and 2008 2015 to 2019
As of December 31, 2013, operating loss carry forwards of GUC-Shanghai and GUC-Europe have
imputation credits that can be used until 2017 and 2020 (expiry years), respectively.
e. Unrecognized deferred tax liabilities associated with investments
As of December 31, 2013 and 2012 and January 1, 2012, the taxable temporary differences associated
with investments in subsidiaries for which no deferred income tax liabilities have been recognized were
NT$0, NT$198 thousand and NT$606 thousand, respectively.
- 72 -
f. Integrated income tax information
December 31,
2013
December 31,
2012
January 1,
2012
Balance of the Imputation
Credit Account - GUC $ 125,110 $ 52,368 $ 48,013
The estimated and actual creditable ratio for distribution of GUC’s earnings of 2013 and 2012 were
13.17% and 10.44 %, respectively.
Under Rule No.10204562810 issued by the Ministry of Finance, when calculating the creditable ratio in
the year of first-time adoption of IFRSs, GUC has included the adjustments to retained earnings from
the effect of transition to IFRSs in the accumulated unappropriated earnings.
The imputation credit allocated to shareholders is based on its balance as of the date of the dividend
distribution. The estimated creditable ratio of GUC may change when the actual distribution of the
imputation credit is made.
There was no earnings generated prior to December 31, 1997.
g. Income tax examination
The tax authorities have examined income tax returns of GUC through 2010.
20. EARNINGS PER SHARE
Years Ended December 31
2013 2012
Basic EPS $2.16 $4.58
Diluted EPS $2.15 $4.55
EPS is computed as follows:
Number of
Shares
Amounts (Denominator)
(Numerator) (In Thousands) EPS (NT$)
Year ended December 31, 2013
Basic EPS
Income for the year attributable to common
shareholders
$ 289,204 134,011 $2.16
Effect of dilutive potential common stock - 791
Diluted EPS
Income for the year attributable to common
shareholders (including effect of dilutive
potential common stock)
$ 289,204 134,802 $2.15
(Continued)
- 73 -
Number of
Shares
Amounts (Denominator)
(Numerator) (In Thousands) EPS (NT$)
Year ended December 31, 2012
Basic EPS
Income for the year attributable to common
shareholders
$ 613,385 134,011 $4.58
Effect of dilutive potential common stock - 922
Diluted EPS
Income for the year attributable to common
shareholders (including effect of dilutive
potential common stock)
$ 613,385 134,933 $4.55
(Concluded)
If the Company may settle the bonus to employees by cash or shares, the Company should presume that the
entire amount of the bonus will be settled in shares and the resulting potential shares should be included in
the weighted average number of shares outstanding in the calculation of consolidated diluted EPS, if the
shares have a dilutive effect. The number of shares is estimated by dividing the entire amount of the
bonus by the closing price of the shares at the balance sheet date. The dilutive effect of the potential
shares should be considered until the shares of employee bonus are resolved in the shareholders’ meeting in
the following year.
21. ADDITIONAL INFORMATION OF EXPENSES BY NATURE
Net income included the following items:
Years Ended December 31
2013 2012
a. Depreciation of property, plant and equipment
Recognized in operating costs $ 4,005 $ 3,383
Recognized in operating expenses 67,135 76,801
Recognized in other income – depreciation of rental assets 4 4
$ 71,144 $ 80,188
b. Amortization of intangible assets
Recognized in operating costs $ 309 $ 1,921
Recognized in sales and marketing expenses 838 996
Recognized in general and administrative expenses 14,489 12,968
Recognized in research and development expenses 138,301 137,508
$ 153,937 $ 153,393
c. Research and development costs expensed as occurred $ 827,450 $ 870,368
- 74 -
Years Ended December 31
2013 2012
d. Employee benefits expenses
Post-employment benefits (Note 12)
Defined contribution plans $ 29,752 $ 28,961
Defined benefit plans 823 710
30,575 29,671
Other employee benefits 915,766 966,224
$ 946,341 $ 995,895
Employee benefits expense summarized by function
Recognized in operating costs $ 117,807 $ 135,325
Recognized in operating expenses 828,534 860,570
$ 946,341 $ 995,895
22. CAPITAL MANAGEMENT
The Company manages its capital to ensure that entities in the Company are able to operate sustainability
while maximizing the return to stakeholders through the optimization of the debt and equity balance. The
Company engages in the semiconductor design services, which is closely tied with customer demand.
Business is influenced by the cyclical nature of the semiconductor industry but not significantly. In
consideration of the industry dynamics, the Company manages its capital in a manner to ensure that it has
sufficient and necessary financial resources to fund its working capital needs, capital asset purchases,
research and development activities, dividend payments, debt service requirements and other business
requirements associated with its existing operations over the next 12 months. Through capital
management, the Company is capable of coping with changes in the industry, striving for improvement, and
ultimately creating shareholder value.
23. FINANCIAL INSTRUMENTS
a. Categories of financial instruments
December 31,
2013
December 31,
2012
January 1,
2012
Financial assets
Loans and receivables
Cash and cash equivalents $ 2,136,080 $ 2,384,588 $ 1,706,126
Notes and accounts receivable, net
(including related parties)
787,583 1,064,321 1,367,608
Other financial assets 2,483 941 531
Refundable deposits 1,353 701 1,468
Pledged time deposits 20,000 20,000 20,000
$ 2,947,499 $ 3,470,551 $ 3,095,733
(Continued)
- 75 -
December 31,
2013
December 31,
2012
January 1,
2012
Financial liabilities
Measured at Amortized cost
Accounts payable (including related
parties) $ 349,831 $ 714,248 $ 750,508
Payables to contactors and equipment
suppliers 4,909 15,450 14,726
Accrued expenses and other current
liabilities 93,195 107,865 148,098
Other long-term payables 154,075 62,662 123,183
Guarantee deposits 17,646 2,904 3,027
$ 619,656 $ 903,129 $ 1,039,542
(Concluded)
b. Financial risk management objectives and policies
The Company’s objectives of financial risk management are to manage its exposure to market risk,
credit risk and liquidity risk related to the operating activities. To reduce the related financial risks,
the Company engages in identifying, assessing and avoiding the market uncertainties with the objective
to reduce the potentially adverse effects the market uncertainties may have on its financial performance.
The plans for material treasury activities are reviewed by Audit Committees and Board of Directors in
accordance with procedures required by relevant regulations and internal controls. During the
implementation of such plans, the treasury function must comply with certain treasury procedures that
provide guiding principles for overall financial risk management and segregation of duties.
c. Market risk
Foreign currency risk
The Company’s operating activities are mainly denominated in foreign currency and exposed to foreign
exchange risk. To protect the volatility of future cash flows arising from changes in foreign exchange
rates, the Company maintains a balance of net foreign currency assets and liabilities in hedge.
The Company’s sensitivity analysis to foreign currency risk mainly focuses on the foreign currency
monetary items at the end of the reporting period. Assuming an unfavorable 10% movement in the
levels of foreign exchanges against the New Taiwan dollar, the net income for the years ended
December 31, 2013 and 2012 would have decreased by NT$58,714 thousand and NT$53,261 thousand,
respectively.
d. Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in
financial loss to the Company. The Company is exposed to credit risk from operating activities,
primarily trade receivables, and from investing activities of deposits with banks. Credit risk is
managed separately for business related and financial related exposures. As of the balance sheet date,
the Company’s maximum credit risk exposure is mainly from the carrying amount of financial assets
recognized in the consolidated balance sheet.
- 76 -
Business related credit risk
The Company has considerable trade receivables outstanding with its customers worldwide. A
substantial majority of the Company’s outstanding trade receivables are not covered by collateral or
credit insurance. While the Company has procedures to monitor and limit exposure to credit risk on
trade receivables, there can be no assurance such procedures will effectively limit its credit risk and
avoid losses.
As of December 31, 2013 and 2012, and January 1, 2012, the Company’s ten largest customers
accounted for 75%, 79% and 88% of accounts receivable, respectively. The Company believes the
concentration of credit risk is insignificant for the remaining accounts receivable.
Financial credit risk
The Company monitors and reviews the transaction limit applied to counter parties and adjusts the
concentration limit according to market conditions and the credit standing of the counter parties
regularly. The Company mitigates its exposure by selecting financial institution with well credit.
e. Liquidity risk management
The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its
business requirements. The Company manages its liquidity risk by maintaining adequate cash and
banking facilities.
As of December 31, 2013 and 2012, and January 1, 2012, the unused financing facilities of the
Company amounted to NT$1,599,793 thousand, NT$1,298,779 thousand and NT$1,100,000 thousand,
respectively.
The table below summarizes the maturity profile of the Company’s financial liabilities based on
contractual undiscounted payments.
Non-derivative financial liabilities
Less Than
1 Year 2-3 Years 4+ Years
Total
December 31, 2013
Accounts payable (including related
parties) $ 349,831 $ - $ - $ 349,831
Payables to contactors and
equipment suppliers 4,909 - - 4,909
Accrued expenses and other current
liabilities 93,195 - - 93,195
Other long-term payables 85,668 68,407 - 154,075
Guarantee deposits - 14,666 2,980 17,646
$ 533,603 $ 83,073 $ 2,980 $ 619,656
- 77 -
Non-derivative financial liabilities
Less Than
1 Year 2-3 Years 4+ Years
Total
December 31, 2012
Accounts payable (including related
parties) $ 714,248 $ - $ - $ 714,248
Payables to contactors and
equipment suppliers 15,450 - - 15,450
Accrued expenses and other current
liabilities 107,865 - - 107,865
Other long-term payables 45,681 16,981 - 62,662
Guarantee deposits - - 2,904 2,904
$ 883,244 $ 16,981 $ 2,904 $ 903,129
January 1, 2012
Accounts payable (including related
parties) $ 750,508 $ - $ - $ 750,508
Payables to contactors and
equipment suppliers 14,726 - - 14,726
Accrued expenses and other current
liabilities 148,098 - - 148,098
Other long-term payables 93,311 29,872 - 123,183
Guarantee deposits - - 3,027 3,027
$1,006,643 $ 29,872 $ 3,027 $1,039,542
f. Fair value of financial instruments
The carrying amounts of the Company’s financial assets and financial liabilities measured at amortized
cost at the end of financial reporting period recognized in the consolidated financial statements
approximate their fair values. Further, the Company did not have any financial assets and financial
liabilities measured at fair values at the end of the reporting period.
24. RELATED PARTY TRANSACTIONS
Intercompany balances and transactions between GUC and its subsidiaries, which are related parties of
GUC, have been eliminated upon consolidation; therefore those items are not disclosed in this note. The
following is a summary of transactions between the Company and other related parties:
a. Operating transactions
Operating revenue
from Sale of Goods Purchases
Years Ended December 31 Years Ended December 31
2013 2012 2013 2012
Investor that have significant
influence over the company $ 21,135 $ 53,355 $ 3,126,049 $ 3,856,583
Other related parties 299 90 12,348 42,759
$ 21,434 $ 53,445 $ 3,138,397 $ 3,899,342
- 78 -
Manufacturing Expenses Operating Expenses
Years Ended December 31 Years Ended December 31
2013 2012 2013 2012
Investor that have significant
influence over the company $ 363,939 $ 690,471 $ 1,070 $ 1,555
Other related parties 147,290 32 - -
$ 511,229 $ 690,503 $ 1,070 $ 1,555
The following balances were outstanding at the end of reporting period:
Receivables from Related Parties
December 31,
2013
December 31,
2012
January 1,
2012
Investor that have significant influence over
the company
$ -
$ 26,528 $ -
Other Current Assets
December 31,
2013
December 31,
2012
January 1,
2012
Investor that have significant influence over
the company $ - $ - $ 96
Payables to Related Parties
December 31,
2013
December 31,
2012
January 1,
2012
Investor that have significant influence over
the company $ 157,448 $ 273,256 $ 153,445
Other related parties 17,147 103 3,739
$ 174,595 $ 273,359 $ 157,184
The terms of sales to related parties were not significantly different from those of sales to third parties.
For other related party transactions, the terms of transactions were determined in accordance with
mutual agreement because there were no comparable terms for third-party transactions. The payment
term granted to related parties is due 30 days from the invoice date or 30 days from the end of the
month of when the invoice is issued, while the payment term granted to third parties is due 30 days
from the invoice date or 75 days from the end of the month of when the invoice is issued.
b. Compensation of key management personnel:
The compensation to directors and other key management personnel were as follows:
Year Ended December 31
2013 2012
Short-term employee benefits $ 43,905 $ 50,179
Post-employment benefits 559 585
$ 44,464 $ 50,764
- 79 -
The compensation to directors and other key management personnel were determined by the
Compensation Committee of GUC in accordance with the individual performance and the market
trends.
25. PLEDGED OR MORTGAGED ASSETS
As of December 31, 2013 and 2012, and January 1, 2012, GUC provided pledged time deposits of
NT$20,000 thousand as collateral for customs clearance.
26. OPERATING LEASE ARRANGEMENTS
GUC leases a parcel of land from the Science Park Administration (SPA), and the operating lease
agreement will expire in December 2021. The lease agreement can be renewed upon expiration, and the
SPA can adjust annual rental amounts by lease agreement.
GUC leases office premises located in Taipei, and the lease agreement will expire in March 2017. The
lease agreement can be renewed upon expiration and rental is payable monthly.
GUC-NA leases office premises located in the United States, and the lease agreement will expire in January
2015. The rental is payable monthly. The lease agreement can be renewed and the rental rate can be
adjusted upon expiration.
The Company’s expenses for lease payments were as follows:
Years Ended December 31
2013 2012
Minimum lease payments $ 15,998 $ 10,373
Future minimum lease payments under the above non-cancellable operating leases are as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Not later than 1 year $ 16,341 $ 15,745 $ 10,473
Later than 1 year and not later than 5 years 20,565 34,426 26,887
Later than 5 years 6,344 8,348 10,435
$ 43,250 $ 58,519 $ 47,795
27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
GUC has entered into license agreements with several companies that own intellectual property rights.
According to the agreements, GUC shall pay specific amounts of money to obtain licenses of their
intellectual property rights or shall pay royalties at specific percentages of sales volume of identified
products. Under the agreements, GUC shall pay at least US$1,600 thousand to the counter party in the
period from September 2013 to September 2016.
- 80 -
28. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND
LIABILITIES
The significant foreign-currency financial assets and liabilities were as follows:
(Unit: Foreign Currency in Thousands)
Foreign
Currencies
(In Thousands)
Exchange Rate
(Note)
Carrying
Amount
December 31, 2013
Monetary items of financial assets
USD $ 36,976 29.805 $ 1,102,069
JPY 27,204 0.2839 7,723
Monetary items of financial liabilities
USD 17,512 29.805 521,931
JPY 19,507 0.2839 5,538
December 31, 2012
Monetary items of financial assets
USD 44,665 29.04 1,297,084
JPY 18,095 0.3364 6,087
KRW 122,336 0.02733 3,343
Monetary items of financial liabilities
USD 26,581 29.04 771,905
JPY 8,994 0.3364 3,026
January 1, 2012
Monetary items of financial assets
USD 48,101 30.275 1,456,257
JPY 43,903 0.3906 17,148
RMB 1,191 4.8049 5,724
Monetary items of financial liabilities
USD 26,462 30.275 801,128
JPY 12,596 0.3906 4,920
RMB 767 4.8049 3,688
Note: Exchange rate represents the number of N.T. dollars for which one foreign currency could be
exchanged.
29. OPERATING SEGMENT INFORMATION
The Company operates in individual industry on the basis of how the Company’s chief operating decision
maker regularly reviews information in order to allocate resources and assess performance. The basis for
the measurement of the operating segment profit (loss), assets and liabilities is the same as that for the
preparation of financial statements. Please refer to the consolidated financial statements for the related
operating segment information.
- 81 -
a. Geographic information
Operating Revenue from
External Customer Non-current Assets
Years Ended December 31 December 31,
2013
December 31,
2012
January 1,
2012 2013 2012
United States $ 1,685,261 $ 450,963 $ 2,366 $ 1,771 $ 2,205
Japan 926,245 1,163,405 617 930 943
China 824,588 1,356,069 2,865 1,135 1,998
Taiwan 772,184 2,876,562 567,727 538,114 627,013
Cayman 515,843 598,481 - - -
Korea 498,275 1,307,133 - - -
England 349,329 407,772 - - -
India 266,884 447,076 - - -
Others 338,132 406,299 21 33 46
$ 6,176,741 $ 9,013,760 $ 573,596 $ 541,983 $ 632,205
The geographic information is presented by billed regions. Non-current assets include property, plant
and equipment and intangible assets, but exclude financial instrument and deferred income tax assets.
b. Production information
Years Ended December 31
Production 2013 2012
ASIC and wafer product $ 4,577,406 $ 7,055,314
NRE 1,486,868 1,870,378
Multiple-Project Wafer 46,696 26,608
Others 65,771 61,460
$ 6,176,741 $ 9,013,760
c. Major customers representing at least 10% of operating revenue
Years Ended December 31
2013 2012
Amount % Amount %
Customer AM $ 1,364,295 22 (Note) -
Customer M (Note) - $ 3,168,496 35
Note: The customer did not exceed 10% of operating revenue in the current year.
30. FIRST-TIME ADOPTION OF IFRSs
a. Basis of preparation for financial information under IFRSs
The Company prepares the consolidated financial statements for the years ended December 31, 2013
under IFRSs. As the basis of the preparation, the Company not only follows the significant accounting
policies stated in Note 4 but also applies to the regulations under IFRS 1.
- 82 -
b. Exemptions from IFRS 1
IFRS 1 establishes the procedures for the Company’s first consolidated financial statements prepared in
accordance with IFRSs. According to IFRS 1, the Company is required to determine the accounting
policies under IFRSs and retrospectively apply those accounting policies in its opening balance sheet at
the date of transition to IFRSs; except for optional exemptions and mandatory exceptions to such
retrospective application provided under IFRS 1. The main optional exemptions the Company
adopted are summarized as follows:
1) Deemed cost. The Company did not measure the cost of property, plant and equipment or
intangible assets at their fair value as of January 1, 2012. The cost of property, plant and
equipment and intangible assets has been calculated according to the IFRS Cost Model.
2) Employee benefits. The Company elected to recognize all cumulative actuarial gains and losses in
retained earnings as of January 1, 2012. In addition, the Company elected to apply the exemption
disclosure requirement provided by IFRS 1, in which the amounts of present value of defined
benefit obligations, the fair value of plan assets, the surplus or deficit in the plan and the experience
adjustments are determined for each accounting period prospectively from the transition date.
3) Share-based payment. The Company elected to take the optional exemption from applying IFRS 2
“Share-based Payment” retrospectively for the shared-based payment transactions granted and
vested before January 1, 2012.
c. Effect of transition to IFRSs
After transition to IFRSs, the effect on the Company’s consolidated balance sheets as of December 31,
2012 and January 1, 2012 (the transition date) as well as the consolidated statements of comprehensive
income and for the year ended December 31, 2012, is stated as follows:
1) Reconciliation of consolidated balance sheet as of December 31, 2012
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Current assets
Cash $ 2,384,588 $ - $ - $ 2,384,588 Cash
Notes and accounts
receivable
1,057,198 - - 1,057,198 Notes and accounts
receivable
Receivables from related
parties
26,528 - - 26,528 Receivables from related
parties
Allowance for doubtful
receivables
(19,405 ) - - (19,405 ) Allowance for doubtful
receivables
Other financial assets 941 - - 941 Other financial assets
Inventories 556,573 - - 556,573 Inventories
Deferred income tax
assets
49,357 - (49,357 ) - - 1)
Prepaid expenses and
other current assets
267,543
-
-
267,543
Other current assets
Total current assets 4,323,323 - (49,357 ) 4,273,966 Total current assets
Net property, plant and
equipment
368,832
-
172
369,004
Property, plant and
equipment
2)
Other assets
Deferred pension cost 743 - (743 ) - - 3)
Assets leased to others,
net
172 - (172 ) - - 2)
Refundable deposits 9,390 - - 9,390 Refundable deposits
Deferred charges, net 172,979 - - 172,979 Intangible assets
Deferred income tax
assets
853 - 56,174 57,027 Deferred income tax assets 1)
Pledged time deposits 20,000 - - 20,000 Pledged time deposits
Total other assets 204,137 - 55,259 259,396
Total $ 4,896,292 $ - $ 6,074 $ 4,902,366 Total
(Continued)
- 83 -
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Current liabilities
Accounts payable $ 440,889 $ - $ - $ 440,889 Accounts payable
Payables to related parties 273,359 - - 273,359 Payables to related parties
Income tax payable 83,948 - - 83,948 Current tax liabilities
Accrued profit sharing to
employees and bonus to
directors
73,795 - - 73,795 Accrued profit sharing to
employees and bonus to
directors
Payables to contractors
and equipment
suppliers
15,450 - - 15,450 Payables on machinery and
equipment
Customer advances 217,481 - - 217,481 Customer advances
Accrued expenses and
other current liabilities
243,968
-
(254 )
243,714
Accrued expenses and other
current liabilities
1)
Total current liabilities 1,348,890 - (254 ) 1,348,636 Total current liabilities
Other long-term payables 16,981 - - 16,981 Other long-term payables
Other liabilities
Accrued pension cost 5,558 25,919 (3,276 ) 28,201 Accrued pension liabilities 3)
Guarantee deposits 2,904 - - 2,904 Guarantee deposits
Deferred income tax
liabilities
-
-
7,071
7,071
Deferred income tax
liabilities
1)
Total other liabilities 8,462 25,919 3,795 38,176
Total liabilities 1,374,333 25,919 3,541 1,403,793 Total liabilities
Capital stock 1,340,119 - - 1,340,119 Share Capital
Capital surplus 569,623 - - 569,623 Capital surplus
Retained earnings 1,622,554 (25,919 ) - 1,596,635 Retained earnings 3)
Others
Cumulative translation
adjustments
(7,804 ) - - (7,804 ) Foreign currency translation
reserve
Net loss not recognized as
pension cost
(2,533 )
-
2,533
-
- 3)
Total shareholders’ equity 3,521,959 (25,919 ) 2,533 3,498,573 Total equity
Total $ 4,896,292 $ - $ 6,074 $ 4,902,366 Total
(Concluded)
2) Reconciliation of consolidated balance sheet as of January 1, 2012
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Current assets
Cash $ 1,706,126 $ - $ - $ 1,706,126 Cash
Notes and accounts
receivable
1,367,608 - - 1,367,608 Notes and accounts
receivable
Other financial assets 531 - - 531 Other financial assets
Inventories 822,792 - - 822,792 Inventories
Deferred income tax
assets
24,338 - (24,338 ) - - 1)
Prepaid expenses and
other current assets
268,760
-
-
268,760
Other current assets
Total current assets 4,190,155 - (24,338 ) 4,165,817 Total current assets
Net property, plant and
equipment
367,033
-
176
367,209
Property, plant and
equipment
2)
Other assets
Deferred pension cost 903 - (903 ) - - 3)
Assets leased to others,
net
176 - (176 ) - - 2)
Refundable deposits 11,236 - - 11,236 Refundable deposits
Deferred charges, net 264,996 - - 264,996 Intangible assets
Deferred income tax
assets
30,955 - 30,552 61,507 Deferred income tax assets 1)
Pledged time deposits 20,000 - - 20,000 Pledged time deposits
Total other assets 328,266 - 29,473 357,739
Total $ 4,885,454 $ - $ 5,311 $ 4,890,765 Total
(Continued)
- 84 -
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Current liabilities
Accounts payable $ 593,324 $ - $ - $ 593,324 Accounts payable
Payables to related parties 157,184 - - 157,184 Payables to related parties
Income tax payable 37,673 - - 37,673 Current tax liabilities
Accrued profit sharing to
employees and bonus to
directors
64,367 - - 64,367
Accrued profit sharing to
employees and bonus to
directors
Payables to contractors
and equipment
suppliers
14,726 - - 14,726 Payables on machinery and
equipment
Customer advances 332,052 - - 332,052 Customer advances
Accrued expenses and
other current liabilities
328,334
-
-
328,334
Accrued expenses and other
current liabilities
Total current liabilities 1,527,660 - - 1,527,660 Total current liabilities
Other long-term payables 29,872 - - 29,872 Other long-term payables
Other liabilities
Accrued pension cost 3,325 21,218 (903 ) 23,640 Accrued pension liabilities 3)
Guarantee deposits 3,027 - - 3,027 Guarantee deposits
Deferred income tax
liabilities
-
-
6,214
6,214
Deferred income tax
liabilities
1)
Total other liabilities 6,352 21,218 5,311 32,881
Total liabilities 1,563,884 21,218 5,311 1,590,413 Total liabilities
Capital stock 1,340,119 - - 1,340,119 Share Capital
Capital surplus 569,623 - - 569,623 Capital surplus
Retained earnings 1,412,221 (21,218 ) - 1,391,003 Retained earnings 3)
Others
Cumulative translation
adjustments
(393 )
-
-
(393 )
Foreign currency translation
reserve
Total shareholders’ equity 3,321,570 (21,218 ) - 3,300,352 Total equity
Total $ 4,885,454 $ - $ 5,311 $ 4,890,765 Total
(Concluded)
3) Reconciliation of consolidated statement of comprehensive income for the year ended December 31,
2012
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Net sales $ 9,013,760 $ - $ - $ 9,013,760 Operating revenue
Cost of sales 6,942,459 - - 6,942,459 Operating costs
Gross profit 2,071,301 - - 2,071,301 Gross profit
Operating expenses
Sales and marketing 265,832 - - 265,832 Sales and marketing
General and
administrative
226,365 (1,016 ) - 225,349 General and administrative 3)
Research and
development
870,368
-
-
870,368
Research and development
Total operating expenses 1,362,565 (1,016 ) - 1,361,549
Income from operations 708,736 1,016 - 709,752 Income from operations
Non-operating income and
gains
Interest income 11,243 - (11,243 ) - - 4)
Gain on disposal of
financial instruments
3,379 - (3,379 ) - - 4)
Gain on disposal of
property, plant and
equipment
433 - (433 ) - - 4)
Others 2,756 - (2,756 ) - - 4)
- - - 13,994 13,994 Other income 4)
- - - (17,351 ) (17,351 ) Other gains and losses 4)
Total 17,811 - (21,168 ) (3,357 )
Non-operating expenses and
losses
Foreign exchange loss, net 17,600 - (17,600 ) - - 4)
Interest expense 234 - (234 ) - - 4)
Loss on disposal of
property, plant and
equipment
70 - (70 ) - - 4)
Others 3,498 - (3,498 ) - - 4)
- - - 234 234 Finance cost 4)
Total 21,402 - (21,168 ) 234
(Continued)
- 85 -
Effect of Transition to IFRSs
Recognition
and
R.O.C. GAAP Measurement Presentation IFRSs
Item Amount Difference Difference Amount Item Note
Income before income tax $ 705,145 $ 1,016 $ - $ 706,161 Income before income tax
Income tax expense 92,776 - - 92,776 Income tax expense
Consolidated net income $ 612,369 $ 1,016 $ - 613,385 Net income
(7,411 ) Exchange differences on
translation of foreign
operations
(5,717 )
Actuarial losses on defined
benefit plans
3)
$ 600,257 Total comprehensive income
for the year
(Concluded)
4) Reconciliation of equity
December 31,
2012
January 1,
2012
Note
Equity under R.O.C. GAAP $ 3,521,959 $ 3,321,570
Adjustment item:
Adjustment of defined benefit plans (23,386) (21,218) 3)
Equity under IFRSs $ 3,498,573 $ 3,300,352
5) Significant reconciliation differences in consolidated statements of cash flows for the year ended
December 31, 2012
The Company prepared the statement of cash flows using the indirect method under accounting
principles generally accepted in the Republic of China (R.O.C. GAAP), in which the interest
received is not required to be disclosed separately; instead, the interest received and the interest paid
are included within the operating activities in the statement of cash flows. However, according to
IAS 7 “Statement of Cash Flows” for the year ended December 31, 2012, the interest received of
NT$10,991 thousand should be disclosed separately in the investing activities; and the interest paid
of NT$234 thousand should be disclosed in the financing activities and the loss on foreign
exchange, net of investing and financing activities of NT$1,305 thousand should be disclosed in the
adjustment of income before income tax based on their nature, respectively.
Except for the above differences, there are no other significant differences between R.O.C. GAAP
and IFRSs in the consolidated statement of cash flows.
d. Notes to the reconciliation of the significant differences:
1) Classifications of deferred income tax asset/liability and valuation allowance
Under R.O.C. GAAP, a deferred tax asset and liability is classified as current or non-current in
accordance with the classification of its related asset or liability. Deferred income tax assets and
deferred income tax liabilities fall into the same taxable entity; thus, they should be offset on the
balance sheet. However, if a deferred income tax asset or liability does not relate to an asset or
liability in the financial statements, it is classified as either current or non-current based on the
expected length of time before it is realized or settled. Under IFRSs, a deferred tax asset and
liability is classified as non-current asset or liability and consider the right of offsetting deferred
income tax liabilities and deferred income tax assets based on taxation by law before reclassifying.
- 86 -
In addition, under R.O.C. GAAP, valuation allowances are provided to the extent, if any, that it is
more likely than not that deferred income tax assets will not be realized. In accordance with IAS
12 “Income Taxes,” deferred tax assets are only recognized to the extent that it is probable that
there will be sufficient taxable profits and the valuation allowance account is no longer used.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from deferred income tax
assets to non-current assets were NT$56,174 thousand and NT$30,552 thousand, respectively;
deferred income tax liabilities to non-current liabilities were NT$7,071 thousand and NT$6,214
thousand, respectively.
2) Classification of leased assets
Under R.O.C. GAAP, leased assets are classified under other assets. Under IFRSs, leased assets
are classified as property, plant and equipment according to their nature. Leased assets are mainly
operating leasing, leasing part of the office, which are not considered as investment properties since
they cannot be sold separately and comprise only an insignificant portion of the plant.
As of December 31, 2012 and January 1, 2012, the amounts reclassified from leased assets to
property, plant and equipment were NT$172 thousand and NT$176 thousand, respectively.
3) Employee benefits
The Company had previously applied an actuarial valuation on its defined benefit obligation and
recognized the related pension cost and retirement benefit obligation in conformity with R.O.C.
GAAP. Under IFRSs, the Company should carry out actuarial valuation on defined benefit
obligation in accordance with IAS 19 “Employee Benefits.”
In addition, under R.O.C. GAAP, it is not allowed to recognize actuarial gains and losses on defined
benefit plans directly to equity; instead, actuarial gains and losses should be accounted for under the
corridor approach which resulted in the deferral of gains and losses. When using the corridor
approach, actuarial gains and losses should be amortized over the expected average remaining
working lives of the participating employees.
Under IAS 19 “Employee Benefits,” the Company elects to recognize actuarial gains and losses
immediately in full in the period in which they occur, as other comprehensive income, which is
classified under retained earnings. Subsequent reclassification to earnings is not permitted.
In addition, under R.O.C. GAAP, the minimum pension liabilities should be recognized in the
balance sheet. If the accrued pension liability is less than the minimum amount, the difference
should be recognized as an additional liability. Under IFRSs, there is no aforementioned
requirement of minimum pension liability.
As of December 31, 2012 and January 1, 2012, accrued pension liabilities of the Company were
adjusted for an increase of NT$22,643 thousand and NT$20,315 thousand, respectively; deferred
pension cost was adjusted a decrease for of NT$743 thousand and NT$903 thousand, respectively.
As of December 31, 2012, net loss not recognized as pension cost was adjusted for a decrease of
NT$2,533 thousand. For the year ended December 31, 2012, pension cost was adjusted for a
decrease of NT$1,016 thousand; actuarial losses on defined benefit plans related to components of
other comprehensive income were recognized in the amount of NT$5,717 thousand.
- 87 -
4) Reclassification of line items in the consolidated statement of comprehensive income
Under IFRSs, income from operations in the consolidated statement of comprehensive income is
prepared based on the Guidelines Governing the Preparation of Financial Reports by Securities
Issuers. In addition, the foreign exchange loss, net gain on disposal of financial assets, and
disposal of property, plant and equipment are reclassified as other gains and losses; interest revenue,
rental revenue and depreciation of rental assets are reclassified under other income; interest
expenses are reclassified under finance cost.
31. ADDITIONAL DISCLOSURES
Following are the additional disclosures required by the SFB for GUC and its investees in which all
significant intercompany balances and transactions are eliminated upon consolidation:
a. Significant transactions
1) Financings provided: None;
2) Endorsements/guarantees provided: None;
3) Marketable securities held (excluding investments in subsidiaries, associates and jointly controlled
entities): None;
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%
of the paid-in capital: Please see Table 1 attached;
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in
capital: None;
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital:
None;
7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in
capital: Please see Table 2 attached;
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: None;
9) Information about the derivative instruments transaction: None;
10) Others: Intercompany relationships and significant intercompany transactions: Please see Table
3 attached;
b. Related information of reinvestment
1) Names, locations, and related information of investees over which the Company exercises
significant influence (Not included the investee in Mainland China): Please see Table 4 attached;
2) Financings provided: None;
3) Endorsement/guarantee provided: None;
4) Marketable securities held (excluding investments in subsidiaries, associates and jointly controlled
entities): None;
- 88 -
5) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20%
of the paid-in capital: None;
6) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in
capital: None;
7) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital:
None;
8) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in
capital: None;
9) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital: None;
10) Information about the derivative instruments transaction: None;
c. Information on investment in Mainland China
1) The name of the investee in Mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership, net
income (losses) of the investee, investment income (losses), ending balance, amount received as
dividends from the investee, and the limitation on investee: Please see Table 5 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment,
unrealized gain or loss, and other related information which is helpful to understand the impact of
investment in Mainland China on financial reports: Please see Table 3 attached.
- 89 -
TABLE 1
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Holding
Company
Marketable Securities Type
and Name Financial Statement Account
Counter
party
Nature of
Relationship
Beginning Balance Acquisition Disposal Ending Balance
Shares/Units
(In Thousands) Amount
Shares/Units
(In Thousands) Amount
Shares/Units
(In Thousands) Amount Carrying Value
Gains (Losses)
on Disposal
Shares/Units
(In Thousands) Amount
GUC Eastspring Investments Well
Pool Money Market Fund
Available-for-sale financial
assets
- - - $ - 41,554,822 $ 550,000 41,554,822 $ 550,657 $ 550,000 $ 657 - $ -
Mega Diamond Money Market
Fund
Available-for-sale financial
assets
- - - - 41,042,179 500,000 41,042,179 500,655 500,000 655 - -
Jih Sun Money Market Fund Available-for-sale financial
assets
- - - - 31,254,541 450,000 31,254,541 450,597 450,000 597 - -
Yuanta Wan Tai Money Market
Fund
Available-for-sale financial
assets
- - - - 30,525,501 450,000 30,525,501 450,423 450,000 423 - -
Fuh Hwa Money Market Fund Available-for-sale financial
assets
- - - - 29,458,161 415,000 29,458,161 415,339 415,000 339 - -
Taishin 1699 Money Market
Fund
Available-for-sale financial
assets
- - - - 22,813,488 300,000 22,813,488 300,296 300,000 296 - -
- 90 -
TABLE 2
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars)
Company Name Related Party Nature of Relationship
Transaction Details Abnormal Transaction Notes/Accounts
Payable or Receivable Note
Purchases/
Sales Amount
% to
Total Payment Terms Unit Price Payment Terms
Ending
Balance
% to
Total
GUC TSMC TSMC is equity method investor of GUC Purchases $ 1,585,961 50% 30 days after monthly closing Note 24 Note 24 $ (85,484) (24%)
TSMC-NA TSMC-NA is a subsidiary of TSMC Purchases 1,540,088 49% 30 days after invoice date and 30
days after monthly closing
Note 24 Note 24 (71,964) (21%)
- 91 -
TABLE 3
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars)
No. Company Name Counter Party Nature of Relationship
(Note 1)
Intercompany Transactions
Financial Statement Account Amount Terms
(Note 2)
Percentage to
Consolidated Operating
Revenue or Total Assets
0 GUC GUC-NA 1 Manufacturing overhead $ 43,424 - 1%
Operating expenses 128,670 - 2%
Accrued expenses 14,064 - -
GUC-Japan 1 Operating expenses 42,788 - 1%
Accrued expenses 3,886 - -
GUC-Europe 1 Operating expenses 2,021 - -
Accrued expenses 246 - -
1 GUC BVI GUC-Shanghai 3 Operating expenses 51,950 - 1%
Accrued expenses 4,517 - -
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The intercompany transactions, prices and terms are determined in accordance with mutual agreements and no other similar transactions could be compared with.
- 92 -
TABLE 4
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company Investee
Company Location Main Businesses and Products
Original Investment Amount Balance as of December 31, 2013
Net Income
(Losses) of the
Investee
Investment
Income
(Losses)
Note
December 31,
2013
(Foreign
Currencies in
Thousands)
December 31,
2012
(Foreign
Currencies in
Thousands)
Shares
Percentage of
Ownership
(%)
Carrying
Value
GUC GUC-NA U.S.A. Products consulting, design and technical support
service
$ 40,268
( US$ 1,264)
$ 40,268
( US$ 1,264)
800,000 100 $ 77,386 $ 4,759 $ 4,759
GUC-BVI British Virgin Islands Investing activities 152,603
( US$ 5,050)
92,883
( US$ 3,050)
5,050,000 100 62,575 (51,383) (51,383)
GUC-Japan Japan Products consulting service 8,783
( YEN 30,000)
8,783
( YEN 30,000)
600 100 13,404 722 722
GUC-Europe Netherlands Products consulting service 4,585
( EUR 100)
4,585
( EUR 100)
- 100 2,641 537 537
- 93 -
TABLE 5
GLOBAL UNICHIP CORP. AND SUBSIDIARIES
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investee Company Main Businesses and
Products
Total Amount
of Paid-in
Capital
(US$ in
Thousands)
Method of
Investment
Accumulated
Outflow of
Investment
from Taiwan as
of January 1,
2013
(US$ in
Thousands)
Investment Flows Accumulated
Outflow of
Investment
from Taiwan as
of
December 31,
2013 (US$ in
Thousands)
Net Income
(Losses) of the
Investee
Percentage of
Ownership
Investment
Income (Losses)
Carrying Value
as of
December 31,
2013
Accumulated
Inward
Remittance of
Earnings as of
December 31,
2013
Outflow Inflow
GUC-Shanghai Products consulting
service
$ 31,165
(US$ 1,000)
(Note 1) $ 31,165
(US$ 1,000)
$ - $ - $ 31,165
(US$ 1,000)
$ 640 100% $ 640 $ 24,867 $ -
Accumulated Investment in Mainland China
as of December 31, 2013
(US$ in Thousands)
Investment Amounts Authorized by
Investment Commission, MOEA
(US$ in Thousands)
Upper Limit on Investment
(US$ in Thousands)
$ 31,165
(US$ 1,000)
$ 31,165
(US$ 1,000)
$ 2,032,335
(Note 2)
Note 1: The Company’s investee with a controlling financial interest; indirectly invested in GUC-Shanghai through GUC-BVI.
Note 2: Subject to 60% of net asset value of GUC according to the revised “Guidelines Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission.