2018 Annual Report Printed on April 12, 2019 Company Spokesperson Hukou fab. Name: Jesse Huang Address: No. 4, Rende Rd., Feng Shan Vil., Title: Vice President, Strategy and Investor Hukou Township, Hsinchu County, Taiwan, Relations R.O.C. Tel: (03)598-5959 Tel:(03)577-0055 Fax: (03)598-3012 E-MAIL: [email protected] U.S. subsidiary Deputy Spokesperson Address: 2890 North First Street, San Jose, Name: Silvia Su CA 95134, U.S.A. Title:Vice President, Finance & Accounting Tel: 002-1-408-922-2777 Management Center Fax: 002-1-408-922-7275 Tel: (03)577-0055 E-MAIL: [email protected] Stock Transfer Agent Company: KGI Securities Co., Ltd., Transfer Headquarter and Fabs Agency Department Hsinchu Headquarter ( Hsinchu fab.) Address: 5F., No. 2, Sec. 1, Chongqing S. Rd., Address: No. 1, R&D Rd. 1, Hsinchu Science Zhongzheng Dist., Taipei City, Taiwan, Park, Hsinchu, Taiwan, R.O.C. R.O.C. Tel: (03)577-0055 Website: http://www.kgieworld.com.tw Fax: (03)566-8989 Tel: (02)2389-2999 Tainan fab. The Certified Public Accountants for the Address: No. 3 and No. 5, Nanke 7th Rd., Latest Annual Financial Statements Southern Taiwan Science Park, Tainan City, Company: PricewaterhouseCoopers,Taiwan Taiwan, R.O.C. Auditors: Chun-Yuan Hsiao, Chih-Cheng Hsieh Tel: (06)505-2388 Address: 27F., No. 333, Sec. 1, Keelung Rd., Fax: (06)505-2345 Xinyi Dist., Taipei City, Taiwan, R.O.C. Website: https://www.pwc.tw Zhubei fab. Tel: (02)2729-6666 Address: No. 37, Xintai Rd., Tai He Vil., Zhubei City, Hsinchu County, Taiwan, R.O.C. Foreign Securities Trade & Exchange Tel: (03)656-2078 ADS exchange: Fax: (03)553-2715 NASDAQ Stock Market Disclosed information can be found at: Zhubei fab. 2 https://www.nasdaq.com Address: No. 112, Zhonghe St., Tai He Vil., ADS code: IMOS Zhubei City, Hsinchu County, Taiwan, R.O.C. Tel: (03)598-5959 Corporate Website Fax: (03)553-2530 https://www.chipmos.com 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 System ........................................................................................................ 5 II. Information of Directors, Supervisors, President, Vice Presidents, Assistant Presidents, Officers of Departments and Branches ........................................................... 7 III. Remuneration to Directors (Including Independent Directors) , Supervisors, President and Vice Presidents .......................................................................................... 13 IV. Implementation of Corporate Governance ...................................................................... 18 V. Information Regarding Audit Fee .................................................................................... 53 VI. Replacement of CPA ........................................................................................................ 53 VII. Company's Chairman, President, or Any Manager in Charge of Finance or Accounting Matters has Held a Position at the Accounting Firm of Its CPA or at an Affiliated Enterprise of Such Accounting Firm in the Most Recent Year .............. 53 VIII. Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders in the Most Recent Year and Up to the Date of Publication of the Annual Report .................................................................................................................. 54 IX. Information on Top 10 Shareholders of the Company Who are Spouses or Relatives Within Two Degrees of Kinship to Each Other ............................................. 55 X. The Combined Shareholding and Ratio of the Company, Directors, Supervisors, Managers and Enterprises which Directly or Indirectly Controlled by the Company in Each Investee.................................................................................... 56 IV. Capital Overview I. Capital and Shares ........................................................................................................... 57 II. Bonds ............................................................................................................................. 62 III. Preferred Shares ............................................................................................................... 62 IV. Global Depository Receipts ........................................................................................... 63 V. Employee Stock Options and Restricted Employee Shares ............................................. 64 VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions ............... 67 VII. Financing Plans and Implementations ............................................................................. 67 V. Operational Highlights I. Business Contents ............................................................................................................ 68 II. Market, Production, and Sales Overview ........................................................................ 80 III. Employees Status ............................................................................................................. 94 IV. Environmental Expenditure Information. ........................................................................ 95 V. Labor Relations……….. .................................................................................................. 95 VI. Material Contracts ........................................................................................................... 96 VI. Financial Information I. Condensed Balance Sheets and Statements of Comprehensive Income.. ........................ 98 II. Financial Analysis for the Most Recent 5 Years ......................................................... 103 III. Audit Committee’s Report of the Most Recent Year ................................................... 106 IV. Financial Report of the Most Recent Year .................................................................... 107 V. Parent Company Only Financial Report of the Most Recent Year ................................ 190 VI. Explanations Regarding Impacts on Company's Financial Status in the Event that the Company or its Affiliates Have Financial Difficulties ..................................... 276 VII. Review of Financial Status, Financial Performance and Risk Management I. Analysis of Financial Status ........................................................................................ 277 II. Analysis of Financial Performance ................................................................................ 278 III. Analysis of Cash Flow ................................................................................................. 279 IV. Major Capital Expenditure Items ................................................................................. 279 V. Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year ................................. 279 VI. Analysis of Risk Management as of the Most Recent Year and as of the Publication Date of the Annual Report ........................................................................ 280 VII. Special Disclosure ....................................................................................................... 286 VIII. Other Special Disclosure I. Summary of Affiliated Companies ................................................................................ 287 II. Status of Company's Private Placement in the Most Recent Year and Up to the Date of Publication of the Annual Report ...................................................................... 288 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 ........................... 289 IV. Other Necessary Supplement .................................................................................... 289 IX. Any Event that Have Significant Impacts on Shareholders’ Rights or Security Prices as Stated in Item 2 of Paragraph 3 of Article 36 of Securities and Exchange Law in the Most Recent Year and Up to the Date of Publication of the Annual Report .................................................................... 289 I. Letter to Shareholders Dear Shareholders, Keep moving forward to deliver high technology, outstanding quality with reliable packaging and testing solutions are the unwavering principles of ChipMOS since its inception. According to our global business strategies, we remain alongside our strategic customers for supporting their product development roadmap to make progress and grow with them in the worldwide market, including Taiwan, China and United States. To maximize value for our shareholders is our endeavor goal. Notable Results of 2018 ． Completed the 2nd stage capital injection of Unimos, in Q1 2018. ChipMOS still owns 45.02% shares of Unimos after two stages of capital injections. ． Secured a new syndicated loan, NT$12.0 billion, with a five-year term in May 2018. It allowed ChipMOS to refinance its existing bank debt on favorable financial terms, while maintaining financial flexibility to support the