1 Message To Our Shareholders

Message To Our Shareholders Dear Esteemed BenQ Shareholder: 2004 for BenQ was a year filled with challenges. The first half saw businesses firing on all cylinders; the second half, however, saw momentum slowed by price war on LCD monitor and customer rotation on handset. The company turned in NT$165 billion in revenue on a consolidated basis, representing a growth of 37% year-over-year; we closed the year with NT$7.7 billion in net income. We're pleased to report that branded revenue went from 29% of total revenue in 2003 to 37% in 2004.

The company posted strong results across many product lines; BenQ-made LCD monitors scored solid market share gains; we became the world's top-three maker of LCD monitor in the second half of the year; furthermore, BenQ-branded monitors went from No. 11 in the world to No. 5. The company was able to execute market share wins as BenQ leveraged greater economies of scale, stronger procurement strengths, added ability to execute a world-class product portfolio, and our proprietary SenseyeTM Technology, a trademarked image-enhancing innovation. BenQ projector was another bright spot. In 2004 BenQ recorded superlative, profitable growth as the company established itself as a leading designer and maker of DLP projectors. The company enjoyed success working with its dealers in a win-win formulation. We set a new high on unit shipment; by year end, BenQ was in the global top-five. Our storage business also had a good year. BenQ was the first company in the world to introduce 16x speed DVD +/-RW drives in a collaborative effort with Philips. By Q4, BenQ had ascended to the global top-four.

Innovation is central to BenQ's execution strategy, and we intend to continue creating world-class products with designs that captivate the consumer's imagination. In 2004 BenQ received 35 major global design awards and our products graced the pages of many leading global publications. BenQ followed up last year's fine showing at Germany's prestigious iF design competition, where the company secured seven top-place finishes, with another strong finish--winning ten top-place prizes. BenQ's brand equity grew 35% in value, according to Interbrand, and for two years in a row BenQ has ranked as one of Interbrand's top-10 global Taiwan brands. Reflective of the company's commitment to innovation, BenQ has over the past five years allocated about 3% of sales to research & development and currently holds over 2,100 global patents.

We sponsored UEFA's EURO 2004 football championship which provided our channel partners with timely marketing support. The sponsorship helped accelerate the company's business momentum in Europe. We closed the year posting strong sales growth. Success aside, sales growth in Europe highlighted a need for better inventory management, higher sales productivity at overseas points of sale, a robust service infrastructure, and better benchmarking of marketing expenditures. We are taking immediate, corrective action steps to shore up these weaknesses and these efforts should minimize future surprises in the company's profit-and- loss accounts.

With BenQ now a known brand in many markets/countries, BenQ enters a new phase of development with "Growth for Profit" as our key objective. We are in the process of implementing D.E.E.P. initiatives with the aim of boosting core-business profitability. D.E.E.P. stands for design/differentiation, efficiency, experience, and preference. To further position BenQ as a provider of differentiated, networked digital lifestyle devices, we are channeling our award-winning designs into many of our products. We are upgrading our product-delivery, service infrastructure so that we can create an impactful, dynamic BenQ experience at every turn. Additionally, we are benchmarking to shorten R&D cycles and increase supply/channel efficiency.

Our D.E.E.P. initiatives are already paying dividends. To give an example, as result of better product design, we are seeing fast improving ASP on some of BenQ's higher-end handsets and LCD monitors. BenQ's product portfolio on the whole is much stronger than twelve months ago. To be sure, building a brand requires plenty of patience and hard work, and with your support, we are one step closer to becoming a sustainable global brand.

We thank you for your continued support!

Yours sincerely,

K.Y. Lee - Chair man and Chief Executive Officer Sheaffer Lee - Chief O p er at ing Officer

1 Table of Contents Message To Our Shareholders 01 Table of Contents 02 Corporate Strategy 03 Review of Operations and Product Strategy 10 Corporate Governance 32 Company Financials 40 Contact information 52 Corporate Strategy

BenQ enters 2005 a better known brand in many Asia Pacific and European markets. The company’s strategy comprises three elements: BenQ’s Fleet-Footed Strategy to increase competitiveness, scale, and profitability; 5C strategy (computing, communications, consumer, crystal, cool brand) to better address market trends and consumers’ digital lifestyle; and DEEP (design & differentiation, experience, efficiency, preference) execution strategy to achieve brand preference.

Since the inception of the BenQ brand three years ago, BenQ has achieved its initial goals of high growth and awareness. The next mission for BenQ is to become a brand consumers prefer. Fleet-Footed Business Strategy BenQ’s Fleet-Footed Strategy Increasing Overall Competitiveness

BenQ celebrated its 3rd birthday in December, 2004. With the curiosity and aptitude for learning of a 3-year-old, BenQ has demonstrated a track record of excelling amidst fierce global competition. In that time span, the company has garnered 64 global design awards and numerous product accolades in Europe, the United States and Asia. In Taiwan alone, BenQ products have consistently achieved new milestones. Whether it’s cell phones or LCD TV, BenQ has consistently stayed on the leading edge in the design and manufacture of stylish IT products.

The past 3 years have been a period of rapid growth for BenQ in terms of revenue, with branded and non- branded revenues alike growing every year. BenQ reached a revenue milestone in the fourth quarter of 2004: BenQ’s branded revenues surpassed 40% of total revenue. Building upon the success of BenQ’s two- legged strategy -- focusing on both branded and non-branded businesses, BenQ plans to continue racing ahead with a new fleet-footed strategy to increase scale and profitability.

BenQ’s fleet-footed strategy extends from the company’s strengthening brand and improving mix of propriety innovation/technology. We are confident the company’s new strategy will ensure that branded profits continue to reach new highs while enabling BenQ to continue providing innovative technology solutions to our non-brand customers.

4 5 Cor p or ate St r ateg y

5C Product St r ateg y 5C St r ateg y B e tter Addressing Market Trends and Consumer Dig ital Lifest y les 5C

For a nu m b er of ye a r s , B en Q h a s b e en de ve l op i n g l e a d i n g - e d g e pro du c t s fo l l ow i n g t h e com p a ny ’s computing-communications-consumer e le c t ronics (3C) roa dmap. To day, B enQ is one of the few Asian br ands expanding b e yond the 3C technolog y arena; B enQ’s business/produc t st r ateg y now incor p or ates two a ddit ional e lements -- B enQ’s cr ystal TFT LCD technolog y and cool br anding -- to make up w hat we call the 5C st r ateg y.

We a re op t i m i s t i c B e n Q’s 5 C s t r a te g y s h o u l d e n a b l e t h e co m p a ny to b e t te r a d d re s s mu l t i m e d i a convergence t rends, w hich we b e lie ve w il l center on three applications having one common e lement in c r ys t a l T F T LCD te ch n o l o g y : m o bi l e ph on e , l a p top com p uter, a n d te l e v i s i on . Wit h c r ys t a l T F T LCD technolog y playing an essential role in al l these applications and B enQ’s g roup of companies p osessing its own TFT LCD technolog y, BenQ is well positioned to implement its 5C strateg y of building a cool br and le ver ag ing st rong core technolog ical st rengths.

4 5 DEEP Execution Strategy Using DEEP Execution Strategy to Achieve Brand Preference Having achieved rapid revenue growth and brand awareness over the past few years, BenQ now strives to become a preferred brand. BenQ is implementing a DEEP execution strategy to further enhance the company's competitive advantage and continue to maintain growth trajectory.

BenQ’s DEEP execution strategy incorporates the following elements:

D: Design & Differentiation - Integration of Asian design elements into innovative technology/solutions Pre-dating the launch of the BenQ brand, BenQ already was a leading designer and maker of IT products that captivated consumers’ imagination. Today our "Meeting of Opposites" design philosophy accentuates east-meets-west design elements that have helped create a series of aesthetically pleasing, highly functional products.

E: Efficiency - Shortening R&D cycles; increasing supply chain and channel efficiency BenQ aims to shorten its R&D development cycles and continue driving greater economies of scale across various product lines. In addition to building products with strong design attributes, the company is at work increasing supply-chain and channel efficiency.

E: Experience - Creating an impactful, dynamic consumer experience at every contact point BenQ is executing a strategy to wow existing or potential customers with a positive BenQ experience at every turn, covering design, product packaging, functionality, point of sale, etc.

P: Preference - To become a preferred brand by launching "mass-tige" products BenQ is launching "mass-tige" products that cater to consumers’ tastes , in order to further position BenQ as a preferred provider of networked digital lifestyle devices.

6 7 Cor p or ate St r ateg y

Computers were originally developed for office and business use only, but over time these applications are evolving and merging in form and function with solutions for personal and home applications.

We've stated that BenQ's mission is to enable enjoyment in a connected IT world. And in a world enmeshed networks, there isn’t a moment in our day that is not affected by networking. As these networks become more complex, digital technology products also are becoming increasingly specialized and diverse.

Understanding that connectivity is a high priority to today’s savvy technology consumers. BenQ is hard at work designing and integrating a suite of cool, high-performance digital lifestyle devices at compelling price points that enable the users to share information, audiovisual content and other forms of digital entertainment.

- K.Y. Lee, Chairman and CEO B enQ's e-Home

B enQ's produc ts are desig ne d to he lp you seamlessly integ r ate Networ k D ig ital Lifest y le D e v ices into e ver y asp e c t of your life for g reater enjoyment and produc t iv it y. Our solutions ful ly opt imize the exper ience of v iew ing/a ccessing dig ital content. What’s more, B enQ’s Tw in-Hub system, compr ising a DVD recorder w ith D ig ital Media Adaptor (DMA) func t ions in the Family Room and the Media Hub in the Home Office, helps you navig ate the dig ital home w ith ease.

6 7 Meeting of Opposites BenQ's Design Philosophy

To fulfill BenQ’s vision of "Bringing Enjoyment and Quality to Life," BenQ established its Lifestyle Design Center (LDC) focused on delivering better designs and technology to meet consumer demands.

BenQ’s design philosophy highlights harmony in the "Meeting of Opposites" and optimal fusion of functional and emotional benefits. BenQ LDC has been at work extracting the essence of Asian culture, art, philosophy, architecture and artifacts, and infusing eastern zen with modern occidental design elements to create a unique design language.

Winner of 64 global awards in the past three years, BenQ is establishing itself as a leader in industrial design and positioned to score winning impressions.

- BenQ Lifestyle Design Center

"If we could test design on a temperature meter, we would find modernism or rationalism on the extreme cold side and post-modernism on the extreme hot side." - Andrea Branzi, highly respected Italian architect/designer

64 International Design Awards 2002 2003 2004 2005 2002 2003 2004 2005

iF : 1 iF China: 6 CES: 2 CES: 4 IDEA: 2 iF : 7 iF : 10 iF : 1 iF China: 6 iFCES: China: 2 15 Red-dot:CES: 4 6 IDEA: 2 IDEA:iF : 7 1 ……iF : 10 G-mark:iF China: 9 15 Red-dot: 6 DFA:IDEA: 1 1 …… G-mark: 9 3 6 DFA:35 1 20+ 3 6 35 20+

Germany America Japan Hong Kong China Germany

Germany America Japan Hong Kong China Germany

8 9 Cor p or ate St r ateg y

iF Desig n Award 2005 Ten of B enQ dig ital lifest y le de v ices were re co g nize d for its innov at ive product desig ns w ith the dist inguishe d iF Desig n Award 2005

T he iF D esig n Award is w idely recog nized as one of the wor ld's top desig n comp e t it ions/awards.

B enQ ' s " Mee t i n g of O pp o s i tes " des i g n phi l o s ophy i s fo c u s e d on enh a n c i n g t h e consum ers' l i fes t y l e by incor p or at ing b oth func t ional and emotional elements into our produc t desig n.

D ig it ial Proje c tor - BenQ PE7700 Scanner - BenQ 7350C Media Gateway - BenQ WM1100

Smar t Phone - BenQ P31 Combo Dr ive - BenQ Slim Combo D ig ital mp3 Player - BenQ Joyb e e 125 Mouse - BenQ Finger Mouse

Mouse - BenQ M310 D ig ital mp3 Player - BenQ Joyb e e 102R D ig ital mp3 Player - BenQ Joyb e e 105 8 9 Digital mp3 Player - BenQ Joybee 210

Review of Operations and Pro duct Strategy Review of Operations Pro duct Strategy ● Display & Imaging Business Group ● Networking & Communications Business Group ● Digital Media Business Group ● Storage Business Unit ● Computer Products Strategic Business Unit Display & Imaging Business Group To better meet the needs of changing business conditions and streamline operations, multifunction printer and scanner product lines reorganized beginning 2005 and became part of the Network Display Business Group (NDG), which changed its name to Display & Imaging Business Group (DIBG).

With a focus currently on LCD monitors and multifunction printers addressing the PC market, we will soon expand business to include car-use displays. We aim to maintain our position as a top-three global LCD display manufacturer.

Main products ● 15"/17"/19” multimedia LCD monitors ● 15"/17"/19" LCD monitors for business use ● 19"/20.1"/23” LCD monitors for professional applications ● Car displays ● Color laser printers ● High resolution film scanners ● Flatbed scanners ● Color Inkjet orinters ● Color multifunction printers

Review of Operations LCD Monitor - BenQ FP783 / Cover of Business Week Business Results With rising demand for LCD monitors in 2004, DIBG shipped seven million units of LCD monitors, hitting a record high. DIBG in 2004 recorded NT$80 billion in revenue, up 20% from 2003.

2004 SALES REVENUE UP 20% YOY LCD Monitor ; Sales Revenue ; NT$ million

0 30,000 60,000 90,000 Note: above data excludes multifunction printer and scanner products

Declining monitor pricing impacted overall sales growth in the second half of 2004; BenQ, however, emerged stronger from both market share and product execution standpoints. Business momentum continues to be strong with both ODM and own-brand customers.

BenQ provided its channel partners with marketing support through the company’s sponsorship of UEFA’s EURO 2004 Football Championships as the Official IT & Statistics Partner. As a result, BenQ scored many channel wins and accelerated sales growth on own-brand monitors.

12 13 Display & Imaging Business Group

Product Features and Awards On product design front, BenQ continues to make solid gains. In 2004, the Consumer Electronics Association (CEA) of America recognized BenQ’s industrial design efforts with an "Honorees for the Innovations 2004 Design and Engineering Showcase" award.

Our products won critical acclaims throughout the year, including several from magazines around the globe. In particular, BenQ’s FP783 (pictured below), a 17" high-performance display, was selected as a "Hot Design" and graced the cover of Business Week.

17” LCD monitor - FP785 17” LCD monitor - FP783 Scanner - 7350CT

Key Features, Awards and Benefits

Clean and simple lines give way to a new definition A stylish display for multimedia entertainment. ■ 7350CT scanner, the winner of Germany’s iF of beauty: Beauty on an understated, luxurious Integrated webcam and speakers with SRS surround Design Award 2005, with vertical scan document, metallic base. sound. and built-in stand and hanging shelf for office

■ Multipurpose bottom hinge creating a unique ■ 2x USB 2.0 ports partition.

showpiece ■ Best platform for multimedia entertainment ■ CM3100 multifunction printer, the winner of

■ Senseye™ Technology enhancing viewing and integration with SRS surround sound speakers Taiwan’s Symbol of Excellence, supporting color with four display modes to fulfill different and webcam copy and printing out photo without computer.

viewing needs ■ Winner of CES 2004 Best Creative Award ■ 5250C scanner, the winner of Germany’s iF

■ Built-in SRS surround sound speakers, ■ Featured on cover page of Business Week Design Award 2004, China’s iF China Design experiencing perfect multimedia enjoyment magazine Award 2004, Taiwan’s Best Choice of Computex

■ Winner of Germany’s 2004 iF Design Award ■ Winner of 2004 IDEA Design Award Taipei 2004, Japan’s G-Mark Design Award,

■ Winner of China’s 2004 iF Design Award Taiwan’s Symbol of Excellence Award and Taiwan’s

■ Winner of 2005 CES Design Award National Award of Excellence, is designed for slim and stylish product.

12 13 Research & Development BenQ has developed a unique image enhancement technology that we trademarked "Senseye™ Technology", a proprietary BenQ innovation that enhances image quality. We are also developing BenQ’s "AMA Technology" to enhance the performance of multimedia PC applications.

Technologies in deployment

● Senseye™ Technology ● AMA Technology (Advanced Motion Accelerator Technology) TM

On-going efforts

● Color engine technology for enhanced color fidelity ● Display with health benefits

Industry, Product Overview and Outlook Overview and Outlook Fluctuations in LCD panel pricing in the second-half of 2004 led to an erosion in the value of LCD panels and monitors, impacting margins in the process. BenQ however emerged stronger amidst intensified competition with greater economies of scale, stronger procurement power and a more differentiated product portfolio.

Emerging in better shape from recent price war on LCD panel/monitor, BenQ is designing and manufacturing more high-end LCD monitors with world-class response time. These technological advances, together with design innovations, have enabled the company to establish a foothold on the performance end of the product spectrum. The company's ability to execute a world-class product portfolio depends also on better access to leading-edge panels, and BenQ’s relationships with AU Optronics and other major panel suppliers have strengthened with increased economies of scale.

According to DisplaySearch, 17"-size LCD monitors accounted for 50% of sales in Q3'04 while 15" LCD monitors dropped to 33.5%. Other LCD monitor sizes, 19" and 20” in particular, grew quickly. DisplaySearch estimated worldwide demand for LCD monitors was approximately 69 million units in 2004; and demand should reach 97 million units in 2005, with 19" LCD monitors in highest growth.

Forecast for 2005 Global LCD-monitor Shipment by Size

15” 17” 19” 20”

Q1’05 27.4% 52.7% 15.1% 4.8%

Q2’05 26.5% 52.0% 16.4% 5.1%

Q3’05 24.0% 51.2% 19.7% 5.1%

Q4’05 20.8% 50.1% 23.9% 5.2%

Q5’TTL 24.4% 51.4% 19.1% 5.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source : DisplaySearch 2004 14 15 Display & Imaging Business Group

Competition and Market Share According to DisplaySearch, BenQ-branded LCD-monitor went from No. 11 in the world at the end of second quarter in 2004 to No. 5 by the end of third quarter, with a 4.6% global market share. In Europe, Middle East and Africa (EMEA), BenQ's ranking went from No. 10 to No. 6; in China, No. 7 to No. 2.

As a top-three global LCD-monitor manufacturer, BenQ enjoys greater economies of scale. We look forward to driving further growth capitalizing on BenQ know-how -- in particular our "Senseye™ Technology" -- and the benefits of backward integration with panel makers including AU Optronics.

Product Strategy in 2005 Key elements of BenQ’s product strategy include:

● Further expanding economies of scale -- We aim to increase total world-wide market share and own-brand market share through growth in EMEA and other emerging markets.

● Securing leading position in higher-end consumer segments by emphasizing BenQ "Hot Designs". The focus will be on building products with innovative features, fashionable designs, plus image enhancement and health-care benefits.

● Expanding business-use market penetration by improving image/color quality. BenQ in 2005 plans to introduce more larger-sized display solutions to meet the demand of corporate/professional users.

LCD Monitor - BenQ FP785 Winner of 2005 CES / 2004 iF / 2004 iF China Design Awards

14 15 Networking & Communications Business Group BenQ offers consumers a unique portfolio of stylish mobile multimedia devices, helping to integrate technology into consumer lifestyles -- because we believe enjoyment really does matter.

Main Products ● GSM/GPRS mobile phones (bar, clamshell, dual display, TFT, embedded camera, etc.) ● CDMA IS-95/CDMA 2000 1X RTT mobile phones ● Smartphones ● Wireless PDA's ● Wireless Network Products

Mobile Phone - BenQ A520

Review of Operations Business Results Networking & Communications Business Group (NCG) reached NT$28.2 billion in revenue and launched several higher-end handsets in 2004. The company enters 2005 with a vastly upgraded product line and higher average selling prices.

2004 SALES REVENUE UP 24% YOY NCG ; Sales Revenue ; NT$ million

0 10,000 20,000 30,000

In terms of units shipped, we shipped 15.5 million units in 2004, an increase of 20% from 2003. The combination of increased volume and improved average selling price from increased shipment of mid-high-end phones enabled BenQ to grow revenue 24% year-on-year.

16 17 Networking & Communications Business Group

Product Features and Awards

3G Phone - S80 PDA Phone - P50 MP3 Phone - Qube Z2 Key Features, Awards and Benefits

■ 1.3 mega pixel CMOS camera ■ Microsoft Windows Mobile 2003 for Pocket PC ■ MP3 playing/recording FM radio ■ LED flash light Phone Edition ■ 3D surrounding/language learning/EQ/ID3 ■ WAP 2.0 ■ Phone: Quad-band GSM/GPRS display ■ Java MIDP 2.0 ■ Built-in WLAN 802.11b and bluetooth ■ Embedded 1.3 mega pixel camera ■ Video streaming ■ 1.3 mega pixel digital camera ■ Java MIDP 2.0 ■ Video clip/camcorder ■ QWERTY keyboard ■ USB1.1 supporting mass storage ■ MPEG4/MP3 player ■ IrDa, USB, SDIO/SD/MMC slot ■ miniSD extension memory ■ PC Sync tool ■ Voice reorganization (speaker independent) ■ External memory (miniSD) ■ Universal remote control ■ IrDA/ USB1.1 ■ “Next Big Thing Award” at CES 2005 from CNET ■ CES-Honorees for Innovations 2004 Design and Engineering Showcase

Mobile Phone - BenQ U700, M350, M305, A500 16 17 Research & Development Technologies in deployment On-going efforts

● GSM/GPRS tri-band mobile phones ● GSM/GPRS quad-band multimedia phones ● CDMA 2000 1X RTT mobile phones ● Embedded 2 mega pixel camera phones ● Embedded VGA camera phones ● WCDMA mobile phones ● Symbian-based smart phones ● Windows mobile-based smart phones ● GPRS + Wireless LAN combo cards ● Wireless PDA's

Industry, Product Overview and Outlook Overview and Outlook Driven by rapid growth in India, Russia and other emerging markets, strong global replacement sales, 3G upgrades, and new features such as MP3 players, and higher resolution camera phones, we expect global demand for handsets in 2005 to remain solid.

Worldwide Mobile Handsets Market Share Trends

GSM/GPRS EDGE W-CDMA CDMAOne/CDMA2000 Others 70%

60%

50%

40%

30%

20%

10%

0%

Source•: Strategy Analytics 2004

In 2004, our camera phones, many embedded with multimedia applications, accounted for over 30% of total units shipped. In 2005 and beyond, BenQ expects to introduce more mid-to-high end product, with a host of multimedia -- music, game, etc. -- applications.

First company in Taiwan to introduce a 3G phone, BenQ is executing advanced 3G technology for phone applications and has been collaborating with network operators. BenQ also will launch a 2.5G handset with WLAN features plus several smartphones in 2005.

With a more complete, higher-ASP product portfolio and improved distribution, in 2004 our handset business successfully expanded into a number of Asian markets, Europe, and the Americas. To meet the needs of growing demand from emerging markets, such as India, Russia, and Brazil, we are investing in upgrading/improving the company’s logistics infrastructure. Additionally we are addressing the European and North American operator space with stronger customization capability.

18 19 Networking & Communications Business Group

Competition and Market Share In 2004, Nokia was ranked No. 1 in volume terms with a 30.4% global share. Motorola was No.2 with a 15.3% share, followed by Samsung (12.7%), Siemens (7.2%) and LG (6.49%).

Here in Taiwan, cell phone market in Taiwan reached 6.6 million units in 2004, growing 10% year-on-year. BenQ is ranked No. 3 in Taiwan with 6% market share, trailing Motorola and Nokia, No. 1 and No.2 respectively. BenQ aims to expand market share in Taiwan and other markets and improve profitability with launch of higher-end handsets.

Product Strategy in 2005 Key elements of BenQ’s product strategy include:

● Completing product portfolio leveraging BenQ’s computing-communications-consumer (3C) technology platform: we plan to launch more feature/multimedia phones, such as smart phones and 3G phones and shortening design cycles by using modular solution blocks.

● Expanding the market from urban to emerging market segments: BenQ is expanding market coverage from developed to emerging markets, such as India, Russia and China, in addition to co-operating with telecom operators in developed countries.

Smart Phone - BenQ P30 Smart Phone - BenQ P31 PDA Phone - BenQ P50

18 19 Digital Media Business Group BenQ’s laptop PC business was separated from Digital Media Business Group and became Computer Products Strategic Business Unit beginning 2005 to better meet business needs; the company’s digital camera business became a part of Digital Media Business Group.

Digital Media Business Group's scope encompasses a number of high-growth products having strong synergies with each other. We aim to capitalize on these synergies, beginning with projector and LCD TV -- centerpieces of the digital home and office.

Main Products Digital projectors, LCD TV's, Joybee (MP3 players), digital cameras, DVD recorders, DVD±RW, and plasma displays.

Review of Operations Business Results Digital Media Business Group’s revenue grew 140% year-on-year. Projectors and LCD TV's were key growth drivers.

2004 SALES REVENUE UP 140% YOY Projector LCD TV ; Sales Revenue ; NT$ million

0 5,000 10,000 15,000 20,000 Note: above data exclude digital camera product's sales revenue

MP3 Player - BenQ Joybee 210 20 21 Digital Media Business Group

Product Features and Awards

Home Cinema Projector - PE8720 Home Theater LCD Display - DV3250 Digital Camera - E53 Key Features, Awards and Benefits

■ DLP™ Technology with DC3 DMD chip ■ Senseye™ Technology ■ Slim design - business card size ■ 1280x720 (720P) WXGA resolution ■ Independent color adjustment ■ High quality/resolution 2.5” LTPS LCD display ■ 6200:1 superior high contrast ratio ■ DCDi de-interlacing ■ 3x optical zoom equipped with high sensitivity ■ Multi-level contrast enhancement powered by a ■ Professional Home Theater video and audio chip image sensor; could also support TV resolution advanced 30-step IRIS ■ HDTV Compatible and 30 frames per second; fluid video recording ■ Senseye™ Technology with extreme dark level & ■ SRS TruSurroundR XT sound effect and playback vivid true color ■ 16:9 ratio guarantees zero distortion ■ BenQ DC6310: Winner of Germany’s iF Design ■ 2004 Taiwan Design Excellence Award ■ 12 ms fast response time Award

Home Theater LCD Display - BenQ DV3250 20 21 Research & Development Technologies in deployment

● The brightest projector (2500 lm) in 5lb category ● 720p HDTV home projector ● Full product line of LCD TV from 15" to 46" ● HD built-in DVD recorder from 160G to 400G ● MP3 player including DRM and stylish ID

On-going efforts

● 1080p HDTV home projector ● 3000 lm above high brightness projector ● SXGA+ high resolution projector BenQ Joybee 200 / 2004 G-Mark Design Award ● HDTV for ATSC, open cable and DVB system ● "Thin" type DLP RPTV over 70" ● Built-in wireless transmission connecting LCD TV, projector and DVD recorder ● Portable media player ● Home media center with the hot appearance and function ● HTiB: Multi-function home theater system ● Thin type, high-contrast DSC

Industry, Product Overview and Outlook Projectors Last few years have seen projectors becoming increasingly affordable and its use becoming commonplace in offices. A leading designer and maker of DLP projectors, BenQ has seen its projector business grow many times in size over the past three years. 2004 was a year in which BenQ recorded superlative, profitable growth; BenQ shipped approximately 400,000 units of projectors in 2004, making BenQ one of the world's top DLP projector makers. Leveraging its strong distribution channel, BenQ established a strong brand in the projector space. The company enjoyed success working with its dealers, who in turn were handsomely remunerated for their partnership. LCD TV According to DisplaySearch, worldwide demand for LCD TV in 2004 was over eight million units, with a market size of US$10.6 billion in value terms. 20-21" models were mainstream and entering into 2005 we are seeing outstanding growth in 30-34" sizes. We believe LCD TV pricing is slowly but surely entering the consumer's "sweet spot," with LCD TV's now priced, in many markets, at less than 2.5x multiple of comparable-sized CRT TV's. Just as demand for LCD monitor began to accelerate when the LCD/CRT multiple dropped below 2.5/3.0x of monitors, we believe demand for LCD TV should begin to take-off in 2005.

As price continues to fall, it seems 2005 will to be the year LCD TV becomes a truly viable replacement product to CRT TV. Demand will also be aided by capacity additions of 6G and 7G TFT-LCD panel fabs. The newer fabs should enable the panel makers to enjoy greater economies of scale and lower the cost of 30-37" models. We believe consumer electronics channel/retailers eager to add a big-ticket item such as LCD TV to its shelves should also help drive demand.

22 23 Digital Media Business Group

Product Strategy in 2005 Projector

BenQ is executing the following strategies in relation to our projector business: ● Expanding business scope - Connecting with PC applications. Broadening product portfolio to include new high lumens, low cost and wireless integrated models; - Connecting with audio-video, crossover applications and HDTV; and - Connecting with mobile phone, e.g., hand-held projectors. ● Delivering BenQ value with high customer satisfaction and superior product quality.

LCD TV

BenQ is executing the following strategies our relation to LCD TV business: ● Leveraging BenQ’s platform of IT products and vertical integration in LCD panels. ● Target markets: - Expanding LCD-TV’s application from consumer business applications; and - Countries targeted: Canada, Switzerland, Germany, Australia, Taiwan, China and Hong Kong. ● Working with strategic partners to secure critical domain knowledge and integrate the company's proprietary Senseye™ Technology into our product lines. ● Creating economies of scale and cost advantages - ensuring efficient supply and high quality via strong supply chain management.

BenQ Projectors "BenQ has been rising like a comet in the projector sky" -- Computer Partner Germany "Best possible picture quality" -- IT Business NET Austria

Projector - BenQ PB7230 22 23 Storage Business Unit BenQ’s storage products business, formerly part of the Imaging Network Business Group (ING), reorganized from ING and changed its name to Storage Business Unit beginning 2005.

Main Products CD-ROM, CD-RW, DVD-ROM, Combo and DVD±RW drives

Review of Operations Business Results BenQ was the first company in the world to introduce and manufacture 16X DVD±RW drives -- one quarter ahead of our competitors. Capitalizing on product success, sales revenue of the storage business grew 46% year-on-year in 2004.

2004 SALES REVENUE UP 46% YOY Optical Disc Drives ; Sales Revenue ; NT$ million

0 10,000 20,000 30,000

DVD±RW - BenQ EW162I 24 25 Storage Business Unit

Product Features and Awards

DVD Rewriter- DW1620 DVD Rewriter - DW1625 LightScribe DVD Rewriter - TW200D Key Features, Awards and Benefits

■ Unprecedented, fastest DVD recording speed ■ Direct disc labeling: burn silkscreen-quality disc ■ High-speed USB2.0 interface for simple ■ Double layer recordable DVD labels direct from your PC with LightScribe installation ■ 8x media over-speed burning at 12x or higher ■ Simplicity: no-hassle labels; just burn the disc, ■ 2.4x DVD+R double layer, 8x DVD±R, 4x DVD± speed flip it and burn the label RW, 24x CDR/RW writing speeds ■ High-speed signal algorithm ■ Mobility: labels can be burned wherever and ■ Double the storage capacity to 8.5GB for a 4-hour ■ QVideo 2.0 for easy real-time recording whenever a disc is burned, no need for a printer of DVD-quality video recording ■ Winner of Taiwan’s PC Magazine 2004, Most ■ Creativity: freedom to combine text and graphics ■ QVideo 2.0 + QSuite for user-friendly application Popular Product the way you like it ■ Tilt control algorithm -- provides dynamic tilt ■ Winner of Singapore’s Hardware Zone, 5-Star ■ 16x DVD+R, 8x DVD-R, 2.4x double layer, 4x calibration to achieve uniform writing quality ■ Winner of Europe’s CDRInfo, Editor’s Choice DVD±RW, 40x/24x CDR/RW writing speeds throughout the entire writing process ■ Winner of Europe’s CDFreaks, Editor’s Choice ■ Winner of Germany’s Chip, Best Buying Tips ■ Winner of Spanish’s PC World, 5-Star

Research & Development Technologies in deployment

● 16x DVD±RW drive ● Slim-type DVD±RW ● DVD recorder module

On-going efforts

● Superior compatibility and user-friendly drives/recorders ● Easy-to-use applications, such as QVideo and Qphone solutions DVD±RW - BenQ DW1625

24 25 Industry, Product Overview and Outlook Overview and Outlook

Independent research institute Techno Systems Research (TSR) projects worldwide optical disc driver (ODD) shipment to grow only 5% in 2005E with revenue declining 5% due to ASP erosion.

According to TSR, global half-height (H/H) DVD±RW shipment doubled to 43 million units in 2004 and will grow another 37% to 58 million units in 2005E and 22% in 2006E.

In 2004, we saw smaller players exited the market. To succeed, we strongly believe it is critical to have scale and ownership of critical intellectual properties. Despite the challenging environment, we expect to further extend market, technology and scale leadership.

Competition and Market Share

BenQ has been collaborating on optical disc drive technology with Philips thru Philips BenQ Digital Storage (PBDS) joint venture. BenQ intends to compete more aggressively for OEM orders on slim-type optical drives, a growth area for the company.

Global Top Five Optical Disc Drive Makers' Rankings and Shares

rank Total ODD Total H/H

1 HLDS 29.7% HLDS 32.8%

2 TSST 19.6% TSST 20.9%

3 Lite-on 14.9% Lite-on 19.1%

4 Matsushita 7.0% BenQ/PBDS 8.8%

5 BenQ/PBDS 6.6% NEC 5.1%

rank DVD±RW(H/H) DVD-ROM(H/H)

1 HLDS 22.0% HLDS 39.6%

2 NEC 18.1% Samsung 17.1%

3 BenQ/PBDS 14.9% Lite-on 16.8%

4 Pioneer 11.8% BenQ/PBDS 10.4%

5 Lite-on 11.1% Pioneer 8.9%

Source: TSR, 2004Q4

26 27 Storage Business Unit

BenQ is also ahead of Taiwan competitors in the release of 16x H/H DVD±RW models. Leveraging advanced product design, our ODD business supplanted NEC in the global top five. BenQ also manufactures own brand H/H optical disc drives for replacement/ clone outlets as well as drives for OEM customers. According to TSR, BenQ ranked No.4 globally in the fourth quarter of 2004 in terms of shipment of H/H drives.

Product Strategy in 2005

● The company is well positioned to further expand market share. Key initiatives include : - Expanding global market share; and - Expanding product line to include slim-type drives.

● Leveraging the company’s close collaboration with Philips, a worldwide leader in optical disc drive technology, and own research & development. The company in 2005 plans to : - Launch blu-ray products; - Launch proprietary QVideo, QScan, and QSuite applications to better serve professional users; - Deliver DVD recorder for consumer application; and - Further leverage Philips relationship into product wins.

DVD±RW - BenQ EW1640

26 27 Computer Products Strategic Business Unit Computer Products Strategic Business Unit was spun off from Digital Media Business Group. BenQ is strengthening the Joybook business in a number of ways. We are benchmarking product-development, logistics, channel management, and service infrastructure against that of world-class branded IT companies.

Main Products Joybook (Laptop PC), Desktop PC, and PC related products.

Review of Operations Business Results In 2004, we strengthened our channel strategy execution in Europe and Asia. We focused on markets such as Germany, Italy, China, Russia etc., and we are targeting to become a top-ten laptop vendor in China in 2005. Our Joybook team aims to continue upgrading its technology and enhance the display quality utilizing Senseye™ Technology. We expect a further break-through in our Joybook business by leveraging synergies with other BenQ product lines such as mobile phone, digital storage, etc.

2004 SALES REVENUE UP 60% YOY Joybook ; Sales Revenue ; NT$ million

0 1,500 3,000 4,500

BenQ Joybook S52 28 29 Computer Products Strategic Business Unit

Product Features and Awards

Joybook 2000 Joybook 8100 Joybook 7000 Key Features, Awards and Benefits

■ 14.1” (4:3) laptop for business market ■ 15.4” 200 nits high brightness widescreen display ■ First 14” (15:9) wide-screen laptop globally ■ Thin and light for customers who travel ■ ATI® MOBILITY™ RADEON™ 9600 3D graphic ■ 200nits ultra-bright laptop extensively chip ■ Drawing inspiration from hardcover books, ■ Designed with silver top cover and dark gray ■ Great wireless connectivity combines refined aesthetics with cutting-edge housing ■ Built-in 2 Firewire 1394 ports for integrating technology ■ Expandable slots via USB and Firewire interface various digital devices. ■ Sturdy yet light magnesium alloy casing ■ Super software management interface with live ■ Integrated remote controller ■ Pioneering thermal system “Frontal air-intake” update ■ In-house design QMedia Center entertainment ■ King-sized keyboard ■ Intelligent online version update software and software ■ No-latch design QMessenger ■ Winner of 2004 iF China Design Award ■ Integrated remote controller ■ Winner of 2004 iF China Design Award ■ QPower-Intelligent power management system ■ Winner of 2004 Japanese G-Mark Design Award ■ Winner of Taiwan Symbol of Excellence ■ Winner of Germany’s Reddot Design Award

Research & Development Technologies in deployment

● 12.1", 14" and 15.4" wide-screen laptops ● Ultra-portable Joybook 6000 and glare-type Joybook 7000 series ● New generation Joybook S52, S72, A82 of Intel® Sonoma platform

On-going efforts

● Launching green-product laptops in conformity with RoHS standards ● Augmenting multimedia applications by adopting advanced graphic and audio technology ● Adding the state-of-art solutions with data protection for business users

28 29 Industry, Product Overview and Outlook According to Taiwan’s Market Intelligence Center (MIC) projection, global laptop market in 2004 reached 47 million units, growing over 25% compared with 36 million units in 2003. PC applications going mobile remained the key growth driver in 2004. With declining laptop ASP, laptop sales in proportion to overall PC market should continue to grow.

According to IDC, demand for laptop PC is expected to reach 84 million units in 2008. We believe demand for laptop PC will remain strong for the next few years and the launch of Intel's Napa Dual-core platform in 2006 and Microsoft’s new LongHorn operating system will be key drivers of growth.

Explosion of Laptop PC in Developed Markets Unit shipment to Year 2009

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: IDC

2004-2009 CAGR

Asia Pacific Japan USA W. Europe RO-W Worldwide

15.4% 3.4% 21.5% 15.7% 20.2% 16.9%

Source: IDC

30 31 Computer Products Strategic Business Unit

Product Strategy in 2005 Key elements of BenQ’s product strategy include:

● Targeting individuals and small & medium businesses. ● Geographic focus: China, Germany, Taiwan, Italy and Russia. ● Product strategies: - Wide-screen format, high brightness display for play & work; - Enhanced user interface - QMedia; - Implementing Senseye™ Technology on higher-end models. ● Efficient channel management; enhancing organizational management and building strong channel relationships as a continuous goal.

BenQ Joybook S52

30 31 Corporate Governance

Home Theater LCD Display - BenQ DV3250

33 Cor p or ate Gover nance

B o ard of Directors & Super v isors

Chair man - K. Y. Lee Director - She affer Lee Director - Joseph Hung

Director - Stan Shih Director - Teddy Lu Director - HB Chen

Director - Ding-Yuan Yang Super v isor - Philip Peng Super v isor - S.C. Hong

2005.03.31 Title/Name Educat ion & Exp er ience Other Related Dut ies MBA, Switzer land IMD Chair man: AU Op t ronics Cor p. Chair man - B.S., Elec t r ical Eng ine er ing , National Taiwan Universit y D irec tor : Darfon Elec t r ics Cor p., Daxon Te chnolog y Inc. K. Y. Lee Vice President of Acer PC Produc t Market ing D irec tor - B.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y Chair man: Darfon Elec t ronic Cor p. Sheaffer Lee Assistant Vice President of Acer Amer ica D irec tor : AU Op t ronics Cor p., Gallant Precision Machining Co., B.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y - D irec tor - Assistant Vice President of Acer PC Produc t Market ing Joseph Hung Executive Vice President of B enQ M.S., Elec t ronical Eng ine er ing , National Chiao Tung Universit y Chair man: iD SoftCapital Inc. D irec tor - Chair man of Acer Group D irec tor : Acer Inc., Wistron Cor p., NanshanLife Insur ance Co., Taiwan Stan Shih Semiconduc tor Manufac tur ing Company M.S. & MBA, UCLA Chair man: Apacer Te chnolog y Inc. Market Manager of Ele c t ronics Research & Ser v ice Organizat ion, Director : Ace r In c . , Gr a n d Tech C G Sy s te m s In c . , R D C S e m i co n d u c to r D irec tor - Indust r ial Te chnolog y Research Institute Co., Ltd. Te ddy Lu Gener al Manager of Acer Europe Executive Vice President of Acer Semiconductor Manufacturing Inc. B.S., Communication Eng ine er, National Chiao Tung Universit y Chair man: Wel ly p ower Op t ronics Co. Ltd. D irec tor - Gener al Manager of B enQ Malaysia D irec tor : Konly Venture Cor p. HB Chen President: AU Op t ronics Cor p. Ph. D., Princeton Universit y Chair man: UniSVR Global Infor mat ion Te chnolog y Cor p., Ra diantech Inc., D irec tor - M.S., Stanford Universit y Integ r ated System Solution Cor p., FameG SOTA Desig n D ing-Yuan Yang President of Winbond Elec t ronics Cor p. Te chnolog y Inc. Vice Chair man of Winbond Elec t ronics Cor p. D irec tor : CheerTek Incor p or at ion, Opnet Te chnolog ies Co., Ltd. M.S., Business of Administr at ion, National ChengChi Universit y D irec tor : Sheng-Hua Venture Capital Cor p. Super v isor - S enior Vice President & CFO of Acer Inc. Super v isor : Apacer Inc., Wistron Cor p., Philip Peng President: iD SoftCapital Inc. B.S., Economics, National Taiwan Universit y Chair man: Giga Venture Part ners & Co. Super v isor - Vice President of Far Easter n Textile Ltd. D irec tor : Apacer Te chnolog y Inc. S.C. Hong President of Hotung Inter nat ional Company Ltd. Super v isor : Ascendaz Venture Capital Cor p. President of Hotung Venture Capital Cor p.

33 Methodology of Corporate Governance

Creating Value for Shareholders and Giving Back to the Community is an Integral Part of BenQ Value BenQ’s board of directors (BOD) aims to continue acting in the best interest of our shareholders, in accordance with commonly accepted corporate governance principles. It’s with the highest standard that our board members work closely with a dedicated team of supervisors and certificate public accountants in carrying out its supervisor duty.

The board members shall benchmark BenQ against best-in-class corporate governance practices in safeguarding shareholders’ interests and making recommendations that will enhance return-on-investment to our shareholders.

- K.Y. Lee, Chairman & CEO

Maximize Shareholder Value While Supervising the Board of Directors as an External Supervisor BenQ Supervisor should review the company financial statements on a timely basis, and work together with management team, internal auditors, and external auditors to review major accounting principles, thereby maximizing shareholder value through strict internal controls and audit. Through constant assessments of risk control, and participation of the board of directors meetings as an observer, the Supervisor oversees the execution and resolution of the company's board of directors. BenQ Supervisor is entrusted with enhancing the efficiency of the board by making recommendations addressing weaknesses in the company's daily operations.

- Philip Peng, Supervisor

34 35 Cor p or ate Gover nance

Recent Material Resolutions Approved by Annual General Meeting and Board of Directors Meeting

Date Mee t ing Approval Events

1.Accep ted B enQ 2003 business rep or t and financial statements. Net sales of parent company for 2003 was NT$108.6 bil lion and of consolidated entit y was NT$128.2 bil lion, and net income after tax was NT$7,500 mil lion, with ear ning s p er share of NT$3.63. 2.Approved the proposal for dist r ibution of 2003 profits and capitalization of 2003 div idends and employee 2004.03.03 2004 1st B OD Mee t ing profit shar ing . Stock div idend of NT$1.0 p er share and cash div idend of NT$1.5 p er share w il l b e dist r ibuted to shareholders. 3.Approved to convene 2004 Annual Gener al Mee t ing . 4.Approved the record date for ret ir ing 30,000,000 shares of share repurchase.

2004.03.29 2004 2nd B OD Mee t ing Approved to repurchase 30,000,000 shares.

1.Accep ted B enQ financial statements for the three months ending on March 31, 2004. 2.Approved to change the proposal for dist r ibution of 2003 profits and capitalization of 2003 div idends and employee profit shar ing . Stock div idend of NT$1.0 p er share and cash div idend of NT$2.0 p er share w il l b e dist r ibuted to 2004.04.27 2003 3rd B OD Mee t ing shareholders. 3.Approved to issue of 3rd Unsecured Cor p or at ion Bond w ithin the amount of NT$4 bil lion. 4.Approved to invest Nanking Ming-Ji Hospital within US$20 mil lion.

1.Accep ted B enQ 2003 business rep or t and financial statements. 2004 Annual Gener al 2.Approved the proposal of B OD for dist r ibution of 2003 profits and capitalization of 2003 div idends and employee 2004.05.20 Mee t ing profit shar ing . 3.Approved the proposal of B OD to rev ise the Ar t icles of Incor p or at ion.

1.Approved the record date for ret ir ing 4,457,000 shares of share repurchase. 2004.06.01 2004 4th B OD Mee t ing 2.Approved the record date for stock and cash div idends.

1.Accep ted B enQ financial statements for the six months ending on June 30, 2004. 2.Approved the merger w ith B enQ Mobile System Inc.(BMS, 100% ow ne d by BenQ Cor p or at ion). 2004.08.19 2004 6th B OD Mee t ing 3.Approved to invest BenQ Medical Center Suzhou (BMCS) in Mainland China by BenQ (L) Cor p. (BQlb, 100% ow ne d by BenQ Cor p or at ion) w ithin the amount of US$20 mil lion.

2004.10.28 2004 8th B OD Mee t ing 2.Accep ted B enQ financial statements for the nine months ended S ep tember 30, 2004.

1.Accep ted B enQ 2004 business rep or t and financial statements. Net sales of parent company for 2004 was NT$147.7 bil lion and of consolidated entit y was NT$174.7 bil lion, and net income after tax was NT$7,619 mil lion, with ear ning s p er share of NT$3.30. 2005.02.04 2005 1st B OD Mee t ing 2.Approved to rev ise the Ar t icles of Incor p or at ion. 3.Approved to ele c t D irec tors and Super v isors. 4.Approved to invest BenQ (shang hai) Ltd. in Mainland China by BenQ (L) Cor p. 5.Approved to convene 2005 Annual Gener al Mee t ing

Approved the proposal for dist r ibution of 2004 profits and capitalization of 2004 div idends and employee profit 2005.03.16 2005 2nd B OD Mee t ing shar ing . Stock div idend of NT$0.5 p er share and cash div idend of NT$1.5 p er share w il l be dist r ibuted to shareholders.

34 35 Management Team Management Resources

BenQ is led by a seasoned management team with a proven track record of product innovation and delivering returns to shareholders:

● Long tenure with BenQ - Solid and Stable

● Strongest branding management team in Taiwan

● Unrivaled in product design & execution

● Lifestyle Design Center enhancing value of BenQ products

36 37 Cor p or ate Gover nance

Cor p or ate Execut ive Officers 2005.03.31

Title Name Personnel Educat ion & Exp er ience Other Related Dut ies

MBA, Switzer land IMD Chair man: AU Op t ronics Cor p. Chair man & CEO K.Y. Lee B.S., Elec t r ical Eng ine er ing , National Taiwan Universit y D irec tor : Darfon Elec t r ics Cor p., Vice President of Acer PC Produc t Market ing Daxon Te chnolog y Inc. Chair man: Darfon Elec t ronic Cor p. B.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y President & CO O Sheaffer Lee D irec tor : AU Op t ronics Cor p., Assistant Vice President of Acer Amer ica Gal lant Precision Machining Co., EVP- EMBA, Thunder bird Inter nat ional Management Institute Jer r y Wang Chair man: BenQ Asia Pacific Inc. CMO Vice President, Cor p or ate Br and Management, Acer Chair man: Daxon Te chnolog y Inc. D irec tor : Gallant Precision Machining Co., Ltd. VP- MBA, Str athclyde Gra duate business School, U.K. Er ic Ky Yu Super v isor : AU Op t ronics Cor p., CFO Cont roller, BenQ Malaysia Dar fon Elec t ronics Cor p., Airoha Te chnolog y Inc. VP- Ph.D., EE, Universit y of Mar y land Networ king & Ir w in S Chen D irec tor : Airoha Te chnolog y Inc. Manager, Qualcomm Inc. Communications BG VP- EMBA, National Taiwan Universit y D isplay & Imag ing Her mit Huang - Ele c t ronics Eng ine er ing , National Taipei Institute of Te chnolog y BG MBA, National Cheng Chi Universit y VP- EMBA, Thunder bird Inter nat ional Management Institute D irec tor : Darfon Elec t ronics Cor p. Peter Chen D ig ital Media BG B.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y Manager, R&D in Display Business, TECO VP- Ph.D., Elec t r ical Eng ine er ing , Universit y of Color a do Advanced Technolog y William Wang - M.S., Institute of Ele c t ro-opt ical Eng ine er ing , National Chiao Tung Universit y Center VP- Ph.D., Elec t r ical Eng ine er ing , National Taiwan Universit y Advanced Technolog y Kelv in Lee M.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y - Center B.S., Elec t r ical Eng ine er ing , National Cheng Kung Universit y VP- Global EMBA, Pacific Wester n Universit y CM Wu - Manufac tur ing B.S., Elec t ronics Eng ine er ing , Chung Yuan Chr ist ian Universit y O p er at ion Office D irec tor : StarBex Inter nat ional Inc., VP YS Hong B.S., Elec t ronics Eng ine er ing , Feng Chia Universit y PSITech Information Technology Co., Ltd. EMBA, National Cheng Chi Universit y VP- B.S., Engine er ing Science, National Cheng Kung Universit y Chair man: Airoha Te chnolog y Inc. Business Str ateg y Rick Lei President, Acer Dig ital S er v ice Cor p. Office President, BenQ Mobile System Inc. EMBA, National Cheng Chi Universit y AVP- M.S., Elec t r ical Eng ine er ing , New Yor k Universit y-Stony Brook Alpha Tsai D irec tor : Copax Photonics Cor p. Stor age BU B.S., Elec t r ical Eng ine er ing , Nation Taiwan Universit y President, Copax Photonics Cor p. AVP- M.S., Mechanical Eng ine er ing , National Cheng Kung Universit y Computer Produc ts Hank Hor ng Executive, PC Div ision, IBM Taiwan - St r ateg ic BU Executive, Str ateg y & D e velopment, IBM China AVP- MBA, National Cheng Chi Universit y Vince Liaw - Display & Imaging BG B.S., ME, National Taiwan Universit y D irec tor- MBA, National Taiwan Universit y JY Hu - D ig ital Media BG B.S., Applied Mathematics D irec tor- M.S., ME, Universit y of Oregon Computer Produc ts Richard Hsu - B.S., ME, Feng Chia Universit y St r ateg ic BU D irec tor- National Taiwan Universit y Apr il Huang - D ig ital Media BG Daxon Te chnolog y Inc. AVP- MBA, New Yor k Universit y Alex Liou - Finance Div ision B.S., Business Administr at ion, National Taiwan Universit y

36 37 Group Organization Company Organization Chart

Shareholders' Meeting

Supervisors

Board of Directors

Chairman Audit Office

CEO

Corporate Sales Business Administrative Operation Operation Operation Operation

Regional Branding Networking Digital Display & Computer Manufacturing Advanced Finance Legal Office Communications Storage BU Products Technology Operation Department BG Media BG Imaging BG Strategic BU Operation Center Division

Business Lifestyle Manufacturing China Taiwan Development HR Division Strategy Office Design Center Office

Corporate Digital Music Global Quality America China Assurance ITS Division Venture Office Center Office

Europe Malaysia

Asia Pacific Mexicana

38 39 Cor p or ate Gover nance

Affiliated Companies 2004.12.31

38 39 Company Financials

LCD Monitor - BenQ FP785 Digital Camera - BenQ E53

41 Company Financials

Capital and Shares Shares Ty p e and Shares Outstanding

Author ized Shares Shares Typ e Notes Outstanding Shares* Un-issued Shares Total Shares Common Shares 2,316,556,831 683,443,169 3,000,000,000 List ing Shares

*include entitlement cer t ificates

O w nership and Dist r ibut ion of Shares As of March 26, 2003 As of March 23, 2004 As of March 20, 2005 Number of Number of Number of Number of Number of Number of Shares Held Shareholders Shares Held Shareholders Shares Held Shareholders D omestic Indiv iduals 823,455,485 134,931 1,106,555,909 148,350 1,243,416,470 159,595 O ther Domestic Cor p or at ions 558,643,613 439 470,860,064 358 468,232,477 319 Foreig n Institutions and Indiv iduals 176,941,823 331 337,349,511 296 418,149,857 316 Gover nment Agencies 78,214,970 7 79,385,388 6 113,568,260 9 D omestic Financial Institutions 43,795,134 39 73,327,335 29 73,189,767 28 Total 1,681,051,025 135,747 2,067,478,207 149,039 2,316,556,831 160,267

D omestic Indiv iduals Other Domestic Cor p or at ions Foreig n Institutions and Indiv iduals Gover nment Agencies Domestic Financial Institutions

Home Theater LCD Display - BenQ DV4680 41 Net Worth, Earning, Dividend and Market Price Per Share Unit: NT$; Per Share Year 2003 Year 2004 Market Price Per Share Highest Market Price 52.5 53.5 Lowest Market Price 35.1 30.3 Average Market Price 43.3 39.5 Net Worth Per Share (Note 1) Before Distribution 21.82 21.25 After Distribution 17.64 - Earnings Per Share (EPS) Weighted Average Number of Shares 2,068,267,262 2,310,824,748 EPS 3.63 3.30 EPS-adjusted (Note 2) 3.24 - Dividend Per Share Cash Dividend 1.5 2.0 Stock Dividend- Earnings 2.0 1.0 Stock Dividend- Capital Surplus - - Accumulated Undistributed Dividend - - Return On Investment Price/Earning Ratio (Note 3) 11.92 11.96 Price/Dividend Ratio (Note 4) 28.85 19.74 Cash Dividend Yield Rate (Note 5) 3.47% 5.07%

Note 1: Subject to change after shareholders’ resolution Note 2: Retroactive adjustment for capitalization of bonus Note 3: Price/Earning ratio = Average market price/Earnings per share Note 4: Price/Dividend ratio = Average market price/Cash dividends per share Note 5: Cash dividend yield rate = Cash dividends per share/ Average market price

Dividend Policy

According to BenQ's Article of Incorporation, the company's dividend policy is as follows:

If the company has surplus profits at the end of each business year, the profit are to be first used to pay taxes and make good of past losses and then set up 10% as legal reserve. The balance, if any, shall be used to pay dividends before being allocated as follows: a. Employee bonus: 5% to 10%; b. Remuneration of directors and supervisors: 1% or less; and c. The balance shall be distributed partially or totally as shareholders’ bonus. Method of distribution and ratio of bonus may be adjusted by the shareholders meeting.

2000-2004 Cash Dividend Payout Ratios

2000 2001 2002 2003 2004*

*To be approved at 2005 Annual General Meeting

42 43 Company Financials

Share Repurchase History

Instance 1st Round 2nd Round 3th Round Action To transfer to employees RETIRED RETIRED Period 2001.09.26-2001.11.25 2003.12.16-2004.02.15 2004.03.30-2004.05.29 Price Range NT$19-49 per share NT$40-45 per share NT$40-45 per share Volume 20,000,000 common shares 30,000,000 common shares 4,457,000 common shares Amount NT$528,762,700 NT$1,256,063,300 NT$196,605,100 Shares Cancelled or Transferred Volume 20,000,000 common shares 30,000,000 common shares 4,457,000 common shares Accumulated Holding(%) N/A N/A N/A. Accumulated Holding as a Percentage of Total Issued Shares(%) 0% 0% 0%

Committed to Returning Cash to Shareholders BenQ is increasing cash returns to investors as the company generates more free cash.

Home Theater LCD Display - BenQ DV3250 42 DVD Recorder - BenQ DE700 43 BenQ Corporation Non-consolidated Balance Sheets December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars)

2002 2003 2004 Assets NT$ NT$ NT$ US$ Current assets: Cash and cash equivalents 2,025,668 1,139,573 599,457 18,886 Short-term investments 9,788,595 3,480,521 5,431,034 171,110 Notes and accounts receivable 6,180,678 8,300,466 5,463,363 172,129 Receivables from related parties 14,298,627 19,737,093 20,528,554 646,772 Other financial assets - current 52,269 69,620 91,054 2,869 Inventories 3,234,679 5,464,505 3,859,895 121,610 Prepaid expenses and other current asset 218,668 299,150 306,704 9,663 Deferred income tax assets – current 816,543 927,183 551,148 17,364 Total current assets 36,615,727 39,418,111 36,831,209 1,160,403 Long-term equity investments : Equity method 23,281,441 27,416,958 30,393,198 957,568 Cost or lower-of-cost-or-market method 2,484,173 2,429,781 1,594,978 50,251 25,765,614 29,846,739 31,988,176 1,007,819 Property, plant and equipment : Land 2,040,680 2,379,356 2,135,472 67,280 Buildings 3,594,740 3,958,980 3,552,100 111,913 Machinery and equipment 2,255,146 2,285,664 2,452,524 77,269 Furniture and fixtures 103,001 131,842 139,819 4,405 Miscellaneous equipment 59,046 74,264 69,770 2,198 Prepayments for plant and equipment 190,481 129,274 212,610 6,699 8,243,094 8,959,380 8,562,295 269,764 Less: accumulated depreciation (1,637,661) (2,087,349) (2,492,858) (78,540) Net property, plant and equipment 6,605,433 6,872,031 6,069,437 191,224 Other assets: Rental assets - 457,208 1,013,907 31,944 Assets for sale 667,187 - - - Refundable deposits 9,553 7,368 53,083 1,672 Deferred expenses 130,895 129,718 130,810 4,121 Deferred income tax assets – noncurrent 64,794 78,050 788,418 24,840 Total other assets 872,429 672,344 1,986,218 62,577 Total assets 69,859,203 76,809,225 76,875,040 2,422,023

2002 2003 2004 Liabilities and Stockholders’ Equity NT$ NT$ NT$ US$ Current liabilities: Short-term borrowings 588,729 - - - Current portion of long-term debt 40,190 - - - Notes and accounts payable 6,053,794 6,963,455 5,875,657 185,118 Payables to related parties 12,832,710 16,126,912 13,339,328 420,269 Bonds payable 2,333,953 201,700 1,400 44 Accrued expenses and other current liabilities 3,965,001 4,624,427 3,576,749 112,689 Income taxes payable 765,984 61,364 251,707 7,930 Deferred inter-company profit 177,207 167,560 5,377 169 Total current liabilities 26,757,568 28,145,418 23,050,218 726,219 Bonds payable 1,388,160 2,697,351 4,287,855 135,093 Other liabilities 435,153 504,492 459,104 14,465 Total liabilities 28,580,881 31,347,261 27,797,177 875,777 Stockholders’ equity : Common stock 16,810,510 20,838,612 23,150,141 729,368 Convertible bonds applied for conversion - 13,436 - - 16,810,510 20,852,048 23,150,141 729,368 Capital Surplus: Additional paid-in-capital in excess of the common stock’s par value 5,238,950 5,238,950 5,152,848 162,345 Convertible bonds converted in excess of the common stock’s par value 6,461,269 6,923,885 7,106,864 223,909 Capital surplus from treasury stock transactions 2,981 7,239 6,812 215 Capital surplus from long-term equity investments 1,592,873 1,408,202 2,421,756 76,300 13,296,073 13,578,276 14,688,280 462,769 Legal reserves 1,764,452 2,504,415 3,254,424 102,534 Retained earnings 8,721,127 8,931,983 8,144,108 256,588 Translation adjustment 766,083 476,861 (81,754) (2,576) Treasury stock (79,923) (881,619) (77,336) (2,437) Total stockholders’ equity 41,278,322 45,461,964 49,077,863 1,546,246 Commitments and contingencies Total liabilities and stockholders’ equity 69,859,203 76,809,225 76,875,040 2,422,023

44 45 Company Financials

BenQ Corporation Non-consolidated Statements of Income Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars, except earnings per share)

2002 2003 2004 NT$ NT$ NT$ US$ Net Sales 93,229,317 108,698,931 147,770,156 4,655,645 Cost of goods sold (81,093,024) (98,448,398) (136,071,972) (4,287,082) 12,136,293 10,250,533 11,698,184 368,563 Change in unrealized inter-company profits 86,902 9,648 162,182 5,110 Gross profits 12,223,195 10,260,181 11,860,366 373,673 Operating expenses : Selling (3,087,963) (3,086,025) (3,433,615) (108,180) Administrative (968,979) (1,092,148) (957,431) (30,165) Research and development (1,728,792) (2,838,847) (3,726,225) (117,398) (5,785,734) (7,017,020) (8,117,271) (255,743) Operating income 6,437,461 3,243,161 3,743,095 117,930 Non-operating income: Interest income 22,669 9,132 6,972 220 Investment income recorded under the equity method, net 1,369,338 3,722,494 3,563,548 112,273 Dividend income 144,079 208,539 169,032 5,326 Gain on disposal of property, plant and equipment 4,041 1,918 3,250 102 Gain on disposal of investments, net 715,660 252,911 382,275 12,044 Foreign currency exchange gain, net 34,374 210,004 278,086 8,761 Others 111,305 178,308 200,053 6,303 2,401,466 4,583,306 4,603,216 145,029 Non-operating expense: Interest expense (309,267) (178,167) (245,046) (7,721) Impairment loss on long-term equity investment - - (350,000) (11,027) Loss on disposal of property, plant and equipment (8,174) (26,054) (19,269) (607) Others (29,944) (2,729) (3,470) (109) (347,385) (206,950) (617,785) (19,464) Net income before income tax expense 8,491,542 7,619,517 7,728,526 243,495 Income tax expense (1,091,913) (119,422) (109,238) (3,442) Net income 7,399,629 7,500,095 7,619,288 240,053 Earnings per share : Basic earnings per share 3.28 3.24 3.30 0.104 Diluted earnings per share 3.20 3.18 3.28 0.103

44 45 BenQ Corporation Non-consolidated Statements of Changes in Stockholders’ Equity Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars)

Common Convertible Capital Legal Retained Translation Treasury Total Stock Bonds Applied Surplus Reserves Earnings Adjustment Stock for Conversion NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$

Balance at January 1, 2002 13,810,879 - 8,189,351 1,461,316 4,387,139 821,817 (529,449) 28,141,053 Net income for 2002 - - - - 7,399,629 - - 7,399,629 Appropriation of earnings and capital surplus: Legal reserves - - - 303,136 (303,136) - - - Retained earnings transferred to common stock 1,616,568 - - - (1,616,568) - - - Capital surplus transferred to common stock 279,664 - (279,664) - - - - - Cash dividends - - - - (1,118,655) - - (1,118,655) Directors’ and supervisors’ remuneration - - - - (27,282) - - (27,282) Convertible bonds converted to common stock and capital surplus 1,103,399 - 3,790,532 - - - - 4,893,931 Treasury stock sold to employees - - 954 - - - 529,449 530,403 Treasury stock held by subsidiaries ------(79,923) (79,923) Cash dividends paid to subsidiaries which hold the Company’s share - - 2,027 - - - - 2,027 Adjustments of net equity of investee companies - - 1,592,873 - - - - 1,592,873 Change in foreign currency translation adjustment - - - - - (55,734) - (55,734) Balance at December 31, 2002 16,810,510 - 13,296,073 1,764,452 8,721,127 766,083 (79,923) 41,278,322 Net income for 2003 - - - - 7,500,095 - - 7,500,095 Appropriation of earnings and capital surplus: Legal reserves - - - 739,963 (739,963) - - - Retained earnings transferred to common stock 3,861,102 - - - (3,861,102) - - - Cash dividends - - - - (2,521,577) - - (2,521,577) Employee bonus in cash - - - - (100,000) - - (100,000) Directors’ and supervisors’ remuneration - - - - (66,597) - - (66,597) Convertible bonds converted to common stock and capital surplus 167,000 13,436 462,616 - - - - 643,052 Treasury stock acquired by the Company ------(802,425) (802,425) Change in treasury stock held by subsidiaries ------729 729 Cash dividends paid to subsidiaries which hold the Company’s share - - 4,257 - - - - 4,257 Adjustments of net equity of investee companies - - (184,670) - - - - (184,670) Change in foreign currency translation adjustment - - - - - (289,222) - (289,222) Balance at December 31, 2003 20,838,612 13,436 13,578,276 2,504,415 8,931,983 476,861 (881,619) 45,461,964 Net income for 2004 - - - - 7,619,288 - - 7,619,288 Appropriation of earnings and capital surplus: Legal reserves - - - 750,009 (750,009) - - - Retained earnings transferred to common stock 2,517,592 - - - (2,517,592) - - - Cash dividends - - - - (4,123,924) - - (4,123,924) Employee bonus in cash - - - - (50,626) - - (50,626) Directors’ and supervisors’ remuneration - - - - (67,501) - - (67,501) Convertible bonds converted to common stock and capital surplus 138,507 (13,436) 301,337 - - - - 426,408 Treasury stock acquired by the Company ------(651,354) (651,354) Treasury stock retired (344,570) - (211,698) - (897,511) - 1,453,779 - Change in treasury stock held by subsidiaries ------1,858 1,858 Cash dividends paid to subsidiaries which hold the Company’s shares - - 6,812 - - - - 6,812 Adjustments of net equity of investee companies - - 1,013,553 - - - - 1,013,553 Change in foreign currency translation adjustment - - - - - (558,615) - (558,615) Balance at December 31, 2004 23,150,141 - 14,688,280 3,254,424 8,144,108 (81,754) (77,336) 49,077,863

46 47 Company Financials

BenQ Corporation Non-consolidated Statements of Cash Flows Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars)

2002 2003 2004 NT$ NT$ NT$ US$ Cash flows from operating activities: Net income 7,399,629 7,500,095 7,619,288 240,053 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 524,268 567,446 546,988 17,233 Amortization 98,695 96,092 66,409 2,092 Change in provision for bad debt (24,805) 1,068 (20,184) (636) Change in provision for inventory obsolescence 6,843 101,025 (78,094) (2,461) Investment income on long-term equity investments, net (1,369,338) (3,722,494) (3,563,548) (112,273) Cash dividends received from investees accounted for by equity method 129,776 322,528 1,015,008 31,979 Loss (gain) on disposal of long-term equity investments, net (552,778) (5,850) 2,478 78 Gain on disposal of short-term investments (162,882) (247,061) (384,753) (12,122) Impairment loss on long-term investment - - 350,000 11,027 Loss on disposal of property, plant and equipment, net 4,133 24,136 16,019 505 Loss on physical count of property, plant and equipment - 865 - - Fixed assets transferred to expenses 258 2,400 158 5 Unrealized foreign exchange gain on overseas convertible bonds (86,175) (30,361) (22,578) (711) Provision (reversal) for redemption of overseas convertible bonds 152,518 (20,037) (10,509) (331) Amortization of bond issuance costs 37,352 4,605 1,067 34 Differences in accounts in the accompanying balance sheets: Notes and accounts receivable (871,190) (2,103,226) 2,841,037 89,510 Receivables from related parties (3,838,552) (5,713,522) (775,212) (24,424) Inventories 847,535 (2,330,851) 1,682,705 53,015 Other financial assets - current 282,343 (17,351) (21,434) (675) Prepaid expenses and other current assets (10,731) (80,483) (3,418) (108) Deferred income tax assets 337,831 (123,896) (334,333) (10,533) Notes and accounts payable (373,575) 909,661 (1,087,798) (34,272) Payables to related parties 6,199,460 3,294,202 (2,787,584) (87,826) Deferred inter-company profit (86,902) (9,647) (162,182) (5,110) Accrued expenses and other current liabilities 2,094,312 659,521 (1,047,679) (33,008) Income tax payables 204,153 (704,620) 190,343 5,997 Other liabilities (19,155) (19,105) (19,105) (602) Net cash provided by (used in) operating activities 10,923,023 (1,644,860) 4,013,089 126,436 Cash flows from investing activities: Additions to long-term equity investments (961,018) (948,184) (316,131) (9,960) Decrease (increase) in short-term investments (6,155,887) 6,555,135 (1,565,760) (49,331) Additions to property, plant and equipment (1,205,609) (669,858) (343,109) (10,810) Proceeds from disposal of long-term equity investments 958,737 36,788 5,243 165 Proceeds from disposal of property, plant and equipment 100,877 17,209 52,829 1,664 Increase in refundable deposits and deferred assets (128,956) (97,334) (64,178) (2,022) Receipt from investees’ capital reduction 191,628 114,138 506,586 15,961 Cash inflow as a result of BMS merge - - 215,020 6,775 Net cash provided by (used in) investing activities (7,200,228) 5,007,894 (1,509,500) (47,558) Cash flows from financing activities: Decrease in long-term debt (640,190) (40,190) - - Decrease in short-term borrowings (996,834) (588,729) - - Redemption of convertible bonds (5,000) (2,129,611) (200,300) (6,311) Treasury stock sold to employees 530,403 - - - Acquisition of treasury stock - (802,425) (651,354) (20,521) Directors’ and supervisors’ remuneration (27,283) (66,597) (67,501) (2,127) Issuance of bonds - 2,000,000 2,050,000 64,587 Payment of cash dividends (1,118,654) (2,521,577) (4,123,924) (129,928) Bonuses for employees - (100,000) (50,626) (1,595) Net cash used in financing activities (2,257,558) (4,249,129) (3,043,705) (95,895) Net increase (decrease) in cash and cash equivalents 1,465,237 (886,095) (540,116) (17,017) Cash and cash equivalents at beginning of year 560,431 2,025,668 1,139,573 35,903 Cash and cash equivalents at end of year 2,025,668 1,139,573 599,457 18,886 Additional disclosure of cash flow information: Cash paid during the year for: Interest, excluding capitalized interest 31,405 190,853 161,760 5,096 Income taxes 549,929 947,938 253,228 7,978 Supplemental disclosure of non-cash investing and financing activities: Change in capital surplus from long-term equity investments 1,592,873 (184,670) 1,013,553 31,933 Change in translation adjustment (55,734) (289,222) (558,615) (17,600) Convertible bonds converted to common stock and capital surplus 4,893,931 643,052 426,408 13,434

46 47 BenQ Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars)

2002 2003 2004 Assets NT$ NT$ NT$ US$ Current assets: Cash and cash equivalents 4,124,705 4,730,777 3,218,141 101,391 Short-term investments 10,284,782 4,924,930 6,357,091 200,286 Notes and accounts receivable 15,081,239 20,454,217 19,151,261 603,379 Receivables from related parties 670,144 1,663,264 2,954,474 93,084 Other financial assets-current 1,006,262 1,359,189 1,619,547 51,025 Inventories 13,126,618 18,727,921 17,475,733 550,590 Prepaid expenses and other current assets 691,805 862,341 1,228,357 38,701 Deferred income tax assets-current 923,288 1,145,600 713,734 22,487 Total current assets 45,908,843 53,868,239 52,718,338 1,660,943 Long-term equity investments: Equity method 13,035,101 15,491,051 20,375,230 641,942 Cost or lower-of-cost-or-market method 3,441,677 3,011,574 2,039,273 64,249 16,476,778 18,502,625 22,414,503 706,191 Property, plant and equipment: Land 2,675,996 2,990,924 3,322,173 104,668 Buildings 7,800,300 8,617,217 8,665,352 273,010 Machinery and equipment 11,391,062 12,959,163 14,670,790 462,218 Furniture and fixtures 399,806 550,999 691,058 21,772 Miscellaneous equipment 821,332 644,605 728,329 22,947 Leasehold improvements 284,997 359,090 425,597 13,409 Prepayments for plant and equipment 849,394 1,724,884 3,345,729 105,411 24,222,887 27,846,882 31,849,028 1,003,435 Less: accumulated depreciation (6,567,736) (7,457,032) (9,621,341) (303,130) Net property, plant and equipment 17,655,151 20,389,850 22,227,687 700,305 Other assets: Refundable deposits 131,795 24,266 57,385 1,808 Deferred expenses and other assets 1,434,367 1,598,641 992,097 31,257 Deferred income tax assets-noncurrent 593,901 404,536 1,205,019 37,965 Total other assets 2,160,063 2,027,443 2,254,501 71,030 Total assets 82,200,835 94,788,157 99,615,029 3,138,469

2002 2003 2004 Liabilities and Stockholders’ Equity NT$ NT$ NT$ US$ Current liabilities: Short-term borrowings 4,624,753 4,875,326 3,410,317 107,446 Current portion of long-term debt 921,590 477,087 523,961 16,508 Notes and accounts payable 17,555,195 22,980,325 20,643,071 650,380 Payables to related parties 3,276,839 4,837,176 6,249,039 196,882 Bonds payable 2,433,953 301,700 101,400 3,195 Accrued expenses and other current liabilities 7,556,144 8,523,620 7,704,191 242,728 Total current liabilities 36,368,474 41,995,234 38,631,979 1,217,139 Bonds payable 1,788,160 2,997,351 4,487,855 141,394 Long-term debt 939,373 1,632,989 4,746,883 149,555 Other liabilities 36,670 142,227 137,698 4,338 Total liabilities 39,132,677 46,767,801 48,004,415 1,512,426 Minority interest 1,789,836 2,558,392 2,532,751 79,797 Stockholders’ equity: Common stock 16,810,510 20,838,612 23,150,141 729,368 Convertible bonds applied for conversion - 13,436 - - 16,810,510 20,852,048 23,150,141 729,368 Capital surplus 13,296,073 13,578,276 14,688,280 462,769 Legal reserve 1,764,452 2,504,415 3,254,424 102,534 Retained earnings 8,721,127 8,931,983 8,144,108 256,588 Translation adjustment 766,083 476,861 (81,754) (2,576) Treasury stock (79,923) (881,619) (77,336) (2,437) Total stockholders’ equity 41,278,322 45,461,964 49,077,863 1,546,246 Commitments and contingencies Total liabilities and stockholders’ equity 82,200,835 94,788,157 99,615,029 3,138,469

48 49 Company Financials

BenQ Corporation and Subsidiaries Consolidated Statements of Income Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars except earnings per share)

2002 2003 2004 NT$ NT$ NT$ US$ Net sales 110,311,839 128,224,676 174,740,823 5,505,382 Cost of goods sold (92,228,803) (109,214,343) (153,943,682) (4,850,148) Gross profit 18,083,036 19,010,333 20,797,141 655,234 Operating expenses: Selling (6,265,750) (7,710,533) (10,162,283) (320,172) Administrative (2,168,340) (2,659,289) (2,689,958) (84,750) Research and development (2,202,064) (3,468,174) (4,522,975) (142,501) (10,636,154) (13,837,996) (17,375,216) (547,423) Operating income 7,446,882 5,172,337 3,421,925 107,811 Non-operating income: Interest income 56,636 35,556 71,802 2,262 Investment income recorded under the equity method, net 635,404 2,180,238 4,163,068 131,162 Dividend income 158,240 212,109 185,270 5,837 Gain on disposal of investments, net 867,053 706,590 439,356 13,843 Foreign exchange gain, net 38,288 206,066 409,510 12,902 Others 299,184 331,334 344,864 10,865 2,054,805 3,671,893 5,613,870 176,871 Non-operating expenses: Interest expense (563,897) (361,178) (475,537) (14,982) Impairment loss on long-term equity investment - - (471,879) (14,867) Others (608,482) (444,567) (98,921) (3,117) (1,172,379) (805,745) (1,046,337) (32,966) Income before income taxes and minority interest 8,329,308 8,038,485 7,989,458 251,716 Income tax expense (1,069,198) (473,281) (302,957) (9,545) Income before minority interest 7,260,110 7,565,204 7,686,501 242,171 Minority interest in net loss (income) of subsidiaries 139,519 (65,109) (67,213) (2,118) Net income 7,399,629 7,500,095 7,619,288 240,053 Earnings per share : Basic earnings per share 3.28 3.24 3.30 0.104 Diluted earnings per share 3.20 3.18 3.28 0.103

48 49 BenQ Corporation and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars)

Convertible Common Bonds Applied Capital Legal Retained Translation Treasury Stock for Conversion Surplus Reserves Earnings Adjustment Stock Total NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ Balance at January 1, 2002 13,810,879 - 8,189,351 1,461,316 4,387,139 821,817 (529,449) 28,141,053 Net income for 2002 - - - - 7,399,629 - - 7,399,629 Appropriation of earnings and capital surplus: Legal reserves - - - 303,136 (303,136) - - - Retained earnings transferred to common stock 1,616,568 - - - (1,616,568) - - - Capital surplus transferred to common stock 279,664 - (279,664) - - - - - Cash dividends - - - - (1,118,655) - - (1,118,655) Directors’ and supervisors’ remuneration - - - - (27,282) - - (27,282) Convertible bonds converted to common stock and capital surplus 1,103,399 - 3,790,532 - - - - 4,893,931 Treasury stock sold to employees - - 954 - - - 529,449 530,403 Treasury stock held by subsidiaries ------(79,923) (79,923) Cash dividends paid to subsidiaries which hold the Company’s share - - 2,027 - - - - 2,027 Adjustments of net equity of investee companies - - 1,592,873 - - - - 1,592,873 Change in foreign currency translation adjustment - - - - - (55,734) - (55,734) Balance at December 31, 2002 16,810,510 - 13,296,073 1,764,452 8,721,127 766,083 (79,923) 41,278,322 Net income for 2003 - - - - 7,500,095 - - 7,500,095 Appropriation of earnings and capital surplus: Legal reserves - - - 739,963 (739,963) - - - Retained earnings transferred to common stock 3,861,102 - - - (3,861,102) - - - Cash dividends - - - - (2,521,577) - - (2,521,577) Employee bonus in cash - - - - (100,000) - - (100,000) Directors’ and supervisors’ remuneration - - - - (66,597) - - (66,597) Convertible bonds converted to common stock and capital surplus 167,000 13,436 462,616 - - - - 643,052 Treasury stock acquired by the Company ------(802,425) (802,425) Change in treasury stock held by subsidiaries ------729 729 Cash dividends paid to subsidiaries which hold the Company’s share - - 4,257 - - - - 4,257 Adjustments of net equity of investee companies - - (184,670) - - - - (184,670) Change in foreign currency translation adjustment - - - - - (289,222) - (289,222) Balance at December 31, 2003 20,838,612 13,436 13,578,276 2,504,415 8,931,983 476,861 (881,619) 45,461,964 Net income for 2004 - - - - 7,619,288 - - 7,619,288 Appropriation of earnings and capital surplus: Legal reserves - - - 750,009 (750,009) - - - Retained earnings transferred to common stock 2,517,592 - - - (2,517,592) - - - Cash dividends - - - - (4,123,924) - - (4,123,924) Employee bonus in cash - - - - (50,626) - - (50,626) Directors’ and supervisors’ remuneration - - - - (67,501) - - (67,501) Convertible bonds converted to common stock and capital surplus 138,507 (13,436) 301,337 - - - - 426,408 Treasury stock acquired by the Company ------(651,354) (651,354) Treasury stock retired (344,570) - (211,698) - (897,511) - 1,453,779 - Change in treasury stock held by subsidiaries ------1,858 1,858 Cash dividends paid to subsidiaries which hold the Company’s shares - - 6,812 - - - - 6,812 Adjustments of net equity of investee companies - - 1,013,553 - - - - 1,013,553 Change in foreign currency translation adjustment - - - - - (558,615) - (558,615) Balance at December 31, 2004 23,150,141 - 14,688,280 3,254,424 8,144,108 (81,754) (77,336) 49,077,863

50 51 Company Financials

BenQ Corporation and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 2002, 2003 and 2004 (expressed in thousands of New Taiwan dollars and US dollars)

2002 2003 2004 NT$ NT$ NT$ US$ Cash flows from operating activities: Net income 7,399,629 7,500,095 7,619,288 240,053 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Minority interest in net (loss) income of subsidiaries (139,519) 65,109 67,213 2,118 Depreciation 2,035,920 2,361,880 2,863,015 90,202 Amortization 186,543 199,560 154,087 4,855 Impairment loss of property, plant and equipment 91,655 - 12,686 400 Loss on disposal of property, plant and equipment 41,837 67,277 38,012 1,198 Fixed assets transferred to expenses 463 6,603 3,941 124 Loss on physical count of property, plant and equipment - 865 - - Gain on disposal of short-term investments (182,342) (397,605) (405,605) (12,779) Gain on disposal of long-term investments (682,099) (314,040) (33,750) (1,063) Impairment loss on long-term investment 65,136 269,317 471,879 14,867 Gain on disposal of common stock of subsidiaries (2,612) 5,055 - - Investment income on long-term equity investments, net (635,404) (2,180,238) (4,163,068) (131,162) Cash dividends received from investees accounted for by equity method - 302,305 917,217 28,898 Unrealized foreign exchange gain on overseas convertible bonds (86,175) (30,361) (22,578) (711) Provision (reversal) for redemption of overseas convertible bonds 152,518 (20,037) (10,509) (331) Amortization of bond issuance costs 38,518 5,770 2,233 70 Differences in accounts in the accompanying balance sheets: Notes and accounts receivable (3,328,395) (5,372,978) 1,302,956 41,051 Receivables from related parties 1,623,698 (993,120) (1,291,210) (40,681) Inventories (2,133,923) (5,601,303) 1,252,188 39,451 Prepaid expenses and other current assets 28,884 (523,464) (626,674) (19,744) Deferred income tax assets 208,275 (32,947) (368,617) (11,614) Notes and accounts payable 2,364,426 5,425,130 (2,337,254) (73,637) Payables to related parties 1,156,877 1,560,337 1,424,117 44,868 Accrued expenses and other current liabilities 2,561,058 404,221 (819,429) (25,817) Other liabilities (1,769) 67,803 4,630 146 Deferred income tax liabilities - 37,754 10,566 333 Net cash provided by operating activities 10,763,199 2,812,988 6,065,334 191,095 Cash flows from investing activities: Proceeds from disposal of property, plant and equipment 184,509 406,697 160,257 5,049 Additions to property, plant and equipment (2,847,457) (4,958,721) (5,007,614) (157,770) Increase in deferred expenses and other assets (5,020) (242,348) (73,824) (2,326) Proceeds from disposal of long-term equity investments 1,697,773 662,461 122,299 3,853 Increase in long-term equity investments (938,413) (1,203,830) (775,282) (24,426) Proceeds from disposal of common stock of subsidiaries 9,970 84,425 - - Increase in common stock of subsidiaries - 4,560 - - Receipt from investees’ capital reduction 191,628 114,138 539,510 16,998 Decrease (increase) in short-term investments (5,644,549) 5,837,457 (1,030,884) (32,479) Net cash provided by (used in) investing activities (7,351,559) 704,839 (6,065,538) (191,101) Cash flows from financing activities: Payment for cash dividends (1,116,627) (2,517,320) (4,123,924) (129,928) Bonuses for employee - (100,000) (50,626) (1,595) Increase (decrease) in short-term borrowings (620,719) 250,573 (1,465,009) (46,156) Increase (decrease) in long-term debt (843,175) 249,113 3,160,768 99,583 Issuance of bonds - 2,000,000 2,050,000 64,587 Redemption of bonds (5,000) (2,229,611) (300,300) (9,461) Directors’ and supervisors’ remuneration (27,283) (66,597) (67,501) (2,127) Increase (decrease) in minority interest 54,491 490,905 (98,064) (3,090) Decrease (increase) in treasury stock 530,403 (802,425) (651,354) (20,522) Net cash used in financing activities (2,027,910) (2,725,362) (1,546,010) (48,709) Effect of exchange rate changes on cash and cash equivalents (34,361) (186,393) 33,578 1,058 Net increase (decrease) in cash and cash equivalents 1,349,369 606,072 (1,512,636) (47,657) Cash and cash equivalents at beginning of year 2,775,336 4,124,705 4,730,777 149,048 Cash and cash equivalents at end of year 4,124,705 4,730,777 3,218,141 101,391 Supplemental disclosure of cash flow information: Cash paid during the year for: Interest, excluding capitalized interest 633,588 360,618 330,517 10,413 Income taxes 255,780 1,082,469 440,847 13,889 Supplemental disclosure of non-cash investing and financing activities: Convertible bonds converted to common stock and capital surplus 4,893,931 643,052 426,408 13,434

50 51 Contact Information

BENQ CORPORATION REGISTRAR & TRANSFER AGENT

Headquarters / Taoyuan Plant SinoPac Securities 157 Shan-Ying Road, Gueishan, Taoyuan 333, Taiwan, R.O.C. 3F, 53, Po Ai Road, Taipei 100, Taiwan, R.O.C. Phone: 886-3-359-8800 Phone: 886-2-2381-6288 http://www.sinopacsecurities.com Taipei office 18 Jihu Road, Neihu, Taipei 114, Taiwan, R.O.C. INDEPENDENT ACCOUNTANTS Phone: 886-2-2799-8800 Wu Kuo-Feng & Wang Ming-Jhy, CPA INVESTOR RELATIONS CONTACTS KPMG Peat Marwick 6th Fl., No. 156, Sec.3, Min-Sheng East Road, Taipei 105, Spokesperson Taiwan, R.O.C. Alex Liou Phone: 886-2-2715-9999 AVP & Controller http://www.kpmg.com.tw Phone: 886-3-359-8800 [email protected] DOMESTIC STOCK EXCHANGE LISTING

Deputy Spokesperson BenQ Common shares David W Huang Taiwan Stock Exchange Corporation Senior Manager of Finance http://www.tse.com.tw/en/ Phone: 886-3-359-8800 [email protected] OVERSEAS SECURITY EXCHANGE LISTING For further information, visit BenQ worldwide website and BENQ ON THE INTERNET login at Investor Relations BenQ’s Investor Relations home page on the worldwide website offers a wealth of corporate information, including BenQ Global Depositary Shares the latest annual report and financial results. Luxemburg Stock Exchange Website: BenQ.com/ir.htm ISIN: US0823012010 http://www.bourse.lu

BenQ Euro Convertible Bonds Luxemburg Stock Exchange ISIN: UX0124567602 http://www.bourse.lu

52 BenQ Fact Sheet 2005.03.31 Founded April 21, 1984 Paid-In Capital USD 685 Million Revenue 2003: USD 3.6 Billion 2004: USD 5.5 Billion CEO K.Y. Lee Management Team Executive Management: K.Y. Lee, Sheaffer Lee, Jerry Wang, Eric KY Yu, Jeff CH Li, Rick Lei Business Management: Hermit Huang, Irwin S. Chen, Peter Chen ,Alpha Tsai, Hank Horng Regional Operations Management: Adrian Chang, Conway Lee, Michael Tseng, Ralph Tang Corporate Vision Bringing Enjoyment and Quality to Life Product Focus Networked Digital Lifestyle Devices Product Overview Display & Imaging Business Group: ● LCD Monitor: 15", 17", 19", 20.1", 23" wide screen (No.3 LCD monitor maker worldwide) ● Imaging products: multi-function peripheral, multi-function printers (MFP) and scanners (No.1 Scanner maker worldwide) Networking & Communications Business Group: ● Mobile phone: GSM/GPRS mobile phones, CDMA/CDMA 2000 mobile phones, Smart Phones, PDA phones, 3G mobile phones ● Wireless Communications: GPRS+WiFi combo products, wireless modules Digital Media Business Group: ● Digital Projector: Digital Projector (data & video) ● LCD TV: 15", 20", 26", 30", 32", 37", 42", 46" LCD TV, 72" Rear Projection TV ● Personal AV: Joybee digital audio player, DVD recorder, portable DVD player ● Digital Camera: 2 ~6 Mega Pixels digital cameras Computer Products Strategic Business Unit: ● Joybook wide screen series laptop PC: 12", 13", 14", 15.4", 17" wide screen Storage Business Unit: ● Optical storage product: CD-ROM, CD-RW, DVD-ROM, Combi, DVD+RW (No. 1 DVD maker worldwide) Sales Offices 4 Regional Operations, 45 Sales & Branch Offices Worldwide ● Europe Regional HQ Sales Office: The Netherlands (DC Son) Benelux, Germany, United Kingdom, France, Italy, Spain (Portugal), Switzerland, Russia, Austria & Eastern Europe (Hungary, Poland, Romania) ● The Americas Regional HQ Sales Office: USA (Los Angeles) USA, Canada, Latin America (Mexico, Argentina, Brazil, Chile) ● China Regional HQ Sales Office: China (Suzhou) Suzhou, Beijing, Shanghai, Chengdu, Guangzhou, Wuhan, Shenyang, Xian, Hong Kong, Shenzhen, Harbin ● APAM* Sales Region: Taiwan (Taipei) Taiwan, Malaysia, India, Thailand, Singapore, Japan, Korea, UAE (Turkey), Australia (New Zealand) Manufacturing ● Taiwan, Taoyuan: Communications, Display Operations ● China, Suzhou: Communications, Display, Optoelectronics ● Malaysia, Penang ● Mexico, Mexicali Patents 2,100 global patents, 2,227 patents pending (2/2005) Quality Certifications ● Taoyuan Plant (Taiwan): ISO-9000, ISO-14000, ODC, OHSAS 18001, TL-9000 ● Suzhou Plant (China): ISO-9000, ISO-14000, TL-9000 ● Penang Plant (Malaysia): ISO-9000, ISO-14000, ODC ● Mexicali Plant (Mexico): ISO-9000, ISO-14000, OHSAS 18001 Sales Breakdown by China The Americas Europe APAM* Total Region 2004(％) 15 30 31 24 100 2003(％) 21 18 29 32 100 2002(％) 23 24 30 23 100 Market Share Products LCD Monitor Projector Storage Scanner Mobile Phone Market Shares(%)in 2004 11% 14% 9% 24% 2％ No. of Employees 14,375 employees, over 30 nationalities (2/2005) ● Taiwan (3,657), China (8,725), Malaysia (1,131), Other regions (862) ● R & D talents (over 2,000) BenQ Group AU Optronics Corp., Daxon Technology Inc., Darfon Electronics Corp., Airoha Technology Corp., Copax Photonics Corp., Darly Venture Inc., BenQ Guru Software Co., Ltd., Philips BenQ Digital Storage Corp, Gallant Precision Machinery Company Ltd, Cando Corp. Recognition ● 10 iF Design Award 2005 (Dec. 2004) ● 4 CES Innovations 2005 Design and Engineering Award (Nov. 2004) ● 9 Good Design Award 2004 (Oct. 2004) ● Interbrand’s Top 10 Global Taiwan Brands Survey: Ranking 6th (Oct. 2004) ● IDEA 2004 Bronze Award (July 2004) ● Business Week magazine "Hot Design" cover (July 2004) ● Business Week magazine "Top 100 Info Tech Companies": Ranking #77 (June 2004) ● 15 iF Design Award China 2004 (Apr. 2004) ● Economist "The World in 2004"- Recognizes BenQ for strategic branding efforts (Jan. 2004) ● Far Eastern Economic Review – Taiwan Top 10 Corporations and "Wins top spot for ● Innovation in response to customer needs" (Dec. 2003) ● 7 iF Design Award 2004 (Dec. 2003) ● 2003 Taiwan Outstanding Design Award (Nov. 2003) ● 14th Taiwan National Quality Award (Oct. 2003) ● 11th Taiwan Industrial Technology Advancement Distinguished Award (Sept. 2003) ● 6 iF Design Award China 2003 (Sept. 2003) ● Common Wealth - 1000 Manufacturing: Ranking 10th (May 2003, Taiwan) ● Business Weekly Taiwan - 1000 Manufacturing: Ranking 10th (May 2003) ● Forbes Magazine – Cover story: "The IQ in BenQ" (Feb. 2003) ● Business Week『THE IT 100』: Top 100 (2002, 2003, 2004) ● Far Eastern Economic Review – "Wins top spot for innovation in response to customer needs" (Dec. 2002) *Denotes Asia Pacific, Africa, Middle East 52