2016 Chipmos Annual Report Printed on April 30, 2017
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Annual Report Website:mops.tse.com.tw Stock Code:8150 2016 ChipMOS Annual Report Printed on April 30, 2017 Notice to readers This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail. 2016 Annual Report Stock Transfer Agent: Printed on April 30, 2017 KGI Securities Co., Ltd., Transfer Agency Spokesperson Department Name: Shou-Kang Chen Address: 5F., No.2, Sec. 1, Chongqing S. Rd., Title:Chief financial officer of Financial & Zhongzheng Dist., Taipei City, Taiwan, Accounting Management Center R.O.C. Tel:(03)577-0055 Tel: (02)2389-2999 E-MAIL:[email protected] Website: www.kgieworld.com.tw Deputy Spokesperson The Accounting Public of Certifying Name: Wei Wang Financial Statement during Recent Years: Title: Vice President of Strategy and Investor PricewaterhouseCoopers (PwC) Taiwan Relations Auditors: Chun-Yuan Hsiao, Chih-Cheng Tel: (03)577-0055 Hsieh E-MAIL: [email protected] Address: 27F., No.333, Sec. 1, Keelung Rd., Headquarters and Fabs: Xinyi Dist., Taipei City, Taiwan, R.O.C. Hsinchu Headquarters (Hsinchu fab.) Website: www.pwc.tw No.1 R&D Rd.1, Hsinchu Science Park, Tel: (02)2729-6666 Hsinchu, Taiwan, R.O.C. Tel: (03)577-0055 Foreign Securities Trade & Exchange Fax: (03)566-8989 NASDAQ Stock Market Tainan fab. Disclosed information can be found at No.3 and No.5, Nanke 7th Rd., Southern http://www.nasdaq.com Taiwan Science Park, Tainan City, Taiwan, ADS code: IMOS R.O.C. Corporate Website: http://www.chipmos.com Tel: (06)505-2388 Fax: (06)505-2345 Zhubei fab. No.37, Xintai Rd., Tai He Vil., Zhubei City, Hsinchu County, Taiwan, R.O.C. Tel: (03)656-2078 Fax: (03)553-2715 Zhubei fab. 2 No.112, Zhonghe St., Tai He Vil., Zhubei City, Hsinchu County, Taiwan, R.O.C. Tel: (03)598-5959 Fax: (03)553-2530 Hukou fab. No.4, Rende Rd., Feng Shan Vil., Hukou Township, Hsinchu County, Taiwan, R.O.C. Tel: (03)598-5959 Fax: (03)598-3012 Table of Contents I. Letter to Shareholders --------------------------------------------------------------------------- 1 II. Company Profile I. Date of Incorporation -------------------------------------------------------------------------- 3 II. Company History --------------------------------------------------------------------------------------- 3 III. Corporate Governance Report I. Organization -------------------------------------------------------------------------------------------- 6 II. Information of Directors, Supervisors, President, Vice Presidents, Assistant Presidents, Officers of Departments and Branches------------------------------------------------------------- 9 III. Remuneration of Directors, Supervisors,President and Vice Presidents --------------------18 IV. Implementation of Corporate Governance ------------------------------------------------------23 V. Information Regarding Audit Fee ----------------------------------------------------------------75 VI. Replacement of CPA -------------------------------------------------------------------------------76 VII.Company's Chairman, President, or Any Manager in Charge of Finance or Accounting Matters has in the Most Recent Year Held a Position at the Accounting Firm of Its CPA or at an Affiliated Enterprise of Such Accounting Firm ------------------77 VIII.Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders During the Most Recent Year and Up to the Date of Publication of the Annual Report--------------------------------------------------------------------------------------78 IX. Relationship among the Top Ten Shareholders--------------------------------------------80 X.The Combined Shareholding and Ratio of the Company, Director, Supervisor, Manager and Enterprises which Directly or Indirectly Controlled by the Company in Each Investee -----------------------------------------------------------------------------------------81 IV. Capital Overview I. Capital and Shares ------------------------------------------------------------------------------------82 II. Bonds --------------------------------------------------------------------------------------------------90 III. Preferred Shares -------------------------------------------------------------------------------------90 IV. Global Depository Receipts -----------------------------------------------------------------------91 V. Outstanding balance ---------------------------------------------------------------------------------92 VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions ------------95 VII. Financing Plans and Implementations ----------------------------------------------------------96 V. Operational Highlight I. Business Contents-------------------------------------------------------------------------------------97 II. Market, Production, and Sales Overview ------------------------------------------------------- 112 III. Employees Status --------------------------------------------------------------------------------- 131 IV. Environmental Expenditure Information ------------------------------------------------------ 132 V. Industrial Relations -------------------------------------------------------------------------------- 132 VI. Material Contracts -------------------------------------------------------------------------------- 134 VI. Financial Information I. Condensed Balance Sheet and Statements of Comprehensive Income ---------------------- 136 II. Financial Analysis for the Most Recent 5 Years----------------------------------------------- 145 III. Audit Committee's Review Report in respect of 2016 Financial Report ------------------ 152 IV. Financial Report of the Most Recent Year ---------------------------------------------------- 157 V. Parent Company Only Financial Report of the Most Recent Year-------------------------- 232 VI. Explanations Regarding Impacts on Company's Financial Status in the Event that the Company or its Affiliates Have Financial Difficulties--------------------------------------- 309 VII. Financial Status, Financial Performance and Risk Management I. Analysis of Financial Status ----------------------------------------------------------------------- 310 II. Analysis of Operation Results-------------------------------------------------------------------- 311 III. Analysis of Cash Flow --------------------------------------------------------------------------- 312 IV. Major Capital Expenditure Items --------------------------------------------------------------- 313 V. Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year----------------------------------------- 313 VI. Analysis of Risk Management ------------------------------------------------------------------ 313 VII. Special Disclosure ------------------------------------------------------------------------------- 320 VIII. Other Special Disclosure I. Summary of Affiliated Companies --------------------------------------------------------------- 321 II. Status of Company's Private Placement in the Most Recent Year and Up to the Date of Publication of the Annual Report ---------------------------------------------------------------- 323 III. Holding or Disposal of Shares of the Company by Subsidiaries in the Most Recent Year and Up to the Date of Publication of the Annual Report ------------------------------ 324 IV. Other Necessary Supplement------------------------------------------------------------ 324 IX. Any Event that Have Significant Impacts on Shareholders’ Rights or Security Prices as Stated in Item 2 of Paragraph 2 of Article 36 of Securities and Exchange Law in the Most Recent Year and Up to the Date of Publication of the Annual Report--------------------------------------------------------------------------- 324 I. Letters to Shareholders From the corporate governance and business deployment strategy point of view, 2016 was a critical transition year for ChipMOS TECHNOLOGIES INC. ("ChipMOS" or the "Company"). With respect to corporate governance, we completed the merger with the former parent company, ChipMOS TECHNOLOGIES (Bermuda) LTD.. This merger was approved and announced by the Board of Directors on January 21, 2016. ChipMOS offered 18.71 common shares and US$3.71 in cash for the exchange of each common share of ChipMOS TECHNOLOGIES (Bermuda) LTD to merge with ChipMOS, which is and continues to be the surviving company. The merger was completed byOctober 31, 2016. As of December 31, 2016, ChipMOS has t approximately 856.75 million shares outstanding. By the end of 2016approximately 56.4% of the outstanding shares were held in the form of the American Depositary Receipt (“ADS”), which started its trading on US NASDAQ Market under the ticker of IMOS from October 31, 2016. One of key business deployment strategies was the was the establishment of collaborative projectwith Tsinghua Unigroup. An extraordinary shareholders' meeting held in January 2016 authorized the Chairman to complete the private placement with Tsinghua Unigroup. However, after taking into account of the changes of investment environment both parties agreed to change the focusto a joint venture opportunity in China. On November 30, 2016, ChipMOS announced to sell 54.98% of its equity interest in ChipMOS TECHNOLOGIES (Shanghai) LTD. to a group of strategic investors led by Tsinghua Unigroup. ChipMOS' consolidated revenue for 2016 was NT$18.4 billion, which reflects a decline of