MediaTek Inc. 2011 Annual Report Publish Date: March 31, 2012 MediaTek annual report is available online at: TSE website: http://newmops.tse.com.tw MediaTek website: http://www.mediatek.com/en/Investor/financial03.php MediaTek Inc. | 2011 Annual Report 1 WorldReginfo - d74a30db-28e7-434a-ae22-237bcf5db662 Contact Information Spokesperson: Name: David Ku Title: Chief Financial Officer TEL: +886-(0)3-567-0766 Email: [email protected] Deputy Spokesperson: Name: Sophia Liang Title: Director, Investor Relations Division TEL: +886-(0)3-567-0766 Email: [email protected] MediaTek Inc. Headquarters: Address: No. 1, Dusing Rd. 1, Hsinchu Science Park, Hsinchu, Taiwan, R.O.C., 300 TEL: +886-(0)3-567-0766 Fax: +886-(0)3-578-7610 MediaTek Inc. Taipei Office: Address: No. 15, Lane 91, Sec. 1, Neihu Rd., Neihu District, Taipei, Taiwan, R.O.C., 114 TEL: +886-(0)2-2659-8088 Transfer Agent: Company: Chinatrust Commercial Bank, Corporate Trust Service Department Address: 5F, No. 83, Chungching S. Rd., Sec. 1, Taipei, Taiwan, R.O.C. TEL: +886-(0)2-2181-1911 Website: http://www.chinatrust.com.tw Independent Auditor: Company: Ernst & Young Auditors: Shao-Pin Kuo, Hsin-Min Hsu Address: 9F, No.333, Keelung Rd., Sec. 1, Taipei, Taiwan, R.O.C. TEL: +886-(0)2-2720-4000 Website: www.ey.com/tw MediaTek Inc. Website: Website: www.mediatek.com MediaTek Inc. | 2011 Annual Report 2 WorldReginfo - d74a30db-28e7-434a-ae22-237bcf5db662 2011 MediaTek Annual Report Table of Contents 1. Letter to Shareholders ............................................................................................................. 5 2. Company Profile ....................................................................................................................... 7 2.1. MediaTek Company Profile ................................................................................................ 7 2.2. Milestones........................................................................................................................ 7 3. Corporate Governance ........................................................................................................... 10 3.1. Organization .................................................................................................................. 10 3.2. Directors and Supervisors ............................................................................................... 12 3.3. Management Team ......................................................................................................... 16 3.4. Corporate Governance Report ......................................................................................... 19 3.5. Information Regarding MediaTek’s Independent Auditors .................................................. 26 3.6. Net Changes in Shareholding .......................................................................................... 27 3.7. Top 10 Shareholders Who are Related Parties to Each Other ............................................. 28 3.8. Long-Term Investment Ownership ................................................................................... 28 4. Capital and Shares .................................................................................................................. 29 4.1. Capital and Shares ......................................................................................................... 29 4.2. Status of Corporate Bonds .............................................................................................. 33 4.3. Status of Preferred Stocks ............................................................................................... 34 4.4. Status of GDR/ADR ......................................................................................................... 34 4.5. Status of Employee Stock Option Plan ............................................................................. 35 4.6. Status of New Shares Issuance in Connection with Mergers and Acquisitions ..................... 36 4.7. Financing Plans and Implementation ............................................................................... 37 5. Business Activities .................................................................................................................. 38 5.1. Business Scope .............................................................................................................. 38 5.2. Market, Production, and Sales Outlook ............................................................................. 46 5.3. Employees ..................................................................................................................... 53 5.4. Important Contracts ....................................................................................................... 54 6. Corporate Social Responsibility ............................................................................................. 55 6.1. Corporate Promise .......................................................................................................... 55 6.2. Social Participation ......................................................................................................... 58 6.3. Environmental Efforts ..................................................................................................... 61 7. Financial Status, Operating Results and Status of Risk Management .................................. 63 MediaTek Inc. | 2011 Annual Report 3 WorldReginfo - d74a30db-28e7-434a-ae22-237bcf5db662 7.1. Financial Status .............................................................................................................. 63 7.2. Operating Results ........................................................................................................... 65 7.3. Cash Flow Analysis ......................................................................................................... 66 7.4. Major Capital Expenditure ............................................................................................... 67 7.5. Investment Policies ......................................................................................................... 68 7.6. Risk Management ........................................................................................................... 68 7.7. Other Material Events ..................................................................................................... 73 8. Other Special Notes ................................................................................................................ 74 8.1. MediaTek Affiliates .......................................................................................................... 74 8.2. Private Placement Securities............................................................................................ 81 8.3. Holding or Disposition of MediaTek Stocks by Subsidiaries ................................................. 81 8.4. Other Significant Events .................................................................................................. 81 8.5. Other Necessary Supplement .......................................................................................... 82 9. Financial Information ............................................................................................................. 82 9.1. Condensed Balance Sheet ............................................................................................... 82 9.2. Condensed Income Statement ........................................................................................ 84 9.3. Independent Auditors’ Opinions ....................................................................................... 86 9.4. Financial Statements for the Past 5 Years ......................................................................... 86 9.5. Supervisors’ Review Report ............................................................................................. 91 9.6. Financial Statements and Independent Auditors’ Report – Parent Company ........................ 92 9.7. Financial Statements and Independent Auditors’ Report – MediaTek & Subsidiaries ................ 141 MediaTek Inc. | 2011 Annual Report 4 WorldReginfo - d74a30db-28e7-434a-ae22-237bcf5db662 1. Letter to Shareholders Dear Shareholders: 2011 remained a year of intense competition and challenges for the IC design industry and also MediaTek. Consumers were uncertain and cautious about the global economy, which limited the growth momentum in the end consumer markets. In order to stimulate demand, consumer electronics manufacturers aggressively launched new products with more added values, leading to even more fierce competition in terms of product specifications and prices. Faced such rapid industry changes and intensifying market competition, MediaTek employees endeavor to excel in their work, achieving a net consolidated revenue of NT$86.9 billion and an earnings per share of NT$12.35 for the fiscal year of 2011. MediaTek has long devoted itself to provide a wide range of high cost-performance products which were well received by customers and were able to sustain leading market shares. Aiming at the fast-increasing demand for smartphones in both China and emerging countries, MediaTek is forging ahead with the development of new product lines by extending mobile communications technology offerings from 3G to 4G smartphones. In 2011, we achieved a breakthrough success in smartphone sales and expect to see a huge business potential by triggering