2007 Annual Report - Mitac

Stock No: 23152007 Annual ReportMiTAC International CorporationMay 15, 2008 printedWebsite: http://newmops.tse.com.tw

1. Spokesman of MiTAC:Spokesman: Billy Ho / General ManagerActing spokesman: Justine Liu/ Manager of Public RelationsTel.: (03)396-2888 / (02)2627-1188E-mail: stock@mic.com.twJustine@mic.com.tw2. MiTAC International Corp.Headquarters & Factory1, Yuan-Far 2 nd Road, Hsinchu County, Hsinchu Industrial ParkTel.: (03)577-9250Linko Branch200, Win-Hua 2 nd Road, Qua-Sun Village, Taoyuan CountyTel.: (03)396-2888Neihu Office6F, 187, Sec. 2, Ti-Ding Road, Neihu District, Taipei CityTel.: (02)2627-11883. Stock agent (Stock agency)Name; Chinatrust, Stock agentAddress: 5F, 83, Sec. 1, Chung-Chin S. Road, Taipei CityTel.: (02)2181-1911Website: http://www.chinatrust.com.tw4. CPAsCPAs: Fang-Yu Wen and Yu-Kuan LinCPA Firm: PricewaterhouseCoopersAddress: 27F, 333, Sec. 1, Keelung Road, Taipei CityTel.: (02)2729-6666Website: http://www.pwc.com/tw/5. Offshore marketable security trade: Non6. Website: http://www.mitac.com

ContentPageI. To Shareholders ................................................................................................................... 1II. Company overviews ........................................................................................................... 41. Date of Establishment ................................................................................................... 42. Company profile............................................................................................................ 4III. Business Operation Report .............................................................................................. 81. Organizational structure ................................................................................................ 82. Information of Directors, Supervisors, General Manager, Vice GMs, AssistantGMs and managers...................................................................................................... 103. Business management ................................................................................................. 244. CPA’s dues.................................................................................................................. 345. New CPAs................................................................................................................... 346. The Company’s Chairman, General Manager, Finance or Accounting managerwho had worked for CPA’s firm or its affiliates within one year ............................... 347. Equity transfer and mortgage of directors, supervisors, managers, and shareholderswith over 10% shareholding........................................................................................ 358. Affiliated top ten shareholders .................................................................................... 369. Consolidated Stockholdings........................................................................................ 38IV. Funds Raising .................................................................................................................. 391. Capital and stock ......................................................................................................... 392. Debenture issuance...................................................................................................... 473. Preferred stock issuance .............................................................................................. 484. Overseas depository receipt ........................................................................................ 485. Employee’s stock option ............................................................................................. 556. New bonus shares for merger or accepting stock shares from anothercompany ...................................................................................................................... 627. Find plan and application ............................................................................................ 63V. Operations overview ......................................................................................................... 641. Operation report .......................................................................................................... 642. Market and sales overview.......................................................................................... 793. Workforce.................................................................................................................... 904. Expenses incurred to address environmental protection issues .................................. 915. Labor/Management Relations ..................................................................................... 946. Major contracts............................................................................................................ 97

VI. Financial Standing .......................................................................................................... 981. Most recent five-year Balance Sheet and Income Statement...................................... 982. Financial analysis for most recent five years ............................................................ 1003. Supervisors’ Report of the most recent year ............................................................. 1024. MiTAC International Corp. Consolidated Financial Statements and Report ofIndependent Accountants .......................................................................................... 103VII. Assessment of financial conditions operational results and potential risks ........... 1761. Financial status, discussion and analysis................................................................... 1762. Analysis of business results....................................................................................... 1763. Cashflow analysis...................................................................................................... 1784. Influence of major capital expenditures in the most recent year on financialcondition.................................................................................................................... 1785. Reinvestment policy in the most recent year, causes for reinvestment incomeand loss, remedial measures and the investment plan within the year...................... 1786. Risk management ...................................................................................................... 1797. Other important events .............................................................................................. 184VIII. Special events of record............................................................................................. 1851. Information of affiliates ............................................................................................ 1852. Subscription of marketable securities in the most recent year and up to thepublication of this annual report................................................................................ 1953. MiTAC stock shares held or disposed by subsidiaries in the most recent year andup to the publication of this annual report................................................................. 1954. Supplementary disclosure ......................................................................................... 1955. In the most recent year and the present year to the publication date of this annualreport, occurrence of events that might have a significant impact on shareholderrights or stock prices, as defined in Article 36, item 2, Part 2 of the “StockExchange Act”........................................................................................................... 195

I. To ShareholdersDear Ladies and Gentlemen:Thanks you for your encouragement and support to MiTAC in last year.In 2007, the global information technology industry had continuing and stable growth.MiTAC, the integrated service provider, IDMS (Innovation, Design, Manufacture, Service),while facing challenges from competitors managed to perform outstandingly for the bestinterest of shareholders with persistence for innovation, technology integration, and acomprehensive supply chain.Sales revenues and profitabilityMiTAC had accumulative sales revenue of NT$ 82.074 billion generated in 2007 thatrepresented slightly 0.97% decay from the sales revenue of NT$ 82.882 billion in 2006. Yet,by the change of product’s combination that GPS products have gained the percentage ofcombination, the gross profits was increasing to NT$ 6.492 billion, which is 5.89% up than2006 and was 100.5% achievement rate comparing to the original target. The net earnings pershare (EPS) were NT$ 4.07.Responding to business environment and R&D and product developmentInformation and telecommunications have grown successfully in the last a few years.MiTAC had growth in the wireless communication market with high gross profits earned.Global conjuncture was affected by the subprime mortgage crisis and up of oil prices,nonferrous metals and grains in 2007; therefore, market influence caused the IT industry torecover slowly. Yet, the market of GPS-functionable PND (Portal Navigation Device) is fastgrowing up. From the estimation of Canalys (the market study institute), the delivery capacityof PND in 2007 are up to 38.95 million sets, about 132% up than 2006 (16.77 million sets). Atthis moment, the ratio of vehicles running in American and European region that have beingequipped with GPS is still low, which is accelerating the fast developing of GPS-functionablePND market demanding that is relatively lower in price.Under this premise, the trend-oriented MiTAC has been focusing on the PND market that isa combination product of media amusement and digital mobile. Except to keep running on ournavigating brand, in 2007, we’ve merged Navman to enrich our R&D experiences andenhance software integration capability. Moreover, in 2007, we also have merged TyanComputer Corp., the leading vendor in the R&D of high-level mainboards. Except for PNDmarket, we’ve also enhanced our competition capability in the server and high-efficiencyoperation market as well.Regarding the pursuing of environment friendly by EU, MiTAC has accommodated toWEEE and RoHS to conduct in the design and supply chain framework in operation. In theR&D of server products, we devote to the environmental protection subject and conduct in theRoHS standard of products to make effort on elevating the application effectiveness of spaceand power consumption.By the regulations announced from the letter of Accounting Research and DevelopmentFoundation in Taiwan in March 2007, since 2008, all of employee’s bonus shares shall be part-1-

of the company’s expenses and not to be the surplus appropriation anymore. This enactmentchange makes little influence to MiTAC. For the new-added expense, we’ll balance it by moreeffective operation and alleviate the impact to minimum.The innovation and R&DTo the subjects of innovation and R&D, by following the past tradition, MiTAC had anamount equivalent to 2% of sales revenues appropriated in 2007 for R&D activities toreinforce the competitiveness of company taken as a whole. MiTAC had 248 patents filed in2007 ranking 6 th nationwide. It was indeed a much better ranking compared to the previousyear.To ensure leading, MiTAC applied its competition advances, strategic planning andefficient financial operation to launch to go on serving major customers, concentratecompany’s resources to develop strategic products; expand the leading superiority under thebasis of existed innovative integration and consistent to the environmental commitments. Weanticipate that all core products will demonstrate a strong growing trend to go on meeting thetargeted annual profits.Prospective in 2008In 2008, all product lines of MiTAC International will have innovative development andprogress. In term of terminal computer development, in addition to positively developing thecustomer-made products and x86 workstations products to maintain our products deliveryamount in certain level, we also are concentrating on the varied market scopes, such as kidsPC and MID for mobile Internet users, etc., to balance the personal characteristicdevelopment on computer tools. In terms of enterprise system product development, inaddition to developing the server industry further for upholding the competition advantagecontinuously, the mission is to have the mass production of new customers and productsarranged. In terms of high-level server products, regarding the high-speed computers andcluster computing application, we are going to develop more different kinds of high-densityand power-saving rack-based servers SFF. In terms of wireless communications, MiTAC willapply collective resources for the development and production of converged devices, usingperfectly planned navigation graphical software and combining Internet applications todevelop in the direction of value-added connected PND, and launch the customer-madeproducts and improve the convenience and smoothness of operating interface; in addition,MiTAC will devote to the completeness of graphical data and products with variedapplications; continuously enhance our competition advantage by means of application,integration, innovation, production quality, cost control. MiTAC will expand new marketthrough our strategic alliances, the internationally famous vendors, in hardware, software andcommunication services. We predict that the delivery amount of PND in 2008 will increasethan 2007.MiTAC International is confident about maintaining innovative R&D, developing uniquetechnology, and upholding customer satisfaction with core competence of “supply chainmanagement”, “brand management”, “technologies integration” “information management”and “product lifecycle management” under efficient operation and IT structure in the years tocome. MiTAC is determined to make a record in the competitive market by having theupstream and downstream supply chain integrated in order to provide a total solution, secure aleading position, and feedback to shareholders and society as a whole.Sincerely yours,-2-

Chairman: Matthew MiauGeneral Manager: Billy Ho-3-

1. Date of establishment: December 8, 1982II. Company overviews2. Company profile(1) Company milestones:1997 ‧MiTAC International US subsidiary SYNNEX successfully acquiredwell-known American distribution channel Computer-Land which wasunprecedented in Taiwan.‧MiTAC International HsinChu factory received ISO 14001 certification.‧Received the bronze medal at the sixth annual “National Invention Award”,demonstrating recognition of research capabilities in patentabletechnologies.‧ Essentia desktop and 5027–notebook computer won the “Best System” and“Best Portable” prizes in the “Best of Computex” awards organized byprofessional computer industry publication Byte Magazine.‧1784 FDW monitor won a Taiwan Symbol of Excellence award.‧MiTAC International marked the fifteenth anniversary of its founding,setting a corporate direction summarized by its slogan “Global ResourcesServing Individual Needs”.1998 ‧MiTAC International issued its second series of unsecured convertibledebenture bonds, raising NT$ 2 billion.‧ LCD PC, Essentia View LCD monitor, and 6031 notebook computer wonTaiwan Symbol of Excellence awards.‧Listed by the Ministry of Economics Affairs’ Bureau of “Foreign Trade as#10 for import/export performance” and “Ranked #17 among the Top 20Private Sector Manufacturers for 1998” as published in the Ministry ofEconomic Affairs’ yearbook.1999 ‧Announced taking of a stake in well-known American computer mainboarddesign house TYAN, thereby entering the market for high-end mainboard.‧A cash infusion of NT$ 500,000 thousand, surplus reinvestment of NT$1,270,857 thousand, and employee dividend recapitalization of NT$ 49,545thousand brought total paid-in capital to NT$ 7,674,597 thousand.‧MiTAC International and its invested subsidiaries were integrated to createthe “MiTAC International Group”, setting a new objective of becoming oneof the "Global 10" business groups.‧The Essentia 6731 slim desktop won a Taiwan Symbol of Excellence Award.‧Received recognition from “The HsinChu County Government as anOutstanding Corporate Taxpayer”.2000 ‧Established “MiTAC Computer (Shanhai) Ltd.”, “MiTAC Computer(Kunzhon) Ltd.” and “Shanghai MiTAC Research Ltd.” to expandproduction scale and respond to strategic deployment.‧Six products, including an LCD Monitor, WebPAD, PDA, and Router wonTaiwan Symbol of Excellence awards.‧Was ranked #14 for number of patent applications in 2000.‧Ws chosen by the Ministry of Economics Affairs’ Bureau of Foreign Tradeas “Outstanding Import/Export Vendor for 2000”.2001 ‧“Received a silver medal at the tenth annual National Invention Awards”, the-4-

second time it has been so honored.‧Ranked #7 among corporate entities in Taiwan for patent applications in2001, a large advance from its #14 ranking in 2000. It was ranked #8 interms of patent approvals.‧MiTAC International’s US subsidiary SYNNEX USA completed acquisitionof all shares of Merisel Canada, Inc.‧Slim Server, Home Router, & CF Card received the 10th Taiwan Symbol ofExcellence awards.2002 ‧MiTAC International Group celebrated its twentieth anniversary,establishing its business operations headquarters in Taiwan.‧MiTAC International became the first domestic vendor in Taiwan to applyfor and complete certification under the government’s “B Plan,” andreceived an award from the Ministry of Economic Affairs’ Development ofIndustrial Technology.‧“Received Supplier Meritorious Performance” Award from SunMicrosystems, Inc. for the second time.‧Selected by the Institute for Information Industry as one of the sixcompanies in 2002 with the richest portfolios of intellectual property assets,and was ranked #7 for the number of patent approvals.‧MiTAC International Group added a new member-“Tyan Computer”, aspecialist in the design of high-end motherboards. Tyan formally establishedits business headquarters in Taiwan. The addition of Tyan’s resourcesenabled MiTAC International’s high-end product line to be morecomprehensive, and allowing both sides to work jointly to expand theircustomer bases.‧MiTAC (Canton) ranked #5 exporter in Canton Province and # 18 exporternationwide.‧Jointly established “Y.S. Educational Foundation” with member companiesin the MiTAC Incorporated Group.2003 ‧Announced the world’s first flip smartphone; launched the world’s first“dual-wireless”, “dual-slot” Pocket PC, and the first Pocket PC with anintegrated camera. Debuted the world’s first product to combine a GPSnavigation system and PDA functionality for car: Mio 168 palm size GPS.‧Won Symbol of Excellence awards.‧Group company SYNNX Corporation of the United States had its IPO onthe New York Stock Exchange (November 25).2004 ‧MiTAC’s Book “98/2: Vitamin Plan” published, shared MiTAC’sexperience in digitalizing its operation. The book received a “Golden BookPrize” for 2004 awarded by the Ministry of Economic Affairs.‧Won Service Excellence Award for 2004, jointly awarded by marketingconsultancy Accenture and local Commonwealth magazine.‧Launched Taiwan’s first smartphone based on Microsoft’s newest operatingsystem, Windows MobileTM 2003 Software for Smartphone; launchedwidescreen, easy-to-use GPS navigation system with built-in exclusivetravel e-book.‧Won the 13th Symbol of Excellence award.‧Shipment of GPS navigation products climbed to #3 in the world.2005 ‧Indirect investment of US$4.2 million in MiTAC Research (Shanghai) tostrengthen its R&D capabilities and raise overall competitiveness.-5-

‧Indirect investment of US$5.5 million in MiTAC Technology (Suzhou) Co.,Ltd. to strengthen its vertically integrated capabilities and increase overallcompetitiveness.‧To coordinate with the second public share offering of SYNNEXCorporation, an American business in which MiTAC has invested, andrealize gains. MiTAC disposed of a portion of its stocks, valued atapproximately US$38 million.‧Ranked #67 by Business Week magazine in the magazine’s info Tech 100listing.‧Received the “Best Quality Supplier of the Year” award from DellComputer, “Best Supplier Performance” award from Fujitsu Siemens, and“Supplier Excellence Award” from NEC.2006 ‧Ranked #71 by Business Week magazine in the magazine’s info Tech 100listing.‧Received the “Preferred Quality Supplier Award” from Intel.‧Received the “Supplier Meritorious Performance Award” from SunMicrosystems Inc.‧Incorporated Mio Technology Korea to develop the Korean market.‧Mio DigiWalker H610 was awarded with iF design Award China 2006.‧8.5” portable TV MPV-800 was awarded with iF Product design Award2007.‧Mio DigiWalker H610 ranked by Business Week magazine as “The Best 20Products of 2006.”‧Mio DigiWalker H610 ranked by Times magazine as the “Cool Gear 2006Tech Buyer’s Guide.”2007 ‧In order to upgrade the competition advantage of wireless satellitenavigation system and global market share, MiTAC had acquired Navmantrademark of Brunswick Corporation and the related operating assets andliabilities (excluding cash) and the equipment of Navman Europe Ltd.,Naviart Ltd., and Naviart Information Technology (Shanghai) Co. Ltd.‧Incorporated Navman Technology Australia PTY LTD. in Sydney Australiato develop the local market.‧Incorporated Navman Technology NZ LTD. in Oakland, New Zealand todevelop the local market.‧Established the mobile communication R&D Centers in Cheng Du City(Mainland China) and Taiwan to reinforce R&D capability.‧Merged Tyan Computer Corp., – a solution plan supplier of HPC system.Tyan becomes a new business division of MiTAC International that workson products R&D, logistic accesses and sales.‧Received the “Supplier Meritorious Performance Award” from SunMicrosystems Inc.‧Mio brand won the fourth “Excellent Brand of Taiwan” award from TaiwanExternal Trade Development Council.‧Mio C720t won the “Best Choice of Computex Taipei 2007” award.‧Mio A702 & P560 won the “iF Design Award China 2007” award.‧Being selected as the excellent vendor of “Potential 99 -- Taiwan” by theETtoday TV channel‧Canalys data indicated that the “Mio” brand became worldwide top 3 ofnavigation products suppliers.-6-

‧Globally first launched the HPC-flex BLADE bare-bones system forworkgroups. Using upgraded cooling mechanism design and noise control toupgrade the HPC server’s work environment to ordinary office one andrealize the personal HPC idea.‧Launched the globally first AMD Opteron Double 1U server, whichassociates two server mainboards into one 1U rack to maximize the spacedensity of rack-based servers.‧Exclusively acquired the Intel Qualified Server Board (IQSB) certificationon high-end servers; and became the only vendor of IQSB plan.2008 ‧ Mio C230 won the “iF Design Award 2008” award.-7-

III. Business Operation Report1. Organizational structure(1) Organizational chart-8-

2. Responsibilities of major departmentsMajor DepartmentsAudit OfficeFinance CenterLegal Affairs CenterResource DevelopmentCenter 人Public Relation OfficeMIS CenterResponsibilities‧ Examine and evaluate internal control mechanisms to ensurethey are thorough and effective; provide analysis, evaluations,and recommendations.‧Financial operations and planning.‧Perform research to assess domestic and overseas investmentopportunities.‧Capital planning; handling of accounting and tax procedures.‧Coordination of board of directors and shareholder meetings.‧Draft and review contracts.‧Provide legal consulting services and support and handle otherlegal matters.‧Strategy stipulation and management of human resources andadministrative affairs.‧Handle investors and media relations, public relations activities.‧Promote digitalized operations of global branches andheadquarters.‧Administration and maintenance of the Company’s internalsystem and network environment.Corporate Planning Office ‧Improvement of workflow and e-commerce.Technical Service Center ‧After-sales customer service.‧Overseas technical support.Procurement CenterProject R&D andDevelopment CenterAdvanced TechnologiesR&D CenterR&D Testing CenterMobile CommunicationsProducts Business UnitClient System BusinessUnitEnterprise SystemsProducts Business UnitTyan Business Unit.‧ In charge of strategy development and management forprocurement center.‧ Provides safety certification, PC engineering and EMcompatibility support.‧In charge of research and development for future productstechnologies.‧In charge of R&D design for compatibility and reliability.‧In charge of R&D, sales, and promotion for mobile and wirelesscommunications products.‧In charge of R&D, sales, and promotion for computer productsaudio/video multimedia products and Digital home products.‧In charge of R&D, sales, and promotion for professional systemproducts.‧In charge of R&D, sales and promotion for high-end serverproducts.-9-

2. Information on Directors, Supervisors, General Manager, Vice GM, Assistant GM, and managers of each department and division(1) Directors and SupervisorsTitle Name Date Elected TermChairman Mathew Miau 06.12. 2007 3-yDirector Billy Ho 06.12. 2007 3-yDirectorDirectorDirectorUPC TechnologyCorp.Rep. Yun KuoXiang-Chung Xue(quitted on May 6,2008)UPC TechnologyCorp.Rep. Simon Wu06.12.2007 3-y06.12.2007 3-y06.12.2007. 3-yDate FirstElected05.17.198605.18.200402.29.198906.12.200702.29.1989Shares held at time ofelectionNumber of shares heldShares currentlyheld by spouse ordependents-10-Shares held underother nameShares Stake Shares Stake Shares Stake Shares Stake18,192,800 1.42% 20,228,932 1.39% 0 0% 0 0%3,572,158 0.28% 3,883,294 0.27% 0 0% 0 0%Education and ExperienceSanta Clara University, EMBACalifornia BERKLEY University,Bachelor, Electrical EngineeringMIS in Computer Science,Fairleigh-Dickinson UniversityMaster UC San DiegoMarketing Manager, Pao HwaTrading Co., Ltd.Positions currently held at othercompaniesCEO MiTAC International Corp.Chairman, MiTAC Inc.Chairman, SYNNEX InternationalCorp.Chairman, Lien Hwa Industrial Corp.Chairman, UPC GroupGM, MiTAC International Corp.Director, MiTAC PrecisionTechnology Corp.Director, Harbinger Venture CapitalDirector, 3-Probe Technologies Co.,Ltd.Director, MiTAC InvestmentChairman, MIO Technology Corp.Apr 27, 2008Spouse or kin within twodegrees of consanguinity whois executive, director,supervisorTitle Name RelationshipNone None NoneNone None NoneGraduate Industrial College of the Vice Chairman & GM, MiTAC Inc.Armed Forces (U.S.)Director, SYNNEX International Corp.None None NoneVice Chairman and CEO, Institute forInformation IndustryExecutive Secretary, NII Team,Executive YuanDirector, US-based Arms PurchaseTeam, Ministry of National defense115,493,040 9.01% 124,642,988 8.55% 10,906 0% 0 0% General Manager, National DefenseManagement CollegeDirector, ARES International Corp.Chairman, MiTAC ComputerChairman, MIEDUDirector, ONSYSDirector, Harbinger VentureManagementChairman, EKERAExecutive Director, Institute forInformation IndustryDeputy Commander, Army CommandDirector, Defense Management Center,Ministry of National DefenseDirector, Air force Command andControl CenterPhD of Biochemical nutriology, Convener of the Scientific & None None NoneWisconsin U., USA.Technological Economics Group,PhD of Agricultural Chemistry, National Policy Study FoundationNational Taiwan U.0 0% 0 0% 0 0% 0 0% Vice Director of National ScienceDevelopment CouncilDirector of Industrial ZonesAdministrative Bureau, NationalScience Development CouncilMBA, University of DallasAssistant GM, UPC Technology None None NoneCFO, Acer Group affiliated company115,493,040 9.01% 124,642,988 8.55% 7,554 0% 0 0% Executive VP for Finance Best PowerTechnology (U.S.)

Title Name Date Elected TermSupervisor Arthur Chiao 06.12.2007 3-ySupervisorLien Hwa IndustrialCorp.Rep. Charles Ching06.12.2007 3-yDate FirstElected05.18.200406.17.1986Shares held at time ofelectionNumber of shares heldShares currentlyheld by spouse ordependentsShares held underother nameEducation and ExperienceShares Stake Shares Stake Shares Stake Shares StakeMSEE and researcher in Business0 0% 0 0% 0 0% 0 0% Administration, WashingtonUniversityNational Tsing Hua University,Industrial Chemistry Graduate School,MasterCouncil for Economic Planning &Development, Executive Yuan81,634,160 6.37% 88,101,635 6.05% 1,122 0% 0 0%Positions currently held at othercompaniesChairman, Walsin Lihwa Corp.Chairman, Winbond Electronics Corp.Director, Lien Hwa Industrial Corp.Director, SYNNEX International Corp.Spouse or kin within twodegrees of consanguinity whois executive, director,supervisorTitle Name RelationshipNone None NoneNone None NoneNote: the major institutional shareholders are listed in Table 1 below.-11-

Name of InstitutionalShareholders(Note 1)Table 1: Major Institutional ShareholdersApr 27, 2008Primary Shareholders of Institutional Shareholders (Note 2)ShareholdersShareholding(%)Lien Hwa Industrial Corp. 23.85%SYNNEX International Corp 3.15%C.L. Ma ( 馬 長 隆 ) 2.94%UPC Technology Corp.Liberty Stationery Corp. 2.23%Yi-Yuan Investment( 義 源 投 資 股 份 有 限 公 司 )2.06%MiTAC International Corp. 1.55%Hua-Mao Co. ( 泰 商 華 貿 有 限 公 司 ) 1.44%Lien Hwa Industrial Corp.Cathay Life Insurance Co. 1.30%Yi-Fong Investment( 義 豐 投 資 股 份 有 限 公 司 )0.92%Taiwan Post Co., Ltd. 0.85%UPC Technology Corp. 9.88%Yi-Yuan Investment( 義 源 投 資 股 份 有 限 公 司 )8.19%China Development Industrial Bank 5.08%Yi-Fong Investment( 義 豐 投 資 股 份 有 限 公 司 )4.75%F.S. Miau ( 苗 豐 盛 ) 3.59%F.C. Miau ( 苗 豐 全 ) 3.44%Matthew Miau 3.24%SYNNEX International Corp 3.14%Y.S. Educational Foundation 3.06%MiTAC International Corp. 2.90%Note 1: The name of the institutional shareholders that are represented by the directors and supervisors must bedetailed.Note 2: The name and shareholding of the major shareholder of the institutional shareholders (who have a stakeamong the ten largest) must be detailed. If the major shareholders are institutional shareholders, please fillout Table 2 below.-12-

Table 2: Major Shareholder in Institutional ShareholdersApr 27, 2008Major shareholder in the institution (Note 2)Name of Institution (Note 1)ShareholdingShareholders(%)UPC Technology Corp. 9.88%Yi-Yuan Investment ( 義 源 投 資 股 份 有 限 公 司 ) 8.19%China Development Industrial Bank 5.08%Yi-Fong Investment ( 義 豐 投 資 股 份 有 限 公 司 ) 4.75%F.S. Miau ( 苗 豐 盛 )Lien Hwa Industrial Corp.3.59%F.C. Miau ( 苗 豐 全 ) 3.44%Matthew Miau 3.24%SYNNEX International Corp 3.14%Y.S. Educational Foundation 3.06%MiTAC International Corp. 2.90%MiTAC Inc. 15.01%Bureau of Labor Insurance 3.06%JP Morgan Stanley account trusted to HSBC 2.55%Oppenheimer Fund account trusted to JP Morgan1.91%ChaseSYNNEX International CorpMatthew Miau 1.78%ING Entrust Fund account trusted to LNG Life Insurance 1.62%S.W. Du ( 杜 書 伍 ) 1.48%Emerging Growth Fund account trusted to JP Morgan 1.36%ChaseTaiwan Post Co., Ltd. 1.34%Labor Pension Fund Supervisory Committee 1.26%Zhi-Jiang Investment ( 志 江 投 資 股 份 有 限 公 司 ) 21.09%Akira Masashi Kadota, , ( 門 田 雅 輝 ) 10.39%Akira Akira Kadota ( 門 田 明 輝 ) 8.87%Yayoi Monta ( 門 田 彌 生 ) 8.87%Liberty Stationery Corp.Takashi Monta Scripture ( 門 田 高 典 ) 8.79%Complete Connection Limited 5.70%J.S. Yu ( 于 靜 深 ) 5.13%J.Z. Sun ( 孫 建 中 ) 4.63%Z. Chang ( 常 正 ) 3.50%C. Chang ( 常 誠 ) 3.50%Yi-Yuan Investment( 義 源 投 資 股 份 有 限 公 司 )BVI Quan Neng Co.( 英 屬 維 京 群 島 商 全 能 有 限 公 司 ) 99.92%UPC Technology Corp. 8.55%MiTAC Inc. 8.08%Lien Hwa Industrial Corp. 6.05%Kuo Hua Life Insurance Co. 2.08%Mei-An Investment ( 美 安 投 資 股 份 有 限 公 司 ) 2.00%SYNNEX International CorpMatthew Miau 1.39%Tsu Feng Investment Corp.( 資 豐 投 資 股 份 有 限 公 司 ) 1.34%Tung Da Investment Co., Ltd.1.18%( 通 達 投 資 股 份 有 限 公 司 )MiTAC Technology Corp. 0.88%Standard Charters Bank Fund trusted to iShares Co. account ofinvestment ( 英 商 渣 打 託 管 iShares 公 司 投 資 專 戶 )0.75%Hwa-Mao Co. Foreign investment --13-

Major shareholder in the institution (Note 2)Name of Institution (Note 1)ShareholdingShareholders(%)Cathay Life Insurance Co. Cathay Financial Holding Corp. 100.00%Yi-Fong InvestmentBVI Ever Futunes Co.( 義 豐 投 資 股 份 有 限 公 司 ) ( 英 屬 維 京 群 島 商 恒 富 股 份 有 限 公 司 )100.00%Taiwan Post Co. Ministry of Traffics and Communications 100.00%Lien Hwa Industrial Corp. 23.85%SYNNEX International Corp 3.15%C.L. Ma ( 馬 長 隆 ) 2.94%Liberty Stationery Corp. 2.23%UPC Technology Corp.Yi-Yuan Investment ( 義 源 投 資 股 份 有 限 公 司 ) 2.06%MiTAC International Corp. 1.55%Hwa-Mao Co. 1.44%Cathay Life Insurance Co. 1.30%Yi-Fong Investment ( 義 豐 投 資 股 份 有 限 公 司 ) 0.92%Taiwan Post Co., Ltd. 0.85%China Development Industrial Bank China Development Financial Holding Corp. 100.00%Y.S. Educational Foundation Non-corporation organization (not applicable)NotapplicableNote 1: If the major shareholders are an institutional shareholder, list the name of the institutional shareholderNote 2: Lists the name and shareholding of a major shareholder in this institution with a stake among the ten largest.-14-

NameQualificationsInformation on Directors and SupervisorsQualification ofcollege oruniversityinstructorrequired forbusiness, law,finance,accounting, orcorporateoperationsFive or more years of workexperience required for business,law, or corporate operationsCertifiedprofessionals ortechnicians forjudge, prosecutor,attorney, CPA, orothers related tocorporateoperationWork experiencerequired forbusiness, law,finance,accounting, orcorporateoperationsMeets requirements forindependence (see note)1 2 3 4 5 6 7 8 9 10Position ofIndependentDirectorcurrently held atother IPOcompaniesMatthew Miau - - - - - - - 0Billy Ho - - - - - 0Xiang-Chung Xue- - 2(quitted on 2008.5.6)Arthur Chiao - - 0Lien Hwa Industrial Corp. - - - - - - - - - - - - - -UPC Technology Corp. - - - - - - - - - - - - - -Notes: A checkmark [ˇ] is placed in the column for each condition met by a given director or supervisor two yearsbefore and during the term.1. Not an employee of the Company and any of the Company’s affiliates.2. Not a director or supervisor of the Company or any of the Company’s affiliates (except for the independent directorsof the Company or the parent company of the Company and the subsidiary invested by the Company directly orindirectly with over 50% voting-right shareholding).3. Not an individual shareholder owning more than 1% of the Company’s outstanding shares nor one of theCompany’s ten largest shareholders.4. Not the spouse or relative within two degrees of lineal consanguinity with any person described by conditions [1] or[2].5. Note a director, supervisor, or employee of an institutional shareholder of the Company directly or indirectlyowning more than 5% of the Company’s outstanding shares of one of the Company’s five largest institutionalinvestors.6. Not a director, supervisor, or manager of, nor a shareholder owning more than 5% of the outstanding shares of, anycompanies or institutions that have a financial or business relationship with the Company.7. Not an individual who has provided financial, business, or legal services or consultancy to the Company during thepast year, nor the owner, partner, director, supervisor, or manager [or spouse of any of the foregoing] of any soleproprietor, partner, company, or institution that has provided financial, business, or legal services or consultancy tothe Company during the past year.8. Not the spouse or relative within two degrees of lineal consanguinity with any director.9. Not committing an act that is defined by Section 30 of the Company Law, Republic of China.10. Not a legal entity [institution] or representative as defined by Section 27 of the Company Law, Republic of China.-15-

Title(2) General Manager, Vice GM, Assistant GM, and managersNameDate tookpositionShares heldShares held byspouse or dependentsShares heldunder othernameShares Stake Shares Stake Shares StakeCEO Matthew Miau 09.01.1998 20,228,932 1.39% 0 0% 0 0%Education and experienceSanta Clara University, EMBACalifornia BERKLEY University,Bachelor, Electrical EngineeringPositions currently held at othercompaniesChairman, MiTAC Inc.Chairman, SYNNEX InternationalCorp.Chairman, Lien Hwa IndustrialCorp.Chairman, UPC GroupApr 27, 2008Spouse or kin within twodegrees of consanguinity whois managerTitle Name RelationNone None NoneGeneralManagerBilly Ho 03.27.2000 3,883,294 0.27% 0 0% 0 0%MIS in Computer Science,Fairleigh-Dickinson UniversityMaster UC San Diego MarketingManager, Pao Hwa Trading Co., Ltd.Director, Harbinger Venture CapitalChairman, MIO Technology Corp.Director, 3-Probe Technology Co.,Ltd.Director, MiTAC InvestmentNone None NoneSeniorViceGMSamuelWang02.23.2005 2,721,133 0.19% 0 0% 0 0%National Taiwan U., MBADepartment of Electrical Engineering,National Taiwan U.Senior Engineer, LongshineElectronics Corp.None None None NoneSeniorViceGMC. J. Lin(took positionon Jun 15,2007)06.15.2007 93,751 0.01% 1,060 0% 0 0%Dept. of Electrical Engineering,National Taiwan U.General Manager of MiTACInternational Co.Deputy Chairman of MiTACComputer (ShunDe District, FushanCity)None None None NoneVice GM Percy Chen 03.20.1997 738,836 0.05% 0 0% 0 0%Department of Business Management,National Sun Yat-Sen U.Department of Electronics, NationalTaipei U.Manager, MiTAC Inc.None None None None-16-

TitleNameDate tookpositionShares heldShares held byspouse or dependentsShares heldunder othernameShares Stake Shares Stake Shares Stake-17-Education and experiencePositions currently held at othercompaniesSpouse or kin within twodegrees of consanguinity whois managerTitle Name RelationVice GM James Yuan 06.06.1997 383,966 0.03% 0 0% 0JD., School of Law, Rutgers U. Director, ATIPS0%Baker & McKenzieNone None NoneDepartment of Medical Engineering,Vice GM Ted Chang 09.01.1999 5 0% 0 0% 0 0% Chung Yuan Christian U.None None None NoneEngineer, Shen-Jar Engineering Co.Vice GM Stone Chen 07.01.2002 1,212,035 0.08% 0 0% 0MBA, National Chengchi U.B.S., Dept. of Electrical Engineering,National Chiao Tung U.0%Office Manager, NexcomNone None None NoneInternational Co., Ltd.Manager, TeleSynery Research Inc.Vice GM Michael Lin 07.01.2002 1,876,978 0.13% 10,981 0% 0Dept. of Electrical Engineering,0%National Taiwan U.None None None NoneVice GM Stone Lin 03.27.2002 373,236 0.03% 1,162 0% 0Dept. of Industrial Management,Ming Hsin U. of Science &0%TechnologyNone None None NoneManager, Radio Taiwan InternationalVice GM Jack Kuo 03.27.2002 651,925 0.04% 0 0% 0National Taiwan U., BusinessManagement School, EMBAMaster’s in Electrical Engineering,0% National Taiwan U. of Science &None None None NoneTechnologyVICE GM, Clevc Computer Co.Deputy Office Manager, Tatung Inc.Vice GM C.S. Chen 03.27.1996 452,625 0.03% 32 0% 0Dept. of Accounting, Soochow U.0%PricewaterhouseCoopers TaiwanNone None None NoneVice GM C.P. Lee 02.25.2004 508,037 0.03% 0 0% 0Graduate School, National ChiaoTung U.0% Lecturer, National DefenseNone None None NoneManagement CollegeSales Director, MiTAC Inc.Vice GM James Wu 11.04.2004 270,751 0.02% 9,600 0% 0Master’s in Electrical Engineering,Tatung U.0%Two years of PhD research, Dept. ofElectrical Engineering, Tatung U.None None None None

TitleNameDate tookpositionShares heldShares held byspouse or dependentsShares heldunder othernameEducation and experienceShares Stake Shares Stake Shares StakeQualified in Electrical Engineering,National Professionals andTechnologists ExaminationOffice Manager, Department of R&D,Marketing and Product Planning,Tatung Corp.Dept. of Electrical Engineering,National Taiwan U.Engineer, Behavior Tech ComputerVice GM King Chen 02.23.2005 1,314,981 0.09% 0 0% 0 0% Corp.Director of MiTAC MobileCommunication Product BusinessUnit Client system Business Unit.Graduate School of TechnologyManagement,Vice GM Alice Fang 02.23.2005 567,391 0.04% 0 0% 0 0% National Chengchi U.Director of MiTAC ResourceDevelopment CenterDept. of Electrical Engineering,NationalCheng Kong U.Vice President, Portable ComputerVice GM Robert Yang 07.19.2005 26,951 0% 0 0% 0Second0%Business Dept., FICSenior VICE GM, Electrical Dept.andPortable Chassis Dept., ChemingMold Corp.Johnson WangMBA, Duland U. USAVice GM(took positionSenior Director of MiTAC Technical12.19.2007 93,936 0.01% 5,658 0% 0 0%on Dec 19,Support and Service Center.2007)Spouse or kin within twoPositions currently held at othercompaniesdegrees of consanguinity whois managerTitle Name RelationNone None None NoneNone None None NoneNone None None NoneNone None None None-18-

(3) Remuneration to directors, supervisors, General Manager, and vice General ManagerDirector CompensationTitleNameCompensation (A)MiTACIn theconsolidatedfinancialstatementDirector compensationCompensation fromIncidental expensessurplus allocated (B)(C)(Note 1)MiTACIn theconsolidatedfinancialstatementMiTACIn theconsolidatedfinancialstatementTotal of previous 3itemsMiTACIn theconsolidatedfinancialstatementSalary, prizemoney, and specialallowance (D)MiTACEmployee bonuses from allocated earningsIn theMiTACconsolidatedfinancialStockstatement Cash bonusbonusEmployee bonus (E)(Note 1)In the consolidatedfinancial statementCash bonusStockbonusNumber of sharesobtained asemployee stockoptions (F)MiTACIn theconsolidatedfinancialstatementUnit: NT$ Thousand/1,000 sharesTotal as a share ofafter-tax earningsChairman Matthew MiauDirector Billy HoUPC Technology Corp.DirectorRep. Yun KuoXiang-Chung XueDirector(quitted on May 6, 2008)376 376 4,800 4,800 160 160 0.09% 0.09% 18,608 18,992 5,400 28,665 5,400 28,665 7,200 7,200 1.03% 1.00% YesUPC Technology Corp.DirectorRep. Simon WuNote 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’s Meeting for approval.Note 2: The total remuneration amount of MiTAC and the companies in the consolidated financial statements this year amounted to 0.09% of Net Income that is lower than the 0.10% in 2006.Note 3: The Statement of Retained Earnings is prepared for the distribution of remuneration to directors and it is submitted to the Board of Directors and Supervisors for approval. The Board of Directors is authorized accordingto the Company Charter to determine the remuneration to directors by referring to the general practice of the industry.Remuneration paid to directors of MiTACBelow 2,000,000Table of RemunerationDirectorTotal amount (A+B+C)In the consolidatedMiTACfinancial statements (G)Matthew Miau/ Billy Ho/Xiang-Chung Xue/ UPCTechnology Corp. Rep.Yun Kuo,Simon WuMatthew Miau/ Billy Ho/Xiang-Chung Xue/ UPCTechnology Corp. Rep. Yun Kuo,Simon WuMiTACTotal amount (A+B+C+D+E)In the consolidatedMiTACfinancial statements (H)Xiang-Chung Xue/ UPCTechnology Corp. Rep.Yun Kuo,Simon WuXiang-Chung Xue/ UPCTechnology Corp. Rep.Yun Kuo,Simon Wu2,000,000 (included)~5,000,000 - - - -5,000,000 (included)~10,000,000 - - - -10,000,000 (included)~15,000,000 - - - -15,000,000 (included)~30,000,000 - - Matthew Miau/ Billy Ho Matthew Miau/ Billy Ho30,000,000 (included)~50,000,000 - - - -50,000,000 (included)~100,000,000 - - - -Over 100,000,000 - - - -Total 5 5 5 5In theconsolidatedfinancialstatementCompensationfrominvestmentother thanMiTACsubsidiary-19-

TitleNameSupervisor Arthur ChiaoSupervisorLien Hwa IndustrialCorp.Rep.Charles ChingCompensation (A)MiTACIn theconsolidatedfinancialstatementSupervisor CompensationSupervisor CompensationSupervisor compensationfrom allocated earnings (B)(Note 1)In theconsolidatedMiTACfinancialstatementIncidental expenses an (C)MiTACIn theconsolidatedfinancialstatementTotal of previous 3 itemsMiTACIn theconsolidatedfinancialstatementUnit: NT$ ThousandCompensationfrominvestmentother thanMiTACsubsidiary144 144 1,200 1,200 44 44 0.02% 0.02% YesNote 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’s Meeting for approval.Note 2:The total remuneration amount of MiTAC this year amounted to 0.02% of Net Income that is lower than the level of 2006. The total remuneration amount of the companies in the consolidatedfinancial statements this year amounted to 0.02% of Net Income that is equivalent to the 0.02% in 2006.Note 3:The Statement of Retained Earnings is prepared for the distribution of remuneration to supervisors and it is submitted to the Board of Directors and Supervisors for approval. The Board ofDirectors is authorized according to the Company Charter to determine the remuneration to supervisors by referring to the general practice of the industry.Remuneration paid to supervisors ofMiTACBelow 2,000,000Table of RemunerationSupervisorTotal amount (A+B+C)In the consolidatedMiTACstatement (D)Lien Hwa Industrial Corp.Rep. F.S. Jin ( 景 虎 士 )Lien Hwa Industrial Corp.Rep. F.S. Jin ( 景 虎 士 )2,000,000 (included)~5,000,000 - -5,000,000 (included)~10,000,000 - -10,000,000 (included)~15,000,000 - -15,000,000 (included)~30,000,000 - -30,000,000 (included)~50,000,000 - -50,000,000 (included)~100,000,000 - -Over 100,000,000 - -Total 2 2-20-

TitleCEOGeneralManagerSenior ViceGMSenior ViceGMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMVice GMNameMatthew MiauBilly HoSamuel WangC.J. Lin(took position onJun 15, 2007)Percy ChenGino Chang(retired on Feb 29,2008)James YuanTed ChangStone ChenMichael LinStone LinJack KuoC.S. ChenC.P. LeeJames WuKing ChenAlice FangRobert YangJohnson Wang(took position onDec 19, 2007)Salary (A)Prize money & specialallowance (B)In theIn theMiTACconsolidated consolidatedMiTACfinancialfinancialstatementsstatementsCompensation for General Manager and Vice GMEmployee bonuses from allocated earnings (C) (Note 1)MiTACIn the consolidated financialstatementsCash bonus Stock bonus Cash bonus Stock bonusUnit: NT$ Thousand / 1,000 sharesTotal of previous 3 items Number of shares obtained Compensation(%) as employee stock options fromIn theIn the investmentconsolidatedconsolidated other thanMiTACMiTACfinancialfinancial MiTACstatementsstatements subsidiary34,975 38,445 49,376 49,376 25,560 99,372 25,560 99,372 3.71% 3.64% 23,000 23,000 有Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’s Meeting for approval.Note 2: The total remuneration amount of MiTAC this year amounted to 3.71% of Net Income that is lower than the3.85% in 2006.Note 3: The total remuneration amount of the companies in the consolidated financial statements this year amounted to 3.64% of Net Income that is lower than the 4.10% in 2006.Note 4: The remuneration to General Manager and Vice GM depends on their performance and contribution to the overall performance of the company; also, by referring to the general practice of the industry.-21-

Table of RemunerationRemuneration paid to GM & Vice GM of MiTACGeneral Manager & Vice GMMiTACIn the consolidated financial statementsBelow 2,000,000 - -2,000,000 (included)~5,000,000 - -5,000,000 (included)~10,000,000C.J. Lin/Percy Chen/Gino Chang/James Yuan/StoneLin/Jack Kuo/C.S. Chen/C.P. Lee/James Wu/AliceFang/Ted Chang/Robert Yang/Johnson WangC.J. Lin/Percy Chen/Gino Chang/James Yuan/Stone Lin/JackKuo/C.S. Chen/C.P. Lee/James Wu/Alice Fang/TedChang/Robert Yang/Johnson Wang10,000,000 (included)~15,000,000 Stone Chen/Michael Lin/King Chen Stone Chen/Michael Lin/King Chen15,000,000 (included)~30,000,000 Matthew Miau / Billy Ho/Samuel Wang Matthew Miau / Billy Ho/Samuel Wang30,000,000 (included)~50,000,000 - -50,000,000 (included)~100,000,000 - -Over 100,000,000 - -Total 19 19-22-

Managers Receiving Employee BonusesUnit: NT$ ThousandTitle Name Stock bonus Cash bonus TotalTotal as a share toafter tax earning(%)CEOMatthew MiauGeneralManagerBilly HoSenior Vice GM Samuel WangSenior Vice GM C.J. Lin(took position onJun 15, 2007)Vice GM Percy ChenVice GM Gino Changon Feb 29,(retired2008)ManagerVice GM James YuanVice GM Ted ChangVice GM Stone ChenVice GM Michael Lin99,372 25,560 124,932 2.21%Vice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangVice GM Robert YangVice GM Johnson Wang(took position onDec 19, 2007)Note: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’sMeeting for approval.-23-

Title3. Business management(1) Board of Directors: 15th (A) director’s meetings (6 times before reform, 9 times after it) in2007 and with the attendance of directors and supervisors as follows:NameActualattendance (B)Frequencyof proxyActual attendance rate(B/A) (%)Chairman Matthew Miau 14 1 93.33%Director Billy Ho 15 0 100.00%DirectorDirectorDirectorUPC Technology Corp.Rep. Simon WuUPC Technology Corp.Rep. Yun KuoXiang-Chung Xue(quitted on May 6, 2008)13 2 86.67%8 1 88.89%7 2 77.78%Supervisor Arthur Chiao 10 0 66.67%SupervisorOthers:Lien Hwa Industrial Corp.Rep. Charles Ching 11 0 73.33%RemarkRe-elected and goon assigned(personal) by theshareholdersmeeting held on2007/6/12.Re-elected and goon assigned(personal) by theshareholdersmeeting held on2007/6/12.Re-elected and goon assigned by theshareholdersmeeting held on2007/6/12.Re-elected and goon assigned by theshareholdersmeeting held on2007/6/12.Re-elected andassigned (personal)by the shareholdersmeeting held on2007/6/12.96/6/12.Yet died on 2008Re-elected and goon assigned(personal) by theshareholdersmeeting held on2007/6/12.Re-elected and goon assigned by theshareholdersmeeting held on2007/6/12.1. For the occurrence of events that are stated in Article 14.3 of Security Exchange Law and resolutionsof the Board of Directors that have the objection or reservation of independent directors documentedor in writing: The date and term of the Board of Directors meeting, the content of proposal, theopinions of all independent directors, and the response of the Company to the opinions of allindependent directors must be detailed: None2. For directors who have themselves been excused from the discussions with conflicting interest, thename of the directors, the content of proposal, and reason for conflicting interest, and voting must bedetailed: None3. The goal and performance of reinforcing the job functions (for example, setup Auditing Committeeand improving data transparency) of the Board of Directors in the year and in recent years: MiTAC-24-

had “Board Meeting Guideline” stipulated in 2006 and revised it in 2008 for reference. Theattendance and advanced education of directors and supervisors are disclosed periodically and fromtime to time on MOPS for the realization of data in time and transparency. The job functions of theBoard of Directors will be reinforced at any time in accordance with the requirement of laws andbusiness management of the company.(2) Auditing Committee: MiTAC is without the setup of an Auditing Committee.-25-

(3) Corporate governanceItem1. The Company’s equity structure andshareholder interest(1) The Company’s approach for handlingshareholder recommendations ordisputes.(2) The Company’s ability to ascertain themajor shareholders with actual controlof the company and to access a list ofthe parties in actual control of majorshareholders.(3) The approach that the Company hasestablished with its affiliated companiesregarding risk management mechanismsand firewall policies.2. Composition of the board of directorsand responsibilities of its members(1) Establishment of an independent board.(2) Regular assessment of the independenceof financial auditor.3. Designation of supervisors and theirresponsibilities(1) Designation of independent supervisors.(2) Communication between supervisorsand the company’s employees andshareholders.4. Establish communication channels forparties whose interests are affected.5. Information transparency(1) Set up a website showing informationabout the Company’s finances andcorporate governance policies.Status(1) The Company uses a spokesperson system to handleshareholder recommendations, questions, and disputes asappropriate.(2) The Company can ascertain the major shareholders with actualcontrol of the company and access a list of the parties in actualcontrol of major shareholders. In accordance with securitiestrade law, each month the number of shares held by thedirectors, supervisors, and major shareholders is reported.(3) Relations with affiliated companies are based on the principleof fairness and reasonableness. Procedures for handlingfinancial and sales activities that involve affiliates aredescribed in written regulations.(1) The Company does not maintain an independent board. Itsdirectors act in accordance with the law, company charter, andshareholder meeting resolutions in fulfilling theirresponsibilities.(2) Evaluated yearly.(1) The Company has not designated independent supervisors. Itssupervisors act in accordance with the law, company charter,and shareholder meeting resolutions in fulfilling theirresponsibilities.(2) The works-relevant staff members report to supervisorsregularly or non-regularly; and supervisors can contact staffmembers directly to acquire required information.Parties whose interests are affected by the actions of the Companycan contact the Company through MiTAC spokesperson or his/herproxy at any time. The hotlines are: 03-396-2888 / 02-2627-1188,email: stock@mic.com.tw/Justine@mic.com.tw。(1) The Company maintains a website at http://www.mitac.com,and a section for investors publishes financial and sales data.(2) The Company maintains a spokesperson system and acting-26-Difference from governance principles practiced by publicly-tradedcompanies, reasons for any such differencesNo substantive differences.(1) MiTAC is beyond the scope of compulsorily assigningindependent directors defined the Stock Exchange Act or Letterof (91) Tai-Zheng-Shang No.003614.(2) If there are necessary legal or practical considerations, policiesdescribed in “Corporate governance practices for publicly listedcompanies” and relevant legislation will be implemented.(1) The Company has not designated an independent supervisorsince the Stock Exchange Act has deleted the relatedrequirement already.(2) If there are necessary legal or practical considerations, policiesdescribed in “Corporate governance practices for publicly listedcompanies” and relevant legislation will be implemented.No substantive differences.No substantive differences.

Item(2) The Company use of other means (forexample, setup of an English-languagewebsite, designation of a specialist tocollect and disseminate companyinformation, implement a spokespersonsystem, publication of procedures forinstitutional investors meeting on thecompany website).6. The Company’s establishment of anomination committee or remunerationspokesperson system.Status(3) Information about the Company is published on the MarketObservation Post System.The Company does not currently maintain a nominationcommittee or a remuneration committee.Difference from governance principles practiced by publicly-tradedcompanies, reasons for any such differencesMiTAC will follow the essential requirements or company’spractical operation of enactments to proceed.committee7. If the Company has set corporate governance regulations in accordance with “Corporate governance practices for publicly listed companies,” please describe theirimplementation and any discrepancy with the regulations set.The Company has not formally established corporate governance regulations.8. The Company’s social liabilities (such as, human rights, employee’s interest, employment’s care, environmental protection, community watch program, social contribution, socialservice, investor’s relationship, supplier’s relationship and affiliate’s rights) and the system and measures adopted to fulfill the social responsibilities:The Company has the following social responsibilities fulfilled on the foundation of human rights:(1) Employee’s interestThe Company believes that employees drive the growth of the organization. Therefore, the Company votes to protect employee’s interests including the interest that is given bylaw and additional interest invested for employees:1) System: (1) Labor insurance and health insurance, appropriation of pension, employee’s education and training, health and safety mechanism, and equal right to employmentfor males and females. (2) Provide employees with various benefits package continuously, such as, group insurance, free health check up, traveling expense, and gymactivities.2) Enforcement: (1) Benefits to employees by law are processed accordingly. (2) Employee’s benefits are arranged by the designated personnel. (3) Employee Relation Office issetup to take care of the personal needs of employees and it is operated successfully.(2) Employee’s care:1) System: The Company has an Employee Relations officer designated to take care of the employees with their needs including employee’s emergency assistance, employee’scomplaint/plea, employee’s hospitalization and medical care, employee’s personal issues, sexual harassment at work place/complaint, and career planning.2) Enforcement: There were not many complaints filed and processed; however, all cases are handled according to the Company’s work code (employee’s consultation andcounseling) for the protection of the employee’s self-esteem and privacy. The aforementioned practices under the precondition of employer-employee relations have indeedhelped build up a harmonious working place and stable organization.(3) Community watch program1) System: (1) Encourage employees to form a fund raising committee for helping out domestic/overseas charity activities. (2) Encourage and sponsor employees to form asocial group to help support charity activities.2) Enforcement: (1) Employee’s fund raising committee: The 921 earthquake and Southern Asia tsunami large-scale fund raising activity with over NT$10 million of fundsraised. (2) Social group: Care for and support minority groups including women and children, senior citizens, handicaps, individuals in need, family support, and vegetablemen with extensive manpower (volunteers) and money (donation) contributed. Arrange fund raising activity voluntarily or jointly for over 50 times in the last three years andit is operated successfully.-27-

Difference from governance principles practiced by publicly-tradedItemStatuscompanies, reasons for any such differences(4) Social contribution1) System: (1) Sponsor the design award of Y.S. Educational Foundation Cup, cultivate domestic designers, and upgrade industrial competitiveness. (2) Provide outstandingstudents with industrial lab. Work and industrial work experience. (3) Join industrial seminars and share managerial experience and industrial experience.2) Enforcement: (1) Assist the design award of Y.S. Educational Foundation Cup to organize the industrial design award. Assist the organizer to arrange the industrial designcontest, arrange promotional campaign in campus, and share industrial experience in order to cultivate outstanding domestic designers and upgrade the design ability ofindustry. (2) Provide on-the-job training opportunity to the winners of the design award of Y.S. Educational Foundation Cup; also, encourage other talented students to applyfor on-the-job training.(5) Social serviceThe Company has based on the belief of feedback the society to participate social service and serve the society, to sponsor charity activities, for example, participating andsponsoring digital differentiation project, sponsor 2004 Olympic contestants in Athens; also, encourage employees to donate used book and computers to help the ones in need insociety.(6) Investor’s relationshipThe Company believes in the principle of sincerity and fair information disclosure, realizing transparent business management, publishing business operation and financialinformation to the public periodically, and setting up the spokesperson & acting spokesperson system for due process of information disclosure. The recommendations andquestions of investors are to be processed by the designated personnel and the e-mail box.(7) Environmental protection1) System: (1) In response to RoHS/WEEE directive, the Company has established a management system for green product and green supply chain. (2) For the substantiation ofsocial responsibility, regulate the environmental responsibility and social responsibility of the Company by the perpetual report.2) Enforcement: (1) In order to fulfill the responsibility of electronics industry to environmental protection, the Company is in the down-stream of the supply chain; therefore,the Company is able to upgrade the green products and components of the industry by demanding the support of suppliers. Supervise suppliers effectively to reduce or stopusing hazard substances in production by the process of green plant certification (for example, GPMS or QC80000). (2) Work with external experts to publish the perpetualreport in order to present the environmental protection effort of the Company and to upgrade industrial integrity and competitiveness.(8) Relationship with suppliers and rights of the affiliates: The Company has maintained a long-term cooperative relationship with suppliers to ensure sufficient supply of rawmaterials.9 Other important information that can aid in understanding the Company’s corporate governance practices (such as, study by directors and supervisors, director attendance andsupervisor status vs. the board, use of quantitative standards for managing risk, implementation of consumer protection or customer policy measures, handling of potentialconflicts of interest among directors, liability insurance purchased by the Company for its directors and supervisors):1) The Company has not formally established regulations covering corporate governance practices. Its directors and supervisors conform to “Corporate governance practices forpublicly listed companies” in performing their duties.2) The Company’s directors and supervisors fulfill their responsibilities acting in good faith and in accordance with the principle of sound management.3) The information of “directors and supervisors attending board meeting” is disclosed in page 18 of the annual report and the “Market Observation Post System.”4) The information of “directors and supervisors receiving advanced education” is disclosed on the “Market Observation Post System.”5) The Company has acquired liability insurance for directors and supervisors according to the “Corporate governances practices for publicly listed companies.”6) The Company has board meeting held at least quarterly to reinforce corporate governance.7) The Company has “Board Meeting Rules” stipulated and enforced and with it reported to the 2007 shareholder’s meeting accordingly. Also, the Company has updated the“Board Meeting Rules” conforming to the regulations as stipulated in the Letter of Gin-Guan-Zhen-Yi-0960074345 (Jan 11, 2008) announced by the Financial SupervisoryCommission, Executive Yuan.-28-

Difference from governance principles practiced by publicly-tradedItemStatuscompanies, reasons for any such differences10 If there is corporate governance report or external auditing report prepared, the internal governance and external audit result must be composed and with the majornonconformities (or suggestions) and corresponding corrective actions detailed:The Company does not have corporate governance or external auditing institutions contracted for service.(4) Disclose the query for corporate governance and relevant regulations: None(5) Information that helps understand corporate governance: Please see the statement above.-29-

(6) Internal control system1) Declaration of internal control in MiTAC International Corp.Declaration of Internal Control SystemDate: April 21, 2008The Company has the following declaration made for the internal control system valued inthe period of January 1 and December 31, 2007:1. The Company is aware that it is the responsibility of the Board of Directors and themanagement to establish, enforce, and maintain the internal control system. TheCompany has an international control system set up to reasonably ensure theachievement of operating effect and efficiency (including profitability, performance, andassets safety), reliable financial statements, and regulation obedience.2. Internal control system is with inevitable limitations. No matter how perfect an internalcontrol system is designed, an effective internal control system provides only areasonable assurance of the aforementioned three objectives. Moreover, theeffectiveness of the internal control system may be affected by the change ofenvironment and situation. The Company’s internal control system is with aself-supervision mechanism; therefore, the Company is able to have corrective actionperformed immediately once the nonconformity is identified.3. The Company has the effectiveness of the internal control system design andenforcement assessed according to the criteria defined in the “Regulations Governingthe Internal Control System of the Public Company” (referred to as “the GoverningRegulations” hereinafter). The internal control criteria in the Governing Regulations isprocessed according to management control and internal control is composed of fiveelements: (1) Environmental control, (2) risk evaluation, (3) control process, (4)information and communication, and (5) supervision. Each element containssub-elements. Please refer to “the Governing Regulations” for details.4. The Company has applied the aforementioned internal control criteria to examine thedesign and performance effectiveness of internal control system.5. Based on the aforementioned test, the Company believes that the internal control system(including the supervision and management of subsidiaries) design and performance inthe aforementioned period of time including the known business operation and objectiveachievement, reliable financial statements, and law obedience is effective and it ensuresthe realization of the said objectives.6. The declaration will be included in the annual report and public offering report for theinformation to the public. Any forged or deceptive information published will bedeemed as a violation against Article 20, Article 32, Article 171, and Article 174 ofStock Exchange Law and will be held responsible by law.7. The Board of Directors approved the declaration unanimously on April 21, 2008 at thepresence of five directors.MiTAC International Corp.Chairman : Matthew MiauGeneral Manager : Billy Ho2. Independent Auditor’s Report for the internal control: None-30-

(7) The Company and employees punished by law, the Company had the employees whohad violated internal control system, major nonconformities, and corrective action inrecent years and up to the publication of the annual report:1) Follow the Letter of Jin-Guan-Zheng-Liu-Fa No. 09700128831 (Apr 14, 2008),announced by the Financial Supervisory Commission, Executive Yuan, regardingMiTAC offering US$1,846,600 suretyship to the TOP WISDOMINTERNATIONAL CORP. (the TOP WISDOM Co.) during Feb 8, 2007 ~ Aug16, 2007, since MiTAC has no business connections with the TOP WISDOM nordirect or indirect Parent-subsidiary corporate relation with shares-holding above50%, nor conforming to the regulation of surety proportional to shareholding rateas defined in Item 2, Article 5 of the “Governance Guideline of Financial Loansand Surety for Market-Opened Firms”, and thus the authority has penalizedMiTAC responsible person in a fine of NT$ 240 thousand by following the“Stocks Exchange Act”.2) MiTAC has offered no any further suretyship to the TOP WISDOM Co. since Aug16, 2007.3) MiTAC responsible person has raised petition to the Administrative Court already.(8) Resolutions reached in the shareholder’s meeting or board meeting in recent yearsand up to the publication of annual report:1) Shareholder’s meetingMeetingDateMotions Resolutions Performance2007.6.12 1. Recognized the distribution of retainedearnings in 2006:Shareholder bonus: Cash dividendUnanimously Ex-stock dividend date was on August 6,2007 and with cash and stock dividenddistributed in late of August.NT$1.2 per share and stock dividendNT$0.8 per share.Employee bonus: Cash NT$ 290,708thousand and stock NT$ 193,805thousand.2. Amend company charter. Unanimously According to the updated company charter.3. Amend assets acquisition & dispositionprocedureUnanimously According to the updated assets acquisition& disposition procedure.4. Re-elect directors and supervisors. Unanimously Selected 5 directors and 2 supervisors; validfor 3 years.5. Decided to remove the restriction ofno-competition clause against directors.Unanimously According to the resolution.2) Board of DirectorsMeetingDateMotionsResolutions2007.1.19 Determined the common stock to be issued for the employee’s stock option: NT$6 per Unanimouslyshare, January 19, 2007 was the EX-stock issuance date. Stock option exercised in Q42006 was for 1,185,750 shares.2007.2.22 Decided to purchase the Portable Navigation Device business and the net assets of the Unanimouslyrelated subsidiary from Brunswick Corp. and its subsidiaries for an amount ofUS$16,000 thousand and the actual net assets value on the settlement date.2007.3.1 1. Determined to invest no more than US$20 million in the wholly owned subsidiary,Silver Star Developments Ltd.Unanimously2. Investment in Mainland: Invested no more than US$2 million in Naviart Information UnanimouslyTechnology (Shanghai) Ltd.2007.3.13 1. Defined the date and reason for summoning 2007 shareholder’s meeting. Unanimously2. Amend company charter. Unanimously-31-

MeetingDate2007.3.22MotionsResolutions1. .Drafted up distribution of retained earnings table in 2006:UnanimouslyShareholder bonus: Cash dividend NT$1.2 per share and stock dividend NT$0.8 pershare.Employee bonus: Cash NT$290,708 thousand and stock NT$193,805 thousand.Compensations to directors and supervisors: 6,000 thousand.2. Recapitalization of surplus with stock shares issued. Unanimously3. Determined to issue 64,000 units of 3 rd employee’s stock option for subscribing Unanimously64,000 thousand shares of common stock.4. Determined the stock exchange ratio for the merger with Tyan to be 1.26 shares of UnanimouslyTyan to unit MiTAC share.5. Decide to issue new stock shares for the merger. Unanimously2007.4.16 1. Determined the common stock to be issued for the employee’s stock option: NT$6 Unanimouslyper share, April 16, 2007 was the EX-stock issuance date. Stock option exercised inQ1 2007 was for 2,467,250 shares.2. Amend Assets Acquisition & Disposition Procedure Unanimously3. Decided to reelect directors and supervisors. Unanimously4. Decided to remove the restriction of no-competition clause against directors. Unanimously5. Amend the “Regulations Governing 3rd Employee’s Stock Option Issuance and UnanimouslySubscription”2007.6.15 1. Selected Matthew Miau at the Chairman. Unanimously2. Hire C.J. Lin as a senior vice GM. Unanimously2007.7.2 EX-stock dividend and cash dividend date was on August 6, 2007. Unanimously2007.7.12 1. Determined the common stock to be issued for the employee’s stock option: NT$6.0 Unanimouslyper share, August 6, 2007 was the EX-stock issuance date. Stock option exercised inApril 1 and July 10, 2007 was for 1,358,500 shares.2. Decided to adjust stock dividend rate and cash dividend rate: Due to the change of Unanimouslyoutstanding stock shares, the distribution rate of stock dividend was adjusted downfrom NT$0.8 per share to NT$0.7922 per share; also, the distribution rate of cashdividend was adjusted down from NT$1.2 per share to NT$1.1883 per share.3. Decided to adjust the converting price of domestic 3rd convertible corporatedebenture: Due to the issuance of new stock shares for recapitalization of surplus, theconverting price was adjusted from NT$43.8 to NT$40.0 on August 6, 2007.Unanimously4. Decided to change CPA to Accountant F.Y. Wen & Y.K. Lin of the Price Waterhouse UnanimouslyCoopers since Q2 of 2007 as compliant with Article 29 of the “Governance ofManaging Market-opened and OTC Firms” to change the CPA per five years.2007.8.20 Board approved the mergers of both Tsu Fung Investment Corp. and So Fung UnanimouslyInvestment Co., Ltd.; the date of merger was temporarily settle on September 1, 2007.2007.8.27 Approved the individual & combined financial reports of 1H, 2007. Unanimously2007.9.13 Decide the date of merger and new shares issuance: to accommodate the actual Unanimouslyapproved date from the competent authority, changed the date of merger and newshares issuance to October 16, 2007.2007.10.12 1. Decide the merger and new shares issuance: settle down the date of merger and new Unanimouslyshares issuance on October 16, 2007, the stock exchange ratio for the merger withTyan is 1.26 shares of Tyan to unit MiTAC share by recapitalization of 50,577,689shares.2. Determined the common stock to be issued for employee’s stock option: NT$4.4 per Unanimouslyshare, October 16, 2007 was the EX-stock issuance date. Stock option exercised inQ3 2007 was for 1,302,500 shares.3. Decided to adjust the converting price of domestic 3rd convertible corporate Unanimouslydebenture: Due to the issuance of new stock shares for recapitalization of merger; theconverting price was adjusted from NT$40 to NT$39.4 on October 16, 2007.4. Investment in Mainland: Invested no more than US$8 million in MiTAC Computer(Kunshan) Co., Ltd. from surplus recapitalization.Unanimously5. Investment in Mainland: Invested no more than US$17 million in MiTAC Computer(Shunder) Ltd. from surplus recapitalization.Unanimously-32-

MeetingDateMotionsResolutions2007.11.1 Decided to invested no more than US$ 20 million to Silver Star Developments Ltd. Unanimously2007.12.19 1. Investment in Mainland: Invested no more than US$1 million in MiTAC Logistics Unanimously(Kunsun) Ltd.2. Bought back MiTAC shares for the 11th times: transferred the buy-back shares toemployees in a price of NT$ 28~32 per share for 5,000 thousand shares.Unanimously3. Hire Johnson Wang as a vice GM. Unanimously2008.1.29 1. Decided to revise the “Regulations to the 11 th Transferring the Buy-Back CompanyShares to Employees”.Unanimously2. Bought back MiTAC shares for the 12 th times: transferred the buy-back shares to Unanimouslyemployees in a price of NT$ 22~28 per share for 5,000 thousand shares.2008.3.14 1. Investment in Mainland: Invested no more than US$7.5 million in Mio Technology Unanimously(China) Ltd.2. Defined the date and reason for summoning 2008 shareholders meeting. Unanimously3. Stipulated the Board Meeting Guidelines of the Company. Unanimously2008.4.21 1. Drafted up distribution of retained earnings in 2007:UnanimouslyShareholder bonus: Cash dividend NT$1.4 per share and stock dividend NT$0.4 pershare.Employee bonus: Cash NT$305,006 thousand and stock NT$ 203,337 thousand.Compensations to directors and supervisors: 6,000 thousand.2. Recapitalization of surplus with stock shares issued. Unanimously3. Remove the restriction of no-competition clause against directors. Unanimously4. Revise the procedure of handling the commodities trading derivatives. Unanimously5. Update the reasons of summoning 2008 shareholders meeting; to accommodate Unanimouslyrelevant enactments and practical operation requirement, revise the “Procedure ofHandling Commodities Trading Derivatives”.6. Determined the common stock to be issued for employee’s stock option: April 21, Unanimously2008 was the EX-stock issuance date. Stock option exercised in Q1 2008 was for482,113 shares.7. Decided to change the CPA: to accommodate the adjustment of interior organization, Unanimouslychange the CPA to Accountant W.C. Wang and Y.K. Lin (Price Waterhouse Coopers)from F.Y. Wen & Y.K Lin (Price Waterhouse Coopers) since 2008.2008.5.14 1. Decided to reelect a supplementary board director. Unanimously2. Decided to remove the restriction of no-competition clause against directors. Unanimously3. Update the reason for summoning 2008 shareholders meeting; add “electsupplementary board director” subject.Unanimously(9) Directors or supervisors who have raised objections to the resolutions reached in theboard meeting that is documented or in writing in recent years or up to thepublication of the annual report: None(10) Resignation and discharge of personnel related to financial statements (includingChairman, General Manager, Accounting Officer, and Internal Auditor Officer) inrecent years or up to the publication of the annual report: None-33-

4. CPA’s dues(1) If the fees other than auditing fees paid to CPA’s firm or its affiliate's share quarter or more compared to the auditing fees, disclose theservice content of both auditing fees and fees other than auditing fees:Unit: NT$ thousandCPA FirmPrice Waterhouse CoopersCPAFan-Yu. Yu-KuanWenLinAuditingFees(2007)SystemdesignFees other than auditing fees (2007)CommercialserviceHumanresources Others Subtotal Yes5,510 - 378 - 2,286 2,664 Is the audition for theentire fiscal year?NoAuditedperiod2007.1.1 ~RemarkFees other than auditing2007.12.31 fees – other serviceprovided including taxconsulting and advisory(2) If changing CPA firm and the auditing fees paid in the fiscal year is less than the former fiscal year, disclose the reason, amount andratio of auditing fees deduced: none.(3) If the auditing fees paid in this fiscal year is 15% or more deduced in this fiscal year than the former year, disclose the reason, amountand ratio of auditing fees deduced: none.5. New CPAs: None6. The Company’s Chairman, General Manager, Finance or Accounting manager who had worked for the CPA firm or its affiliateswithin one year: Noneservice-34-

7. Equity transfer and mortgage of directors, supervisors, managers, and shareholderswith over 10% shareholding(1) Changes in shares position among directors, supervisors, managers, and majorshareholders:2007 2008 currently to April 27Title Name Increase Increase Increase Increase(decrease) in (decrease) in (decrease) in (decrease) inshares held collateral shares shares held collateral sharesChairman Matthew Miau 2,236,132 0 325,000 0GeneralManagerBilly Ho 504,136 0 332,000 0DirectorUPC Technology Corp.Rep. Yun Kuo, Simon Wu9,149,948 0 0 0DirectorXiang-Chung Xue(quitted on May 6, 2008)0 0 0 0Supervisor Arthur Chiao 0 0 0 0SupervisorLien Hwa Industrial Corp.Rep. Charles Ching6,467,475 32,500,000 0 0Senior Vice GM Samuel Wang 1,076,793 0 332,000 0C.J. LinSenior Vice GM (took position on June 15, 64,826 0 28,000 02007)Vice GM Percy Chen 78,601 0 59,000 0Vice GMGino Chang(retired on February 29, (31,766) 0 39,000 02008)Vice GM James Yuan 162,482 0 33,000 0Vice GM Ted Chang (112,000) 0 0 0Vice GM Stone Chen (1,015,640) 0 130,000 0Vice GM Michael Lin 248,640 0 156,000 0Vice GM Stone Lin 173,927 0 72,000 0Vice GM Jack Kuo 117,022 0 39,000 0Vice GM C.S. Chen 36,085 0 59,000 0Vice GM C.P. Lee 350,182 0 15,000 0Vice GM James Wu 108,348 0 33,000 0Vice GM King Chen 521,892 0 143,000 0Vice GM Alice Fang 221,760 0 65,000 0Vice GM Robert Yang (42,306) 0 17,000 0Vice GMJohnson Wang(took position onDecember 19, 2007)0 0 39,000 0Note: The other party for equity transfers or mortgage is not an affiliate.(2) Equity transfer: N/A(3) Equity mortgage: N/A-35-

8. Affiliated top ten shareholdersNameUPC Technology Corp.Rep. Matthew MiauMiTAC Inc.Rep. Matthew MiauLien Hwa IndustrialCorp. Rep. MatthewMiauKuo Hua Life InsuranceCo. Rep. Ming Xian XiaMarket AmericaInvestment Co.Rep. C.B. ChuNumber of shares heldShares currentlyheld by spouse ordependentsShares heldunder other nameNames and relations of the Top Ten shareholders who areaffiliates (spouse or level-2 blood relatives) as defined inNo. 6 communique of the Finance & Accounting StandardShares Stake Shares Stake Shares Stake Title RelationshipLien Hwa Industrial Corp.Invested valued withEquity MethodMiTAC Inc.Same ChairmanMatthew MiauChairman of theCompanySame Chairman of the124,642,988 8.55% 0 0% 0 0%Company and Tsu FungTsu Fung Investment Corp.Investment Corp.’sparent companySame one for theMiTAC Technology Corp.Company Chairman andthe director of MiTACTechnology Corp.UPC Technology Corp. Same ChairmanLien Hwa Industrial Corp. Same ChairmanMatthew MiauChairman of theCompanySame Chairman of the117,747,205 8.08% 0 0% 0 0%Company and Tsu FungTsu Fung Investment Corp.Investment Corp.’sparent companySame one for theMiTAC Technology Corp.Company Chairman andthe director of MiTACTechnology Corp.UPC Technology Corp.Invested valued withEquity MethodMiTAC Inc.Invested valued withEquity MethodMatthew MiauChairman of thecompany88,101,635 6.05% 0 0% 0 0%Same Chairman of theCompany and Tsu FungTsu Fung Investment Corp.Investment Corp.’sparent companySame one for theMiTAC Technology Corp.Company Chairman andthe director of MiTACTechnology Corp.30,279,000 2.08% 0 0% 0 0% -- --29,106,161 2.00% 0 0% 0 0% -- --Lien Hwa Industrial Corp.UPC Technology Corp.Matthew Miau 20,228,932 1.39% 0 0% 0 0% MiTAC Inc.Tsu Fung InvestmentCorp. Rep. Billy Ho19,583,322 1.34% 0 0% 0 0%Tsu Fung Investment Corp.MiTAC Technology Corp.UPC Technology Corp.Lien Hwa Industrial Corp.Chairman of theCompanyChairman of theCompanyChairman of theCompanyChairman of theCompany’s parentcompanyCompany’s directorSame Chairman of theCompany’s parentcompany and UPCTechnology Corp.Same Chairman of theCompany’s parentcompany and Lien HwaIndustrial Corp.Apr 27, 2008Remark-36-

NameTung Da Investment Co.,Ltd. Rep. T.C. ChouMiTACTechnologyCorp. Rep. Francis TsaiStandard Charters BankFund trusted to iSharesCo. account ofinvestment ( 英 商 渣 打託 管 iShares 公 司 投 資專 戶 )Number of shares heldShares currentlyheld by spouse or under other name are affiliates (spouse or level-2 blood relatives) asdependentsShares heldNames and relations of the Top Ten shareholders whodefined in No. 6 communique of the Finance &Accounting StandardShares Stake Shares Stake Shares Stake Title RelationshipSame Chairman of theMiTAC Inc.Company’s parentcompany and MiTACInc.Chairman of theMatthew MiauCompany’s parentcompanyThe Chairman of theCompany’s parent’sMiTAC Technology Corp. company is the rep.director of MiTACTechnology Corp.The Company’s parentTung Da Investment Co., company is the majorLtd.shareholder of Tung DaInvestment Co.17,174,852 1.18% 0 0% 0 0% Tsu Fung Investment Corp.UPC Technology Corp.Rep.: Matthew Miau12,863,607 0.88% 0 0% 0 0% MiTAC Inc.Lien Hwa Industrial Corp.Matthew MiauTsu Fong Investment Corp.,The Company’s majorshareholder is the parentcompany of Tsu FungInvestment Corp.The Company’s directoris the Chairman of UPCTechnology Corp.The Company’s directoris the Chairman of LienHwa Industrial Corp.The Company’s directoris the Chairman ofMiTAC Inc.The Company’s directorThe Company’s corp.director rep. is theChairman of Tsu FungInvestment Corp.’sparent company.10,926,952 0.75% 0 0% 0 0% -- --Apr 27, 2008Remark-37-

9. Consolidated StockholdingsInvested Businesses(Note)Investment by theCompanyInvestment by Directors,Supervisors, Managers, andBusinesses ControlledDirectly or indirectly by theCompanyApr 30, 2008Units: Shares; %Total investmentShares Stake Shares Stake Shares StakeMiTAC Technology Corp. 190,396,939 35.53% 28,445,470 5.31% 218,842,409 40.84%Tung Da Investment Co., Ltd. 53,145,723 49.99% 0 0.00% 53,145,723 49.99%Silver Star Developments Ltd. 215,495,404 100.00% 0 0.00% 215,495,404 100.00%Tsu Fung Investment Corp. 59,670,040 100.00% 0 0.00% 59,670,040 100.00%3 Probe Technology Corp. 1,080,000 23.13% 0 0.00% 1,080,000 23.13%Lain Jie Investment Co., Ltd. 12,995,000 49.98% 0 0.00% 12,995,000 49.98%Channel Overseas Corp. 1,125,945 5.00% 0 0.00% 1,125,945 5.00%MiTAC Inc. 28,549,614 8.75% 111,470,148 34.15% 140,019,762 42.90%Overseas Investment &1,000,000 1.11% 0 0.00% 1,000,000 1.11%Development Corp.Lien Hwa Industrial Corp. 21,720,116 2.90% 99,649,131 13.32% 121,369,247 16.22%UPC Technology Corp. 12,494,262 1.55% 220,488,562 27.35% 232,982,824 28.90%Gemtek Technology Co., Ltd. 5,414,924 2.25% 11,536 0.00% 5,426,460 2.25%Habinger Venture CapitalCorp.Asia-Pacific Technology &Intellectual Property ServicesInc.28,099,000 14.05% 13,401,000 6.70% 41,500,000 20.75%140,000 0.85% 0 0.00% 140,000 0.85%MiTAC Development Corp. 8,559,400 47.55% 0 0.00% 8,559,400 47.55%DLC Technology Corporation 6,500,000 98.48% 100,000 1.52% 6,600,000 100.00%Foreground Technology Ltd. 9,045,492 100.00% 0 0.00% 9,045,492 100.00%Note: A long-term investment of the Company.-38-

1. Capital and stock(1) Source of capital stock1) Outstanding stock sharesYear/MonthIV. Funds RaisingAuthorized Capital Stock Paid-in Capital RemarksIssueprice Shares Value Shares Value Sources1998.08 10 900,000,000 9,000,000,000 577,578,648 5,775,786,480 Recapitalization by capital surplus, recapitalization by surplusand conversion of debenture stock certificate byNT$497,723,730, NT$273,747,860 and NT$27,077,520respectively.-39-Cases whereassets other thancash used forstock callsApr 30, 2008, Units: NT$; SharesDate capital increase in effect (receivedauthorization) and documentationnumber- 1998.06.09(87) Securities and FuturesCommission (I) directive #499771998.09 10 900,000,000 9,000,000,000 585,428,580 5,854,285,800 Convert debenture stock by NT$78,499,320 - -1999.02 10 900,000,000 9,000,000,000 635,428,580 6,354,285,800 Cash recapitalization by NT$500,000,000 - 1998.11.06(87) Securities and FuturesCommission (I) directive #930041999.08 10 1,360,000,000 13,600,000,000 767,459,721 7,674,597,210 Recapitalization of surplus and employee stock bonuses intoNT$1,270,857,160 and NT$49,454,250 respectively.- 1999. 06.22 (88) Securities and FuturesCommission (I) directive #567802000.02 10 1,360,000,000 13,600,000,000 769,108,799 7,691,087,990 Conversion of corporate debenture bonds into NT$16,490,780. - -2000.07 10 1,360,000,000 13,600,000,000 892,427,727 8,924,277,270 Recapitalization of surplus, employee stock bonuses, andcorporate debenture bonds conversion into NT$1,153,663,180,NT$78,956,480 and NT$569,620 respectively.2001.07 10 1,710,000,000 17,100,000,000 994,513,299 9,945,132,990 Recapitalization of surplus and employee stock bonuses intoNT$892,427,720 and NT$128,428,000 respectively.2002.07 10 1,710,000,000 17,100,000,000 1,041,568,630 10,415,686,300 Recapitalization of surplus and employee stock bonuses intoNT$397,729,310 and NT$72,824,000 respectively2003.12 10 1,710,000,000 17,100,000,000 1,056,381,210 10,563,812,100 Employee redemption of stock option vouchers valued atNT$148,125,800 during Q4 2003.2004.03 10 1,710,000,000 17,100,000,000 1,065,034,460 10,650,344,600 Employee redemption of stock option vouchers valued atNT$86,532,500 during Q1 2004.2004.06 10 1,710,000,000 17,100,000,000 1,066,090,550 10,660,905,500 Employee redemption of stock option vouchers valued atNT$10,560,900 during Q2 2004.2004.09 10 1,710,000,000 17,100,000,000 1,067,386,130 10,673,861,300 Employee redemption of stock option vouchers valued atNT$12,955,800 during Q3 2004.2004.12 10 1,710,000,000 17,100,000,000 1,081,476,055 10,814,760,550 Employee redemption of stock option vouchers valued atNT$140,899,250 during Q4 2004.2005.03 10 1,710,000,000 17,100,000,000 1,089,458,555 10,894,585,550 Employee redemption of stock option vouchers valued atNT$79,825,000 during Q1 2005.2005.06 10 1,710,000,000 17,100,000,000 1,142,483,297 11,424,832,970 Recapitalization of surplus and employee stock bonuses intoNT$421,712,220 and NT$76,994,400, respectively.Employee redemption of stock option vouchers valued at NT$31,540,800 during Q2 2005.2005.09 10 1,710,000,000 17,100,000,000 1,146,134,952 11,461,349,520 Employee redemption of stock option vouchers valued atNT$36,516,550 during Q3 2005.2005.12 10 1,710,000,000 17,100,000,000 1,156,104,402 11,561,044,020 Employee redemption of stock option vouchers valued atNT$99,694,500 during Q4 2005.2006.03 10 1,710,000,000 17,100,000,000 1,162,298,717 11,622,987,170 Employee redemption of stock option vouchers valued atNT$61,943,150 during Q1 2006.- June 03, 2000 Securities and FuturesCommission (I) directive # 47983- June 07, 2001 Securities and FuturesCommission (I) directive # 136070- June 18, 2002 Securities and FuturesCommission (I) directive 0910132851- January 29, 2004 Industrial Park Vendordirective #0930001436- April 22, 2004 Industrial Park Vendordirective#0930010105- July 19, 2004 Industrial Park Vendordirective#0930019167- October 26, 2004 Industrial Park Vendordirective#09300029491- January 25, 2005 Industrial Park Vendordirective#0940001540- April 21, 2005 Industrial Park Vendordirective #0940009962- August 08, 2005 Industrial Park Vendordirective#0940020614- November 07, 2005 Industrial ParkVendor directive#0940030393- February 10, 2006 Industrial ParkVendor directive#0950002803- May 08, 2006 Industrial Park Vendordirective#0950010674

Year/MonthAuthorized Capital Stock Paid-in Capital RemarksIssueprice Shares Value Shares Value Sources2006.06 10 1,710,000,000 17,100,000,000 1,277,584,632 12,775,846,320 Recapitalization of surplus and employee stock bonuses into NT$906,690,250 and NT$177,782,900, respectively.Employee redemption of stock option vouchers valued atNT$68,386,000 during Q2 2006.2006.09 10 1,710,000,000 17,100,000,000 1,278,573,632 12,785,736,320 Employee redemption of stock option vouchers valued atNT$9,890,000 during Q3 2006.2006.12 10 1,710,000,000 17,100,000,000 1,279,759,382 12,797,593,820 Employee redemption of stock option vouchers valued atNT$11,857,500 during Q4 2006.2007.03 10 1,710,000,000 17,100,000,000 1,282,226,632 12,822,266,320 Employee redemption of stock option vouchers valued atNT$24,672,500 during Q1 2007.2007.06 10 2,200,000,000 22,000,000,000 1,404,657,860 14,046,578,600 Recapitalization of surplus and employee stock bonuses into NT$1,016,921,700 and NT$193,805,580, respectively.Employee redemption of stock option vouchers valued atNT$13,585,000 during Q2 2007.2007.09 10 2,200,000,000 22,000,000,000 1,456,538,049 14,565,380,490 Employee redemption of stock option vouchers valued atNT$13,025,000 during Q3 2007.Recapitalization by receiving the merger of Tyan ComputerCorp. valued at NT$505,776,890.2008.03 10 2,200,000,000 22,000,000,000 1,457,020,162 14,570,201,620 Employee redemption of stock option vouchers valued atNT$4,821,130 during Q1 2008.2008.04 10 2,200,000,000 22,000,000,000 1,457,136,504 14,571,365,040 Employee redemption of stock option vouchers valued atNT$1,163,420 in April 2008.Cases whereassets other thancash used forstock callsDate capital increase in effect (receivedauthorization) and documentationnumber- October 11, 2006 Industrial Park Vendordirective#0950026982- November 01, 2006 Industrial ParkVendor directive#0950028931- February 08, 2007 Industrial ParkVendor directive#0960003499- May 10, 2007 Industrial Park Vendordirective#0960011459- Aug 30, 2007 Industrial Park Vendordirective 0960022806- Dec 07, 2007 Industrial Park Vendordirective#0960033461- May 14, 2008 Industrial Park Vendordirective#0970012288- Application for change is yetto be filed-40-

StocktypeCommonstockAuthorized Capital StockOutstanding shares Unissued(Note) sharesTotal1,457,136,504 742,863,496 2,200,000,000Apr 27, 2008 Unit: ShareRemarkOf authorized capital stock:70,000,000 shares are reserved for conversion ofcorporate debenture bonds;250,000,000shares are reserved for redemption ofstock option vouchers by employeesNote: Outstanding stock shares are listed stock before deducting 10,000,000 shares of Treasury Stock.2) Shelf registration: None(2) Shareholding StructureQTYStructure ofshareholdersNumber ofShareholdersNumber ofshares heldPercentage oftotal sharesGovernmentinstitutionsFinancialinstitutionsOtherinstitutionsIndividualsQualifiedForeigninstitutionalinvestorsReservedSharesApr 27, 2008Total7 15 208 125,360 293 1 125,8848,795 62,018,683 456,782,273 770,110,958 158,215,795 10,000,000 1,457,136,5040.00% 4.26% 31.35% 52.84% 10.86% 0.69% 100.00%(3) Stock shares1) Common stockPar Value of NT$10 for Each Share Apr 27, 2008Level of holdingsNumber ofShareholdersShares Held Proportion of total1-999 40,573 12,607,960 0.87%1,000-5,000 56,783 133,625,031 9.17%5,001-10,000 14,232 110,497,159 7.58%10,001-15,000 4,826 59,385,769 4.08%15,001-20,000 3,036 55,606,618 3.82%20,001-30,000 2,470 62,089,240 4.26%30,001-50,000 1,849 73,186,319 5.02%50,001-100,000 1,237 88,533,117 6.08%100,001-200,000 480 69,380,193 4.76%200,001-400,000 206 55,913,218 3.84%400,001-600,000 68 33,583,930 2.30%600,001-800,000 27 18,807,805 1.29%800,001-1,000,000 19 17,482,834 1.20%Over 1,000,001 78 666,437,311 45.73%Total 125,884 1,457,136,504 100.00%2. Preferred stock: None-41-

(4) Major shareholdersName of major shareholdersStockShares HeldStakeApr 27, 2008UPC Technology Corp. 124,642,988 8.55%MiTAC Inc. 117,747,205 8.08%Lien Hwa Industrial Corp. 88,101,635 6.05%Note: Three shareholders of MiTAC have over 5% shareholding.ItemMarketprice per(5) Market price per share, net worth, earnings, and dividendYearBeforeadjustment2006 2007AfteradjustmentBeforeadjustmentAfter adjustment2008current year toApril 30(Note 6)Highest 55.30 49.54 49.80 44.56 33.10Lowest 24.80 21.69 27.50 27.50 (Note 8) 22.05share Average (Note 2) 39.32 39.86 27.09Net worthBefore distribution 22.36 23.69 23.62per share After distribution 20.89 22.06 (Note 1) -EarningsWeighted average shares 1,226,685 1,342,390 1,388,016 1,463,041 (Note 1) 1,427,560per share Earnings per share 4.39 4.01 4.07 3.86 (Note 1) 0.50Dividendper shareReturn oninvestmentStockCash dividend 1.1883 1.0859 1.4 1.4 (Note 1) -Retained Stockearningsgrants Additional paid-incapitalAccumulated unpaiddividend0.79225 0.4 (Note 1) -- - -- - -P/E ratio (Note 3) 8.67 9.54 13.36 (Note 7)Dividend Yield (Note 4) 31.78 27.72 (Note 1) -Cash dividend yield(Note 5)3.15% 3.61% (Note 1) -Note 1: The Company has not yet held a shareholder’s meeting to determine allocation of earnings for 2007 that isproposed by the Board of Directors.Note 2: Average market price is based on the trade amount and shares each year.Note 3: Price/Earnings ratio = Yearend share price/Earnings per shareNote 4: Price/Dividend ratio = Yearend share price/Cash dividend per shareNote 5: Cash dividend yield rate = Cash dividend per share/Average closing share price for yearNote 6: Net worth per share and earnings per share must be stated in the financial statements audited (reviewed) by CPAsup to the publication of the most recent quarterly report while columns must be filled out up to the publication ofthe annual report.-42-

Note 7: The earnings per share of the 1st quarter 2007 should be translated to the annual earnings per share forcomparison.Note 8: The lowest market price per share is the price after dividend is deduced, no adjustment is required.(6) Dividend policy and implementation1) Company dividend policy:The Company is part of an industry that is in a growth phase, and the Companyis growing along with this industry. In consideration of the industry environmentin which the Company operates, long-term financial planning needs, and futurefinancing requirements, as well as to satisfy shareholders demand for cash inflows,the Company shall, after payment of taxes and covering losses occurring in pastyears, allocate 10% of earnings as a legal reserve. Moreover, it shall afterdeducting interest paid to shareholders allocate at least 5% as an employeedividend, with the means of distribution of the remainder, together with anyundistributed earnings from the previous year, to be proposed by the Board ofDirectors for approval at the shareholder’s meeting.If the employee dividend described above is distributed as stock shares,employees of the Company subsidiaries who meet specified conditions are alsoeligible to receive such shares. The Chairman is authorized to set the relevantconditions.The earnings allocations and shareholder cash dividend rates described aboveare to be set by the Board of Directors giving due consideration to the Company’sfinancial condition, future financing requirements, and profitability, with cashdividends not less than 10% of total stock dividends, and subject to adjustmentsapproved at the shareholder’s meeting.2) Dividend distribution proposal for consideration of the Shareholder’s MeetingIn accordance with the above principles, the Company’s Board of Directorsdrafted a proposal for dividend distribution at its meeting on Apr 21, 2008. Thisproposal covers dividends for the 2007 fiscal year, and calls for a per sharedividend of NT$1.4 and NT$0.4 in cash and stock, respectively. The proposal willbe presented for approval at the shareholder’s meeting on June 25, 2008.3) Expected change of dividend policy: None.(7) Impact on Company Performance and Earnings per share at stock grants set forconsideration of this year’s shareholder’s meetingUnit: NT$ ThousandYear 2008Item(projected)Initial paid-in capital 14,565,380Dividend forcurrent yearChanges inoperatingperformanceCash dividend per share (NT$) 1.40Number of shares distributed as recapitalization of earnings 0.04Number of shares distributed as recapitalization of capital-reservesOperating profitsN/P (Note)Increase (decrease) in operating profits compared to theprevious year.After-tax net earnings-43-

PresumptiveEPS and P/ERatioIncrease (decrease) in after-tax net earnings compared to theprevious yearEarnings per shareIncrease (decrease) in earnings per share compared to theprevious yearAverage yearly return on investment (inversed yearly P/Vratio)If recapitalization of earnings replacedentirely by cash dividendIf recapitalization of capital reserves notinstitutedIf capital reserves not used forrecapitalization and recapitalization ofearnings replaced by cash dividendProposed EPSProposedaverage yearlyreturn oninvestmentProposed EPSProposedaverage yearlyreturn oninvestmentProposed EPSProposedaverage yearlyreturn oninvestmentNote: As stipulated by “Regulations Governing the Publication of Financial Forecasts of PublicCompanies” MiTAC needs not reveal projections for 2008 as it has not made public completefinancial forecasts.(8) Employee bonuses and Remuneration for Directors and Supervisors:1) Scale or scope of employee bonuses and remuneration for directors and supervisors asset forth in Company Charter:A. Employee bonus: Where the Company has earnings at the end of the business year, afterpaying all relevant taxes, deducting accumulated deficits from past years, and setting asidea legal reserve of ten percent, it shall in accordance with the law appropriate a specialearnings surplus. After payment of interest on stocks, a minimum of 5% of the remaindershall be appropriated for employee bonuses.B. Scale or scope of remuneration for directors and supervisors: not specified in companycharter.2) Information on the proposed scheme for distribution of employee bonuses as approvedby the Board of DirectorsOn Apr 21, 2008, the Board of Directors passed a resolution on the distribution of theCompany’s earnings in 2007 as follows:A. Distribute to employees cash bonuses totaling NT$305,006,158, stock bonuses totalingNT$203,337,430 and remuneration totaling NT$ 6,000,000 to directors and supervisors.B. Proposed number of shares to be distributed as employee stock bonuses: 20,333,743, or26% of capitalized earnings.C. After-tax basic earnings per share is NT$3.70 after accounting for employee bonuses andremuneration for directors and supervisors. After-tax basic earnings per share is NT$3.38after accounting for employee bonuses paid with cash, stock issued at market price(average closing-price of the last month of the recent fiscal year), and remuneration fordirectors and supervisors.-44-

3) Use of previous-year (2006) earnings for employee bonuses and for director andsupervisor compensations(1) Distribution:Employee cash bonusesEmployee stock bonusesA. Number of sharesB. ValueC. Shares of total outstanding sharesDirectors and supervisors compensation(2) EPS-related informationOriginal EPSProjected EPS (Note)2007 Actual figures reserved upon atShareholders and Board Meetings290,708,00019,381,000 shares193,805,0001.56%6,000,0004.393.99Note: Projected EPS = (Net profits for the current period – employee bonuses – director and supervisorscompensation) / Weighted average of outstanding share volume of the current calendar year)-45-

(9) Treasure stocks (Stocks Buybacks)May 15, 2008Unit: NT$ Thousand; 1,000 sharesSequence 1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th 9 th 10 th 11 th 12 thBoard ofDirectorsresolution datePurpose ofBuyback2001.9.14 2003.5.29 2003.8.6 2003.8.29 2003.9.16 2003.12.5 2004.2.24 2004.3.11 2004.5.6 2004.12.2 2007.12.19 2008.1.29Transferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesTransferred toemployeesPeriod ofBuyback2001.9.17~2001.11.162003.5.30~2003.7.292003.8.7~2003.8.252003.9.1~2003.9.162003.9.17~2003.10.202003.12.8~2003.12.242004.2.25~2004.3.102004.3.12~2004.4.122004.5.7~2004.6.162004.12.3~2005.2.22007.12.20~2008.1.292008.1.30~2008.2.19Buyback pricerangeProjected sharesbuybackType & Quantityof sharespurchasedActual sharesbuybackCost per share ofbuyback (NT$)10~13 10.5~12 10.5~14 10.5~14 10.5~14 10.5~15 15~17 15~17.5 13.5~15 14~16.5 28~32 元 22~28Common stock38,460Common stock190Common stock5,000Common stock0Common stock5,000Common stock5,000Common stock5,000Common stock5,000Common stock10,000Common stock10,000Common stock5,000Common stock5,000Common stock5,000Common stock5,000Common stock10,000Common stock10,000Common stock10,000Common stock10,000Common stock10,000Common stock1,000Common stock5,000Common stock5,000Common stock5,000Common stock5,0002,212 0 69,112 68,079 137,834 72,425 84,065 153,557 146,533 16,072 131,837 124,57911.6 - 13.8 13.6 13.8 14.5 16.8 15.4 14.7 16.1 26.4 24.9Reason forincompletion ofbuying treasurestock per theBoard’s decisionCash in hand wasan advantage forbusiness operationdue to the 911eventStock price wentup beyond thebuying price ofTreasury stockapproved by theBoard ofDirectors.- - - - - - -Stock price wentup beyond theceiling of Bod’sdecision.- -Shares cancelledand transferredAccumulatedsharesAccumulatedshares aspercentage ofissued shares (%)190 0 5,000 5,000 10,000 5,000 5,000 10,000 10,000 1,000 0 00 0 0 0 0 0 0 0 0 0 5,000 10,0000.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.34% 0.69%-46-

2. Debenture issuanceMay 15, 2008Type of DebentureDomestic 1 st guaranteed corporate debenture Domestic 3 rd convertible corporate debenturebondbondIssuing (processing) date May 25, 2004 ~ May 26, 2004 August 12, 2005Face value NT$5 million NT$100,000Issuing location and trade TaiwanTaiwanlocationIssuing price Face value Face valueNT$2 billionNT$3 billionTotal amountA Bond and B Bond are offered byguaranteeing bank, in which, A Bond includesAA bond and AB bond while B Bond includesBA bond and BB bond. A Bond and B Bondare issued for an amount of NT$500 million,each.AA bond, BA bond, and BB bond: Face rate 0%Interest rate1.60%AB bond: If the floating rate 2.00%, face rate is 4.50% minus floating rate;moreover, the face rate may not go below 0%.Validity 5-year; due date: 5.25.2009 ~ 5.26.2009 5-year; due date: Aug 11, 2010GuarantorA Bond: Taipei BankNoneB Bond: Bank of CommunicationsTrusteeTrust Department of SinoPac BankWealth Management Business Trust Division ofthe First BankUnderwriter None Yuanta Securities GroupAttorney H.G. Kuo B.H. KaoCPA Fang-Yu Wen, Ying-fei Liu Ying-fei Liu, Wei-chen WangSinking fundA Bond: In a lump sum on the due dateB Bond: 50% refund each in the 4th year and5thfrom the issuing dateUnderstanding principal NT$2 billion NT$3 billionRedemption or liquidation beforedue date clauseRestrictive clauses None NoneRating service, rating date, andcorporate debenture bond ratingNoneNoneConverted (exchangedor subscribed) amountof common stock, GDRNoneNoneor marketable securityOtherup to the publication ofrightsthe annual reportIssuance & ConversionAct (exchange oroption)Please refer to Article 6 of the CorporateDebenture Bond Issuance and Conversion Act- Please refer to Article 17 of the CorporateDebenture Bond Issuance and Conversion ActN/AIssuance & conversion, exchangeor stock option act, issuanceN/Aconditions causing stock dilutionand affecting shareholder’s equityDepository service for theexchangeN/APlease refer to the Corporate Debenture BondIssuance and Conversion ActBased on the total stock issuance of NT$3billion and NT$39.4 per share, if it is convertedtotally, 76,142 thousand common stock sharesare issued that amounted to 5.23% of thecurrent issuance.N/A-47-

Debenture ConversionType of debentureDomestic 3 rd convertible corporate debenture bondYearUp to May 15,2006 2007Item2008Debenture Max. 115.5 120.85 107converting Min. 98 98 98.5market102.98 109.43 102.75AveragepriceConverting priceIssuing date andconverting priceFulfilling conversionobligation1. 1.1.2006.~ 8.15.2006.:482. 8.16.2006~12.31.2006:43.81. 1.1.2007.~ 8.5.2007:43.82. 8.6.2007~10.15.2007:403. 10.16.2007~12.31.2007:39.4Issuing date: 8.12.2005Converting price: 48Issuing stocks39.43. Preferred stock issuance: None4. Overseas depository receipt: None-48-

MiTAC International Corp.Regulations Governing Domestic 3 rd Convertible Corporate Debenture Bond Issuanceand Conversion1. BondsThe Domestic 3 rd Convertible Corporate Debenture Bond (referred to as “the convertiblebond” hereinafter) of MiTAC (referred to as “the Company” hereinafter).2. Issuing dateAugust 12, 2005 (referred to as the “issuing date” hereinafter).3. Total issuance amount and par valueTotal issuance amount is for NT$3 billion at NT$100,000 par and it is issued at face value.4. Issuance periodIssuance period is for 5-year from August 12, 2005 to August 11, 2010 (referred to as the“due date” hereinafter).5. Bond face rateFace rate is 0%.6. Sinking fund and dateBondholders may have the bond converted to common stock shares of the Companyaccording to Article 10 of the Governing Regulations or exercise the Put right according toArticle 18 of the Governing Regulations, or, the Company exercises the Call right beforedue date according to Article 17 of the Governing Regulations, or, redeems the bond in alump sum at face value on the due date.7. CollateralThis convertible bond is a bond without collateral. Upon the issuance of the convertiblebond, if the Company has other guaranteed bond with option or convertible bond issued,this convertible bond will be processed equivalently as the guaranteed bond with option orconvertible bond with equivalent credit or collateral right.8. Converting objectThe Company will have new stock shares issued for the conversion to common stock.9. Converting periodExcept for the period from the three business days prior to the book closure period, bookclosure ex-right date while the Company contacting Stock Exchange Corporation for stockdividend, book closure ex-dividend date for cash dividend, and book closure ex-right datefor recapitalization of cash to the distribution date, bondholders may inform TaiwanDepository & Clearing Corporation (referred to as “the TDCC” hereinafter) by brokers tocontact the underwriting office of the Company to have the convertible bonds converted tothe common stock of the Company in accordance with Article 10, Article 11, and Article 15of the Governing Regulations since the day after the issuance of this convertible bond forone month till ten days before the due date.10. Converting procedure(1) Bondholders fill out the “Convertible Bond Bank Account Conversion / Redemption /Put Application Form” (remarked “conversion”) at the security brokers and then thesecurity broker is to have an application filed to the depository & clearing company.The depository & clearing company is to have the application forwarded to theunderwriting office of the Company for immediate conversion and it cannot bewithdrawn. The conversion process will be completed in five business days uponreceiving and with common stock of the Company deposited into the account of thebondholders.(2) Overseas Chinese and foreigners who have applied to have the convertible bondconverted to the common stock of the Company are to have the process arranged by-49-

ank transfer.11. Converting price and price adjustment(1) Converting priceThe price of the convertible bond is based on the cutoff date of July 28, 2005.Theconverting price (rounded up to the first decimal of New Taiwan Dollar) of theCompany’s convertible bond is based on the average closing price of the Company’scommon stock on the prior business day, prior three business days, or on the prior fivebusiness days by 112% converting premium rate. For any Ex-right and Ex-dividendenforced before the cutoff date, the sampled closing price for calculating the convertingprice must be translated to the Ex-right or Ex-dividend price. If there is any Ex-right orEx-dividend enforced after determining the converting price and before the issuancedate, the converting price is to be adjusted accordingly. The bond converting price isNT$48 per share.(2) Converting price adjustment1) Except for the Company’s marketable securities with debt-for-equity SWAP or stockoption exchanged for common stock and private marketable security, upon theissuance of the converting bond by the Company, converting price is to be adjustedaccording to the following equation (rounded up to the first decimal of New TaiwanDollars) while there is additional common stock shares issued (recapitalization ofcash, surplus, additional paid-in capital, employee’s bonus, issuing new stock sharesfor merger or accepting stock shares of another company, stock split andrecapitalization of cash for attending global depository receipt) by the Company; also,please contact GreTai Securities Market (referred to as “GreTai” hereinafter) to havethe converting price announced and adjusted on the Ex-right cut-off date for newbonus shares:Converting pricebefore × Outstanding ProceedsAdjustedstock shares + collected perconverting price = adjustmentshareOutstanding stock shares+new bonus shares×New bonussharedNote 1: The outstanding shares are the net of the Treasury stock shares that are notyet cancelled or transferred.Note 2: The proceeds collected per share are zero for stock dividend or stock split.Note 3: The proceeds collected per share of the new bonus shares recapitalization ofmerger is the certified net worth per share of the discontinued companybefore the merger cutoff date by SWAP ratio. The proceeds collected pershare of the new bonus shares for the shares accepted from the othercompany are the certified or reviewed net worth per share of the saidcompany by SWAP ratio.Note 4: If the price of new bonus shares is adjusted on the Ex-right cut-off date of therecapitalization of cash, it is to be adjusted according to the updated newbonus share price and the aforementioned equation. If the updatedconverting price is lower than the converting price announced prior to theEx-right cut-off date, please contact the GreTai to have the updatedconverting price announced.Note 5: If it is a recapitalization of merger, the converting price is to be adjusted onthe merger cut-off date. If it is a recapitalization of stock split, the-50-

converting price is to be adjusted on the stock split cut-off date. If therecapitalization of cash is by pricing and purchasing or if the recapitalizationof cash is by attending global depository receipt, since there is not anEx-right cut-off date designated, the converting price is to be adjusted uponthe completion of stock issuance.2) Upon the issuance of the convertible debenture bond, if the Company has marketablesecurities with debt-for-equity SWAP or stock option issued at the price lower thanthe transfer price per share (Note 1) or stock option price, or, if debt-for-equitySWAP is offered to others for a reason other than the recapitalization of cash,converting price is to be adjusted according to the following equation (rounded up tothe first decimal of New Taiwan Dollar) also, please contact the GreTai to have theconverting price adjusted on the issuance date of the marketable security or stockoption:Adjustedconvertingprice=Convertingprice beforeadjustment× Outstandingstock sharesConverting price or stock+option price of new bonus ×shares or stock optionConverting shares orstock option shares ofnewly issued marketablesecurity or stock optionOutstanding stock shares + Converting shares or stock option shares of newly issuedmarketable security or stock optionNote 1: The market price per share is the average closing price of the Company’scommon stock share for one business day, three business days, or fivebusiness days prior to the cutoff date of the marketable security withdebt-for-equity swap or stock option.Note 2: The outstanding shares are net of the Treasury stock shares that are not yetcancelled or transferred.Note 3: If the marketable security with debt-for-equity swap or stock option is paidfor with the Treasury stock, the outstanding stock shares in the equation arenet of the new bonus shares for the newly issued marketable security orstock option.3) Upon the issuance of the convertible debenture bond, if the outstanding commonstock shares are reduced for a reason other than the cancellation of Treasury stock,the converting price is to be adjusted according to the equation below; also, pleasecontact the GreTai to have it adjusted on the decapitalization cutoff date:Adjusted converting price=Converting price before adjustment×Outstanding common shares before decapitalizationOutstanding common shares after decapitalizationNote 1: The outstanding shares are net of the Treasury stock shares that are not yetcancelled or transferred.(3) Converting price resetIn addition to having the converting price adjusted according to the aforementionedanti-dilution clause, the Company is to have the price reset on the date when it is issuedfor six months and the stock dividend ex-right cutoff date or ex-dividend cutoff date(whichever is later) from 2007 to 2010.If there is no stock dividend or cash dividenddistributed in the year, the converting price (no adjustment is needed if it is higher thanthe converting price of the year before the price reset) is to be reset on the cutoff date ofJuly 5th according to the pricing model for converting price in clause (1).The adjustedconverting price may not be lower than an amount equivalent to 80% of the converting-51-

price at the time of issuance (adjustment can be made while the total amount ofcommon stock changed); also, please inform GreTai in writing to announce the updatedconverting price. The regulation of converting price reset does not apply to the requestfor conversion made before or on the cutoff date.(4) Converting price adjustment on the ex-dividend dateUpon the issuance of the converting bond, if the ratio of cash dividend distributed forthe Company’s common stock to common stock capital exceeds 15%, the convertingprice should be adjusted proportionally to the part beyond 15% on the ex-dividendcutoff date; also, please inform GreTai in writing to announce the updated convertingprice. The said regulation of having converting price adjusted down does not apply tothe request for conversion made before the ex-dividend cutoff date. The equation ofadjustment is illustrated as follows:Adjusted converting price = Converting price before adjustment – (The ratio of cashdividend distributed for the Company’s common stock to common stock capital-15%) x1012. OTC and off OTC of converting debenture bondThe converting bond is traded over-the-counter once an application is filed to the GreTaibefore the issuance date and it is off OTC trade once the Company converts it to commonstock or call or buyback entirely.13. New bonus sharesThe common stock of the Company that is traded for the converting bond will be traded inthe stock market from the date the common stock delivered. The Company will contactthe Stock Exchange Corporation to have the said arrangement announced. If the Companyhas the common stock issued virtually, it is to be traded virtually in the stock market fromthe delivery date.14. Registration of stock capital changeThe Company is to have the stock shares and stock value issued for the conversion of theconverting bond in the last quarter announced in 15 days at the end of the quarter.Moreover, an application for stock capital change is to be filed to the competentauthorities at least once quarterly.15. Conversion of odd sharesFor debt-for-equity swap, the Company will pay cash for anything less than one share(rounded up to New Taiwan Dollars).16. Rights and obligations after conversionThe rights and obligations of the common stock of the debt-for-equity swap are identicalto the common stock shares issued originally by the Company.17. Call right of the Company for the convertible bondThe Company may exercise Call right against the convertible bond in the following (1)and (2) situations:(1) Since the day after the issuance of this convertible bond for one month till forty daysbefore the due date, if the Company’s common stock closing-price is over 50% higherthan the converting price for thirty business days consecutively, the Company mayhave a “bond Calls notice” sent to bondholders (to the address stated in the creditorlog five days prior to the mailing service; also, the investors who have acquired theconvertible bond by trade or other means are to be informed by announcement) bycertified mail in the following thirty business days and please inform the GreTai inwriting to have it announced.(2) Since the day after the issuance of this convertible bond for one month till forty daysbefore the due date, if the outstanding convertible bond value is lower than 10% of the-52-

total issuance value, the Company may have a “bond Calls notice” sent to bondholders(to the address stated in the creditor log five days prior to the mailing service; also, theinvestors who have acquired the convertible bond by trade or other means are to beinformed by announcement) by certified mail at any time and please inform the GreTaiin writing to have it announced.The Company has the bond call cutoff date set on the date thirty days after the “bond callsnotice” is mailed. For bondholders who have the underwriting office of the Companyinformed in writing to have the calls made with cash prior to the bond calls cutoff date(effective upon arrival according to the postal mark), the Company will have theconvertible bond called in five business days from the calls cutoff date at the face value.For bondholders who have not had the underwriting office of the Company informed inwriting to have the calls made with cash prior to the bond calls cutoff date, the Companymay have the convertible bond converted to the common stock on the bond calls cutoffdate according to the converting price at the time.18. Put rights of bondholdersThe Company has the convertible bond Put cutoff date set on the date three years after theissuance date. The Company may have a “bond Puts notice” sent to bondholders bycertified mail thirty days before the Put cutoff date and please inform the GreTai inwriting to have it announced. Bondholders may inform Taiwan Depository & ClearingCorporation or the Company’s underwriting office (effective upon arrival by postal markand it may not be withdrawn) by brokers in writing within thirty days upon announcementto demand the Company to have the convertible bonds redeemed at the face value in cash.19. Cash dividend and stock dividend in the converting year(1) Cash dividendBondholders who have applied for bond conversion in the period from January 1 tothree business days prior to the book closure ex-dividend date for cash dividend withStock Exchange Corporation are entitled to the cash dividend of the prior yearresolved in the shareholder’s meeting.Bondholders who have applied for bond conversion the day after the cash dividendex-dividend cutoff day to December 31 of the year are not entitled to the cash dividendof the prior year resolved in the shareholder’s meeting but are entitled to the cashdividend of next year resolved in the shareholder’s meeting.(2) Stock dividendBondholders who have applied for bond conversion in the period from January 1 tothree business days prior to the book closure ex-right date for stock dividend withStock Exchange Corporation are entitled to the stock dividend of the prior yearresolved in the shareholder’s meeting.Bondholders who have applied for bond conversion the day after the stock dividendex-right cutoff day to December 31 of the year are not entitled to the stock dividend ofthe prior year resolved in the shareholder’s meeting but are entitled to the stockdividend of the next year resolved in the shareholder’s meeting.20. The convertible bond that is call (including the call from GreTai), paid, or converted bythe Company will be cancelled and will not be sold or issued again along with theconversion right.21. The convertible bond and the bonus common stock shares are ordered. The booking,registration of change, mortgage, and loss of the convertible bond and the bonus sharesare to be processed according to the “Regulations Governing IPO Underwriting” andCompany Law; moreover, the bond trade tax is to be processed according to the Tax Law.22. Bondholders have the convertible bond trusted to the First Bank. The First Bank is to-53-

audit and supervise the Company in performing the convertible bond on behalf of thebondholders.Bondholders who have acquired the convertible bond at its initial public offering or duringthe process agree to the trust agreement signed between the Company and the trustee, therights and obligations of trustee, and the issuance and conversion guidelines; also,authorize the trustee to represent them and agree not to have the authorization revokedthroughout the process. Bondholders may have the content of the trust agreementexamined during the Company’s or the trustee’s office hours.23. The underwriting office of the Company is authorized to have the principal, interest, andconversion of the convertible bond processed.24. According to Article 8 of the Stock Exchange Law, no physical bond will be prepared forthe converted bond.25. The events that are not covered in the Regulations Governing Convertible Bond Issuanceand Conversion are to be processed according to the relevant regulations.-54-

5. Employee’s stock option(1) Employee’s stock option processedType of employee’s stockoptionDate approved by competentauthorities1st employee’s stock option(overdue)2 nd employee’s stock option(1 st term)(1 st one after merging TyanComputer Corp. shares)2 nd employee’s stock option(2 nd term)(1 st one after merging TyanComputer Corp. shares)-55-3 rd employee’s stock option(1 st term)(2 nd one after merging TyanComputer Corp. shares)3 rd employee’s stock option(2 nd term)(2 nd one after merging TyanComputer Corp. shares)May 15, 20084 th employee’s stock option(1 st term)(3 rd one after merging TyanComputer Corp. shares)9.13, 2001 1.4, 2005 1.4, 2005 8, 16, 2005 8, 16, 2005 3.31, 2006Issuing (processing) date 10.18, 2001 3.31, 2003 12.31, 2003 8.31, 2005 3.10, 2006 6.30, 2006Issuance (Note 1) 99,000 units 1,115.84 units (Note 2) 139.672 units (Note 2) 1,297.348 units (Note 2) 489.278 units (Note 2) 404.759 units (Note 2)Ratio of stock option tooutstanding shares6.79% 0.08% 0.01% 0.09% 0.03% 0.03%Validity 6 years 6 years 6 years 6 years 6 years 6 yearsPerformance Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock sharesLimited stock option period andratio (%)Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2.1, 2007 50%2.1, 2008 75%2.1, 2009 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2.1, 2007 50%2.1, 2008 75%2.1, 2009 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Stock shares subscribed 85,001,025 shares 389,485 shares 37,485 shares 41,532 shares 129,953 shares 0 sharesStock value subscribed $711,174, 428 $3,544,314 $367,353 $639,592 $2,495,098 $0Outstanding stock optionStock option price of outstandingstock optionRatio of outstanding stock optionto outstanding shares(%)Impact on shareholder’s equity0 shares(13,998,975 shares wereconfiscated)726,355 shares 102,187 shares 1,255,816 shares 359,325 shares 404,759 shares$4.4 $9.1(Note 2) $9.8(Note 2) $15.4(Note 2) $19.2(Note 2) $23.1(Note 2)0.00% 0.05% 0.01% 0.09% 0.02% 0.03%The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.Note 1: Each stock option can subscribe 1,000 common shares of MiTAC.Note 2: Followed the merger agreement to make the shares-subscription amount and price per unit in a ratio of (MiTAC:Tyan = 1:1.26).The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.The Company’s employeeswith stock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.

May 15, 2008Type of employee’s stockoption4 th employee’s stock option(2 nd term)(3 rd one after merging TyanComputer Corp. shares)5 th employee’s stock option(1 st term)5 th employee’s stock option(2 nd term)6 th employee’s stock option(1 st term)6 th employee’s stock option(2 nd term)7 th employee’s stock option(4 th one after merging TyanComputer Corp. shares)Date approved by competentauthorities3.31.2006 12.1.2006 12.1.2006 4.16.2007 4.16.2007 8.24.2007Issuing (processing) date 3.19.2007 12.7.2006 1.11.2007 7.30.2007 8.17.2007 9.26.2007Issuance (Note 1) 711.895 units (Note 2) 32,000 units 32,000 units 32,000 units 32,000 units 1,245.222 units (Note 2)Ratio of stock option to outstandingshares0.05% 2.20% 2.20% 2.20% 2.20% 0.09%Validity 6 years 6 years 6 years 6 years 6 years 6 yearsPerformance Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock sharesLimited stock option period and ratio(%)Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according tothe following schedule exceptfor the book closure period bylaw.Time Stock option ratio2 years 50%3 years 75%4 years 100%Employees with stock optionright for over two years to tendays before the due date maysubscribe stocks according to thefollowing schedule except for thebook closure period by law.Time Stock option ratio2 years 50%3 years 75%4 years 100%Stock shares subscribed 0 0 0 0 0 0Stock value subscribed 0 0 0 0 0 0Outstanding stock option 711,895 shares 32,000,000 shares 32,000,000 shares 32,000,000 shares 32,000,000 shares 1,245,222 sharesStock option price of outstanding stockoptionRatio of outstanding stock option tooutstanding shares(%)Impact on shareholder’s equity$22.7 (Note 2) $33.4 $32.9 $38.5 $35 $22.4 (Note 2)0.05% 2.20% 2.20% 2.20% 2.20% 0.09%The Company’s employeeswith stock option right maynot subscribe stock in twoyears; therefore, it does notcause substantial dilutioneffect to shareholder’s equity.The Company’s employeeswith stock option right maynot subscribe stock in twoyears; therefore, it does notcause substantial dilutioneffect to shareholder’s equity.The Company’s employeeswith stock option right maynot subscribe stock in twoyears; therefore, it does notcause substantial dilutioneffect to shareholder’s equity.Note 1: Each stock option can subscribe 1,000 common shares of MiTAC.Note 2: Followed the merger agreement to make the shares-subscription amount and price per unit in a ratio of (MiTAC:Tyan = 1:1.26).The Company’s employeeswith stock option right maynot subscribe stock in twoyears; therefore, it does notcause substantial dilutioneffect to shareholder’s equity.The Company’s employeeswith stock option right maynot subscribe stock in twoyears; therefore, it does notcause substantial dilutioneffect to shareholder’s equity.The Company’s employees withstock option right may notsubscribe stock in two years;therefore, it does not causesubstantial dilution effect toshareholder’s equity.-56-

1 st employee’s stock option (overdue)(2) Name, acquisition, and subscription of the managers with employee’s stock option and the top ten employees with stock option and with astock option amount exceeding NT$30 million:May 15, 2007TitleNameCEOMatthew MiauGeneralManagerBilly HoSenior Vice GM Samuel WangC.J. Lin(took positionSenior Vice GMon June 15,2007)Vice GM Percy ChenGino ChangVice GM(retired onFebruary 29,2008)Vice GM James YuanVice GM Ted ChangVice GM Stone ChenVice GM Michael LinVice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangShares ofstockoptionRatio of stockoption to totaloutstandingsharesStock optionexercised14,839,000 1.01% 1,125,0006,250,0003,779,0003,335,000350,000Stock optionprice (NT$)Subscribed-57-Stock optionamountRatio of stockoption exercisedto totaloutstandingsharesOutstandingstock optionVice GM Robert YangJohnson Wang(took positionVice GMon December19, 2007)2 nd employee’s stock option (1 st term) (1 st one after merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.9.38.87.86.04.4Unit: NT$ Thousand / shareNot subscribed yetRatio ofoutstandingOutstanding Outstandingstock option tostock option stock optiontotalprice (NT$) valueoutstandingshares116,489 1.01% 0 4.4 0 0.00%

2 nd employee’s stock option (2 nd term) (1 st one after merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.3 rd employee’s stock option (1 st term) (2 nd one after merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.3 rd employee’s stock option (2 nd term) (2 nd one after merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.4 th employee’s stock option (1 st term) (3 rd one after one merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.4 th employee’s stock option (2 nd term) (3 rd one after merging Tyan Computer Corp. shares): no management member acquired and subscribed the stock options.-58-

5 th employee’s stock option (1 st term)5 th employee’s stock option (2 nd term)TitleNameCEOMatthew MiauGeneral Manager Billy HoSenior Vice GM Samuel WangC.J. Lin(took positionSenior Vice GMon June 15,2007)Vice GM Percy ChenGino Chang(retired onVice GMFebruary 29,2008)Vice GM James YuanVice GM Ted ChangVice GM Stone ChenVice GM Michael LinVice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangVice GM Robert YangJohnson Wang(took positionVice GMon December19, 2007)CEOMatthew MiauGeneral Manager Billy HoSenior Vice GM Samuel WangC.J. Lin(took positionSenior Vice GMon June 15,2007)Vice GM Percy ChenGino Chang(retired onVice GMFebruary 29,2008)Vice GM James YuanVice GM Ted ChangShares ofstockoptionRatio of stockoption to totaloutstandingsharesStock optionexercisedStock optionprice (NT$)SubscribedStock optionamount-59-Ratio of stock optionexercised to totaloutstanding sharesOutstandingstock optionNot subscribed yetOutstanding Outstandingstock option stock optionprice (NT$) valueRatio of outstandingstock option to totaloutstanding shares5,610,000 0.39% 0 33.4 0 0.00% 5,610,000 33.4 187,374 0.39%5,610,000 0.39% 0 32.9 0 0.00% 5,610,000 32.9 184,569 0.39%

5 th employee’s stock option (2 nd term)6 th employee’s stock option (1 st term)TitleNameVice GM Stone ChenVice GM Michael LinVice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangVice GM Robert YangJohnson WangVice GM(took positionon December19, 2007)CEOMatthew MiauGeneral Manager Billy HoSenior Vice GM Samuel WangC.J. LinSenior Vice GM (took position onJun 15, 2007)Vice GM Percy ChenGino Chang(retired onVice GMFebruary 29,2008)Vice GM James YuanVice GM Ted ChangVice GM Stone ChenVice GM Michael LinVice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangVice GM Robert YangJohnson Wang(took position onVice GMDecember 19,2007)Shares ofstockoptionRatio of stockoption to totaloutstandingsharesStock optionexercisedStock optionprice (NT$)SubscribedStock optionamountRatio of stock optionexercised to totaloutstanding sharesOutstandingstock optionNot subscribed yetOutstanding Outstandingstock option stock optionprice (NT$) valueRatio of outstandingstock option to totaloutstanding shares5,885,000 0.40% 0 38.5 0 0.00% 5,885,000 38.5 226,573 0.40%-60-

CEOMatthew MiauGeneral Manager Billy HoSenior Vice GM Samuel WangC.J. Lin(took positionSenior Vice GMon June 15,2007)Vice GM Percy ChenGino ChangVice GM(retired onFebruary 29,2008)Vice GM James YuanVice GM Ted ChangVice GM Stone Chen5,895,000 0.40% 0 35 0 0.00% 5,895,000 35 206,325 0.40%Vice GM Michael LinVice GM Stone LinVice GM Jack KuoVice GM C.S. ChenVice GM C.P. LeeVice GM James WuVice GM King ChenVice GM Alice FangVice GM Robert YangJohnson WangVice GM(took positionon December19, 2007)7 th employee’s stock option (4 th one after merging Tyan Computer Corp. shares): no managers acquired and subscribed the stock options.Note:The employees who were list top 10 of stock option and the amount of stock option exceeding NT$30 million except managers: none.6 th employee’s stock option (2 nd term)-61-

6. New bonus shares for merger or accepting stock shares from another company:(1) Disclosure of new bonus shares for merger or accepting stock shares from anothercompany in recent years or up to the publication of the annual report:1) To enhance competition capability, the Company has applied the “asymmetric merge”model to merge Tyan Computer Corp. This merger issue has passed the board meetingheld on March 22, 2007 by both parties and accepted by Tyan Computer’sshareholders annual convention held on June 13, 2007. After merger, MiTAC is theone who has absorbed Tyan Computer; the late one thus has become a vanished firm.The share-exchanging rate between MiTAC and Tyan is 1:1.26 (1.26 Tyan Computercommon shares can exchange one MiTAC common share), which MiTAC hasextended stock shares issuance in an amount of 50,577,689 common shares; theissuance date was Oct 16, 2007. MiTAC’s new shares from the merger were open tomarket exchange since Dec 20, 2007. This merger has been approved by the FinancialSupervisory Commission, Executive Yuan and the Company’s capital shares changeregistration is completed.2) Evaluation comments from the undertaking securities dealer on the ex-share issuancefor merger or similar in the last quarter:A. Date completing the merge registration: Dec 7, 2007B. Impact to the Company’s operations:By acquiring the remarkable marketing network and R&D & technologicalservices of customer-made products from Tyan Computer, the Company canutilize the advantage upon R&D & sales end to associate the servers and mainboards business, which enable MiTAC providing a total solution with moreflexible design capability and upgrade the Company’s competition capability inthe related field.C. Impact to the Company’s finance:Preliminary Q1, 2008 income of MiTAC is NT$15,132 million, lower thanearned in Q1 2007 (before the merger) (NT$17,898 million). Possible reasoncausing the income decay is from global recession made by the subprimemortgage crisis in America, and by the transition of new and old products.D. Impact on shareholder’s equity:After the merger, MiTAC has re-associated the interior resource and launchednew products to market, which will enrich the market competition capability inreturn. We anticipate promoting the profit-earning ability over the merger effortthat will gradually appear and effective resource applications. The merger thusshows a positive effort to shareholder’s equity.E. Does merger effort appear?The merger now is still in a transition period; after it is complete, the mergereffect can be shown in the prospects of integrating the Company’s servers,high-end main boards and barebones-system products and give customersproducts with diverse functions, which will contribute positive benefit toenhance competition energy to market. We anticipate that the merger effort willappear gradually in the near future.3) Substantially interpret the relevant impact to shareholder’s equity for the operationeffectiveness that fails to meet the planned one in last quarter: N/A(2) Except OTC firms, disclosure of new bonus shares for merger or accepting stock sharesfrom another company approved by the Board of Directors in recent years or up to the-62-

publication of the annual report: none.7. Fund plan and application:There is not any outstanding fund planning or any fruitless fund project up to thequarter prior to the printing of the annual report.-63-

1. Operation report(1) Business scopeV. Operations Overview1) Major businesses and main current products MiTAC’s four major businesses are: (1)Client system business products; (2) enterprise products, including workstations,servers, and storage devices; (3) wireless communications products, includinghandheld computers (including “PND – Portable Navigation Device,” “PDA – PIM,GPS, and multimedia functionality,” smart phone “Smart Phone – PDA and Phoneand GPS-enabled PDA phone and multimedia functionality,” as well as relatedtechnical support and location based services, etc.; (4) channel servers, including thehigh-end two-way, four-socket & eight-socket processor servers and workstations.2) Business rationUnit: NT$ ThousandYearProduct2007 Ratio (%)Computer & communication82,073,897 100.00products3). Main current productsA. Client system business products‧ High-end business computer ‧High-end network computers‧ Miniaturized multimedia PCs ‧All-In-One LCD computers‧ High-end computer motherboards ‧Entry-level and mid-range workstations‧ High-end barebones computer systems ‧Simplified terminal computers‧ Networked multimedia servers and storage systems‧ Digital multimedia adapter (DMA)‧ IP set-top box (IP STB)B. Enterprise products‧ High-end workstations ‧General-purpose servers ‧Rack-mounted servers‧ Communications servers ‧Blade Servers‧ NAS, Network Storage Server‧ Attached StorageC. Wireless communications products‧ Portable Navigation Device‧ Handheld computers (including PDA PIM, GPS, and multimediafunctionality)‧ Smart Phone -- PDA, Phone, and GPS-enabled PDA phones as well astechnical support and services related to the above products as well astechnical support and after-sales service and location based service, etc., forthe above products.-64-

D. Channel servers products‧ High-end workstations ‧General-purpose servers ‧Rack-mounted servers‧ Communications servers ‧Blade Servers4). Products or technology slated for developmentA. Client system business products‧Personal computers with integrated digital appliance business features anddiversified styling and application design.‧Personal computers interoperable with home appliances.‧Personal computers that integrate wired or wireless networking features.‧High-performance low-cost dual-core processor-based workstations.‧Integrated hardware platform for web-based AV content services.‧System protocol and integration of simplified terminal computers & servers.‧R&D of all-In-One LCD computer technologies.‧Web-centric digital appliance business and end-user storage products.‧Work with service organizations in fields such as television, video, education,and healthcare to provide end-user with digital service systems.B. Enterprise products‧High-performance workstations based on RISC/CISC processors.‧High-performance servers.‧High-density servers.‧Servers for communications applications.‧Technology for storage devices.C. Wireless communications products‧Technology for integrating computers and communications.‧Integration of data access, voice, and wireless broadband communicationsfunctionality.‧Technologies for developing web-centric personal computers, IA products,communications devices, and storage solutions.‧Technology for multimedia applications.‧Wireless communications and networking technologies.‧Technology for wireless communications equipment.‧Development of new digitalized multimedia technologies to create newbusiness opportunities and the foundation for related products.‧Operating systems and application software.‧Virtual reality software development and applications.‧VOIP communications products.‧GPS and electronic navigation technologies and location based service.D. Channel servers products‧High-performance servers (four-socket or eight-socket HPC server platform).-65-

‧R&D of high-density servers.‧High-density blade servers.‧Technology for storage devices.E. Others‧ High-density, high frequency electronics architectures and automatedproduction testing technologies.‧ High-yield product design approach (DFM).‧ Product design and manufacturing that address environmental concerns andmeet ISO 14000 standards.‧ High-speed PC architecture and heat flow technologies.(2) State of the industry: The following summarizes the situation for MiTAC’s four mainproduct lines.1) Client system business productsA. In 2007, the market for Client system business products grew by 13.2%. Basedon Institute for Information Industry projections, in 2008, the growth rate willbe approximately 10.9%.-66-

400,000350,000300,000250,000200,000150,000100,00050,0000Thousand Units2001 2002 2003 2004 2005 2006 2007 2008(e) 2009(f) 2010(f) 2011(f) 2012(f)20%15%10%5%0%-5%-10%Shipment VolumeYoY GrowthSource: MIC February 2008B. The market growth percent of desk-top PC in 2007 is about 3.2%; from IDCprediction, the growth percent of 2008 will be 2.6%.180,000160,000140,000120,000100,00080,00060,00040,00020,0000Thousand Units2001 2002 2003 2004 2005 2006 2007 2008(f) 2009(f) 2010(f) 2011(f) 2012(f)10%8%6%4%2%0%-2%-4%-6%-8%Shipment VolumeYoY GrowthSource: MIC February 2008C. In the home market, Client system business has been repositioned, with theirraw processing horsepower deemphasized and the focus shifted to their use inmultimedia entertainment and digital home applications. As a result, personalcomputers are integrating functionality related to graphics, video, audio, anddata, to initiate a new phase of strong growth.D. Under the high security and efficient remote control, the industry desperatelyneeds an intense design and system integration from ODM vendors, whichprecisely meets MiTAC’s powerful system integration capability making closecooperation with international well-known brands manufacturers; the futuregrowth vision is steady.E. Since the trend of remarkable growth on global terminal computers is hard,MiTAC will associate the superiority of systemic integration and supply-67-

customers barebones systems or complete computer sets for solution tocustomers.F. Pricing pressures are increasing for major brand vendors, and the ability ofTaiwanese companies to fulfill orders for contract manufacturing at low cost isa compelling advantage. With brand vendors continuing to increase the shareof manufacturing outsourced, Taiwanese companies can expect to see theirshipment volumes grows as a result.G. From the popularity broadband network built by digital broadcast, cell phones,Asymmetric Digital Subscriber Line (ADSL) and Fiber to the Home (FTTH),etc., digital technologies have accessed to homes from enterprises. Appliancesapplied to connect Internet beyond PCs are TV sets, audio-video homeappliances, refrigerators, air conditioners, wash machines and telephones, etc.;the services are in a wide variety.H. As studied by Forrester Research, upon the constant increasing of worldwidebroadband users, it is predicted that in 2010, home broadband users will gainto approx. 46.5 million and the related web-centric digital business (DMA, IPSTB, IP TV and NAS, etc.) and end-user storage products will be furthergrowing up in response.I. Along with the launches of digital TV channels and mature of multimediaapplications, the vehicle-carried and hand-carried TV market demanding willgrow up for many times.2) Enterprise productsServers are used mainly for building corporate information systems, makingthem an essential infrastructure investment for businesses. Because informationsystems are a critical tool for any modern corporation seeking to sustain itsoperations, companies place great importance on total cost of ownership (TCO,Total Cost of Ownership) when it comes to purchasing servers. TCO includes thebusiness costs incurred when the system is not operational as well as regularmaintenance costs. Therefore, they demand reliability, availability, serviceability,usability, and manageability – characteristics that are collectively termedRASUM – from servers, which consequently require longer times for productdevelopment and testing. Once products are introduced on the market, they havecorrespondingly higher margins and a longer product life cycle. As a result,major multinational server vendors are relatively cautious when it comes tooutsourcing manufacturing or design of their server products, and building abusiness partnership requires a longer time. Besides hardware products, softwareproducts are another important factor in the quality of services provided byservers.In terms of product types, traditional pedestal servers are already seeinggradual decreases in their share of shipments in the American market. Replacingthem as the mainstream choice are rack-mount servers, and this shift shouldbecome evident in Europe and Asia as well over the next one or two years.-68-

Following rack-mount servers are high compute-density blade servers. Becauseof the more stringent heat dissipation demands of rack-mount and blade serversstemming from their high compute densities, vendors in this segment will bespending more for R&D and allied investment than was necessary in the past forpedestal servers.As for the storage device market, in the past, under the circumstance of closedsupply structure and the production amount of uniform model of products aresmall, vendors rarely outsourcing from Asian region since the manufacturingprofit is good enough. But in the past two years, a terrible market competition hasforced vendors seeking for outsourcing partners in Asian; this will result instorage vendors outsourcing a greater proportion of their manufacturing, whichwill greatly benefit Taiwanese vendors.3) Wireless communications productsA. Current state of the industry and development prospectsa. PDA – including PIM, GPS, and multimedia functionalityTraditional PDAs encountered stagnant growth in 2002. The mainfunction of these products, personal information management, was notconsidered a must-have feature in the consumer market. However, as theproduct evolved, the Portable Navigation Device (PND) products grow upfast and under the trend of using the Converged Mobile Device – acombination of PDA and phone – to associate communication, GPS andcomputing; PDA market has been integrated by the main stream products.Data published by IDC market survey result shows that the shipmentamount of global traditional PDA (without embedded cell phone) in Q32007 were 728 thousand pieces, about 40% down than Q3 2006; the annualshipment amount was also down for 15 quarters consecutively. However,MiTAC has introduced innovative functions into PDA products withattractive “available functions – to – price ratio, the sales status of allMio-branded GPS products is well and maintains in global top 3 in stable.b. Portable Navigation DeviceStatistical data compiled by the research institutes showed that worldwideshipments of GPS products totaled approximately US$4 billion in 1998,US$17 billion in 2005, and expected to reach US$25 billion in 2008. ThePortable Navigation Device is expected to be used by over 3 billion usersworldwide in 2020 and with a market value of NT$16,000 billion. Theglobal market value of GPS will reach EURO 270 billion.After the use of GPS shifted from the military to commerce, portablenavigation devices have caught the attention of the world in recent yearsafter the technology breakthrough for compact size and power-saving; also,the availability of cost-effective components and digital graphics andinformation technology. Thus, the market of mobile navigating products hasbecome hot recently.And from latest study data published by Canalys, the global shipmentamount of GPS devices were 16.8 million pieces in 2006, as compared to7.4 million shipped in 2005, the growth ratio is 127%. In 2007 the shipmentamount are largely increasing to 39 million pieces. In global PND market,the EMEA area is the highest demanding one that shares about 71% of-69-

global total demanding; the second one is in North American, about 20% ofglobal total consumption.As the PND products come to the growing stage in product’s life cycle,the competition becomes severe. The trend of making GPS combine cellphone, camera and other devices, as well as more entry-level productslaunched to market, the shipment amount are elevated and price is down.The average price of ASP in 2006 is 23% down than in 2005. As predictedby the study institutes, disregard the price down, the global vehiclesproduced in 2010 are about 65 million sets,although the price has fallensharply, as counted by one third of them that are equipped with PND; thePND market would reach 20 million pieces. For the vehicles currently run inthe world there are over 800 million of them now are not equipped with aPND yet The ratio of in-car GPS systems in Europe (6~8% in Europe and2~4% in North America) remains low. Motor companies remain using highprice OE vehicle embedded PND; therefore, the PND market with low priceGPS has room for growth in the market.c. Smart PhoneMobile communication devices with GPS function was the hot subject in2007. 2008 is the year of GPS cell phones. The main driving force of GPScell phones is from the related codes being built worldwide (USA: E-911,EU: E-112 and Japan: E110/119) and progress of micro process in wafergraphics and packing technologies. The solution plan of single-chipsemiconductor, better digital navigation map, states-of-art map software andlocation based services have stimulated market demanding forcefully. Themarket research institutes estimate that shipment amount of GPS cell phonesin 2008 will reach 240 million pieces, 550 million pieces in 2012; the ratioof GPS-supported cell phones to all cell phones is predicted 30%. In 2008,the market demanding of GPS-supported cell phones will reach US$50billion and over US$100 billion worldwide in 2012.The market of smart phone is expected to have dramatic growth alongwith the data processing functionality improving continuously, the pricedropping, several smart phones being promoted, and the added values(location based service (LBS) and etc.) provided by the communicationsindustry. GPS is going to be a “killer” application to cell phones. By the yearof 2010, shipments of converged Windows Mobile device will approach57,640,000 with a compound growth rate of 75.6% reached and a greatgrowth potential market expected.B. Interconnectedness of the industry’s upstream and downstream segmentsTaiwan vendors have supplied approx. 80% of personal GPS devices perglobal demanding, which shows the powerful integrating capability ofTaiwanese GPS vendors throughout the GPS industry’s supply chain. Thehandheld device industry lays stress on “short, small, light, thin” consumerproducts that are easy to carry and are personalized. As most vendors in theindustry handle everything from initial concept (especially for ID design) totesting and production of the finished device, they must have the capability toproduce all-in-one embedded system devices, as well as to integrate softwareand hardware. The upstream and mid-stream segment includes vendors of keyhardware components such as microprocessors, displays, touch panels,-70-

memory, driver ICs, batteries, acoustic filter, quartz oscillator, objectivedevices, antenna, GPS chipset, GPS module, receiver, connectors andpushbuttons, etc., plus the operating systems integration, GIS graphic data andterminal products, as well as the digital content and software applicationssupplied by multimedia developers. Downstream vendors are mainlyOEM/ODM customers and channel businesses.C. Various product development trendsBesides their characteristic “portable information,” handhelds alsoincorporate the latest advances in web applications and wirelesscommunications technology, so that the information and communications thata user is interested in are accessible at any time and from any place. Highvalue-added products can be targeted at different markets.a. Portable Navigation DeviceWhile the pure PDA market shrank and GPS application is designedwithout PDA interface, a common-use PND, the PND-embedded will becombined with other consumer electronic products, such as GPS, mobile TV,DAB & PMP, becoming a sort of multi-functional products gathering GPS,mobile TV, DAB & PMP. PND will focus on the applications of verbalidentification and combination; more other consuming functions also will beadded to PND products, such as MP3, Blue Tooth, iPod and USB, etc.Besides, requirement to the GPS products are region-oriented; for example,Asia-Pacific consumers pay more attention to multimedia audio-videoamusement capability (digital TV/DVD), whereas consumers in Japan (topGPS penetration ratio area in the world) pay more attention to drivinginformation and 3D satellite navigation capability. In European market,consumers rather emphasize on driving safety and emergent communicationrequirement; yet, North American consumers prefer simple operatinginterface.The key parts’ prices of GPS are decreasing for over 20% per year and theratio of product price and functional price is accepted by commonconsumers. While the commercial application of PND has been initiatedsince 1990, the market demanding of products applied for each of the GPSapplications is growing in geometric ratio and is developed in the trends oflow price, tiny size, diverse functions and popularization. In addition,including real-time information to PND has become a new trend already;PND navigation with navigation map software and Internet application willbecome a necessity of consumers in daily life.b.Smart PhoneResearch data indicates that the estimated associated annual growing rateof smart phone within 2006~2011 is 30.3%; the major region of growth is inN. America and W. Europe, where the associated annual growth ratios are54.7% and 42.9% in respective. As per the high growth and ASP promotion,high-end and smart cell phone products currently are rising up in marketdemanding rapidly. The basic trend of combining the communication andcomputing functions to cell phones remains unchanged. In performances,outer appearance and applications, the information and amusementdemanding become more and more significant. Most of cell phonesproduced now can play music, video files, take pictures and have Blue-71-

Tooth capability; the camera function made in cell phones has exceeded78% in 2007.From GPS module downsizing, improvement of graphical informationprocessing capability and the popularization of mobile positioning service,the embedded mobile communication devices have improved product’svalues. It is predicted that in 2008, the global shipment amount of GPS cellphones are 248 million pieces and in 2010 are to be 540 million pieces.From penetrating GPS function to smart cell phone, Europe will become thenext largest market of GPS cell phones. Under the trend of mobilecommunication and data transmission, Microsoft operating system for smartphones that collects the functions of communication, audio-videomultimedia, documentation processing and email together is growing up in aratio over 10% per year as the rapidest growing operating platformworldwide.D. Competitive landscapea. Competition among different operating systemsFor smart phone, the primary operating systems are the Symbian OSsupported by mobile phone vendors such as Nokia and Sony Erickson, andMicrosoft’s Windows Mobile, which is favored by PC vendors. In addition,a small number of smart phones use Linux and Palm OS, such as modelsfrom Motorola and PalmOne.From the development of smart phone operating system, although theSymbian operating system remains the leader among smart phones, however,with a market share of 64% according to IDC, it projects that a concertedpush for Microsoft’s Windows Mobile operating system fromtelecommunications network operators and major mobile phone vendors, aswell as Taiwanese smart phone makers will push Symbian’s market sharedown to 54.8% in 2010, while Windows Mobile’s own market share willincrease from 16.5% to 22.1%. Symbian’s operating system and Microsoft’sWindows Mobile operating system together take up 80% market share ofsmart phone market.Microsoft has cooperated with 115 vendors in 55 nations worldwide andwith a partnership formed with over 100 multimedia services. There are over18,000 business applications made and with a comprehensive industrialecosystem constructed. According to Microsoft’s own internal projections,Microsoft can build on the worldwide Windows user base of 700 million toraise their share of the mobile phone software market to up to 60%. Allindications are that the advantages of Microsoft’s operating system, such asrich multimedia and web features, data sharing facilities (to and from a PC),familiar interface, file-level compatibility, full-color AV support fast datatransfer speeds, and declining prices and broad market application potentialwill increase its penetration in the smart phone segment.b. Competition among vendorsHandheld device is expected to grow with diversity and severecompetition while more vendors are involved in R&D, manufacturing, andproduction. MiTAC developed and manufactured the world’s first handheldcomputer based on Microsoft’s operating system platform and integrating a-72-

GPS navigation system. It successfully developed a market for its product,and since its launch in late 2003; it has been well received in European andAsian markets, with shipments hitting new highs consistently. In terms ofproduct positioning, we are continuing our successful approach of designingproducts around consumer needs and bundling comprehensive maps and aneasy-to-use, intuitive user interface to differentiate our products.As for smart phone, although they comprise a niche market, shipments aregrowing rapidly and they represent an enormous business opportunity.MiTAC has already introduced several Microsoft OS-based smart phones,demonstrating its aggressive stance. Combining satellite, navigationtechnology, MiTAC has the first Windows Mobile GPS intelligent smartphone introduced in 2006 that provides file management and information tohave navigation, communications, and digital life data combined forbusiness users with their need for mobile information access and its successis evidenced with the sales record.MiTAC is drawing on sustained R&D innovation, manufacturing quality,and cost controls to strengthen its competitive advantage. In particular, it isdeveloping products that take into account market trends, customersatisfaction, and the ability to create customer demand. Through strategicalliances with major international vendors in software, hardware, and mobilecommunication services, as well as by continuing to create innovativeproducts, develop new markets, and winning new orders.4) Channel server productsA. From IDC study report, in the following four years, x86 servers will growup stably and the trading amount will increase to 33.7 billion in 2009 from26.5 billion in 2005. The associated mean annual growth rate exceeds 7%. Ascomparing with the non-x86 professional servers under special applicationsthat are saturated in market demanding, the vision on x86 servers market isoptimistic, many companies and individuals change to use x86 servers. Afterthe two-core and four-core products were launched in 2006, companiesgradually take actions on transferring server equipment; now the four-coreservers are the mainstream of market already. The server industry isanticipated to be prosperous.MiTAC has been dedicated to the design and manufacturing of x86 servermain boards; we predict that in 2009, MiTAC can take 10% market share onIntel servers and 35% on AMD servers, which is about 10% of the x86 servermarket.B. Future vision and growth trend on super computersFor super computer applications, since super computers have been appliedin colleges, enterprises research institutes and governmental offices and arespecific market oriented. In the past, supper computers are bought mainly toreplace old one, the growth thus is restricted and not outstanding. Yet, from thespecial requirements made from genetic engineering or biochemicaltechnologies, it might turn the super computer and parts supply into hotbusiness.-73-

In the past a few years, super computer market expands rapidly; IDCpredicts that the Technical Workgroups market, which are the entry-level ofsuper computers, will largely grow up and, as predicted by Mohr law, access adifferent development status per each three months. By comparing with otherhigh-price high speed computers, the slowdown of expansion on these bigcomputers will become a market trend. On the contrary, advanced scientifictechnologies can drive enterprises to develop products with lower cost, higherefficiency and less power consumption. IDC thus predicts that in 2009, thegrowth of low price, low-end high-speed super computers like TechnicalWorkgroup would be faster; the shipment amount will exceed 230,000 sets peryear; the associated mean growing rate is 13.4% and business income canexceed US$ 2.4 billion. It is obvious that the brand new blue-sea market ofhigh-speed super computers has been established.(3) Technology and R&D1) R&D costUnit: NT$ ThousandYearItem2007 Mar 31, 2008 (Note)R&D cost 1,767,999 410,065Note: Up to the quarter prior to the print of the annual report.2) Technologies or products successfully developed in the most recent completedyear and the current year to the publication date of this annual reportMiTAC’s main R&D strategy is to respond to global development trends in thewireless communications, mobile communications, and web applications markets,keeping abreast of new technology and product development timetables, andcoordinating R&D staff in Taiwan, China and the US to launch new products.MiTAC works to conform to product specifications promulgated by technologyleaders in the mainstream market, while developing proprietary technologiesin-house and introducing products that meet market demand in a timely manner toseize business opportunities. MiTAC’s competitiveness rests on its productdiversity, the comprehensiveness of product lines, and a soundupstream/downstream supply chain infrastructure and global manufacturinginfrastructure.A. Key results:a. Allied with international leading brand vendors of servers, workstation, andstorage equipment vendors to develop and manufacture servers andworkstations based on high-performance processors, in the process givingMiTAC a leadership position in the server and workstation segments.b. Adopted Microsoft software technology such as its wireless PDA platform,and developed wireless networking products in parallel. Also jointlydeveloped products with major world-class vendors in the PDA and PocketPC segment.-74-

c. Successfully integrated GPS chips in a series of handheld device products,combining this embedded hardware with GPS digital map applicationssoftware to provide market-leading solutions.d. Base on MiTAC’s global vertical and horizontal teamwork and integrationsystem, from ID design to tooling molds and vertical integration ofproduction, to satisfy customers and market demand. Drawing from thecomprehensive distribution network and coordination capability of MiTAC todevelop high-tech wireless Internet and PC technology with internationalbrands. MiTAC aims to become one of the major PC suppliers with the coreproducts of PC and home computers that combine imagery, sound effects,video, and wireless.B. Productsa. Client system business1 Business and home PCs: A series of computers with a basic architecturebuilt around processors with the newest technologies, and integrating bothPCI-Express graphics cards and high-definition audio, wirelessnetworking, with structural designs that stress efficient thermalperformance.2 Entry-level and midrange workstations: Based on single and dual Intel andAMD x86 processors.3 Small form factor multimedia PCsFull-featured Client system business product solutions for the digitalhome and digital office.4 The highly integrated All-In-One LCD PC series in 17”, 19’ or 22”.5 Internet multimedia servers and storage system: Digital media servers andstorage systems will play an important role as digital home applicationsbecome increasingly more prevalent. MiTAC is drawing on maturedevelopment technologies for PCs and networking systems to developmulti-media servers which could store multimedia contents and playbackthrough ethernet streaming. So far MiTAC has successfully launchedNAS1, 2 & 4 hard drives associated with P to P download software BTthat are very popular in market and iTune server.6Digital media adapter (DMA): The defining feature of digital mediaadapters is that they allow users to play back Digital appliance businessfiles – such as photographs, MP3 music, web casts, movies, video chips,and so on – from their computers, network hard disk drives, and mediaservers on television and stereo equipment. Consequently, digital mediaadapters serve as a bridge among computers, media servers, and homeentertainment systems. MiTAC considers this a promising market, and hastherefore devoted considerable resources to developing this category ofproduct. So far MiTAC has launched one DMA model that can connect to-75-

Nokia N cell phone with WiFi wireless connection.b. Business computers1 Workstations: Expand joint development, design, manufacture, anddistribution of high-performance single- and dual-processor workstationswith world-class vendors. Become one the few vendors with UNIX andWindows operating system workstations made available.2 Servers: MiTAC has accumulated extensive R&D experience withmultiprocessor servers over the years. In response to market growth anddemand globally for server storage devices, MiTAC’s R&D team hasdeveloped single-, dual-, and quad-processor servers, and drowns onhigh-density system integration technologies to develop high-densityservers.3 Storage equipment: In response to expansion of the storage equipmentmarket, MiTAC has dedicated R&D resources to developing associatedtechnologies and products.c. Wireless communications products1 Wireless communications and networking products: Draw from strategicalliances and investments to develop computer interface cards and PDAswith Bluetooth, IEEE 802.11b, IEEE 802.11a, IEEE 802.11g wirelessconnectivity and personal digital processor; in addition, the products haveintegrated DVBT to hand-carried wireless communication products.2 PND and PDA (including PIM, GPS, and multimedia functionality):Allied with international vendors to build the world’s most compactPocket PC. In addition, it was the first to market a PDA productintegrating digital camera, WiFi connectivity, Bluetooth support, and GPSfunctionality. Integrates communications and communications-relatedfunctionality into Microsoft operating system and perform location basedservice process; to give it more practical, lifestyle-oriented applications.3 Smart Phone – with PDA & Phone and GPS-enabled multimediafunctionality: Combined computing technology and mobilecommunication module, MiTAC has GPS Smartphone developed thatprovides the functions of phone, digital camera, multimedia, and wirelessnavigation system.d. Channel servers products1High-end server platform: successfully developed the mainboards andbare-bones system for 4-socket/8-socket servers that lead other vendors inthe server industry. MiTAC is the supplier that can supply the most broadand complete 4-socket/8-socket servers platform products.2 Compacted bare-bones for servers: the first one in the world launchingAMD Opteron Double 1U servers. Integrate two pieces of 2-socket servermainboards into a 1U rack to optimize the space compactness inside the-76-

ack. And MiTAC also has launched the blade server bare-bones system tomarket.(4) Long- and short-term business development plans1) Client system businessA. Short-term business development plans: The US, Europe, and Japan are theworld’s major PC markets. MiTAC’s business was in the past focused on thesemarkets, and in the future it would continue to develop further ODM businessopportunities in these markets. On the product strategy front, compact systemis catching attention in market; therefore, it is also the focus of development.So far the digital appliance products is at the beginning of prosperousdevelopment; in 2006, udert eh drive of Intel ViiV, there is a sign of marketdemanding already. For a short-term plan, in order to enlarge the digitalappliance product’s business, we will accommodate to the market extendingand demanding status developing profit-based products under an ODM patterntoward American & European market; and expand customers source fromdifferent fields.B. Long-term business development plans: In 2007, the Asia-Pacific region sawthe fastest growth in shipments, and indeed the proportion of shipments to theAsia-Pacific region has already surpassed that to Japan, with the mainlandChinese market being the single largest in the Asia-Pacific region. Forlong-term business development, exploiting the potential of developingmarkets in the Asia-Pacific region and China will be the key. On the productstrategy front, the application of diversified products by consumers in all agegroups remains the focus of development. From the developing capability ofdigital audio-video products built from ODM production and the tendency thatthe digital audio-video market is extending to worldwide, we are going tolaunch more competitive digital audio-video products to market and extendthis field’s business from the existed American & European market to global.Moreover, we are working on making alliance relations with digital servicesproviders and co-develop the new and more potential digital audio-videomarket.2) Enterprise productsA. Short-term business development plans: On the product strategy front, MiTACwill continue to work together with UNIX customers to jointly develop,manufacture, and provide repair services for workstations and various types ofservers. It will also devote staff to developing a full line of Intel architecturesingle- and dual-processor servers in order to expand its customer base andincrease revenues.B. Long-term business development plans: It will continue development and salesof rack-mount and general-purpose servers. New blade servers and networkstorage equipment will drive business growth over the next three years.-77-

Business strategy includes expanding cooperation with major server customersaround the world. Where shipping modules or full systems, entry-level orhigh-end solutions, cooperating on single product line or multiple ones,MiTAC seeks long-term stable cooperative relationship. It will continue tostrengthen its product development capabilities and speed, product quality, andability to control delivery times, global supply chain management, and globallogistics and service systems to solidify its position as a major server ODMsupplier.3) Wireless communications productsA. Short-term business development plans: Use a market demand-driven approachto develop competitive mobile communications products. Use innovative andprofessional product planning, development and design, and productioncapabilities to provide customers with high-value-added services. Strengthenoverall performance, increase the level of customer’s satisfaction in order tobroaden the customer base; combine the features of online to Internet, cheapmap available and point of interest, and use targeted products to aggressivelydevelop businesses in different segments to expand business.B. Long-term business development plans: Base on the global distribution andsales model and service network to work with partners and vendors. Takeadvantage of the global distribution network of MiTAC SYNNEX Group,highly integrated product planning and value added products; also, expand thefoundation of major international brands for broader sources of customers.4) Channel server productsA. Short-term business development plans:a. Marketing strategies Constantly enhance agent services & management mechanism. Increase the chances and effectiveness of exposing related MiTACproducts in MiTAC Website, professional print media and expositions. Enhance the incubation of marketing and sales personnel. Positively build Mainland China and E. European markets. Reinforce the supply-chain management; use e-business operation tobuild tight global logistic management. Consistently build close strategic cooperation relations with famousupstream & end user relations.b. R&D strategies Develop out multifunctional and high-efficiency web server operatingplatform. Master the key technologies of server software management system. Enhance technical supports and services and first launch new models tomarket.-78-

Supply multifunctional products and technical service supports; elevateproduct’s compatibility, reduce design expenditure and shorten R7Dcycle time of products.B. Long-term business development plans:a. Marketing strategies Enhance cooperation relations made between upstream and end-userindustries strategic alliances and create double-win strategy. Focus on Mainland China’s market to accommodate the trend ofMainland China attending WTO and fast growing of IT industries inMainland China. Build globalizing service points; expand the markets in E. Europe, Indiaand M. East Asia. Flexibly and timely satisfy local clients by globalizingtechnical consultation and services. Constantly elevate global exposing rate.b. R&D strategies2. Market and sales overview(1) Market analysis Positively develop high value-added products: except consistentlyworking on servers and workstation mainboards, make development onserver platforms and embedded market, etc. Basing on system chips to reinforce product’s performances. Well perform global logistics and supply chain management; elevateproduct quality and reduce production cost by means of R&D andoutsourcing works.1) Sales regions of main products2) Market shareRegions 2007Unit: NT$ ThousandN. America 30,779,816Europe 29,733,158Asia & Australia 20,433,605Taiwan 1,127,318Total 82,073,897A. Client system business products According to Institute for Information Industrystatistics, worldwide sales for Client system business in 2007 were approximately150 million units. MiTAC sold roughly 110 million entry-level and midrangeworkstations and Client system business and handheld devices, for a market shareof roughly 7.23%.Because the majority of MiTAC’s OEM customers are drawn from the ranks-79-

of the world’s top ten PC brand vendors, as MiTAC imitates on effort to increaseits share of the OEM market, and the global economy recovers, high growth canbe expected for 2008, with MiTAC’s market share rising furthers.B. Enterprise productsBecause MiTAC’s products are mainly produced for ODM customers, it ismore difficult to gauge their market share. Drawing on many years of experience,Taiwan’s major IT vendors are already able to provide integrated global logisticsmanagement, providing customers with the best possible competitive advantageby coordinating design, testing, manufacturing, assembly, and distribution withthe customer’s market launch timetable. The evident trend towards internationalbrand vendors continuing to seek Taiwanese partners shows that more and morenon-PC products will be seeking their design and manufacture outsourced toTaiwanese companies. Most Taiwanese companies, including MiTAC, cananticipate enhanced competitiveness through this type of alliance, helping themexpand market share.C. Wireless communications productsIn 2007, GPS products were a hot seller, with global PND shipments of around16.8 million units, and global GPS shipments of about 39 million units, about136% up than in 2006. MiTAC’s midrange, high-end, entry-level product lineupis complete; in 2007, the shipments of MiTAC GPS products are close to 8million units. In 2008, MiTAC not only comprises on the hand-carried GPSproduct line up but also on the pre-equipped and post-equipped vehicle-equippedGPS market positively by cooperating with vehicle manufacturers. By regionview, the markets in different regions of the world are:a. European marketEuropean market remains the main market with the top five markets rankedin the order of Germany, UK, France, Italy, and Spain that represented over70% market share in Europe. In 2008, sales in W. European market are up for36%. According to the growth analysis per nation, it was maintained at thelevel of 60%~100% in 2006-2007. Market study institutes predict that in 2007,over 14.4 million PND units are sold in W. European market; they also predictthat it will increase to 20 million units in 2008, 36% up than in 2007. PNDunits sold in E. European market were about 550,000 units in 2007, thepredicted sales amount in 2008 is over one million units. MiTAC has stablegrowth secured in the market of the European community; for thenew-developing markets beyond USA and European nations, MiTAC is topone in many countries.b. North AmericaIn 2007, annual GPS shipments to North America were 12 million units thatshares 31% of global market, which is the second biggest market in the worldthat is only below European market. MiTAC, the worldwide major GPS-80-

supplier coming from Taiwan, took 6% of USA market in Q4 of 2007 by itsown “Mio” brand and becomes the top four GPS brand in America.c. Asia-Pacific marketThe Asia-Pacific area is the second fast growing area in the world; in 2007,there were totally 4,517.5 thousand GPS units sold in this area, from which S.Korea shares 43% and all sellers are local dealers; Australia shares 19%,Mainland China shares 14% and Taiwan shares 8%; Japan only shares 4% ofmobile GPS market in Asia-Pacific area (most cars are equipped with GPSfunction already and those units are excluded from the GPS unit sold inmarket). In 2007, the GPS market in Asia-Pacific area has grown up for 139%.From the latest data published by Canalys, in 2007, Taiwan has sold out359.4 thousand GPS units; among them, MiTAC’s Mio products shares 40%from Taiwan market as the top one among the GPS suppliers. In Q1 2007,MiTAC has merged Navman and the shipments in Asia-Pacific area largelyincreased and become the top one GPS brand in Asia-Pacific area.While the GPS product price is going down and the demand of handheldphones for GPS application is growing. The high demand for cars in MainlandChina and the growing recognition and demand of consumers for navigationproducts has inspired the local automobile industry to develop and sell GPSproducts or promote GPS-enabled navigation system; since MiTAC hascooperated with many vehicle manufacturers in Mainland China and themarket share of Mio products is about 25%, therefore, market growth isexpected. GPS market demand in Japan is a different practice from the rest ofthe world. GPS combined with other products or cooperation with the carindustry is expected. So far MiTAC is working on products certification in thegoal of accessing the supply chain of vehicle manufacturers; and there shouldbe significant growth in 2008.Global smart phones were mainly in Western Europe before 2003, and thenthey started moving into North America and Asia since 2004. Relevant datashows that the associated growth rate of smart phone within 2006~2011 will be30.3%, N. American and W. European regions are the major regions of growth,which contribute the growth rates of 54.7% and 42.9% in respective. From thehigh market growing rate and elevation of ASP, we can see that the high-endand smart phone products are in a fast-developing stage. In 2007, over 50%(52% to be exact) of smart phones will be shipped to Western Europe still for avolume of 26 million units. It shows a stable growth of smart phone in thishead market. The development of smart phone in North American, Japan,Korea, and Taiwan is second to the Western Europe market and the popularityof smart phones in those markets will grow continuously.From the downsizing of GPS module and embedded into mobilecommunication devices to increase the product’s value, it is predicted that the-81-

global shipments of GPS cell phones in 2008 would exceed 248 million unitsfrom 175 million units in 2007. In 2012, the global shipments ofGPS-supported cell phones would grow up to 560 million units. By analyzedform regional market, N. America is the major market of GPS cell phone; it ispredicted that after the E911 Bill is enforced in 2008, the rate of GPScapability to all cell phones will grow up to 88.9%. Japanese market ownsmature services and cheap cell phone prices; as driven by operation vendorsand cell phone manufacturers, it is estimated that up to 2010, the rate of GPScapability equipped in cell phones will be 91.9% as top one in the world. In2007, there were only about 5 million GPS cell phones in Europe, yet, up to2012, it is predicted that GPS cell phones used in Europe would rise up to 90million. From the penetration of GPS capability to cell phones, Europe willbecome the next biggest market of GPS cell phone. MiTAC’s products arewell positioned; continuing product innovation, mobile positioning, marketexpansion, and increased orders will have a positive effect on future salesrevenues and market share.D. Channel servers productsFrom IDC study report, in the following four years, x86 servers will growup stably and the trading amount will increase to 33.7 billion in 2009 from26.5 billion in 2005. The associated mean annual growth rate exceeds 7%. Ascomparing with the non-x86 professional servers under special applicationsthat are saturated in market demanding, the vision on x86 servers market isoptimistic, many companies and individuals change to use x86 servers. Afterthe two-core and four-core products were launched to market in 2006,companies gradually take actions on transferring server equipment. From thereports of well-known press (Taiwan) e-Times (2007.5.2) and Computer News(2007.5.1), now the two-core servers are the mainstream of market andfour-core one would become the mainstream of tomorrow. The server industryis anticipated to be prosperous.MiTAC has been dedicated to the design and manufacturing of server mainboards; we predict that in 2009, MiTAC can take 10% market share on Intelservers and 35% on AMD servers, which is about 10% of the x 86 servermarket shares.3) Supply and demand projections and potential for future growthA. Client system business productsIt has already been more than 20 years since the PC arrived on the scene.Product development is largely mature, and at least as far as the major marketsof North America, Europe, and Japan are concerned the market is already quitesaturated with limited potential for continued growth. As for such new marketsas China, India, and Latin America, as PC penetration rates in these areas arelower than in the previously mentioned markets, the prospects for sustainedgrowth are excellent.-82-

The digital appliance business products market so far is expandingprosperously per the popularization of Internet, launch of digital TV channelsand elevating of wireless web transmission speed as well as driving from CPUvendors. It will go on grow up and forward to the trend of development inglobal market. MiTAC will accumulate sufficient energy from ODM, and takeup the extremely rapid developing digital appliance business products marketby operating with international famous manufacturers.B. Enterprise productsWith economic recovery more clearly evident, these are greater willingnesson the part of businesses to invest in IT. The server market has seen demandrecover, and contract-manufacturing orders from major international servervendors are on the rise. Global server shipments have been growing at anaverage of 10% since 2003.In response to a simultaneous increase in volume and decline in prices, majorinternational server vendors are seeking to increase competitiveness and expandmarket share by lowering costs through an increase in the proportion ofmanufacturing that they are outsourcing. As a result, Taiwanese servercompanies with their advantages in cost, development speed and deliveryflexibility have been direct beneficiaries. The scope of Taiwan’s server industryis expanding in tandem with the increase in contract manufacturing orders.Though the majority of manufacturing outsourcing by international vendors toTaiwanese companies is for entry-level and low-end products, volume increasesand a rising proportion of higher-priced rack-optimized and blade servers arecompensating for falling prices for some components and for contractmanufacturing services, so that overall shipment value continue to showgrowth.Looking to 2008 of Taiwan servers market, although the global prosperity isunder the shadow of subprime mortgage, still, in general, we predict that it willmaintain slow growth. For the new products like blade servers and iSCSIstorage devices, we predict a relatively outstanding growth is reachable; and theshipments of servers in Taiwan market should be maintained in growth.C. Wireless communications productsThe push behind the European Union’s Galileo project and the FCC E-911communications security rules is leading to the prospect of the development ofeven more novel applications for GPS products. As the use of GPS-basedservices become more convenient, and the services become more reliable andaffordable, demand for consumer-oriented applications in areas such asrecreation and car navigation is continuing to increase. By drawing on theextensive resources of the IT industry as a whole, the increasing breadth ofavailable GPS services, and integration with mobile communications, the GPSmarket will become increasingly diverse, and give rise to enormous businessopportunities. Combining PDA or smart phone to GPS receiver has become akey subject of development for GPS vendors to the mobile positioningapplication products, which include normal consumable GPS electronic-83-

products (PDA, Handheld PC, Smart Phone and vehicle PND). The applicationsis broad and would share two third of GPS market.As indicated by relevant study reports, the estimated market demanding ofglobal smart phones in 2008 is 141 million units, yoy is +31.78%; theassociated growing rate in 2006~2011 can meet 30%. The majormarket-growing area is in N. America (in 2006~2011 the associated growingrate is 54.7% and in W. Europe the growing rate is 42.9%). From theoutstanding growth rate and up of asp, it is clear that the high-end and smartphone products are to grow up in market demanding sharply. It is estimated thatthe growing rate of windows mobile OS would be 53.3% in 2008. With growthexpected to be double that of other mobile phones over the next five years,smart phones promise to be the next star product. Microsoft vows to have thesales of phone software permits increased by one fold in 2008 for a volume of20 million sets. The market share of Microsoft’s Windows Mobile operatingsystem is growing continuingly and with product combination expanded. Thedevelopment and growth of the phone market will help make computersoftware and Internet service more meaningful to business users and consumers.MiTAC is working on self-brand smart phones and windows mobile OSplatform; using continual product innovation and strategic alliances withworld-class vendors to develop new markets and obtain new orders. Theseefforts will pay off in sustained revenue growth and increasing market share.D. Channel servers productsFor super computer applications, since super computers have been appliedin colleges, enterprises research institutes and governmental offices and arespecific market oriented. In the past, super computers are bought mainly toreplace old one, the growth thus is restricted and not outstanding. Yet, from thespecial requirements made from genetic engineering or biochemicaltechnologies, it might turn the super computer and parts supply into hotbusiness.In the past few years, super computer market expands rapidly; IDC predictsthat the Technical Workgroups market, which are the entry-level of supercomputers, will largely grow up and, as predicted by Mohr law, access adifferent development status per each three months. By comparing with otherhigh-price & high-speed computers, the slowdown of expansion on these bigcomputers will become a market trend. On the contrary, advanced scientifictechnologies can drive enterprises to develop products with lower cost, higherefficiency and less power consumption. IDC thus predicts that in 2009, thegrowth of low price, low-end high-speed super computers like TechnicalWorkgroup would be faster; the shipment amount will exceed 230,000 sets peryear; the associated mean growing rate is 13.4% and business income canexceed US$ 2.4 billion. It is obvious that the brand new blue-sea market ofhigh-speed super computers has been established.4) Favorable and unfavorable factors affecting MiTAC’s competitive position and-84-

development prospects, and strategic responsesTo overcome the challenges presented by global economic recession, MiTACwill take advantage of the new Joint Development Manufacturing (JDM)approach that combines global R&D, engineering, manufacturing design, projectmanufacturing, sales distribution, and technical/after-sales support to achievehigher levels of customer satisfaction and a greater competitive advantage overrivals.A. Competitive positionThe core competitive strength in MiTAC’s wireless communications businessand products lies in: Sales development, R&D capabilities, effective cost control,stable product quality and high-yield production process, fast mass productionramp-up, inventory management and component procurement, thorough logisticsupport capabilities, and market cooperation and sound financials.MiTAC’s core competitive strength is as follows:a. Understanding of customer requirements and market directions: Observingthe continued growth of the market for wireless communications-enabledhandhelds, MiTAC and its customers are jointly developing this market. Inaddition, MiTAC is discussing cooperative ventures with several world-classIT and communications vendors. This interaction allows MiTAC to graspmarket trends and quickly develop new products that reflect emergingdemand.b. Collaborate with first-rank software and hardware vendors to ensure supply:Include software vendors to support software development and suppliers ofkey hardware components.c. R&D innovation: A series of products have won awards and achieved marketshare leadership.d. Product quality continues to advance and production capacity to expand: Theaccumulation of many years of experience with PC and embedded systemstechnology is an important advantage in design and manufacturing, andproduction capacity of PND has also increased for 30% global market share.e. By taking advantage of existing channel markets and the Group’s globallogistics and service network, MiTAC can provide more comprehensivecustomer service.B. Factors favorable to development prospectsa. Integration of supply chain for Internet infrastructure equipmentAn effective distribution approach combined with the development andimplementation of global e-commerce mechanisms has enabled MiTAC todevelop products with high unit price, adopt direct production anddistribution model, greatly increasing efficiency, reducing costs and raisingcustomer satisfaction.b. Global e-manufacturing modelAfter several years of refining a logistics model, MiTAC’se-manufacturing infrastructure has been completed. This infrastructureencompasses R&D and design operations in Taiwan and the US, combinedwith production sites in China and Taiwan where modules and half-finishedproducts are manufactured, and BTO/CTO assembly centers in the US,Australia, and the UK, which together form a globally distributed-85-

manufacturing system. This system is organized in a way that takes intoaccount factors such as various products’ technological sophistication,production cost, transport times, and the tariffs to which they are subjected, inorder to achieve the ability to create an order fulfillment system that canrespond in real time to customer needs. In Taiwan, the major products are themainboards workstations servers and data-storing devices with high technicalgrade; the low technical grade parts and systems of products needing longtransporting time are manufactured in Mainland China; and the high-pricemajor parts are acquired from worldwide production bases. Such a globallydistributed manufacturing network has enabled MiTAC to grow from aregional organization into an international e-manufacturer with worldwideR&D, engineering, production, and distribution infrastructure.c. Expand development of high value-added productsIn response to emerging development trends favoring the integration ofwireless network communications and computers, MiTAC is formingstrategic alliances with leading international vendors to jointly developmarkets. MiTAC has demonstrated outstanding innovation and design, R&D,production, and manufacturing capability in GPS and Smart Phones; also, hasseveral GPS-enabled navigation products launched in market. MiTAC has theconcept of Computing and GPS integrated and applied to Smart Phone withvoice and data processing capability combined to compete in marketsuccessfully in the sense of functionality (such as, multimedia, games,personal data management, and PC data transmission), ID design, and price.MiTAC will develop a diverse range of products including WindowsCE-based handheld computers (PDA – including PIM, GPS, and multimediafunctionality) with GPS (PND - Portable Navigation Device) navigationfeatures, and smart phones (Smart Phone – PDA and Phone and GPS-enabledmultimedia functionality). MiTAC has continually introduced innovative andPND and GPS Smart Phone features and value-added services, and is movingtoward more sophisticated and real-world solutions to create enhanced value.PND navigation features combined with appropriate digital maps and wellthought-out navigation software will make PND an essential lifestyle devicefor mainstream consumers in the future.d. Strong market growing tendencyIn addition to continuing to develop key market such as North America andEurope, positively exploring markets with GPS growing potential inAsia-Pacific region including in Mainland China, Japanese and E. Europeanmarket, is also a key of development. Also ASP is down fast, yet, it doesn’truin profit and the market is still growing up in stable. The vehicle-embeddedGPS units are restricted to high-class models (slow in growth, in 2004~2006,the CAGR is about 10%~12%; the gross profit of leading brand’s endproducts is anticipated to maintain above 10%).e. Complete digitalization of the supply chainReflecting the needs of MiTAC’s global production, and to respond tolocalized requirements for different customers, MiTAC has not onlymodularized design of key components but it has also worked to integrateupstream vendors into a B2B e-commerce system. The aim is to achieve the-86-

ability to respond in real time to customer requirements, reducing operationalrisks, shrinking inventory levels, and providing clients with more responsiveservice.C. Factors unfavorable to development prospectsa. Intense competition: As major vendors continue to initiate development andmanufacture of handhelds, it forecasts that products will become more diverse.The price-down of OE vehicle embedded system has stimulated the high-endcompetitors to move down to take up market. PND and wirelesscommunications products will be integrated continuously. While thenavigating function of intelligent cellulars or high-grade cell phones canbreakthrough technical limit, upon the success of GPS-enabled sales model,even with only 30% of the hundreds of millions of cell phones sold equippedwith GPS-enabled device, it will soon replace PND and become the mainproduct in market.Responsive measures: Be attentive to R&D innovation, strengthen R&D capabilities, shortenproduct development times, and maintain ability to introduce new models.Then use product differentiation and mass production to maintainleadership in products and profitability. Increase customer satisfaction in areas from design to mass production andlogistic support. Seek opportunities to enter strategic alliances withworld-leading vendors. Make thorough use of global sales and distribution logistical approach.Establish comprehensive materials planning system, value chain andlogistic support capabilities.b. Key components remain controlled by foreign vendors and experience insoftware and hardware integration:Strategic response Maintain an excellent supply chain relation with international keycomponents suppliers. Training talents for operating platform andcommunications components and software and hardware integration is anurgent task to be dealt with for developing the smart phone market inTaiwan. Diversify suppliers for key components: Seek additional suppliers toensure ample sources of components and competitive pricing. In addition,establish excellent interactive relations with domestic vendors eitherproducing or planning to produce key components, and thereby increaseflexibility in supplier options. Use volume to obtain a support advantage: Because several productfamilies have sold well and won orders from large OEM/ODM customers,procurement costs have been greatly reduced.-87-

(2) Major applications and production process for main products1) Major product applications:Product TypeImportant Users and FeaturesWorkstationsGraphical computing tool needed by design workersServersData computing tool for businessesStorage EquipmentData storage tool for businessesDesktop PCsEssential productivity, educational, entertainment tool forindividuals, families, schools, and companies; wirelesstransmission and multimedia data shared.Handheld computers (PDA – Application: In-car navigation systemincluding PIM, GPS, andmultimedia functionality)PND - Portable Navigation Application: In-car navigation system, vehicle, cargoDevicetracking and instant communication…Smart Phone – PDA and Phone Wireless data transmission, GPS, voice, data, video,functionality and GPS-enabled multimedia applications and location based service. Formultimedia functionality businesses (PIM management, such as, personal planner,business cards management, minutes of meeting, e-mailreceiving and sending, multimedia entertainment tool…) andconsumers.2) Production processElectronic ComponentsSMT Automated AssemblyICT TestingManual AssemblySubstrate SolderingSubstrate Touch-upSubstrate BurnATE Automated TestingFunctional TestingSystem AssemblyFunctional TestingPackagingRandom TestingFinished Product-88-

(3) Supply of key componentsName Origin Supply StatusCPU Original Manufacturer: US ExcellentHard Disk Drives Original Manufacturer: US, Japan, Korea ExcellentDRAMOriginal Manufacturer: US, Japan, Germany,KoreaExcellentFlash Original Manufacturer: US, Korea AcceptablePrinted CircuitBoardsOriginal Manufacturer: Taiwan, US, China ExcellentLCD Panels Original Manufacturer: Taiwan, Japan, Korea ExcellentCHIPSETOriginal Manufacturer: Taiwan, US,ExcellentGermany, KoreaCDROM Original Manufacturer: Taiwan, Japan, Korea ExcellentMODEM Original Manufacturer: Taiwan ExcellentCamera Module Original Manufacturer: Taiwan, Japan, Korea ExcellentBattery Pack Original Manufacturer: Taiwan, Japan Excellent(4) Major customers and suppliers in the most recent two years1) Listing of major customersUnit: NT$ Thousand2006 2007Share ofItemShare of globalCustomer Amount global Net Customer AmountNet Sales (%)Sales (%)1 “E” 21,523,512 25.97 “E” 18,732,410 22.822 SYNNEX 14,175,208 17.10 SSDL 14,647,047 17.853 SYNNEX 10,023,276 12.21Other 47,183,643 56.93 Other 38,671,164 47.12Net Sales 82,882,363 100.00 Net Sales 82,073,897 100.00Increases and decreases in purchase amounts reflect the Company’s considerations ofmarket trends, product demand, business prospects, R&D technology, sales profits, andcustomer contracts.2) Listing of major suppliersUnit: NT$ Thousand2006 2007Share ofShare of Year’sItem SupplierSupplier name Amount Year’s NetAmount Net PurchasesnamePurchases (%)(%)1 MiTACMiTAC26,394,063 33.7419,307,445 28.98ShunDe2 MiTACComputer(Kunshan)Co., Ltd.11,695,820 14.95ShunDeMiTACComputer(Kunshan)Co., Ltd.13,390,415 20.10Other 40,144,862 51.31 Other 33,925,220 50.92Net PurchasesNet78,234,745 100.0066,623,080 100.00PurchasesIncreases and decreases in purchase amounts reflect the Company’s considerationsof yearly sales strategy, material requirements, vendor supply prices, delivery terms, andproduct quality.-89-

(5) Production volume and value for the last two yearsUnit: NT$ Thousand/setVolume/value Year2006 2007Major products Capacity Volume Value Capacity Volume ValueComputers and23,000,000 18,328,781 74,164,395 23,500,000 16,287,467 70,537,991peripheralsNote: The production capacity figures listed above include overseas processing work.(6) Sales volume and value for the last two yearsUnit: NT$ Thousand/setVolume/value Year2006 2007Domestic Foreign Domestic ForeignMajor products Volume Value Volume Value Volume Value Volume ValueComputers andperipherals 182,909 1,054,289 18,199,910 81,828,074 243,283 1,127,318 16,422,673 80,946,579(7) Key Performance Indicator1) Labor cost supported by the average sales revenues for the last two yearsUnit: NT$ Thousand2006 2007Sales revenues 82,882,363 82,073,897Labor cost 1,487,264 1,548,047Labor cost / Sales revenues 0.02 0.022) Average sales revenue generated by each employee in the most recent two yearsUnit: NT$ Thousand2006 2007Sales revenues 82,882,363 82,073,897Number of employees 1,365 1,468Sales revenues / Number ofemployees 60,720 55,9093) Financial structure, solvency, and operational ability in the most recent two years2006 2007Debt ratio (%) 52.04 45.47Current ratio (%) 149.73 136.93Quick ratio (%) 105.93 107.13Accounts receivableturnover (times)5.49 4.86Inventory turnover(times)8.89 7.793. Workforce(1) Staff’s information in the most recent two years and up to the publication of this annualreport-90-

Number ofemployeesYear 2006 2007 2008 to May 15Direct labor 0 0 0Indirect labor 1,365 1,468 1,513Total 1,365 1,468 1,513Average age 37.49 36.52 35.94Average Years ofEmploymentLevel ofeducation6.09 5.27 5.20PhD 8 6 8Master 346 417 454College 983 1,021 1,029High school 23 19 17Less than 5 5 5(2) Qualification of personnel who are responsible for financial data transparencyInternal Auditors of the Republic of China: 4 personsAccountant of the Republic of China: 1 person4. Expenses incurred to address environmental protection issuesLast year and in the current year of the publication date of this report, the Company hasnot suffered losses or been subjected to any fines stemming from environmentalcontamination.The Company’s policy regarding environment protection is as follows:As a professional computer assembly vendor, the production process consists of assemblyoperations. Therefore, the production process does not give rise to any regulated airpollution, water pollution, or toxic wastes. In addition, in 1992 the Company receivedrecognition from the Environmental Protection Agency as an outstanding vendor of top 500businesses in the Agency’s first environmental protection assessment. It achieved ISO14000 certification in 1997, and maintains a commitment to preventing pollution. In 1999,it won a two=year mark of distinction after passing a safety and hygiene system evaluationconducted by the Council of Labor Affairs. The Company shall continue to promoteenvironmental protection and worker safety, with the aim of attaining sustainedzero-pollution, zero-injury business operations.(1) BackgroundMiTAC International Corp. provides personal computer/server products includingworkstation, server, storage device, and mobile communications. Regarding theenvironmental plea of European Community, MiTAC has followed European directivesincluding WEEE (Directive on the Waste Electronics and Electrical Equipment) with afocus on design for environment and with the concept of recycle, disassembly, andrecycling imports design, for example, energy supply design (applying ACPI operatingsystem for power-saving/low-power CPU / module design/ supporting IPMI softwareand optimized resources management) and ROHS (Restriction of HazardousSustenance Directive) with a focus on controlling the hazardous substances of Pb, Cd,Hg, Cr6+, PBBs, and PBDEs in green product management, introducing design &development review / suppliers management / material acceptance, constructinginternal Green Product Internet portal and SOP; also, initiating organizational strategyreview periodically in compliance with European directives. Construct an occupationalhealth and safety system to minimize occupational hazards and to protect employee’s-91-

health and safety; also, to save the relevant cost. The improvement of work conditionhas indeed helped improve employee’s occupational virtue and productivity at the sametime.(2) MiTAC’s environmental health and safety strategyMiTAC International has its environmental safety and health policy developedaccording to the aforementioned environmental protection concept and four conceptualphases:Cherish resources on earth: Respect the exclusivity of resources on earth, upgradeenergy utilization efficiency and advocate energy saving, reduce waste andpromote resources recycling and reuse. Improve environmental safety and health continuously: Substantiateenvironmental safety and health management system for continuous improvement,prevent pollution, realize clean production and product protection, and provideemployees with a safe and healthy working environment.Obey regulations: Obey the environmental health and safety law of thegovernment and commit to obey the related regulations, such as, Europeandirectives: RoHS, WEEE, and EuP.Develop Green Products: Develop, design, and produce Green Products that aredesigned for environment, provide products that are with low-pollution / energysaving, and recycling.We believe that all businesses have experienced the challenge of “on going concern”of an enterprise” on the way to their success. MiTAC had supported the ITDP of theMOEA since 2003 to develop lead-free and halogen-free system assembly procedureand technology through four stages of review and approval process. The developmentwas completed successfully in 2005. The process of internal quality system is dividedinto (a) Quality control system: Completed successfully the 3-year renewal of ISO9001:2000 and developed TL9000 management system on the foundation of ISO9001:2000; also, completed the quality certification of communications product at theend of 2005; (b) Environmental control system: Complete ISO 14001:2000 certificationand OHSAS 18001:1999 audit according to the schedule planned. The IECQQC080000 activity has been initiated in August this year to review the function of eachdepartment/responsible departments/main operation procedure according to IECQdirectives. Therefore, after the preliminary audit started, SGS notify body that isauthorized by IECQ in the United States for an audit had concluded positively afterauditing the operation of MITAC in September through three stages of process and thenthe audit for QC080000 (IECQ HSPM) was completed successfully on 12/7/2006. Weare dedicated to environmental protection effort and we wish to find a balance betweenbusiness development and ecosystem protection.Moreover, we understand the importance of the safety and health of employees to thebusiness development of the enterprise. Therefore, we spare no expense to provideemployees with a safe and comfortable working environment. MiTAC commits itself toprovide employees’ with a safe and healthy working environment, to maintain abalance between business development and environment protection, to obeyenvironmental protection requirements, to realize business development and ecosystemconservation, and to fulfill the social responsibility as a lawful enterprise and citizen onthe earth.MiTAC International’s environmental health and safety strategy [MiTACInternational vs. Earth Friendly Policy]-92-

One earth: MiTAC fellows are devoted to protect the one and only earth of ourstogether hand-in-hand.Two systems: Substantiate ISO14001+OHSAS18001 and protect environment all yearround.Three directives: follow RoHS+WEEE+EuP to save energy and recycle products.Four steps: PDCA leads and “Let’s go for” Green production!(3) Responsible policy to RoHSIn response to the requirement of RoHS, MiTAC will start to educate its suppliersthrough the implementation of “G Plan” of the MOEA. The RoHS compliance audit forClass-I suppliers will be conducted at theirs. For the request made to MiTAC by someof MiTAC’s suppliers regarding the RoHS process of its Class-II suppliers, the rawmaterial control process will help MiTAC reduce RoHS risk that is caused by thedesign change and material change of the up-stream suppliers.MiTAC has utilized the supply chain e-control to have the RoHS report system forsuppliers planned so suppliers will no longer troubled by the problem of multipleproducts, multiple production sites, and multiple contact windows; moreover, the dataexchange efficiency of RoHS is improved.MiTAC has an XRF SEA1000A agreement signed with How-My Electronics in 2007,acquired ICP equipment, and setup laboratory so the Incoming Department can be surethat the components delivered by the suppliers are in compliance with RoHS.(4) Response to the impact of environmental protection directives from EuropeanCommunity on business operationMiTAC had completed the industrial technology development plan of the MOEA –the lead-free and halogen-free system assembly procedure and technology development;therefore, MiTAC is one of the enterprises retains lead-free process. A systematicmanagement process is applied to ensure the lead-free components supplied bysuppliers in compliance with RoHS; therefore, MiTAC is capable for green productproduction and with products shipped to Europe upon the request of customers.Therefore, the environmental protection directives from European Community do notaffect the business operation of MiTAC negatively.(5) MiTAC responds to the environmental protection directives from European CommunitySince the announcement and enforcement of WEEE in European Community, theenvironmental protection of electronics has shifted from self-declaration to clearlydefine recycle rate for product design. EuP design for environment directives will be setforth on 8/11/2007; therefore, DfE (Design for Environment)/Eco-design is recognizedby MiTAC as one of the design requirements. After building the EuP product-checkingcapability in last year, MiTAC is able to have the mechanical design of componentspreviewed in the online system according to the raw material and processing applied tounderstand whether the design comply with the design criteria of recycle andease-to-disassemble.(6) Measure to respond the Greenhouse Gas (GHG) issuePer the global warming issue that becomes more and more serious as time being, torespond the trend of controlling CO2 emission amount and reducing CO2 emitted toatmosphere in the future, MiTAC has initiated the CO2 amount checking operationsince Aug 2007. The checking scope contains MiTAC production base in MainlandChina. By the assistance of Taiwan Inspection Technologies Co., the Companyperforms the introduction of checking CO2 gas emission amount and training programof interior inspectors as to follow ISO14064-1 to check CO2 emission amount and-93-

ecord the checking data; and build the interior documentation and certificationprocedure in response for reference while performing effective CO2 reduction practicelater. Meanwhile, the Company positively reduce CO2 emission amount and introducenew energy-saving plans, such as, introduce regeneration energy—solar energy,resource recycling, power saving—luminance management, air conditioningmanagement in summer time and etc., in the goal of reducing CO2 emission amount toatmosphere.As per the Greenhouse Gas Protocol, MiTAC perform the tasks of certifying CO2emission amount and data collection. The Company regularly checks the CO2 emissionamount of last year. The interior check and certifying data of CO2 emission amount in2007 are shown in below: Direct CO2 emission (scope 1): total CO2 emission amount are 7,076 metric tons per,about 12% of total CO2 emission amount. Indirect CO2 emission (scope 2): total CO2 emission amount are 53,702 metric tonsper year, about 88% of the total CO2 emission amount; mainly occurred from power& steam procured externally.MiTAC cares about the global climate change, dedicates to protect earth sourceand well fulfills the duty of being an enterprise citizen. We will consistently drive thecontrol of CO2 emission in the prospective of reducing operation cost and forcing onthe sustainable energy development made from resource efficiency, power saving,environment protection; and devotes to the goal of creating a low-CO2 economicsociety from industries.5. Labor/Management RelationsThe Company is an information technology company, and its staff is suitably composed.In order to pursue a business philosophy based on humane management principles, theCompany has actively sought to create various communication channels, and respects theviews of its employees. Employees are able to actively participate in affairs related tolabor/management relations.(1) Communication and incentivesThe Company greatly values the views of its employees, and has designated adedicated staff member to be in charge of employee relations. It has also created a postoffice box, encouraging employees to provide their opinions and respond to problems.Each year, an employee meeting is held, better allowing employees to directlycommunicate with executive. In the hope that employee needs could be better met,every six months, departmental satisfaction surveys are conducted, as well as acomprehensive executive survey. At the end of each year, an employee satisfactionsurvey is conducted in order to ensure that employee concerns are understood.The Company has spared no effort to establish internal communication channels. Atpresent, the e-mail system is already in general use by employees, reducing paper wasteand a proliferation of reports – and increasing communication efficiency. At the sametime, the Company has created an internal “speak out mail box” e-mail address whereemployees can directly express their views. In addition, in consideration of employees,the Company invested more than NT$4 million to setup a videoconferencing system(Video Conference Room, VCR) linking offices in Hsinchu, Linkou, and Taipei,thereby reducing the need to travel between these locations for work purposes. Sincethis system was implemented, employees in Hsinchu, Linko, and Taipei can holdinter-office meetings without needing to leave their own offices, while the efficacy ofthe Company’s internal communications has been greatly enhanced.-94-

The Company has also implemented an electronic bulletin board to regularlypromulgate the Company’s business ideals, announce business performance, andpublish useful information form the outside world. In order to provide an effectiveencouragement to employees and enhance morale, the Company selected anoutstanding employee at the end of each year, and also honors senior employees whohave completed five, ten, fifteen, and twenty years of service. At the Company’s yearend weiya party, the chairman and General Manager present gold commemorativeplaques and monetary prizes.It is one of the Company’s main business units at the Hwa-ya Technology Park inTaoyuan. In order to care for the employees, a shuttle bus is provided to transport thembetween the Park and Taipei. At the location, a sufficient number of spaces in a parkinggarage are allotted to those employees driving to work. These measures are undertakento give employees a more convenient and comfortable working environment.(2) Benefits and training1) BenefitsThe Company considers its employees to be one of its most important assets. Inaddition to providing employees with insurance in conformance with relevant laborlaws, the Company has also joined group life and overseas travel insurance plans,with the Company covering the full amount of insurance fees.A well-organized employee benefits committee with members selected byindividual departments not only holds regular meetings to coordinate the Company’sworker benefits measures and programs, but also organizes intra-company clubs topromote leisure and recreational activities (free of charge) including gym, danceclassroom, massage club and indoor table tennis that can help build camaraderieamong employees.The Company has established a reference library that is open to employees all day,stocking it with materials on CD-ROM and participating in the “Sci-Tech InterlibraryCooperation Association” so that employees can easily access information pertinentto their work.The Company disburses substantial funds for employee education every yearaccording to the comprehensive training programs in order to substantiateemployee’s education and training, stimulate employees’ potential, upgradeemployee’s occupational competence, and allow them to continuously learn andgrow as they work. The Company has e-Learning equipment arranged in 2000 withover one thousand e-learning courses arranged including management, profession,and general knowledge. The e-learning setup makes it possible for employees in allMiTAC facilities to learn online wherever and wherever they want for real timelearning. Several years of effort in this area, have yielded results.2) Employee education and trainingA. Education and training efforts in 2007The Company invested a total of NT$5.4 million on education and training in2007. Approximately 13,900 employees received training (approx. 10,300 traineesin classroom courses and approx. 3,600 trainees in online courses).B. Education systemIn order to accommodate the Company’s business philosophy, long-term talentcultivation plans, and integrate the Company’s education and training resources,the Company provides the following approaches: required and elective employeetraining, instructor regulations, approach for encouraging the internal developmentof instructional materials, regulations on managing outside training, approach for-95-

managing instructional materials, approach for executive training, and awarding ofdegrees by MiTAC University.(3) Retirement systemThe Company has in accordance with the basic labor laws of the Republic of Chinaand Pension Act, established a comprehensive and legally sanctioned retirementsystem.Besides setting up a dedicated trust fund account for employee retirement, theCompany has also established an oversight committee composed for representatives ofboth labor and management. This committee monitors use of this trust fund account,and transfers pension funds to this account on a monthly basis, at a rate determined by aneutral third party.(4) Labor/management agreementThe Company brings a spirit of protecting employees and sharing gains to itsinteraction with employees, with the hope of maintaining excellent labor/managementrelations. In the future, the management will remain committed to humane management,and the establishment a system of multiple communication channels. Besidesmaintaining the current harmonious relations between employees and management, thehope is that this relationship can be further advanced in the future.(5) Work environment and Worker Safety MeasuresIn order to raise the quality of the work environment and worker safety measures, toprotect workers from injuries, deaths, or protests, the Company implemented practicesthat enabled it to obtain OHSAS-18001 certification on November 6, 2003, andcontinues to actively promote these practices.(6) Standards for employee behaviorIn order to ensure that there are consistent standards for employee behavior, thesestandards have been formalized (with a total of 28 articles). These articles are groupedinto four main categories including service principles, confidentiality agreements andban on employment at competitors, use of the Internet in the workplace and datasecurity, and interaction with suppliers. The said standards for employee behavior arepublished on e-bulletin for the reference of employees and a friendly reminder toemployees. In addition, the “Employee Reward and Penalty Guidelines” has also beendrafted to serve as the basis for determining employee rewards and penalties.(7) Potential loss from labor dispute, projected loss amount and responsive measures in themost recent year and up to the publication of this annual report, if the information is notavailable, please explain:MiTAC does not have any potential loss from labor dispute expected in the mostrecent year and up to the publication of this annual report. MiTAC holds a harmoniouslabor relation; therefore, the possibility of potential loss occurred from labor dispute islow.-96-

6. Major contractsType Party Period of validity Major terms LimitationsOEM Customer “E” From August 1, 2002to July 31, 2005, itcan be automaticallySet the terms for themanufacture, delivery,and warranty ofextended for one year computer products. Noneif there is not awritten notice fortermination served.DistributionAgreementCustomer “A” For a period of oneyear from October 26,2006 can beautomaticallyextended for one year.Set the terms for thesales of computersand electronic-relatedproducts.None-97-

VI. Financial Standing1. Most recent five-year Balance Sheet and Income Statement(1) Condensed Balance SheetUnit: NT$ ThousandYearMost recent five-year financial data2008/3/31(Audited byItem 2003 2004 2005 2006 2007accountant)(Note)Current assets 16,018,538 20,874,292 25,390,052 36,117,501 35,901,473 32,557,656Funds and21,869,98611,966,267 13,727,485 16,311,089 18,216,392 22,353,401investmentFixed assets 2,667,533 2,516,750 2,408,847 2,220,427 2,239,867 2,229,584Intangible assets - - - - 613,095 613,095Other assets 1,210,913 936,419 1,074,115 1,219,528 1,152,041 1,190,140Total assets 31,881,751 38,073,446 45,202,603 57,792,348 62,278,377 58,478,961Beforedistribution 11,313,864 16,764,510 16,259,451 24,121,951 26,219,092 22,731,551CurrentliabilitiesAfter25,944,042 Not yet Not yetdistribution 11,930,789 17,516,570 17,892,161distributed distributedLong-term liabilities 3,000,000 2,500,000 5,002,374 5,021,478 1,510,983 1,504,586Other liabilities 596,256 880,308 1,109,112 933,224 586,213 584,679Beforedistribution 14,910,120 20,144,818 22,370,937 30,076,653 28,316,288 24,820,816TotalliabilitiesAfter31,898,744 Not yet Not yetdistribution 15,527,045 20,896,878 24,003,647distributed distributedCommon stock 10,563,812 10,814,761 11,561,044 12,797,594 14,565,380 14,570,202Capital reserve 3,086,493 3,072,497 3,064,411 3,118,583 4,202,512 4,160,960Retained Beforedistribution 3,136,089 4,658,273 8,346,259 11,012,564 13,628,008 14,345,922earningsAfterdistribution 2,519,164 3,407,506 5,629,0767,979,746 Not yetdistributedNot yetdistributedUnrealized lossesfrom price drops(8,801) (7,439) (4,244) 628,977 744,699 803,105Translation adjustment 765,441 232,288 591,457 722,552 1,193,436 387,459Stockholder Before27,715,695 33,962,089 33,658,145equity distribution 16,971,631 17,928,628 22,831,666Total After25,893,604 Not yet Not yetamount distribution 16,354,706 17,176,568 21,198,956distributed distributedNote: To the end of quarter prior to the publication date of this annual report.(2) Condensed Income StatementUnit: NT$ ThousandItemYearMost recent five-year financial data2003 2004 2005 2006 20072008/3/31(Audited byaccountant)(Note)Operating revenues 39,575,954 50,503,234 74,305,798 82,882,363 82,073,897 15,132,364Gross profits 2,979,345 4,106,483 7,271,109 9,079,602 10,130,910 1,658,583Operating income 555,300 1,145,074 3,718,672 4,958,306 4,574,512 516,939Non-operating revenues 1,006,878 1,540,410 2,137,707 1,482,530 2,137,177 405,488Non-operating expenses (491,528) (409,298) (322,425) (310,042) (219,517) (97,238)-98-

Year2008/3/31Most recent five-year financial data(Audited byItemaccountant)(Note)2003 2004 2005 2006 2007Pre-tax income from continuingoperations1,070,650 2,276,186 5,533,954 6,130,794 6,492,172 825,189Income from continuingoperations1,051,473 2,142,499 4,941,793 5,383,612 5,648,262 717,914Income from discontinuedoperations- - - - - -Extraordinary losses - - - - - -Accumulated effect of changes inaccounting principles- - - (124) - -Net income 1,051,473 2,142,499 4,941,793 5,383,488 5,648,262 717,914Pre-Earnings retrospectionEarnings1.03 2.11 4.53 4.39 4.07 0.50per share Post-retrospection 0.81 1.68 3.78 4.01Note: To the end of the quarter prior to the publication date of this annual report.Not yetdistributedNot yetdistributed(3) Name of certifying accountants and their recommendations for the most recent fiveyears:Year Name of Accounting Firm Name of Certifying Accountant20072006200520042003Pricewaerhouse CoopersTaiwanPricewaerhouse CoopersTaiwanPricewaerhouse CoopersTaiwanPricewaerhouse CoopersTaiwanPricewaerhouse CoopersTaiwanFang-Yu Wen, Yu-Kuan LinYing-fei Liu, Fang-Yu WenYing-fei Liu, Fang-Yu WenYing-fei Liu, Wei-chen WangYing-fei Liu, Fang-Yu WenAuditRecommendationsUnqualifiedAmended unqualifiedUnqualifiedAmended unqualifiedAmended unqualified-99-

2. Financial analysis for most recent five yearsAnalysisFinancialstructure(%)Solvency(%)Operationalcapabilities(Note 2)YearMost recent five years financial analysis2008.3.31(Audited by2003 2004 2005 2006 2007 accountant)(Note 1)Debt ratio 46.77 52.91 49.49 52.04 45.47 42.44Share of long-term funds infixed assets 748.69 811.71 1,155.39 1,474.36 1,583.71 1,577.10Current ratio 141.58 124.51 156.13 149.73 136.93 143.23Quick ratio 107.13 91.60 118.15 105.93 107.13 107.76Times interest earned ratio 5.13 10.76 20.45 31.18 33.11 19.23Turnover rate of receivables(times) 4.76 4.86 5.87 5.49 4.86 4.04Days sales in receivables 77 75 62 67 75 90Inventory turnover (times) 10.54 9.80 11.52 8.89 7.79 6.65Turnover rate of payables(times) 11.16 7.94 8.51 6.64 5.48 4.87Days to sell inventory 35 37 32 41 47 55Turnover rate of fixed assets(times) 14.51 19.48 30.17 35.81 36.80 27.09Turnover rte of total assets(times) 1.34 1.44 1.78 1.61 1.37 1.00Return on assets (%) 4.42 6.75 12.48 10.80 9.70 1.25Return on shareholdersequity (%) 6.30 12.28 24.25 21.30 18.32 2.12OperatingPercent ofprofit 5.26 10.59 32.17 38.74 31.41 3.55paid-inPre-taxProfitability capital(%)income 10.14 21.05 47.87 47.91 44.57 5.66Income ratio (%) 2.66 4.24 6.65 6.50 6.88 4.74Pre-retrospeSimple EPS ction 1.03 2.11 4.53 4.39 4.07 0.50(NT$) Post-retrospection 0.81 1.68 3.78 4.01Not yetdistributedNot yetdistributedCash flow ratio (%) 1.21 13.33 21.79 18.15 19.96 5.79Cash flow Cash flow adequacy ratio (%) 60.39 81.89 151.46 79.63 122.78 142.89Cash reinvestment ratio (%) - 7.57 9.60 8.70 10.11 3.62LeverageOperating leverage 4.79 3.25 1.56 1.39 1.29 1.80Financial leverage 1.88 1.26 1.08 1.04 1.05 1.10Analysis of changes in financial ratio in 2006 and 2007 (changes less than 20% are exempted):Cash flow adequacy ratio was up because the net cash flow of operating activities for the most recent five years in2007 is increasing than in 2006.Note 1: To the end of quarter prior to the publication date of this annual report.Note 2: For convenience in marking comparisons, the operational capability for the first quarter of 2008 has beenconverted to a yearly figure.-100-

1. Financial structure(1) Debt ratio = Total liabilities / Total assets(2) Ratio of long-term funds to property and equipment = (Net shareholders’ equity +Long-term debts) / Net fixed assets2. Solvency(1) Current ratio = Current assets / Current liabilities(2) Quick ratio = (Current assets – Investment – Prepaid expenses) / Current liabilities(3) Time-Interest-earned ratio = Net income before income tax and interest expense /Interest expense3. Operational capability(1) Turnover rate of receivables (including accounts receivable and notes receivable fromoperations) = Net sales / Average receivables balance (including accounts receivableand notes receivable from operations) in various terms(2) Days sales in receivable = 365 / Turnover rate of receivables(3) Inventory turnover = Cost of goods sold / Average value of inventory(4) Turnover rate of payables (including accounts payable and notes payable fromoperations) = Cost of goods sold / Average accounts payable balance (includingaccounts payable and notes payable from operations) in various terms(5) Days to sell inventories = 365 / Inventory turnover(6) Turnover rate of property and equipment = Net sales / Net fixed assets(7) Turnover rate of overall assets = Net sales / Total assets4. Profitability(1) Return on assets ={Profit after tax +〔Interest expenses x (1 – (tax rate)〕}/Averageof total assets(2) Return on shareholders’ equity = Profit after tax / Average net equity(3) Net profit rate = Profit after tax / Net sales(4) EPS = (Profit after tax – Dividend from preferred stock) / Weighted average ofoutstanding shares5. Cash Flow(1) Cash flow ratio = Cash flow from operations / Current liabilities(2) Cash flow adequacy ratio = Most recent five-year cash flow from operations /Most recent five-year (sum of capital expenditures, increases in inventory, cashdividends)(3) Cash reinvestment ratio = (Cash flow from operating activities – Cash dividend) /(Gross fixed assets + Long-term investment + other assets + Working capital)6. Leverage(1) Operating leverage = (Net revenue – Variable cost of goods sold and operating expenses)/ Operating income(2) Financial leverage = Operating income / (Operating income – Interest expense)-101-

3. Supervisors’ Report of the most recent yearMITAC INTERNATIONAL CORP.Supervisors’ ReportThe report is made in accordance with the Company Law Article 219 after we examined thefiscal year 2007 (January 1~December 31, 2007) balance sheets, income statements, changesin stockholders’ equity, and cash flows, which were transmitted from the Board of Directorsand found correct.TO: The fiscal year 2008 Annual Shareholders’ Meeting of MiTAC International Corp.Supervisor: Arthur ChiaoCharles Jin(Representative of Lien Hwa Industrial Corp.)Apr 28, 2008-102-

4. MiTAC International Corp. Consolidated Financial Statements and Report ofIndependent AccountantsReport of Independent AccountantsTo the Board of Directors and stockholders of MiTAC International Corp.PWCR07000424We have audited the accompanying consolidated balance sheets of MiTAC International Corp.and its subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements ofincome, of changes in stockholders' equity and of cash flows for the years then ended. Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audits.We conducted our audits in accordance with the“Rules Governing the Examination of FinancialStatements by Certified Public Accountants”and generally accepted auditing standards in theRepublic of China. Those standards and rules require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for an opinion.In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of MiTAC International Corp. and its subsidiaries as ofDecember 31, 2007 and 2006, and the results of their operations and their cash flows for the yearsthen ended in conformity with the “Rules Governing the Preparation of Financial Statements ofSecurities Issuers”, “Business Entity Accounting Law”, “Regulation on Business EntityAccounting Handling” and generally accepted accounting principles in the Republic of China.As described in Note 3 to the financial statements, effective January 1, 2006, the Company and itssubsidiaries adopted R.O.C. Statements of Financial Accounting Standards No.34, “Accountingfor Financial Instruments” and No. 36, “Disclosure and Presentation of Financial Instruments”.April 1, 2008-----------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are intended only to present the financialposition, results of operations and cash flows in accordance with accounting principles andpractices generally accepted in the Republic of China and not those of any other jurisdictions. Thestandards, procedures and practices to audit such consolidated financial statements are thosegenerally accepted and applied in Republic of China.~103~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)2007 2006 2007 2006ASSETS LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Assets Current LiabilitiesCash and cash equivalents (Note 4 (1)) $ 14,411,289 $ 10,984,144 Short-term loans (Notes 4 (11) and 6) $ 4,343,830 $ 8,101,223Financial assets at fair value through profit or loss Commercial paper payable – net (Note 4 (12)) 44,000 130,000(Note 4 (2)) 9,301 1,579 Financial liabilities at fair value through profit or loss (Note 4 (13)) 21,811 23,565Available-for-sale financial assets – current (Note 4 (3)) 910,249 437,177 Notes payable 31,937 89,698Notes receivable – net 95,661 203,658 Accounts payable 12,528,936 16,557,899Notes receivable – related party (Note 5) - 82,411 Accounts payable – related parties (Note 5) 714,261 103,187Accounts receivable – net (Note 4 (5)) 11,442,869 13,165,057 Income tax payable (Note 4 (20)) 1,330,339 859,246Accounts receivable – related parties (Notes 4 (5) and 5) 3,155,139 4,283,826 Accrued expenses 6,063,645 5,254,286Other receivables 607,819 431,099 Other payables 333,283 873,881Other financial assets – current (Note 6) 570,668 - Receipts in advance 657,312 566,571Inventories - net (Note 4 (6)) 9,760,547 12,747,435 Current portion of long-term debts (Notes 4 (14) and 6) 3,500,000 -Prepayments 717,342 811,245 Provision for product warranty 1,180,073 531,986Deferred income tax assets – current (Note 4 (20)) 890,581 501,033 Other current liabilities 474,851 633,21642,571,465 43,648,664 31,224,278 33,724,758Long-term LiabilitiesLong-term Investments Derivative financial liabilities for hedging – non-current (Note 10 (7) 10,983 21,478Available-for-sale financial assets –- non-current Bonds payable (Notes 4 (14) and 6) 1,500,000 5,000,000(Note 4 (3)) 1,140,106 1,093,521 Long-term debts (Notes 4 (14) and 6) - 3,259Financial assets carried at cost – non-current (Note 4 (4)) 1,709,031 1,145,990 1,510,983 5,024,737Long-term investments accounted for under the equity Other Liabilitiesmethod (Note 4 (7)) 10,196,690 8,277,617 Accrued pension payable (Note 4 (15)) 87,808 72,29813,045,827 10,517,128 Deposit in 180 11,218Other Financial Assets – non-current (Note 6) 38,494 41,544 Deferred income tax liability (Note 4 (20)) 553,621 949,926Others 81,198 76,487Property, Plant and Equipment - net 722,807 1,109,929(Notes 4 (8) and 6) 8,731,095 13,414,763 Total Liabilities 33,458,068 39,859,424Stockholders' EquityIntangible Assets Common stock (Note 4 (16)) 14,565,380 12,797,594Goodwill (Note 4 (9)) 1,281,236 - Capital reserve (Note 4 (17)) 4,202,512 3,118,583Deferred pension cost - 1,617 Retained earnings (Note 4 (18))Other intangible assets 254,635 546,680 Legal reserve 2,161,080 1,622,7311,535,871 548,297 Unappropriated earnings 11,466,928 9,389,833Other Assets Unrealized financial instruments gain (loss) 744,699 628,977Refundable deposits 108,005 130,375 Cumulative translation adjustments 1,193,436 722,552Deferred charges 349,542 615,041 Treasury stock (Note 4 (19)) ( 371,946 ) ( 564,575 )Deferred income tax assets – non-current (Note 4 (20)) 138,710 - Minority interest - 2,250,246Others (Notes 4 (10) and 6) 901,148 909,553 Total Stockholders' Equity 33,962,089 29,965,9411,497,405 1,654,969 Commitments and Contingent Liabilities (Note 7)Significant subsequent event (Note 9)TOTAL ASSETS $ 67,420,157 $ 69,825,365 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 67,420,157 $ 69,825,365The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated April 1, 2008.~104~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,EXCEPT EARNINGS PER SHARE)2007 2006Operating revenues-net (Note 5) $ 90,220,490 $ 91,697,189Operating costs (Note 5) ( 75,836,219 ) ( 79,606,838 )Gross profit 14,384,271 12,090,351Operating expensesSelling expenses ( 4,824,134 ) ( 3,085,492 )Administrative expenses ( 2,103,622 ) ( 1,068,374 )Research and development expenses ( 2,551,401 ) ( 2,285,120 )( 9,479,157 ) ( 6,438,986 )Operating income 4,905,114 5,651,365Non-operating income and gainsInterest income 255,152 180,714Gain on valuation of financial assets 3,071 293Gain on valuation of financial liabilities 1,754 -Investment income accounted for under the equitymethod (Note 4 (7)) 1,006,576 667,995Dividend income 80,180 79,899Gain on disposal of investment 401,063 8,683Gain on physical count of inventories 1,968 1,405Exchange gain, net 239,100 300,929Other income 407,184 321,3232,396,048 1,561,241Non-operating expenses and lossesInterest expense ( 326,803 ) ( 442,636 )Loss on valuation of financial liabilities - ( 23,565 )Other investment loss (Note 4 (4)) - ( 75,884 )Loss on disposal of property, plant and equipment ( 47,482 ) ( 59,404 )Other losses ( 36,258 ) ( 59,765 )( 410,543 ) ( 661,254 )Income before income tax 6,890,619 6,551,352Income tax expense (Note 4 (20)) ( 1,042,595 ) ( 852,032 )5,848,024 5,699,320Cumulative effect of changes in accounting principles - ( 447 )Consolidated net income $ 5,848,024 $ 5,698,873Attributable to:Equity holders of the Company $ 5,648,262 $ 5,383,488Minority interest 199,762 315,385Consolidated net income $ 5,848,024 $ 5,698,873Beforeincome taxAfterincome taxBeforeincome taxAfterincome taxBasic earnings per share (in NT dollars) (Note 4 (21))Consolidated net income $ 4.96 $ 4.21 $ 4.87 $ 4.24Minority interest income ( 0.17 ) ( 0.14 ) ( 0.23 ) ( 0.23 )Net income attributable to equity holders of the Company $ 4.79 $ 4.07 $ 4.64 $ 4.01Diluted earnings per share (in NT dollars)Consolidated net income $ 4.63 $ 3.93 $ 4.59 $ 4.00Minority Interest ( 0.17 ) ( 0.14 ) ( 0.24 ) ( 0.24 )Net income attributable to equity holders of the Company $ 4.46 $ 3.79 $ 4.35 $ 3.76The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated April 1, 2008.~105~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYFOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)2006CommonStockCapitalReserveLegalReserveRetained EarningsUnappropriatedEarningsUnrealizedFinancialInstrumentsGain (loss)CumulativeTranslationAdjustmentsTreasuryStockMinorityInterest TotalBalance at January 1, 2006 $11,561,044 $ 3,064,411 $ 1,128,552 $ 7,217,707 ( $ 4,244 ) $ 591,457 ( $ 727,261 ) $ 2,014,402 $ 24,846,068Distribution of 2005 earnings:Legal reserve - - 494,179 ( 494,179 ) - - - - -Employee bonuses – cash - - - ( 266,675 ) - - - - ( 266,675 )Employee bonuses – stock 177,783 - - ( 177,783 ) - - - - -Stock dividends 906,690 - - ( 906,690 ) - - - - -Cash dividends - - - ( 1,360,035 ) - - - - ( 1,360,035 )Directors’ and supervisors’ remuneration - - - ( 6,000 ) - - - - ( 6,000 )Exercise of employee stock options 152,077 ( 37,372 ) - - - - - - 114,705Capital reserve due to change in ownership of long-term investments - 85,646 - - - - - - 85,646Recognition of subsidiaries’ reversal of unrealized profit onavailable-for-sale financial assets - - - - 654,699 - - - 654,699Recognition of realized loss on derivative financial liabilities forhedging - - - - ( 21,478 ) - - - ( 21,478 )Consolidated net income for 2006 - - - 5,383,488 - - - 315,385 5,698,873Cash dividends received by subsidiaries from the Company - 17,538 - - - - - - 17,538Translation adjustment for 2006 - - - - - 131,095 - - 131,095Treasury stock transaction-net - ( 11,640 ) - - - - 162,686 - 151,046Decrease in minority interest - - - - - - - ( 79,541 ) ( 79,541 )Balance at December 31, 2006 $12,797,594 $ 3,118,583 $ 1,622,731 $ 9,389,833 $ 628,977 $ 722,552 ( $ 564,575 ) $ 2,250,246 $ 29,965,941(CONTINUED)~106~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)FOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)2007CommonStockCapitalReserveLegalReserveRetained EarningsUnappropriatedEarningsUnrealizedfinancialinstrumentsgain – (loss)CumulativeTranslationAdjustmentsTreasuryStockMinorityInterest TotalBalance at January 1, 2007 $12,797,594 $ 3,118,583 $ 1,622,731 $ 9,389,833 $ 628,977 $ 722,552 ( $ 564,575 ) $ 2,250,246 $ 29,965,941Distribution of 2006 earnings:Legal reserve - - 538,349 ( 538,349 ) - - - - -Employee bonuses – cash - - - ( 290,708 ) - - - - ( 290,708 )Employee bonuses – stock 193,805 - - ( 193,805 ) - - - - -Stock dividends 1,016,922 - - ( 1,016,922 ) - - - - -Cash dividends - - - ( 1,525,383 ) - - - - ( 1,525,383 )Directors’ and supervisors’ remuneration - - - ( 6,000 ) - - - - ( 6,000 )Exercise of employee stock option 51,282 ( 22,597 ) - - - - - - 28,685Issuance of common stock as a result of merger 505,777 1,126,365 - - - - - - 1,632,142Capital reserve due to change in ownership of long-term investments - ( 12,581 ) - - - - - - ( 12,581 )Recognition of subsidiaries’ reversal of unrealized profit onavailable-for-sale financial assets - - - - 105,227 - - - 105,227Recognition of realized loss on derivative financial liabilities for hedging - - - - 10,495 - - - 10,495Consolidated net income for 2007 - - - 5,648,262 - - - 199,762 5,848,024Cash dividends received by subsidiaries from the Company - 18,834 - - - - - - 18,834Translation adjustment for 2007 - - - - - 470,884 - - 470,884Treasury stock transaction-net - ( 26,092 ) - - - 192,629 - 166,537Decrease in minority interest - - - - - - ( 2,450,008 ) ( 2,450,008 )Balance at December 31, 2007 $14,565,380 $ 4,202,512 $ 2,161,080 $ 11,466,928 $ 744,699 $ 1,193,436 ( $ 371,946 ) $ - $ 33,962,089The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated April 1, 2008.~107~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)Cash flows from operating activities:2007 2006Consolidated net income $ 5,848,024 $ 5,698,873Adjustments to reconcile consolidated net income to net cashprovided by operating activities:Bad debts expense 36,213 44,936Depreciation 1,663,375 1,579,769Amortization 643,392 548,721Gain on valuation of financial assets ( 3,071 ) ( 293 )Gain on valuation of financial liabilities ( 1,754 ) -Loss on valuation of financial liabilities - 23,565Cash dividends from long-term investments accounted for underthe equity method 71,667 91,068Long-term investment income accounted for under the equitymethod ( 1,006,576 ) ( 667,995 )Other investment loss - 75,884Gain on disposal of investments ( 401,063 ) ( 8,683 )Loss on disposal of property, plant and equipment, net 47,482 59,405Effects of changes in accounting principles - 447Changes in assets and liabilities:(Increase) decrease in:Notes receivable 190,115 ( 159,380 )Accounts receivable 2,038,260 ( 2,918,819 )Other receivables ( 152,636 ) ( 141,429 )Inventories 2,891,973 ( 907,841 )Prepayments ( 325,513 ) 643,174Other current assets - 20,387Deferred income tax assets ( 528,258 ) 7,269Increase (decrease) in:Notes payable ( 59,333 ) 71,532Accounts payable ( 2,410,724 ) 1,363,787Income tax payable 504,778 257,270Accrued expenses 472,430 1,594,967Other payables ( 164,576 ) ( 119,386 )Receipts in advance 171,655 ( 313,778 )Other current liabilities ( 170,796 ) ( 181,301 )Deferred income tax liabilities ( 311,444 ) ( 174,468 )Provision for product warranty 629,247 ( 56,921 )Accrued pension payable 7,466 2,761Net cash provided by operating activities 9,680,333 6,433,521(CONTINUED)~108~

Cash flows from investing activities:MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)2007 2006(Increase) decrease in financial assets at fair value through profitor loss and available-for-sale financial assets ( $ 41,738 ) $ 110,719Inecrease in long-term investments ( 80,832 ) ( 73,539 )Proceeds from disposal of long-term investments 529,778 1,336Increase in financial assets carried at cost – non-current ( 74,755 ) -Increase in other financial assets ( 567,619 ) -Acquisition of property, plant and equipment ( 1,538,175 ) ( 2,557,015 )Proceeds from disposal of property, plant and equipment 396,340 625,156Decrease (increase) in refundable deposits, net 18,381 ( 92,930 )Increase in intangible assets - ( 54,672 )Increase in deferred charges ( 422,004 ) ( 682,167 )(Increase) decrease in other assets, net ( 761 ) 134Decrease in financial liabilities at fair value through profit or loss - ( 3,504 )Derivative financial liabilities for hedging – non-current - ( 2,374 )Net cash paid for acquisition of Navman ( 446,655 ) -Cash received due to merger with Tyan 728,151 -Cash transferred out from MPT due to MPT being merged intoother company ( 373,593 ) -Net cash used in investing activities ( 1,873,482 ) ( 2,728,856 )Cash flows from financing activities:Decrease (increase) in short-term debts, net ( 2,705,180 ) 1,596,487Decrease in commercial paper payable, net ( 86,000 ) ( 37,952 )Repayment of long-term loans ( 3,259 ) ( 381,800 )Decrease in deposit-in ( 125 ) ( 4,146 )Exercise of employee stock options 28,685 114,705Employee bonuses paid ( 290,708 ) ( 266,675 )Directors’ and supervisors’ remuneration ( 6,000 ) ( 6,000 )Cash dividends paid ( 1,506,498 ) ( 1,342,450 )Purchase of treasury stock ( 18,859 ) -Sale of treasury stock 329,653 151,046Decrease in minority interest - ( 79,541 )Net cash used in financing activities ( 4,258,291 ) ( 256,326 )Effects of changes in exchange rates ( 121,415 ) ( 153,026 )Net increase in cash and cash equivalents 3,427,145 3,295,313Cash and cash equivalents at beginning of year 10,984,144 7,688,831Cash and cash equivalents at end of year $ 14,411,289 $ 10,984,144Supplemental disclosures of cash flow information:Cash paid for interest $ 326,235 $ 422,224Cash paid for income tax $ 1,394,193 $ 771,516(CONTINUED)~109~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)Net assets acquired due to merge with Tyan and acquisitionof Navman, excluding cash2007 2006Accounts receivable $ 1,456,611 $ -Inventories 879,213 -Other current assets 97,069 -Property, plant and equipment 230,989 -Goodwill 1,281,236 -Other assets 9,923 -Accounts payable ( 1,483,978 ) -Accrued expenses ( 903,801 ) -Other current liabilities ( 64,608 ) -Other liabilities ( 56,403 ) -Cash infusion due to business combination:$ 1,446,251 $ -Net cash paid for acquisition of Navman $ 446,655 $ -Issued new stocks for merger with Tyan 505,777 -Premium on paid-in capital 1,126,365 -Investment before merger with Tyan 95,605 -Less: net assets acquired due to merger with Tyan andacquisition of Navman, excluding cash ( 1,446,251 ) -Net cash acquired for consolidation of Tyan $ 728,151 $ -Cash paid for acquisition of Navman $ 519,088 $ -Less: cash of Navman ( 72,433 ) -Net cash paid for acquisition of Navman $ 446,655 $ -The Company’s subsidiaries merged into another companyNet assets transferred out from MPT excluding cash $ 1,150,159 $ -Investment before merger into another company ( 1,523,752 ) -Cash transferred out from MPT due to merger of MPT intoanother company ( $ 373,593 ) $ -The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated April 1, 2008.~110~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2007 AND 2006(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,EXCEPT AS OTHERWISE INDICATED)1. HISTORY AND ORGANIZATION1) The CompanyMiTAC International Corp. (“the Company”) was incorporated as a companylimited by shares under the provisions of the Company Law of the Republic ofChina (R.O.C) on December 8, 1982 and started its operations on December 15,1982. The main activities of the Company include the design, manufacture, salesand services of micro-computers, mobile communications and related products aswell as other related investments. As of December 31, 2007, the Company and itssubsidiaries had 12,878 employees.2) Subsidiaries included in the consolidated financial statements and their changes in2007MiTAC InternationalCorp.Ownership (%)December 31,Investor Subsidiary Main activities2007 2006Silver Star Developments Ltd. Investment holding 100% 100%(SSDL) and its subsidiaries″ MiTAC Precision TechnologyCo., Ltd. (MPT) and itssubsidiaries″ Tsu Fung Investment Corp.(TFC) and its subsidiaries″ Foreground Technology Ltd.and its subsidiariesDescriptionDesign, manufactureand sales of moldand partsNote (2) 47.97% Note (1)Investment holding 100% 100%Investment holding 100% - Note (3)Note (1): The Company’s direct and indirect ownership of MiTAC PrecisionTechnology Co., Ltd. (MPT) decreased to below 50% ownership in thefourth quarter of 2006. However, the Company still had substantial abilityto control MPT. As such, MPT was included in the consolidated financialstatements.Note (2): MiTAC Precision Technology Co., Ltd. was deconsolidated since MPTwas merged into MiTAC Technology co., Ltd., on August 31, 2007 andthe Company had lost control over MPT’s subsidiaries. Thus the revenuesand expenses of MPT were excluded in the consolidated financialstatements from August 31, 2007.Note (3) The Company succeeded Foreground Technology Ltd. (Foreground) andits subsidiaries since the Company merged with Tyan ComputerTechnology Co., Ltd. on October 16, 2007. Thus the revenues andexpenses of Foreground were included in the consolidated financial reportfrom October 16, 2007.~111~

3) Majority-owned subsidiaries excluded in the consolidation: None.4) Adjustment for subsidiaries with different balance sheet datesSome of SSDL’s subsidiaries adopted accounting periods that are different from theCompany’s accounting period. However as the difference is not over 3 months, thefinancial reports of these subsidiaries are consolidated without any adjustment.5) Special operating risks in foreign subsidiaries: None.6) Nature and extent of the restrictions on fund remittance from subsidiaries to theparent company: None.7) Contents of subsidiaries’ securities issued by the parent Company: Refer to Note 4(18).8) Information on convertible bonds and common stock issued by subsidiaries: TsuFung Investment Corp. and SSDL and its subsidiaries increased their capitalamounting to $75,000 and $1,485,099, respectively in 2007.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accompanying consolidated financial statements of the Company and its subsidiaries(collectively referred herein as the Group) are prepared in accordance with the “RulesGoverning the Preparation of Financial Statements by Securities Issuers”, “BusinessEntity Accounting Law”, “Regulation on Business Entity Accounting Handling” andaccounting principles generally accepted in the Republic of China. The Group’ssignificant accounting policies are summarized below:1) Basis for preparation of consolidated financial statementsThe financial statements of subsidiaries in which the Company owns more than50% of the subsidiaries’ shares and controlled entities are included in consolidation.All inter-company accounts and transactions have been eliminated in theconsolidated financial statements.2) Translation of financial statements of foreign subsidiariesAssets and liabilities of foreign subsidiaries are translated into New Taiwan dollarsusing the exchange rates at the balance sheet date. Equity accounts are translated athistorical rates except for beginning retained earnings, which is carried forwardfrom prior year’s balance. Dividends are translated at the rates prevailing at the dateof declaration. Profit and loss accounts are translated at weighted-average rates ofthe year. The resulting translation differences are included in “cumulativetranslation adjustments” under stockholders’ equity.3) Foreign currency transactionsA. The Group maintains its accounts in New Taiwan dollars. Transactionsdenominated in foreign currencies are translated into New Taiwan dollars at thespot exchange rates prevailing at the transaction dates.B. Receivables and other monetary assets and liabilities denominated in foreigncurrencies are translated at the spot exchange rates prevailing at the balancesheet date. Exchange gains or losses are included in current results ofoperations.~112~

C. When a gain or loss on a non-monetary item is recognized in profit or loss, anyexchange component of that gain or loss shall be recognized in profit or loss.Conversely, when a gain or loss on a non-monetary item is recognized in equity,any exchange component of that gain or loss shall be recognized in equity.However, non-monetary items that are measured on a historical cost basis aretranslated using the exchange rate at the date of the transaction.4) Classification of current and non-current itemsA.Assets that meet one of the following criteria are classified as current assets;otherwise they are classified as non-current assets:a) Assets arising from operating activities that are expected to be realized orconsumed, or are intended to be sold within the normal operating cycle;b) Assets held mainly for trading purposes;c) Assets that are expected to be realized within twelve months from the balancesheet date;d) Cash and cash equivalents, excluding restricted cash and cash equivalents andthose that are to be exchanged or used to pay off liabilities more than twelvemonths after the balance sheet date.B.Liabilities that meet one of the following criteria are classified as currentliabilities; otherwise they are classified as non-current liabilities:a) Liabilities arising from operating activities that are expected to be paid offwithin the normal operating cycle;b) Liabilities arising mainly from trading activities;c) Liabilities that are to be paid off within twelve months from the balance sheetdate;d) Liabilities for which the repayment date cannot be extended unconditionallyto more than twelve months after the balance sheet date.5) Cash equivalentsCash and cash equivalents include cash on hand and in banks and other short-termhighly liquid investments which are readily convertible to known amount of cashand which are subject to insignificant risk of changes in value resulting fromfluctuations in interest rates.6) Financial assets and financial liabilities at fair value through profit or lossA. Financial assets and financial liabilities at fair value through profit or loss arerecognized and derecognized using trade date accounting and are recognizedinitially at fair value.B. These financial instruments are subsequently remeasured and stated at fairvalue, and the gain or loss is recognized in profit or loss. The fair value oflisted stocks, OTC stocks and closed-end mutual funds is based on latestquoted fair prices of the accounting period. The fair value of open-end andbalanced mutual funds is based on the net asset value at the balance sheet date.~113~

C. When a derivative is an ineffective hedging instrument, it is initiallyrecognized at fair value on the date a derivative contract is entered into and issubsequently remeasured at its fair value. If a derivative is a non-optionderivative, the fair value initially recognized is zero.7) Available-for-sale financial assetsA. Available-for-sale financial assets are recognized and derecognized using tradedate accounting and are initially stated at fair value plus transaction costs thatare directly attributable to the acquisition of the financial asset.B. The financial assets are remeasured and stated at fair value, and the gain orloss is recognized in equity, until the financial asset is derecognized, at whichtime the cumulative gain or loss previously recognized in equity shall berecognized in profit or loss. The fair values of listed stocks, OTC stocks andclosed-end mutual funds are based on latest quoted fair prices of theaccounting period. The fair values of open-end and balanced mutual fundsare based on the net asset value at the balance sheet date.C. If there is any objective evidence that the financial asset is impaired, thecumulative loss that had been recognized directly in equity shall be transferredfrom equity to profit or loss. When the fair value of an equity instrumentsubsequently increases, impairment losses recognized previously in profit orloss shall not be reversed. When the fair value of a debt instrumentsubsequently increases and the increase can be objectively related to an eventoccurring after the impairment loss was recognized in profit or loss, theimpairment loss shall be reversed to the extent of the loss recognized in profitor loss.8) Financial assets carried at costA. Investment in unquoted equity instruments is recognized or derecognized usingtrade date accounting and is stated initially at its fair value plus transactioncosts that are directly attributable to the acquisition of the financial asset.B. If there is any objective evidence that the financial asset is impaired, theimpairment loss is recognized in profit or loss. Such impairment loss shall notbe reversed when the fair value of the asset subsequently increases.9) Derivative financial instruments for hedgingWhen the transactions qualify for all the conditions of applying hedge accounting,the resulting profit or loss is recognized by offsetting the changes in the fair valuesof hedging instrument and hedged items. When the transactions qualify as cash flowhedges, the effective portion of any gain or loss on remeasurement of the derivativefinancial instrument to fair value is recognized directly in equity.10) Accounts receivableAccounts receivable represents claims resulting from are sale of goods or services.The fair value of accounts receivable shall be calculated based on the imputedinterest rate. Accounts receivable which are collectible within one year, where thedifference between the fair value and the value at maturity is insignificant andtrading is also frequent, need not be measured at fair value.~114~

11) Allowance for doubtful accountsAllowance for doubtful accounts is provided based on the collectibility of accounts,notes and other receivables.12) InventoriesA.Inventories of the Company are stated at standard cost, which is adjusted toactual cost at year-end.B.Inventories of the Company and its subsidiaries are valued at the lower of cost ormarket value at balance sheet date. The market value is based on thereplacement cost for raw materials and supplies and net realizable value forwork in process, finished goods and merchandise. Allowance for slow movingitems and decline in the market value is provided when necessary.13) Long-term equity investments accounted for under equity methodA. Long-term equity investments in which the Group holds more than 20% of theinvestee company’s voting shares or has the ability to exercise significantinfluence on the investee’s operational decisions are accounted for under theequity method. The excess of the initial investment cost over the acquired netasset value of the investee attributable to goodwill is no longer amortized,effective January 1, 2007. Retrospective adjustment of the amount of goodwillamortized in previous year(s) is not required. The excess of acquired net assetvalue of investee over the initial investment cost is allocated proportionately andapplied as a reduction to the book values of identifiable non-current assets, andany remaining amount of such excess after this allocation is credited toextraordinary gains. However, negative goodwill acquired prior to December 31,2006 is continuously amortized.B. For investments accounted for under the equity method, the Companyrecognizes investment gains or losses by quarter. The unrealized profits andlosses from intercompany transactions between the Company and investeecompany during the current year shall be eliminated.C. Exchange differences arising from translation of the financial statements ofoverseas investee companies accounted for under the equity method arerecorded as “cumulative translation adjustments” under stockholders’ equity.14) Property, plant and equipmentA. Property, plant and equipment are stated at cost. Interest incurred on loansused to finance the construction of property and plant is capitalized anddepreciated accordingly.B. Depreciation is calculated on a straight-line basis over the assets’ estimateduseful lives. Residual values of fixed assets still in use at the end of theoriginal service lives are depreciated based on the newly estimated remainingservice lives of the assets. The useful lives of the fixed assets are 3 – 10 years,except for buildings, which are 3 - 55 years.C. Maintenance and repairs are expensed as incurred. Significant renewals andimprovements are capitalized and depreciated accordingly.~115~

D. Idle assets are valued at the lower of book value or net realizable value (basedon the appraised value by a real estate appraisal company) and classified asother assets. Rental assets are valued at cost and classified as other assets;current depreciation is recorded as non-operating expense.15) Intangible assetsLand use rights are amortized on a straight-line method over 48~50 years.16) Deferred chargesA. Telephone installation expenditure is amortized on a straight-line method over 5years.B. Mold expenses are amortized on a straight-line method over 2 years.C. Issuance costs of bonds are deferred and amortized on a straight-line methodover the life of the bonds.D. Software cost is amortized on a straight-line method over 5 years.17) Impairment of non-financial assetsThe Group recognizes impairment loss when there is indication that the recoverableamount of an asset is less than its carrying amount. The recoverable amount is thehigher of the fair value less costs to sell and value in use. The fair value less costs tosell is the amount obtainable from the sale of the asset in an arm’s length transactionafter deducting any direct incremental disposal costs. The value in use is the presentvalue of estimated future cash flows to be derived from continuing use of the assetand from its disposal at the end of its useful life. When the impairment no longerexists, the impairment loss recognized in prior years shall be recovered. Howeverimpairment loss of goodwill is not recoverable.18) Convertible bondsFor convertible bonds issued prior to and including December 31, 2005, inaccordance with the EITF 95-78 issued by the Accounting Research andDevelopment Foundation of the R.O.C., the Company elected not to bifurcate theembedded derivatives and accounted for those convertible bonds as follows:A. When bonds are converted, the par value of the bonds is credited to commonstock and any excess is credited to capital reserve. No gain or loss is recognizedon bond conversion.B. Expenditures incurred on issuance of convertible bonds are classified asdeferred assets and amortized over the life of the bonds. In cases where thebonds are converted or redeemed before the maturity date, the issuanceexpenditures are expensed in proportion to the amount of bonds converted orredeemed.~116~

19) Pension planUnder the defined benefit pension plan, net periodic pension costs are recognized inaccordance with the actuarial calculations. Net periodic pension costs includeservice cost, interest cost, expected return on plan assets, and amortization ofunrecognized net transition obligation and gains or losses on plan assets.Unrecognized net transition obligation is amortized on a straight-line basis over 15years. Under the defined contribution pension plan, net periodic pension costs arerecognized as incurred.20) WarrantyWarranty is estimated based on historical experience. Service warranty expense isincluded in the current year's operating expense.21) Income taxA. Income taxes are allocated on the inter- and intra-period basis. Over or underprovision of prior years’ income tax liabilities is included in current year’sincome tax.B. Investment tax credits arising from expenditures incurred on acquisitions ofequipment or technology, research and development, employees training, andequity investments are recognized in the year the related expenditures areincurred.C. An additional 10% tax is levied on the unappropriated retained earnings and isrecorded as income tax expense in the year the stockholders resolve to retainthe earnings.22) Employee stock options (intrinsic value method)The employee stock options granted or amended on or after January 1, 2004 areaccounted for in accordance with EITF 92-072, “Accounting for Employee StockOptions”, prescribed by the R.O.C. Accounting Research and DevelopmentFoundation. Under the stock-based employee compensation plan, compensationcost is recognized using the intrinsic value method and pro forma disclosures on netincome and earnings per share is prepared under the fair value method.23) Revenues and expensesRevenues are recognized when the earning process is substantially completed andthey are realized or realizable. Costs and expenses are recognized as incurred.24) Treasury stockA. Treasury stock is stated at cost using the weighted-average method and isreported as a deduction under stockholders’ equity.B. Upon subsequent disposal of the treasury stock, the excess of the proceeds fromdisposal over the book value is credited to capital reserve. However, if the bookvalue of the treasury stock exceeds the proceeds from disposal, the excess isfirst charged against capital reserve and the remainder, if any, is charged againstretained earnings.~117~

C. The book value of treasury stock is determined by the weighted-averagemethod.D. When treasury stock is retired, the treasury stock account is credited and allcapital account balance related to the treasury shares, including capital reservefrom paid-in capital in excess of par are debited on a proportionate basis. Whenthe book value of treasury stock is higher than capital account balance,including additional paid-in capital in excess of par, the difference is debited tooffset against this capital reserve from treasury stock. However, when thebalance of this capital reserve account is insufficient to offset the difference,then the remaining amount should be charged against retained earnings. Whenthe book value of treasury stock is less than the capital account balance,including additional paid-in capital in excess of par, the difference is credited tocapital reserve from treasury stock.25) Use of estimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptions thataffect the amounts of assets and liabilities and the disclosures of contingent assetsand liabilities at the date of the financial statements and the amounts of revenuesand expenses during the reporting period. Actual results could differ from thoseassumptions and estimates.26) Business combinationThe Company adopted the R.O.C. SFAS No. 25, “Accounting for BusinessCombination - Purchase Method” to deal with business combination transaction.According to the R.O.C. SFAS No. 25, if the market value of equity securitiesissued for business combination could not represent the fair value of the dissolvedcompany’s net assets, the Company should evaluate the fair value of acquired netassets (including goodwill). The net amount of fair value of the acquired net assets,after deducting the face value of equity securities issued for business combinationand related costs, was recognized as capital reserve. Impairment testing on goodwillacquired due to business combination shall be conducted annually.3. EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES1) GoodwillEffective January 1, 2006, the Group adopted the amendments of R.O.C. SFAS No. 1,No. 5, No. 7, No. 25 and No. 35, which discontinued amortization of goodwill.These changes in accounting principles had no significant effect on the net income andearnings per share as of and for the year ended December 31, 2006.~118~

2) Financial instrumentsA. Effective January 1, 2006, the Group adopted the R.O.C. SFAS No. 34,"Accounting for Financial Instruments ", and No. 36, " Disclosure and Presentationof Financial Instruments".B. As a result of these changes in accounting principles, total equity increased by$633,221 as of December 31, 2007 and had no significant effect on net income andearning per share for the year ended December 31, 2007.4. DETAILS OF SIGNIFICANT ACCOUNTS1) Cash and cash equivalentsCash:December 31,2007 2006Petty cash $ 2,735 $ 4,574Checking and savings accounts 3,623,876 1,283,396Time deposits 7,968,556 5,691,835Cash equivalents:11,595,167 6,979,805Repurchase bonds 2,816,122 2,510,158Commercial papers - 1,494,1812) Financial assets at fair value through profit or lossCurrent items:Financial assets held for trading$ 14,411,289 $ 10,984,144December 31,2007 2006Corporate bonds $ 7,500 $ -Adjustment of financial assets held for trading 1,801 1,579$ 9,301 $ 1,579A. The Group recognized net gain of $3,071 and $293 in 2007 and 2006, respectively.B. The nature and contractual terms of derivatives are described in Note 11.~119~

3) Available-for-sale financial assetsCurrent items:December 31,2007 2006Listed stocks $ 768,319 $ 378,516Adjustments of available-for-sale financial assets 141,930 58,661Non-current items:$ 910,249 $ 437,177Listed (TSE and OTC) stocks $ 1,010,545 $ 689,680Adjustments of available-for-sale financial assets 129,561 403,8414) Financial assets carried at costNon-current items:$ 1,140,106 $ 1,093,521December 31,2007 2006Emerging stocks $ 645,051 $ 645,051Unlisted stocks 1,063,980 500,939$ 1,709,031 $ 1,145,990The above investments were measured at cost since its fair value cannot be measuredreliably.5) Accounts receivable - netDecember 31,2007 2006Third parties $ 12,894,380 $ 13,251,047Less: Allowance for doubtful accounts ( 124,702 ) ( 85,990 )Allowance for sales rebate ( 1,326,809 ) -11,442,869 13,165,057Related parties 3,155,139 4,283,826$ 14,598,008 $ 17,448,883The Company entered into an agreement with Chailease Credit Service Co., Ltd. tosell its accounts receivable in 2006. Under the agreement, the Company is not requiredto bear the credit risk of the underlying accounts receivable, but is liable for the lossesincurred on any business dispute. The Company did not derecognize these accountsreceivable, as debtors pay the accounts receivable directly to the Company. As ofDecember 31, 2006, the Company had sold outstanding accounts receivableamounting to $41,290 with no amounts advanced.~120~

6) Inventories - netDecember 31,2007 2006Raw materials $ 4,372,334 $ 6,201,686Work in process - 187,843Finished goods 6,290,875 7,087,252Inventory in transit - 49,80210,663,209 13,526,583Less: Allowance for obsolescence and market valuedecline ( 902,662 ) ( 779,148 )7) Long-term investments accounted for under the equity methodA. Details of long-term equity investments are set forth below:$ 9,760,547 $ 12,747,435December 31,2007 2006PercentagePercentageof directof directAmount ownership Amount ownershipEquity method:MiTAC Technology Corp. $ 3,706,157 35.70% $ 1,891,184 31.23%Tyan Computer Technology Corp. - (Note 2) 251,940 17.83%(Note 1)Tung Da Investment Co., Ltd. 668,761 49.99% 671,852 49.99%3 Probe Technology Co., Ltd. 10,421 23.25% 9,992 23.25%Lian Jie Investment Co., Ltd. 79,749 49.98% 82,236 49.98%Shen-Tong Construction &Development Co., Ltd. 84,297 47.55% 13,099 46.79%Synnex Corp. 5,322,520 27.34% 5,050,710 29.84%Brilliant Star Holding Ltd. - (Note 3) 260,429 18.47%(Note 1)Harbinger II (BVI) Venture CapitalCorp. 46,921 49.96% 46,175 49.96%Main Power Ltd. 13,509 50.00% - -Suzhou MiTAC Precision TechnologyCo., Ltd. 264,355 35.78% - -$ 10,196,690 $ 8,277,617Note 1: The investee companies are accounted for under the equity methodbecause the Company exercises significant influence on the investees’operational decisions although its direct and indirect ownership is lessthan 20%.Note 2: On October 16, 2007, The Company merged with Tyan ComputerTechnology Co., Ltd.Note 3: The Company lost its ability to exercise significant influence on theinvestees’ operational decisions because the ownership percentagecontinued to decline.~121~

B. Investment income (loss) accounted for under the equity method for the yearsended December 31, 2007 and 2006 is set forth below:For the years ended December 31,Investee company 2007 2006Equity method:MiTAC Technology Corp. $ 407,357 $ 113,925Tyan Computer Technology Corp. ( 13,439 ) 36,547Tung Da Investment Co., Ltd. 44,244 26,2313 Probe Technology Co., Ltd. 429 607Lian Jie Investment Co., Ltd. ( 2,478 ) ( 45,410 )Shen-Tong Constuction & Development Co., Ltd. ( 359 ) ( 454 )Synnex Corp. 620,722 541,712Brilliant Star Holding Ltd. ( 30,229 ) ( 5,888 )Harbinger II (BVI) Venture Capital Corp. 973 725Main Power Ltd. ( 9,604 ) -Suzhou MiTAC Preclsion Technology Co., Ltd. ( 11,040 ) -$ 1,006,576 $ 667,9958) Property, plant and equipment - netCostDecember 31,2007 2006Land $ 1,130,861 $ 1,112,202Buildings 4,718,339 5,212,595Machinery 5,150,892 8,344,557Computer and communication equipment 1,019,006 822,642Transportation equipment 121,465 161,791Furniture and fixtures 784,925 684,500Leasehold improvements 73,401 35,548Other equipment 973,498 2,117,41213,972,387 18,491,247Accumulated depreciation ( 5,388,628 ) ( 5,565,026 )Accumulated impairment ( 12,149 ) ( 12,149 )Construction in progress and prepayments for equipment 159,485 500,691Net book value $ 8,731,095 $ 13,414,7639) GoodwillDecember 31,2007Goodwill $ 1,281,236A.The goodwill resulted from the merger with Tyan Computer Technology Co., Ltd.and acquisition of Navman Corp., which represents the excess of acquisition costover fair value of acquired net assets of Tyan Computer Technology Co., Ltd. andNavman Corp.~122~

B.Goodwill impairment testing is conducted in accordance with the R.O.C. SFAS No.35. On December 31, 2007, the Company evaluated the recoverable amount ofassets used for operations and goodwill based on their value in use. The value inuse is the present value of estimated future cash flows to be derived fromcontinuing use of the asset and goodwill and from their disposal at the end of theiruseful life, which is based on the five-year financial forecast with the discount rateof 6.98%. The following sets forth the methods and assumptions used to estimatethe recoverable amount of assets and goodwill:a) Estimated operating revenue: it is calculated based on industrial and marketinformation and the Company’s future operations and sales planning.b) Estimated operating cost: it is calculated based on the estimated gross profitmargin, which is derived from prior years’ operating costs and the Company’sfuture operations and sales planning.c) Estimated operating expense: it is calculated based on prior years’ operatingexpenses and the Company’s future operations and sales planning.C.The recoverable amount calculated based on the foregoing assumptions is higherthan the sum of carrying value of identifiable assets and goodwill on December 31,2007, therefore, there was no impairment loss.10) Other assetsDecember 31,2007 2006Land $ 734,207 $ 676,122Building 121,172 124,331Rental buildings and machinery, net 135,724 199,863Others 808 -991,911 1,000,316Less: Accumulated impairment ( 90,763) ( 90,763)$ 901,148 $ 909,553The Company owns a piece of agricultural land, located at Treasure Mountain, HsinChu Hsien, with a total area of 129,322.60 square meters, for the employees’ housingproject.11) Short-term loansDecember 31,2007 2006Unsecured bank loans $ 3,659,376 $ 7,883,202Secured bank loans 684,454 218,021$ 4,343,830 $ 8,101,223Interest rates 1.62%~6.12% 5.71%~6.03%~123~

12) Commercial paper payable - netDecember 31,2007 2006Commercial paper $ 44,000 $ 130,000Interest rates 2.12% 1.53%~1.65%13) Financial liabilities at fair value through profit or loss - currentDecember 31,2007 2006Current items:Adjustment of financial liabilities held fortrading-Derivative financial instruments $ 21,811 $ 23,565A The Group recognized net gain and loss of $1,754 and $23,565 for the yearsended December 31, 2007 and 2006, respectively.B. The nature and contractual terms of derivatives are described in Note 11.14) Long-term debtsa) Long-term debtsDecember 31,2007 2006Long-term unsecured loans - from banks $ - $ 3,259Interest rate - 2%b) Bonds payableDecember 31,2007 2006Secured bonds payable $ 2,000,000 $ 2,000,000Less: Current portion ( 500,000) -1,500,000 2,000,000Unsecured bonds payable 3,000,000 3,000,000Less: Current portion ( 3,000,000) -- 3,000,000$ 1,500,000 $ 5,000,000A. On May 25, 2004, the Company issued secured bonds. The main terms of theissue are as follows:(a) Total amount: $2,000,000(b) Interest rate: 1.60% per annum for par value of $1,500,000. Floating ratewith approximately 1.60% after hedging for par value of $500,000.(c) Maturity date: May 25, 2008 for par value of $500,000, and May 25, 2009for par value of $1,500,000.(d) Collateral: Equity securities. (Refer to Note 6)~124~

B. On August 12, 2006, the Company issued unsecured convertible bonds. Themain terms of the issue are as follows:15) Pension plan(a)Total amount: $3,000,000(b)Interest rate: Zero(c)Maturity date: August 12, 2010(d)Convertible price: NT$48 per share of common stock. The price shall bereset when issuance of common shares or distribution of cash dividendsexceeds 15% of total paid-in capital. The reset of convertible price isbased on the formula and terms defined in the bond’s prospectus. Thereset price shall be lower but no less than 80% of the original convertibleprice. As of December 31, 2007, the convertible price is NT$39.4.(e)Put and call: After three years from the issuance of bonds, the investors canhave the Company redeem all the bonds. From one month after the bondsissued to ten days before the maturity date, if the Company’s closing pricein Taiwan Stock Exchange is 50% higher than the convertible price thenfor continuous 30 working days, or the unconverted bonds exceed 10% oftotal amount of bonds issued, the Company can call all the bonds at parvalue.A. The Company and its subsidiary, MiTAC Precision Technology Co. Ltd., have anon-contributory and funded defined benefit pension plan in accordance with theLabor Standards Law, covering all regular employees. Under the defined benefitplan, two units are accrued for each year of service for the first 15 years and oneunit for each additional year thereafter, subject to a maximum of 45 units.Pension benefits are based on the number of units accrued and the averagemonthly salaries and wages of the last 6 months prior to retirement. TheCompany contributes monthly an amount equal to 2% of the employees’ monthlysalaries and wages to the retirement fund deposited with Bank of Taiwan, thetrustee, under the name of the independent retirement fund committee.B. Based on actuarial assumptions for 2007 and 2006, the discount rate is 3.5%,expected rate of return on plan assets is 3.5%, and the rate of compensationincrease is 3%.~125~

C. The following sets forth the pension information based on the actuarial report:a. Funded status of the pension planDecember31, 2007December31, 2006Vested benefit obligation ( $ 64,424 ) ( $ 26,247 )Non-vested benefit obligation ( 240,624 ) ( 201,567 )Accumulated benefit obligation ( 305,048 ) ( 227,814 )Effect of projected salary increase ( 130,174 ) ( 117,624 )Projected benefit obligation ( 435,222 ) ( 345,438 )Fair value of plan assets 249,560 241,020Funded status ( 185,662 ) ( 104,418 )Unrecognized transition (asset) obligation ( 3,148 ) 2,127Unrecognized loss 114,831 39,562Recognized accrued pension payable - ( 1,617 )Prepaid pension cost ( $ 73,979 ) ( $ 64,346 )Vested benefit $ 75,136 $ 31,361The Company’s subsidiary, MiTAC Precision Technology Co., Ltd., waseliminated due to merger with MiTAC Technology Co., Ltd., on August 31,2007, and the related assets and liabilities were assumed by MiTACTechnology Co., Ltd.b. Net pension cost comprises the following:2007 2006Service cost $ 20,003 $ 13,239Interest cost 11,615 15,219Expected return on plan assets ( 8,255 ) ( 8,073 )Amortization of unrecognized loss on planassets 254 5,785Amortization of unrecognized transitionasset ( 1,050 ) ( 699 )Net periodic pension cost $ 22,567 $ 25,471D. Effective July 1, 2005, the Company and its subsidiary, MiTAC PrecisionTechnology Co. Ltd., established a defined contribution pension plan (the “NewPlan”) under the Labor Pension Act. Employees have the option to be coveredunder the New Plan. Under the New Plan, the Company and its subsidiarycontributes monthly an amount based on 6% of the employees’ monthly salariesand wages to the employees’ individual pension accounts at the Bureau of LaborInsurance. The benefits accrued are portable when the employees are terminated.Pensions are paid by monthly installments or in lump sum based on theaccumulated balances of the employees’ individual pension accounts. Thepension costs were $54,594 and $54,175 in 2007 and 2006, respectively.The Company’s mainland subsidiaries have a defined contribution plan. Monthlycontributions are based on a certain percentage of employees' monthly salariesand wages to an independent fund administered by the government in accordancewith the pension regulations in the People’s Republic of China.~126~

16) CapitalUnder the scheme, retirement benefits of existing and retired employees are to beprovided by the government-managed fund and the Company and its subsidiaryhas no further obligations beyond the monthly contributions.A. As of December 31, 2007, the Company′s authorized capital was $22,000,000,consisting of 2,200,000 thousand shares of common stock (including 250,000thousand shares reserved for employee stock options), and the paid-in capital was$14,565,380 with a par value of $10 (in dollars) per share.B. Based on the resolution of stockholders’ during their meeting on June 12, 2007,the Company issued new shares from the capitalization of retained earnings of$1,016,922 and employees’ bonuses of $193,805. The Company had completedthe amendment procedures for registration on August 6, 2007.C. In accordance with the resolution adopted by the Board of Directors on March 22,2007, the Company merged with Tyan Computer Technology Co., Ltd. by way ofabsorption merger and asymmetric merger pursuant to Article 18 of BusinessMergers and Acquisitions Law to expand the Company’s business scale, raiseoperational efficiency and strengthen competitive capability. The Company is thesurviving company and Tyan Computer Technology Co., Ltd. is the dissolvedcompany after merger, the surviving company’s name is MiTAC InternationalCorp. On the merger base day of October 16, 2007, the Company issued 50,578thousand shares of new common stock in the amount of $505,777 at a conversionratio of 1.26 shares of Tyan Computer Technology Co., Ltd. common stock inexchange for one share of the Company’s common stock. The amount of capitalraised through the issuance of new common stock had been registered.D. The exercise price of the Company’s first stock option incentive plan was based onthe market price of the Company’s common stock on the issuance date. Theexercise price can be adjusted when the Company issues stock dividends ordeclares cash dividends after options are granted. Employees can exercise optionsratably over a two-year period and expire in six years.(a) A summary of the activity under the Company’s stock option plan is set forthbelow:For the year ended December 31, 2007 For the year ended December 31, 2006Weighted averageWeighted averageIn thousands ofsharesexercise price(in NT dollars)In thousands ofsharesexercise price(in NT dollars)Outstanding at thebeginning of the year 8,620 $ 6.0 23,943 $ 7.8Options granted - -Stock dividends oradjustment of numberof options - -Options exercised ( 5,128 ) 4.4 ( 15,208 ) 7.54Options confiscated ( 3,492 ) ( 115 )Outstanding at theend of the year - 8,620 6.0Exercisable options atthe end of the year - 8,620Approved and not yetissued options at theend of the year - -~127~

E. The exercise price of the Company’s second stock option incentive plan was basedon the market price of the Company’s common stock on the issuance date. Theexercise price can be adjusted when the Company issues stock dividends or declarescash dividends after options are granted. Employees can exercise options ratablyover a two-year period and expires in six years.(a) A summary of the activity under the Company’s stock option plan is set forthbelow:Outstanding at thebeginning of theyearFor the years ended December 31,2007 2006In thousandsof sharesWeighted averageexercisable price(in NT dollars)In thousandsof sharesWeighted averageexercisable price(in NT dollars)32,000 $ 37.7 32,000 $ 37.7Options granted 32,000 37.2 - -Stock dividends or- -adjustment ofnumber of optionsOptions exercised - -Options confiscated - -Outstanding at theend of the year 64,000 33.15 32,000 37.7Exercisable optionsat the end of theyear - -Approved and notyet issued options atthe end of the year- 32,000(b) As of December 31, 2007, the summary of the outstanding stock option planwas as follows:Number of options outstanding at the end of the year Exercisable options at the end of the yearRange ofexerciseprice(in NT dollars)In thousandsof sharesExpectedweightedaverageresidual yearsWeightedaverageexercise price(in NT dollars)In thousandsof sharesWeighted averageexercise price(in NT dollars)$32.9 and 33.4 64,000 4.99 $ 33.15 - $ -F. The exercise price of the Company’s third stock option incentive plan was based onthe market price of the Company’s common stock on the issuance date. Theexercise price can be adjusted when the Company issues stock dividends or declarescash dividends after options are granted. Employees can exercise options ratablyover a two-year period and expires in six years.~128~

(a) A summary of the activity under the Company’s stock option plan is set forthbelow:For the year ended December 31, 2007Weighted averageIn thousands ofsharesexercise price(in NT dollars)Outstanding at the beginning of the year -Options granted 64,000 39.175Stock dividends or adjustment of number ofoptions -Options exercised -Options confiscated -Outstanding at the end of the year 64,000 36.75Exercisable options at the end of the year -Approved and not yet issued options at theend of the year -(b) As of December 31, 2007, the summary of the outstanding stock option planwas as follows:Range ofexercisableprice(in NT dollars)Number of options outstanding at the end of the yearIn thousandsof sharesExpectedweightedaverageresidual yearsWeightedaverageexercise price(in NT dollars)Exercisable options at the end of the yearIn thousandsof sharesWeighted averageexercise price(in NT dollars)$ 38.5 and 35 64,000 5.61 $ 36.75 - $ -G. The Company assumed 9,946 units of employee stock options issued by TyanComputer Technology Co., Ltd. due to merger with Tyan Computer Technology Co.,Ltd. According to the business merger agreement, 1.26 units of employee stockoptions of Tyan Computer Technology Co., Ltd. could be exchanged for one unit ofthe Company’s employee stock options. A total number of 7,892 thousand shares ofnew common stock would be issued due to exercise of employee stock options. Theexercise price can be adjusted when the Company issues stock dividends or declarescash dividends after options are granted. Employees can exercise options ratablyover a two-year period and expires in six years.(a) A summary of number of options and the weighted-average exercise price underthe Company’s stock option plan for the year ended December 31, 2007 is setforth below:For the year ended December 31, 2007Weighted averageIn thousands ofsharesexercise price(in NT dollars)Outstanding at the beginning of the year - $ -Options granted - -Take over from merger 5,404 17.45Stock dividends or adjustment of number of options - -Options exercised - -Options confiscated - -Outstanding at the end of the year 5,404 17.45Exercisable options at the end of the year 135Approved and not yet issued options at the end of the year -~129~

(b) As of December 31, 2007, the summary of the outstanding stock option planwas as follows:Number of options outstanding at the end of the year Exercisable options at the end of the yearRange ofexerciseprice(in NT dollars)In thousandsof sharesExpectedweightedaverageresidual yearsWeightedaverageexercise price(in NT dollars)In thousandsof sharesWeighted averageexercise price(in NT dollars)$ 9.1 1,116 1.17 $ 9.1 48 $ 9.19.8 140 1.92 9.8 3 $ 9.815.4 1.297 3.58 15.4 8419.2 489 4.25 19.223.1 405 4.50 23.122.7 712 5.05 22.722.4 1,245 4.125 22.45,404 $ 17.45 135H. The following sets forth the pro forma net income and earnings per share basedon the assumption that the compensation cost is accounted for using the fairvalue method for the stock options granted on or after January 1, 2004:Net incomeBasic earnings pershare (EPS) (indollars)Diluted EPS (indollars)Net income stated in the statement of incomePro forma net incomeEPS stated in the statement of incomePro forma EPSEPS stated in the statement of incomePro forma EPSFor the year endedDecember 31, 2007$5,648,2625,310,9504.073.83(a) The Company estimated the fair value of second stock option as of grant dateunder Black-Scholes option model. The factor’s weighted average informationand fair value are listed as follows:Grant dateDecember 7,2006Grant dateJanuary 11,2007Dividend yield rate 0% 0%Expected price volatility 29.09% 28.59%Risk-free interest rate 1.83% 1.87%Expected vesting period 3.75 years 3.75 yearsWeighted-average fair value pershare (in dollars)3.793.69.39 9.16Options granted (in shares) 32,000,000 32,000,000~130~

(b) The Company estimated the fair value of third stock option as of grant dateunder Black-Scholes option model. The factor’s weighted average informationand fair value are listed as follows:Grant dateJuly 30, 2007Grant dateAugust 17,2007Dividend yield rate 0% 0%Expected price volatility 29.92% 29.92%Risk-free interest rate 2.44% 2.44%Expected vesting period 3.75 years 3.75 yearsWeighted-average fair value pershare (in dollars)11.46 9.25%Options granted (in shares) 32,000,000 32,000,000(c) The Company assumed the employee stock options issued by Tyan due tomerger with Tyan. The Company estimated the fair value of stock options as ofgrant date under Black-Scholes option model except the grant date of September26, 2007 was under Binomial option model. The factor’s weighted averageinformation and fair value are listed as follows:.Grant dateAugust 31,2005Grant datemarch 10,2006Dividend yield rate 0% 0%Expected price volatility 50.00% 50.00%Risk-free interest rate 2% 2.00%Expected vesting period 6 years 6 yearsWeighted-average fair value pershare (in dollars)12.44 12.46Options granted (in shares) 3,422,000 667,000Grant dateJune 30, 2006Grant dateMarch 19,2007Dividend yield rate 0% 0%Expected price volatility 50.00% 75.00%Risk-free interest rate 2.00% 2.00%Expected vesting period 6 years 6 yearsWeighted-average fair value pershare (in dollars)12.78 10.78Options granted (in shares) 510,000 897,000~131~

Grant dateSeptember 26,2007Dividend yield rate 0%Expected price volatility 27.78%Risk-free interest rate 2.52%Expected vesting periodWeighted-average fair value pershare (in dollars)17) Capital reserve4.375 years4.68%Options granted (in shares) 1,569,000The R.O.C. Company Law requires that capital reserve shall be exclusively used tocover accumulated deficit or to increase capital and shall not be used for any otherpurpose. However, capital reserve arising from paid-in capital in excess of par valueon issuance of common stock and donations can be capitalized once a year, providedthat the Company has no accumulated deficit and the amount to be capitalized doesnot exceed 10% of the paid-in capital.18) Retained earningsA. Legal reserveThe legal reserve can be used to offset losses. Capitalization of the legal reserveis permitted, provided that the balance of the reserve exceeds 50% of theCompany’s paid-in capital and the amount capitalized does not exceed 50% ofthe balance of the reserve.B. Undistributed earnings: According to the Company's Articles of Incorporation,current year's earnings, if any, shall be distributed in the following order:(a) Covering prior years' operating losses, if any;(b)Paying all taxes and dues;(c) Setting aside 10% of the remaining amount, after deducting (a) and (b), aslegal reserve;(d) Setting aside special retained earnings reserve of the remaining amount,after deducting (a), (b) and (c), by the resolution at the stockholders’meeting.(e) Allocating dividends and bonuses.(f)Allocating at least 5% of the remaining amount, after deducting (a), (b), (c),(d) and (e) as employees’ bonus.The distribution of the Company’s undistributed earnings shall be proposedby the Board of Directors and resolved in the annual Stockholders’ meeting.~132~

C. The Company had resolved to distribute cash dividends of $1.2 per share forbothe years and stock dividends of $0.8 per share for both years during the 2007and 2006 meetings of the board of directors and shareholders, respectively. Inaddition, an adjustment of cash dividend and stock dividend was made in 2007of $1.1883 and $0.7923 per share, respectively; an adjustment of cash dividendand stock dividend was made in 2006 of $1.1947 and $0.7965 per sharerespectively due to treasury stocks and stock options exercised (dividends pershare are in NT dollar.)D. As of April 1, 2008, the Company had not yet held the meeting of Board ofDirectors to discuss the earnings distribution proposal for 2007; the relatedinformation can be obtained from the “Market Observation Post System” websiteof the Taiwan Stock Exchange Corporation after the approval of the resolutionadopted by the Board of Directors and shareholders.E. The information on the 2006 earnings distribution for employees’ bonuses anddirectors’ and supervisors’ remuneration are as follows:(1) Distributiona. Employee cash bonusesb. Employee stock dividends(a) Shares (in thousands of shares)(b) Amount(c) Percentage of outstanding shares in 2006c. Directors’ and supervisors’ remuneration(2) Information about earnings per share (in dollars)a. Original EPSb. Imputed EPS (Note)Approved in the Stockholders,Meeting$ 290,70819,381$ 193,8051.56%$ 6,000$ 4.39$ 3.99Note: Imputed EPS = (Net income - employees’ bonuses - directors’ andsupervisors’ remunerations) /weighted average outstanding common sharesfor 2006.19) Treasury stock2007(in thousands of shares)Reason for reacquisition Beginning shares Addition Reduction Ending sharesTo be reissued to employees 24,139 650 24,139 650Company’s common shares held by15,849 3,734 - 19,583its subsidiaries, TFC Investment Co.,Ltd.Company’s common shares held by- 2,658 - 2,658its subsidiaries, SSDL2006(in thousands of shares)Reason for reacquisition Beginning shares Addition Reduction Ending sharesTo be reissued to employees 35,178 - 11,039 24,139Company’s common shares held byits subsidiaries, TFC and So FungInvestment Co., Ltd. 14,680 1,169 - 15,849~133~

A. Pursuant to the R.O.C. Securities and Exchange Law, the number of sharesbought back as treasury stock should not exceed 10% of the number of theCompany’s issued and outstanding shares and should not exceed the sum ofretained earnings, paid-in capital in excess of par value and realized capitalreserve.B. Pursuant to the R.O.C. Securities and Exchange Law, treasury stock should not bepledged as collateral and is not entitled to dividends before it is reissued to theemployees.C. Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should bereissued to the employees within three years and shares not reissued within thethree-year period are to be retired. Treasury shares to enhance the Company’scredit rating and the stockholders’ equity should be retired within six months ofacquisition.D. Due to the merger of the Company and Tyan Computer Technology Co., Ltd., theCompany’s investee companies, Tsu Fung Investment Corp. and Silver StarDevelopments Ltd., hold 2,479 thousand and 2,658 thousand shares of theCompany’s common stock through shares conversion in the amount of $67,254and $77,002, respectively.E. So Fung Investment Co., Ltd. was eliminated due to merger with Tsu FungInvestment Co., Ltd. on September 1, 2007.F. As of December 31, 2007, the total number of the Company’s shares held by itssubsidiaries, Silver Star Developments Ltd., was 2, 658 (in thousand shares) withan average book value of $28.97 (in dollars) per share and market vaule of$31.85 (in dollars) per share.G. As of December 31, 2007, the total number of the Company’s shares held by itssubsidiaries, Tsu Fung Investment Corp., was 19,583 (in thousand shares) with anaverage book value of $14.1 (in dollars) per share and market value of $31.85 (indollars) per share.H. In 2007, the Company transferred 24,139 thousand shares of treasury stockstotaling $329,653 to its employees and recognized a capital reserve-treasurystock transaction due to the selling price was lower than the book value. Thetransfer price was between $13.11 and 14.47 (in dollars) per share.I. In accordance with EITF-91-340, when the subsidiaries obtain cash dividendsfrom the Company, it should write off investment income and adjust capitalreserve-treasury stock transaction. As of December 31, 2007 and 2006, theadjustment amount was $18,834 and $17,538, respectively.~134~

20) Income taxA. Income tax expense and payable:2007 2006Income tax at statutory tax rate $ 1,813,775 $ 1,720,262Tax effect of permanent differences ( 853,292 ) ( 550,059 )10% tax on unappropriated earnings 195,505 202,079Tax effect of investment tax credits ( 254,926 ) ( 374,926 )Overdue tax assessed and approved by the TaxAuthority 417,983 -Valuation allowance of deferred income tax assets - ( 97,444 )Adjustment of prior year’s income tax expense ( 285,614 ) ( 51,031 )Withholding tax 9,164 3,151Income tax expense 1,042,595 852,032Net effect of deferred income tax liabilities 839,702 167,198Adjustment of prior year’s income tax expense 285,614 51,031Prepaid income tax ( 686,228 ) ( 141,357 )Income tax paid by subsidiary ( 125,169 ) ( 69,628 )Tax which is subjected to separate withholdingincome tax ( 9,164 ) ( 3,151 )Adjustment of MPT and its subsidiaries’ prior year’sincome tax payable ( 29,848 ) -Adjustment of Tyan prior year’s income tax payable 9.493 -Translation adjustment 3,344 3,121Income tax payable $ 1,330,339 $ 859,246B. Deferred income tax assets and liabilities:December December31, 2007 31, 2006Deferred income tax assets – current $ 900,799 $ 501,033Deferred income tax assets – non-current $ 335,407 $ 27,300Deferred income tax liabilities – current $ 16,414 $ -Deferred income tax liabilities – non-current $ 553,621 $ 977,226Valuation allowance current $ 10,218 $ -Valuation allowance non-current $ 196,697 $ -~135~

C. Components of deferred income tax assets and liabilities:Current (shown in other current assets):Temporary differencesDecember 31, 2007 December 31, 2006Amount Tax Effect Amount Tax EffectProvision for loss on obsoleteinventories $ 495,158 $ 123,790 $ 276,835 $ 69,209Foreign exchange loss 10,919 2,730 169,821 42,455Unrealized warranty 883,210 220,802 532,803 133,201Others 2,143,611 535,903 1,024,672 256,168Investment tax credits 4,641 1,160 -Valuation allowance ( 10,218 ) -Non-current:Temporary differences$ 874,167 $ 501,033Unrealized investment gain ( $ 2,110,854 ) ( $ 527,715 ) ( $ 3,908,904 ) ( $ 977,226 )Others 989,376 247,344 109,198 27,300Investment tax credits 62,157 -Valuation allowance ( 196,697 ) -( $ 414,911 ) ( $ 949,926 )D. The Company is eligible for investment tax credits under the statute forUpgrading Industry and losses available to be carry forward as of December 31,2007 are as follows:Item Total tax credits Unused tax creditsFinal year taxcredits are dueResearch and Development $ - $ 62,157 2012Loss carryforward - 1,160 2012E. The Company's income tax returns through 2004 have been assessed and approvedby the Tax Authority. The Company had applied for reinvestigation because partof the research and development for years 2000, 2001 and 2003 were assessed asnot qualified for tax credit and therefore there was income tax addition payableamounting to $469 for the year 2001 half of which was already paid and $7,678tax returned deducted for the year 2000. The reinvestigation of 2000, 2001 and2003 were rejected by the Tax Authority and the Company has applied for taxlitigation for these years. The Company had applied for reinvestigation because allof R&D and part of employees’ training for 2004 were assessed as not qualifiedfor tax credit, but the Company had no additional income tax payable because theCompany had remaining balance of tax credit to use.F. Unappropriated earningsDecember 31, 2007 December 31, 2006Earnings earned before 1998 $ 305,502 $ 305,502Earnings earned in and after1998 11,161,426 9,084,331$ 11,466,928 $ 9,389,833~136~

G.December 31, 2007 December 31, 2006Balance of stockholders’tax credit account $ 1,309,935 $ 338,8202007 (estimated) 2006 (actual)Ratio of deductible taxcredit $ 18.83% $ 11.14%21) Earnings per shareIncome beforeincome taxAmountFor the year ended December 31, 2007Earnings per share (in dollars)WeightedAverageOutstandingCommon Income beforeNet income Sharesincome tax Net income(in thousandsof shares)Basic earningsper share:Net income $ 6,655,257 $ 5,648,262 $ 4.79 $ 4.07Cumulative effectof changes inaccountingprinciples - - - -Net income 6,655,257 5,648,262 1,388,016 $ 4.79 $ 4.07Less: effect ofdilutive potentialcommon stocksissued by investeecompanies( 64,136 ) ( 52,834 )Effect of dilutivepotential commonstocks:Convertible bonds - - 76,142Employee stockoptions - - 12,392Diluted earningsper share $ 6,591,121 $ 5,595,428 1,476,550 $ 4.46 $ 3.79~137~

Income beforeincome taxAmounta. The weighted-average outstanding common stock for 2007 and 2006 excludedtreasury stock.b. The weighted-average outstanding common stock for 2006 has been adjustedretroactively because of the capitalization of unappropriated earnings in 2007.22) Personnel, depreciation and amortization expensesThe personnel, depreciation and amortization expenses for 2007 and 2006 were asfollows:Cost of salesFor the year ended December 31, 2006Earnings per share (in dollars)WeightedAverageOutstandingCommon Income beforeNet income Sharesincome tax Net income(in thousandsof shares)Basic earningsper share:Net income $ 6,235,967 $ 5,383,985 $ 4.64 $ 4.01Cumulativeeffect ofchanges inaccounting ( 447 ) ( 447 ) - -principlesNet income $ 6,235,520 $ 5,383,488 1,342,390 $ 4.64 $ 4.01Less: effect ofdilutivepotentialcommon stocksissued byinvesteecompanies ( 36,069 ) ( 27,745 ) -Effect ofdilutivepotentialcommon stocks:Convertible- - 68,493bondsEmployee stockoptions - - 12,205Diluted earningsper share $ 6,199,451 $ 5,355,743 1,423,088 $ 4.35 $ 3.76For the year ended December 31, 2007OperatingexpensesNon-operatingexpensesPersonnel expenses $ 1,752,757 $ 3,679,175 $ - $ 5,431,932Salaries 1,440,928 3,150,829 - 4,591,757Labor and health insurance 62,523 193,837 - 256,360Pension 52,028 109,149 - 161,177Others 197,278 225,360 - 422,638Depreciation 1,060,293 557,137 15,945 1,633,375Amortization 480,013 163,379 - 643,392Total~138~

Cost of salesFor the year ended December 31, 2006OperatingexpensesNon-operatingexpensesPersonnel expenses $ 2,137,851 $ 2,135,402 $ - $ 4,273,253Salaries 1,945,243 1,835,343 - 3,780,586Labor and health insurance 79,490 106,771 - 186,261Pension 21,316 96,312 - 117,628Others 91,802 96,976 - 188,778Depreciation 1,040,753 513,571 25,445 1,579,769Amortization 445,453 103,268 - 548,721Total5. RELATED PARTY TRANSACTIONS1) Names of the Related Parties and their relationship with the CompanyNames of the related partiesMiTAC Inc.MiTAC Technology Corp. (MTC) and itssubsidiariesTyan Computer Technology Corp. (TYAN)3Probe Technologies Corp.Lian Jie Investment Co., Ltd.Shen-Tong Construction & Development Co.,Ltd.Wisdom Investment Co., Ltd.Tyan Computer Corp. (TYAN US)Top Wisdom International Corp.Synnex Corp. (SYNNEX) and its subsidiariesSynnex Technology International Corp. (SIC)Harbinger Venture Management Co., Ltd.Lien Hwa Industrial Corp.Harbinger II (BVI) Venture Capital Corp.UPC Technology CorporationBOC Lien Hwa Industrial Gas Corp.United Industrial Gas CorporationMiTAC Communication Co., Ltd.Gemtek Technology Co., Ltd. (Gemtek)Investee Company accounted for under the equity method(Note 1)Investee Company accounted for under the equity method.Investee Company accounted for under the equity method.Indirect Investee Company accounted for under the equitymethod.Indirect Investee Company accounted for under the equitymethod.Indirect Investee Company accounted for under the equitymethod.Common board chairman.Common board chairman.The relationship with the CompanyInvestor Company accounted for under the equity method.Investee Company accounted for under the equity method.(Note 2)Investee Company accounted for under the equity method.Indirect Investee Company accounted for under the equitymethod.Common board chairman.Common board chairman.Common board chairman.The Company’s chairman is BOC’s directorThe Company’s chairman is United’s directorThe Company’s chairman is MiTAC Communication Co., Ltd.’sdirector.The Company is Gemtek’s directorNote1: MTC merged with Mitac Precision Technology Co., Ltd. and assumed itssubsidiary company of Hot Link Technology Ltd. and its subsidiaries on August31, 2007. The transaction amounts after August 31, 2007 are disclosed in relatedparty transactions~139~

Note 2: The Company merged with Tyan Computer Technology Co., Ltd. and assumed thesubsidiary, Foreground Technology Ltd. The transaction amounts before August31, 2007 are disclosed in related party transactions.2) Significant related party transactions and balancesA. Purchases (including process expenditures)For the years ended December 31, 2007 and 2006, the Company purchased fromrelated parties amounting to $2,495,551 and $1,001,319, respectively.The purchase price to related parties is based on market value. The payment period is150 days and 90 days after offsetting certain receivables and payables according topayment terms to overseas and domestic related parties, respectively. The paymentperiod to regular suppliers is approximately 90 days after purchase date.B. Sales2007 2006SYNNEX and its subsidiaries $ 10,412,897 $ 14,206,545Others 3,226,097 6,543,592$ 13,638,994 $ 20,750,137The selling price to related parties is based on market value. The collection period is150 days and 90 days after offsetting certain receivables and payables according tocollection terms to overseas and domestic related parties, respectively. The collectionperiod for regular customers is approximately 90 days after shipping date.C. Accounts receivable and notes receivableDecember 31,Accounts receivable - 2007 2006SYNNEX and its subsidiaries $ 2,649,878 $ 3,264,930Others 505,261 1,018,896$ 3,155,139 $ 4,283,826Notes receivable -SIC $ - $ 82,411D. Other receivablesDecember 31,2007 2006MTC and its subsidiaries $ 190,951 $ 56,771Others 24,771 7,116$ 215,722 $ 63,887~140~

E. Accounts payableF. (a) During 2007 and 2006, the Company purchased machinery and mold equipmentfrom related parties at the price of $146,768 and $192,385, respectively.(b) During 2007 and 2006, the Company sold machinery and mold equipment torelated parties at the price of $3,596 and $149,991 and recognized a gain of $258and $6,359, respectively.G. During 2007 and 2006, the Company paid to related parties expenses of $23,907 and$18,372, respectively.H. As of December 31, 2006, the Company guaranteed and endorsed the bank loans ofTop Wisdom International Corp. amounting to $95,270.I. As of December 31, 2007 and 2006, MiTAC Technology Corp. provided guaranteesfor rent to the Company amounting to $3,600 and $3,450, respectively.J. As of December 31, 2007, the Company guaranteed Suzhou MiTAC PrecisionTechnology Co., Ltd. via Silver Star Development Ltd. amounting to $83,225.K. In 2007 and 2006, the Company earned rent revenue from related parties amountingto $24,778 and $32,171, respectively.6. ASSETS PLEDGED AS COLLATERALDecember 31,ASSETS 2007 2006 Subject of collateralIntangible assets – land use right $ - $ 54,782 Short-term debtsBuilding 560,922 834,428 Short-term debts, long-termdebts, and provisional seizure(Described in Note 7(5))Long-term investments accountedfor under the equity method:Marketable securities 925,785 899,738 Bonds payableTreasury stocks:Marketable securities 66,344 82,070 Commercial paper payableSaving account 565,169 - Short-term debts and developTreasure MountainOther financial assets:Saving account 5,500 - Royalty contractMarketable securities - 20,064 Provisional seizure (Described inNote 7(6))$ 2,123,720 $ 1,891,0827. COMMITMENTS AND CONTINGENT LIABILITIESDecember 31,2007 2006MTC and its subsidiaries $ 678,408 $ 103,146Others 35,853 41$ 714,261 $ 103,1871) The Group had outstanding letters of credit for inventory purchases of approximately$68,451 and $9,498 at December 31, 2007 and 2006, respectively.~141~

2) The Company has credit lines for guarantee of customs duties in 2007 and 2006. Asof December 31, 2007 and 2006, the amount of customs duties guaranteed by the bankwas $4,000 and $4,500, respectively.3) The Company leased certain land (from 1987 to 2008), factories and offices (up toOctober 2007 and July 2008) under operating leases. Annual rental payments areapproximately $51,726.4) Kunshan City and Countryside Construction Co., Ltd. filed a lawsuit with theGuangzhou Arbitration Committee in August 2006 alleging that the subsidiary of theCompany, MiTAC Computer (Kunshan) Co., Ltd., should pay the remaining balanceof $35,542 (RMB$58,502) for the third phase of Kunda employee dormitoryconstruction to Kunshan City and Countryside Construction Co., Ltd. However,MiTAC Computer (Kunshan) Co., Ltd. immediately filed a counterclaim that KunshanCity and Countryside Construction Co., Ltd. failed to complete the project on expectedschedule, and should pay the penalty of $54,359 (RMB$13,005) for 155 days ofdeferment in construction to MiTAC Computer (Kunshan) Co., Ltd. Finally, theGuangZhou Arbitration Committee rejected the claim of Kunshan City andCountryside Construction Co., Ltd. and counterclaim of MiTAC Computer (Kunshan)CO., Ltd.5) The subsidiary of the Company, MiTAC Computer (Kunshan) Co., Ltd. filed a lawsuitwith the Guangzhou Arbitration Committee, alleging that the foundation project ofplant undertaken by Crowndeen Foundation Construction Co., Ltd. failed to meet thequality standards specified under contract. Accordingly, MiTAC Computer (Kunshan)Co., Ltd. is asking for breaking off the contract and taking back already payments of$27,962 (RMB$7,008) for this construction, and seeking damages. CrowndeenFoundation Construction Co., Ltd. also filed a counterclaim with the Court askingMiTAC Computer (Kunshan) Co., Ltd. to pay the remaining balance of $20,860 forthe construction. MiTAC Computer (Kunshan) Co., Ltd. pledged buildings asguarantee of $82,253 (RMB$19,678) in March 2006 and requested the Court to freezethe bank account of Crowndeen Foundation Construction Co., Ltd. at $25,113(RMB$6,008). Crowndeen Foundation Construction Co., Ltd. also petitioned for thefreezing of the bank account of the Company at $20,064 (RMB$4,800) with the Courtin September 2007. Finally, the Arbitration rendered a decision that the constructioncontract be termimated and ordered Crowndeen Foundation Construction Co., Ltd.should to refund payments to MiTAC Computer (Kunshan) Co., Ltd amounting to$31,116 (RMB$7,008).8. SIGNIFICANT DISASTER LOSSNone.9.SIGNIFICANT SUBSEQUENT EVENTNone.~142~

10. OTHER INFORMATION1) The fair values of the financial instruments.Financial AssetsBook valueDecember 31, 2007 December 31, 2006Quotationsin an activemarketFair valueEvaluationmodelBook valueQuotationsin an activemarketFair valueEvaluationmodelFinancial assets withfair value equal to bookvalue $ 30,429,944 $ - $ 30,429,944 $ 29,322,114 $ - $ 29,322,114Financial assets at fairvalue through profit orloss 6,618 6,618 - - - -Available-for-salefinancial assets 2,050,355 2,050,355 - 1,530,698 1,530,698 -Financial assets carriedat cost 1,709,031 - 1,709,031 1,145,990 - -$ 34,195,948 $ 2,056,973 $ 32,138,975 $ 31,998,802 $ 1,530,698 $ 29,322,114Currency SWAP $ - $ - $ - $ 1,579 $ - $ 1,579Forward foreignexchange $ 2,683 $ - $ 2,683 $ - $ - $ -Financial LiabilitiesBook valueDecember 31, 2007 December 31, 2006Quotationsin an activemarketFair valueEvaluationmodelBook valueQuotationsin an activemarketFair valueEvaluationmodelFinancial liabilitieswith fair value equal tobook value $ 27,045,335 $ - $ 27,045,335 $ 33,145,840 $ - $ 33,145,840Bonds payable 5,000,000 5,056,816 - 5,000,000 5,111,674 -Long-term debts - - 3,259 - 3,259$ 32,045,335 $ 5,056,816 $ 27,045,335 $ 38,149,099 $ 5,111,674 $ 33,149,099Purchase of forwardforeign exchange $ 19,601 $ - $ 19,601 $ 23,565 $ - $ 23,565Interest rate Swap $ 10,983 $ - $ 10,983 $ 21,478 $ - $ 21,478Currency Swap $ 2,210 $ - $ 2,210 $ - $ - $ -The methods and assumptions used to measure the fair value of financial instruments are asfollows:A. For short-term instruments, the fair values were determined based on their carryingvalues because of the short maturities of the instruments. This method was applied toCash and cash equivalents, Notes receivable, Accounts receivable. Other receivables,Other financial assets, Refundable deposits, Short-term loans, Commercial paperpayable, Notes payable, Accounts payable, Income tax payable, Accrued expenses,Other payables, Provision for product warranty, Other current liabilities and Deposit in.B. The fair value of financial instruments for trading is based on their quoted market price.C. Available-for-sale financial instruments are based on the market value of securities.D. Fair value of bonds payable is estimated using the market value. The book value oflong-term loans is used as fair value as the loans bear floating interest rates.E. Derivative financial instruments: The estimated fair values are the expected cash flow(using rates quoted by financial institutions) if the contracts are terminated at thebalance sheet date, including unrealized gains or losses generally. The quotes fromfinancial institutions are available for most of the Company’s derivate financialinstruments.~143~

2) Inter-company transactions eliminated:Transactions eliminated Transaction parties 2007 20061.Write-off of long-term investments andstockholders’ equity2.Write-off of inter-company receivables andpayablesMiTACInternational Corp. ,MiTAC PrecisionTechnology Co.,Ltd., Silver StarDevelopments Ltd.,Tsu Funginvestment Co., andits subsidiaries andForegroundTechnology Ltd.$ 16,408,630 $ 14,128,828" 15,365,599 13,487,9173.Write-off of inter-company purchases and sales " 52,671,662 57,341,8354.Write-off of inter-company unrealized gain " 126,750 78,2343) As of December 31, 2007 and 2006, the financial assets and the financial liabilities withfair value risk due to the change of interest amounted to $2,816,122 and $2,510,158;$4,544,000 and $4,630,000, respectively, and the financial assets and the financialliabilities with cash flow risk due to the change of interest amounted to $11,126,454 and$6,872,539; $4,854,813 and $8,622,701, respectively.4) For the years ended December 31, 2007 and 2006, total interest income and totalinterest expense for financial assets and financial liabilities that are not at fair valuethrough profit or loss amounted to $255,152 and $180,714; $318,803 and $434,636,respectively.5) Financial risk managementIn order to identify, evaluate and manage market risk, credit risk, liquidity risk and cashflow risk, the Group has established a risk management program and carries outprocedures to monitor the fluctuations in exchange rate and interest rate, as well asimplement credit controls over its transaction counterparties.By considering factors such as changes in industrial environment, competitive position,and market risks, the Group adjusts related positions of financial assets and liabilities inorder to optimize its risk exposure, maintain liquidity and centrally manage all marketrisks. The Group mainly use derivative financial instruments to hedge the operating risk.In order to manage its risk exposure, the Group established a risk management programas follows:A. Interest rate riskThe Group undertakes derivative financial instruments such as interest rate swaps, tohedge cash flow risk and fair value risk arising from fluctuations in interest rates.B. Foreign exchange riskTo hedge cash flow fair value risk arising from fluctuations in exchange rates, theGroup undertakes derivative financial instruments such as forward exchangecontracts to hedge recognized assets and liabilities denominated in foreigncurrencies and highly probable forecast transactions.~144~

6) Information of financial riskA. Market risk(a) Equity financial instruments: The investment in these financial instruments isinfluenced by market price. The Group evaluates the investment performanceperiodically. Thus, the price risk is low.(b) The Group issues secured and unsecured bonds payable. Although the fair valueof bonds payable would be changed due to changes in market interest rate andmarket price, the Group evaluates the market risk periodically then the Groupexpects to have no significant market risk(c) Short-term financial instruments: Maturities of these financial instruments arewithin one year. Therefore, the Group expects to have no significant market risk.(d) Derivative financial instruments: The forward contract was entered into forhedging the fluctuation of exchange rate. Gains or losses on this contract is likelyto be offset from the hedged items. Therefore, the market risk is low.B. Credit risk(a) Equity financial instruments: The Group trades with reputable counter-parties.Thus, there is no significant credit risk.(b) There are no credit risk in the Group’s bonds payable.(c) Short-term financial instruments: The Group has established control proceduresover the credit management on counter-parties, and the counter-parties arereputable companies and financial institutions with high credit ratings. The Groupbelieves its exposure to potential default risk is low.(d) Derivative financial instruments: The Group believes its exposure to potentialdefault risk is low due to the counter-parties being reputable institutions, and theGroup diversifies the credit risks by entering transactions with multiplecounter-parties.C. Liquidity risk(a) Equity financial instruments:The Group invests in available-for-sale financial assets, which are traded inactive markets and can be readily converted into certain amount of cashapproximate to their fair vaules. The liquidity risk exposure is low.The Group is exposed to a higher liquidity risk since its investments in financialassets carried at cost have no active market. However, the Group has no intentionto hold these financial assets for trading and does not expect to sell thosefinancial assets frequently. Therefore, the exposure to liquidity risk would beeffectively reduced.~145~

(b) Bonds payable:The Group manages its financing and investing activities based on its operatingcapital requirements and capital expenditure budgets, thus, the liquidity risk isexpected to be low.(c) Short-term financial instruments: Maturities of these financial instruments arewithin one year. And the Group has set operating plans to deal with future cashneeds. Thus, liquidity risk is believe to be minimal.(d) Derivative financial instruments: The forward for trading was entered for hedgingthe foreign exchange risk. It results cash in and cash out, respectively at maturity.Because the Group will receive and pay the cash on settlement dates and thefuture working capital is sufficient, therefore, the liquidity risk and cash flow riskis low.D. Cash flow risk(a) The Group issues parts of secured bonds payable with fixed interest rate and partsof secured bonds payable with floating interest rate. The Group undertakesinterest rate swaps to hedge cash flow risk arising from fluctuations in interestrates.The Group issues unsecured bonds payable with zero interest and there is no cashflow risk arising from fluctuations in interest rates.(b) Derivative financial instruments: These financial instruments are non-interestbearing financial instruments. Thus, there is no cash flow risk.(c) Short-term financial instruments: Maturities of these financial instruments arewithin one year, there is no material cash flow risk.7) The Group’s interest rate risk arises from floating rate bonds payables. Bonds payablesissued at variable rates expose the Group to cash flow interest rate risk, therefore theGroup undertakes interest rate swaps to hedge cash flow risk.Hedge itemInterest expenses ofbonds payable withfloating interest rateFinancialinstrument wasdesignated forhedginginstrumentInterest rateSWAPDesignated for hedgingDecember 31,2007December 31,2006Period ofanticipated cashflow($ 10,983) ($ 21,478) 2004.05.25~2009.05.25Period of gain(loss) recognizedin incomestatementsN/AFor the years endedDecember 31, 2007For the years endedDecember 31, 2006ItemsAmount of gain or loss recognized directlyin equity ( $ 10,495 ) ( $ 21,478 )Amount removed from equity andrecognized in profit or loss - -Amount removed from equity and adjustedin non-financial assets / liabilities - -~146~

8) Business CombinationA. In order to raise the competitive advantages of the Company’s product lines, GlobalPositioning and Navigation Systems, and expand its global market share, the Companyacquired the assets and liabilities related to the “Navman” brand under the PortableNavigation Device Business Department of Brunswick Corp. (U.S.A.) and equity sharesof Navman Europe Ltd., Naviart Ltd. (Hong Kong) and Naviart Information Technology(Shanghai) Co., Ltd. on February 22, 2007 indirectly through its overseas subsidiary,Silver Star Developments Ltd. and Silver Star Developments Ltd.’s subsidiary (SSDL andits subsidiary).The following sets forth the required disclosures to the business combination pursuant tothe R.O.C. SFAS No. 25:a) A brief introduction of dissolved companies:Navman Europe Ltd. and Naviart Ltd. (Hong Kong) were originally under the PortableNavigation Device Business line of Brunswick Corp. (U.S.A.). They were formerlyengaged in sales of Handheld Personal Digital Global Positioning and NavigationSystems. Naviart Information Technology (Shanghai) Co., Ltd. was formerly engagedin research, development and sales of Handheld Personal Digital Global Positioningand Navigation Systems.b) Date of acquisitions, percentage of acquisitions and accounting for businesscombination - purchase method:The Company acquired the assets and liabilities related to the “Navman” brand underthe Portable Navigation Device Business Department of Brunswick Corp. (U.S.A.)and equity shares of Navman Europe Ltd., Naviart Ltd. (Hong Kong) and NaviartInformation Technology (Shanghai) Co., Ltd. on February 22, 2007 indirectly throughits overseas subsidiary, SSDL and its subsidiary. The base date of acquisitions was seton March 23, 2007. The Company adopted the R.O.C. SFAS No. 25, “Accounting forBusiness Combination - Purchase Method” to account for the business combinationtransaction.c) The period when the income (loss) of the dissolved companies was included in theconsolidated statement of income of the Company:The income (loss) of the dissolved companies for the period from March 24, 2007 toDecember 31, 2007 was included in the consolidated statement of income of theCompany.d) Cost of acquisitions and type, quantity and amount of securities issued for businesscombination:In accordance with the business merger agreement, the total acquisition cost wasUS$16 million (NT$519,008 thousand), which was fully paid by cash.e) Initial amount of goodwill, accumulated impairment loss of goodwill at beginning ofyear and impairment loss recognized in this year:The excess of acquisition cost over fair value of acquired net assets, net of liabilitiesincurred, was recognized as goodwill, in the amount of $668,140.~147~

f) Contingent acquisition amount, stock warrants and commitments under the businessmerger agreement and their accounting treatments:In accordance with the agreement, the total of acquisition cost was US$16 millions;however, the acquisition amount would be adjusted based on the adjustments of cashbalance and net value of working capital on the base date of acquisition. As ofDecember 31, 2007, the acquisition cost was finally set at US$16 million. Afterdeducting the acquired cash balance of US$2,233.6 thousand of the dissolvedcompanies on the acquisition base date, the net cash paid for the acquisition wasUS$13,767.4 thousand.g) Significant assets disposed due to business combination: None.B. In accordance with the resolution adopted by the Board of Directors on March 22, 2007,the Company merged with Tyan Computer Technology Co., Ltd. by way of absorptionmerger to expand the Company’s business scale, improve operational efficiency andstrengthen competitive capability. The Company is the surviving company and TyanComputer Technology Co., Ltd. is the dissolved company after merger. The conversionratio for merger was 1.26 shares of Tyan Computer Technology Co., Ltd.’ common stockin exchange for one share of the Company’s common stock. The base date of merger wasset on October 16, 2007. The Company adopted the R.O.C. SFAS No. 25, “Accounting forBusiness Combination - Purchase Method” to deal with business combination transaction. Thefollowing sets forth the related disclosures to the merger:a) A brief introduction of the dissolved company:Tyan Computer Technology Co., Ltd. was established on February 15, 1994 andstarted its operations in the same year. The company was formerly engaged in design,manufacturing, processing, leasing, import and export of computers, electronicproducts and communications products.b) The period when the income (loss) of the dissolved company was included in theconsolidated statement of income of the Company:The income (loss) of the dissolved company for the period from October 16, 2007 toDecember 31, 2007 was included in the consolidated statement of income of theCompany.c) Cost of acquisitions and type, quantity and amount of securities issued for businesscombination:The Company issued 50,578 thousand shares of new common stock for the merger.The acquisition cost of $1,727,747 was determined based on the average closing priceof the Company common shares for a reasonable period within the resolution date ofmerger by the Board of Directors.d) Initial amount of goodwill, accumulated impairment loss of goodwill at beginning ofyear and impairment loss recognized in this year:The excess of acquisition cost over fair value of acquired net assets, net of liabilitiesincurred, was recognized as goodwill in the amount of was $613,095.~148~

e) Contingent acquisition amount, stock warrants and commitments under the businessmerger agreement: none.f) Significant assets disposed due to business combination: None.C. The pro forma statements of income for the years ended December 31, 2007 and 2006were prepared under the assumption that the Company acquired Navman Europe Ltd.,Naviart Ltd. (Hong Kong), Naviart Information Technology (Shanghai) Co., Ltd. andTyan Computer Technology Co., Ltd. on January 1, 2007 and 2006. The following setsforth the pro forma disclosures:~149~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIESPROFORMA CONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT FOR EARNINGS PERSHARE WHICH IS EXPRESSED IN NEW TAIWAN DOLLARS)2007 2006Net Operating Revenues $ 93,600,559 $ 101,349,587Other Operating Revenues 509,556 383,141Total Operating Revenues 94,110,115 101,732,728Operating Costs ( 78,853,466 ) ( 89,067,396 )Other Operating Costs ( 342,648 ) ( 125,905 )Total Operating Costs ( 79,196,114 ) ( 89,193,301 )Gross Profit 14,914,001 12,539,427Operating ExpensesSelling expenses ( 5,341,727 ) ( 3,412,731 )Administrative expenses ( 2,284,823 ) ( 2,522,439 )Research and development expenses ( 2,894,424 ) ( 2,655,844 )( 10,520,974 ) ( 8,591,014 )Operating Income and Gain 4,393,027 3,948,413Non-operating IncomeInterest income 268,610 197,174Gain on valuation of financial assets 3,409 -Gain on valuation of financial liabilities 1,779 -Investment income accounted for under the equity method 1,019,548 631,448Dividend income 80,180 79,900Gain on disposal of investments 401,063 8,623Exchange gain, net 212,153 315,789Gain from price recovery of inventory 34,500 -Gain on physical count of inventories 1,074 -Other income 416,769 335,9812,439,085 1,568,915Non-operating Expenses and LossesInterest expense ( 327,619 ) ( 444,418 )Loss on valuation of financial assets - ( 44 )Loss on valuation of financial liabilities - ( 23,565 )Other investment loss - ( 75,884 )Loss on disposal of property, plant and equipment ( 50,148 ) ( 60,029 )Loss on market price decline and obsolete and slow-movinginventories - ( 91,464Other losses ( 45,796 ) ( 63,296 )( 423,563 ) ( 758,700 )Income Before Income Tax 6,408,549 4,758,628Income Tax Expense ( 990,293 ) ( 897,831 )Cumulative effect of changes in accounting principles - 10Consolidated Net Income $ 5,418,256 $ 3,860,807Attributable to:Equity holders of the Company $ 5,218,494 $ 3,545,422Minority interest 199,762 315,985$ 5,418,256 $ 3,860,807Common stock earnings per share:Basic earnings per shareConsolidated net income $ 3.79 $ 3.00Minority interest ( 0.14 ) ( 0.23 )Net income attributable to equity holders of the Company $ 3.65 $ 2.77Diluted earnings per shareConsolidated net income $ 3.54 $ 2.84Minority interest ( 0.14 ) ( 0.24 )Net income attributable to equity holders of the Company $ 3.40 $ 2.60~150~

11.SUPPLEMENTARY DISCLOSURESA. Information of Significant Transactions:(1) Loans granted during the year ended December 31, 2007: None.(2) Endorsements and guarantees provided during the year ended December 31, 2007:Endorser / guarantorMiTACInternational Corp.Party beingendorsed /guaranteedTsu FungInvestment Co.,″ So FungInvestment Co.,Ltd. (Note 1)″ MiTAC JapanCorp.Relationship withthe endorser /guarantorLimit onendorsements /guaranteesprovided for asingle partyMaximumoutstandingendorsements /guarantees amountduring 2007the Outstandingendorsements /guarantees amountat Dec. 31, 2007the Amount ofendorsements /guarantees withcollateral placedRatio ofaccumulatedendorsements /guarantees amountto net asset valueof the CompanyCeiling on totalamount ofendorsements /guaranteesprovidedSubsidiary $15,770,988 $410,000 $310,000 - 0.98% $31,541,976″ ″ 110,000 - - - ″″ ″ 116,000 116,000 - 0.37% ″″ MiTAC U.K. Ltd. ″ ″ 18,077 18,077 - 0.06% ″″ Top WisdomInternational Corp.″ Silver StarDevelopments Ltd.″ Navman EuropeLtd.″ MiTAC AustraliaPty Ltd.″ Tyan ComputerCorp. (USA)Joint ventureinvestee company″ 95,270 - - - ″Subsidiary ″ 1,399,575 597,545 - 1.89% ″Note 1: So Fung Investment Co., Ltd. was absorbed by Tsu Fung Investment Co. on September 1, 2007.″ ″ 196,830 196,830 - 0.62% ″″ ″ 16,403 16,403 - 0.05% ″″ ″ 82,500 82,500 - 0.26% ″~151~

(3) Marketable securities held as of December 31, 2007:Securities held by TypeMiTACInternationalCorp.Name of marketablesecuritiesStocks MiTAC TechnologyCorp.Relationship with theissuerInvestee companyaccounted for under theequity methodGeneral ledgeraccountLong-terminvestmentaccounted forunder the equitymethod~152~December 31, 2007Number of shares Book value Percentage Market value (Note 1)190,396,939 $3,710,877 35.70% $4,950,320(Note 2)″ ″ Tung Da Investment Co.,″ ″ 53,145,723 668,761 49.99% 668,761Ltd.″ ″ Tsu Fong Investment Co. ″ ″ 59,670,040 1,054,187 100.00% 1,330,271(Note 3)″ ″ 3 Prode Technologies″ ″ 1,080,000 10,391 23.13% 10,391Co., Ltd.″ ″ Foreground TechnologyLtd.″ ″ 9,045,492 536,635 100.00% 536,635(Note 4)″ ″ Lian Jie Investment Co.,″ ″ 12,995,000 79,749 49.98% 79,749Ltd.″ ″ Silver Star DevelopmentsLtd.″ ″ 215,495,404 14,817,808 100.00% 14,894,810(Note 3)″ ″ Shen-Tong Construction″ ″ 8,559,400 84,297 47.55% 84,297& Development Co., Ltd.″ ″ Channel OverseasNone Financial assets1,125,945 - 5.00% -Corporationcarried at cost″ ″ MiTAC Inc. the Major stockholder of ″ 28,549,614 645,051 8.75% 645,051the Company″ ″ Overseas Investment &None ″ 1,000,000 10,000 1.11% 10,000Development Corp.″ ″ Harbinger II (BVI) Share board chairman ″ 28,099,000 229,247 14.05% 229,247Venture Capital Corp.″ ″ Asia-Pacific Technology Board member of″ 140,000 - 0.85% -& Intellectual PropertyService Inc.Asia-Paicfic″ ″ UPC Technology Share board chairman Available-for-sale 12,494,262 227,396 1.55% 227,396Corporationfinancial assets″ ″ Lien Hwa IndustrialCorp.″ ″ 21,720,116 401,822 3.06% 401,822″ ″ Gemtek Technology Co.,Ltd.Board member ofGemtek″ 5,414,924 301,070 2.25% 301,070Note 1: The market value of investments accounted for under the equity method was based on the net asset value of the investee company, while the market value ofinvestments accounted for under the cost method was based on acquisition cost if not listed or the closing price during the last month of the year if listed.Note 2: The investor provided 47,500 thousand shares as collateral.Note 3: The book value decreased by $353,086 as the Company accounted for shares held by Tsu Fung Investment Corp. and Silver Star Developments Ltd. and itssubsidiaries in accordance with the Statement Of Financial Accounting Standards for treasury stocks.Note 4: On October 16, 2007, the Company merged with Tyan Computer Technology Corp. and assumed Foreground Technology Ltd and its subsidiaries.

(4) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2007InvestorMiTACComputerCorp.MarketablesecuritiesStock-SilverStarDevelopmentsLtd.Generalledgeraccount CounterpartyLong-terminvestmentsaccounted forunder theequity methodSilver StarDevelopmentsLtd.Relationshipwith theCompanyInvesteecompanyaccountedfor underthe equitymethodBalance as at January 1, 2007 Addition DisposalNumber ofshares(inthousands) AmountNote: The ending balance represents investment income, translation adjustments etc.~153~Number ofshares(in thousands) AmountNumber ofshares(in thousands)SellingpriceBookvalueGain(loss) ondisposalBalance as at December31, 2007Numberof shares(inthousands) Amount169,995 $11,880,187 45,500 $1,485,099 - $ - $ - $ - 215,495 $14,817,808(Note)(5) Real estate acquired amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2007: None.(6) Real estate disposed amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2007: None.(7) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2007:The companybuying /sellingproductsMiTACInternational Corp.TransactionsReason and situation of having differenttransaction terms between related partiesAccounts and notes receivable(payable)Name of relatedpartiesRelationship withthe counterpartyPurchases /Sales AmountPercentage ofpurchase /sales Credit Term Unit price Credit Term BalancePercentage ofaccount FootnoteSilver Star Investee company Sales $14,647,047 18% Note 1 Note 2 Note 1 $6,526,617 38%Developments accounted forLtd. and its under the equitysubsidiaries method″ ″ ″ Purchases 33,063,724 49% Note 3 ″ Note 3 ( 7,914,709 ) 66%Note 4 Purchases 1,335,658 2% Note 3 ″ Note 3 - -″ MiTAC PrecisionTechnology Co.,Ltd. and itssubsidiaries″ Tyan ComputerTechnologyCorp.″ SynnexTechnologyInternationalCorp.Share boardchairmanNote 5 Sales 1,101,942 1% Note 1 ″ Note 1 - -Sales 147,962 - Note 1 ″ Note 1 - -″ ″ ″ Purchase 226,495 - Note 3 ″ Note 3 ( 34,907 ) -″ Synnex Corp. Indirect investee Sales 10,023,276 12% Note 1 ″ Note 1 2,513,421 15%and itssubsidiariescompanyaccounted forunder the equitymethod.″ ″ ″ Purchase 103,468 - Note 3 ″ Note 3 - -″ GemtekTechnology Co.,Ltd.The Company isGemtek’s directorSales 1,109,835 1% Note 1 ″ Note 1 193,211 1%

TransactionsReason and situation of having differenttransaction terms between related partiesAccounts and notes receivable(payable)The companybuying /sellingproductsName of relatedpartiesRelationship withthe counterpartyPurchases /Sales AmountPercentage ofpurchase /sales Credit Term Unit price Credit Term BalancePercentage ofaccount FootnoteMiTACMio Technology Indirect investee Sales 282,785 - Note 1 ″ Note 1 $25,238 -International Corp. Corp.companyaccounted forunder the equitymethod″ Tyan Computer″ Sales 278,358 - Note 1 ″ Note 1 122,593 -Corp.″ ″ ″ Purchases 176,665 - Note 3 ″ Note 3 - -″ MiTACTechnologyCorp.″ ″ 543,478 1% Note 3 ″ Note 3 (84,818) 1% Note 4Note 1:The collection period is 150 days and 90 days after offsetting certain receivables and payables according to collection terms to overseas and domestic related parties,respectively. The collection period for regular customers is approximately 90 days after shipping date.Note 2:The selling price to related parties is based on market value.Note 3:The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,respectively. The payment period for regular supplies is approximately 90 days after purchase date.Note 4:MiTAC Technology Corp. merged with MiTAC Precision Technology Co., Ltd. and continues its rights and obligation.Note 5:The Company merged with Tyan Computer Technology Corp. and continues its rights and obligation.(8) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2007:Company NameMiTACInternational Corp.Name of thecounterpartySynnex Corp. and itssubsidiaries″ Gemtek TechnologyCO., Ltd.″ Silver StarDevelopments Ltd. andits subsidiariesRelationship with thecounterpartyInvestee companyaccounted for underthe equity methodThe Company isGemtek’s directorInvestee companyaccounted for underthe equity method″ Tyan Computer Corp. Investee companyaccounted for underthe equity methodBalance of receivable from related party Overdue receivablesNotes/AccountsreceivableOtherreceivablesTotalTurnover rate(times)AmountCollectionmethodSubsequentreceived amountBad debts allowanceprovided$2,513,421 $ 20,377 $2,533,798 3.48 $ - N/A $ 2,029,185 $ -193,211 - 193,211 4.14 - N/A 193,211 -6,526,617 74,032 6,600,649 3.53 - N/A 4,317,976 -122,593 699 123,292 2.61 - N/A 77,497 -~154~

(9) Information on derivative transactions.To hedge existing assets denominated in foreign currencies:December 31, 2007:Item Notional Amount (in thousands) Contract Period Contract TermsSales of forward foreign exchange US$ 20,000 2007.12.4~2008.01.28 Note 1″ EUR 30,500 2007.11.13~2008.03.14 Note 1″ JPY 100,000 2007.12.28~2008.01.28 Note 1″ AUD 24,300 2007.11.26~2008.03.14 Note 2″ NZD 2,600 2007.12.18~2008.02.15 Note 1Buy of currency SWAP US$ 148,150 2007.12.10~2008.01.28 Note 1Interest rate SWAP NT$ 500,000 2004.05.25~2009.05.25 Note 2December 31, 2006:ItemNotional Amount(in thousands)Contract period Contract TermsSales of forward foreign exchange US$ 52,000 2006.12.01~2007.01.31 Note 1″EUR$ 37,800 2006.11.07~2007.03.15 Note 1Buy of forward foreign exchange US$ 17,000 2006.12.27~2007.01.03 Note 1Interest rate SWAP NT$ 500,000 2004.05.25~2009.05.25 Note 2Note 1: Future cash flow: the Company will receive (pay) cash or sale (purchase) contracts on settlement dates.Note 2: On exercise of SWAP, the amount of cash outflow is calculated at a fixed rate of 1.6%, and the amount of cash inflow is calculated using a floating rate (6-monthUSD-LIBOR-BBA), observed as follows:If 6M LIBOR2.0%, the floating rate is 4.5% less 6M LIBOR, which is above or equal to 0%.~155~

B. Information of Subsidiaries:(1) Related information of Subsidiaries as of December 31, 2007:InvestorMiTACInternationalCorp.InvesteeCompanyMiTACTechnologyCorp.″ Tyan ComputerTechnologyCorp.″ Tung DaInvestment Co.,Ltd.″ Silver StarDevelopmentsLtd.″ Tsu FungInvestment Co.″ 3ProbeTechnologies″ MiTAC PrecisionTechnology Co.,Ltd.″ Lian JieInvestment Co.,Ltd.″ Shen-TongConstruction &DevelopmentCo., Ltd.″ ForegroundTechnology Ltd.Location(Country)the MainbusinessoperationsTaiwan Manufacturingand sale ofnotebookcomputer,military andindustrialcomputersystems, etc.″ Manufacturingand salea ofcomputers andelectronic parts,EndingbalanceOriginal amount Shares held by the CompanyBeginningbalanceNumber of sharesPercentageownedBook valueIncome (loss) of theinvestee CompanyGain/Lossrecognized bythe Company$1,391,549 $721,964 190,396,939 35.7% $3,710,877 $1,248,606 $407,357 Investeeaccounted forunder equitymethodNote 3 53,204 - - - (43,471) (8,841) Note 3etc.″ Investment 299,985 299,985 53,145,723 49.99% 668,761 84,272 44,244 Investeeaccounted forunder equitymethodBritish VirginIslands″ 6,703,676 5,218,577 215,495,404 100.00% 14,817,808 1,138,261 1,039,728 SubsidiaryTaiwan ″ 625,000 550,000 59,670,040 100.00% 1,054,187 260,517 260,517 ″″ Informationprocess service,sales of softwareand internationaltrading.″ Manufacturingand sales ofmold, electronic16,800 16,800 1,080,000 23.13% 10,391 2,182 429 Investeeaccounted forunder equitymethodNote 1 669,585 - - - 104,075 23,066 Note 1connectors.″ Investment 129,950 129,950 12,995,000 49.98% 79,749 (4,958) (2,478) Investeeaccounted forunder equitymethod″ Building andfactoryconstruction,leasing and salesBritish VirginIslands85,594 14,037 8,559,400 47.55% 84,297 (698) (359) ″Investment 313,677 Note 3 9,045,492 100.00% 536,635 7,063 7,063 SubsidiaryNote~156~

InvestorSilver StarDevelopmentsLtd. (SSDL)InvesteeCompanyTyan ComputerTechnologyCorp.Location(Country)the MainbusinessoperationsTaiwan Manufacturingand sales ofcomputers andelectronic parts,etc.″ Synnex Corp. USA Informationprocess services,sales of computerperipheral,system andnetwork products″ Harbinger II(BVI) VentureCapital Corp.″ MainpowerInternational Ltd.″ Suzhou MiTACPrecisionTechnology Co.,Ltd.Tsu FungInvestmentCorp.So FungInvestmentCo., Ltd.MioTechnologyCorp.MiTACPrecisionTechnologyCo., Ltd.So FungInvestment Co.,Ltd.″ Mio TechnologyCorp.Mio TechnologyCorp.DLC TechnologyCorp.Hot LinkTechnology Ltd.British VirginIslandsEndingbalanceOriginal amount Shares held by the CompanyBeginningbalanceNumber of sharesPercentageownedBook valueIncome (loss) of theinvestee CompanyGain/Lossrecognized bythe CompanyNote 3 $ 60,982 - - $ - ($43,471) Note 3$754,876 917,682 8,652,824 27.34% 5,363,029 2,073,316 Investeeaccounted forunder equitymethod bySSDL″ 50,730 50,730 1,457,850 49.96% 46,921 1,948 ″″ ″ 16,425 16,425 500,000 50.00% 13,509 (13,462) ″China Manufacturing ofmainboard,desktopcomputers,interfere cards,etc.260,720 - - 35.78% 264.355 (30,855)Taiwan Investment Note 2 460,000 - - - 3,273 Note 2″ Informationprocess serviceand sales ofsoftware.″ Informationprocess servicesand sales of5,000 Note 2 500,000 100.00 18,279 (11,581) Subsidiary ofTsu FungInvestmentCorp.Note 2 5,000 - - - (11,581) Note 2software.Taiwan 1,000 - 100,000 100.00% (1,500) (16,500) Subsidiary ofMioTechnologyCorp.British VirginIslandsNote 1: MiTAC Precision Technology Co., Ltd. was merged with MiTAC Technology Corp.Investment Note 1 970,800 - - - 101,905 (Note 1)Note 2: Tsu Fung Investment Corp. merged with So Fung Investment Co., Ltd. and assumed its long-term investments accounted for under equity method.Note 3: The Company merged with Tyan Computer Technology Corp. and its long-term investments accounted for under equity method.Note~157~

(2) Loans granted during the year ended December 31, 2007:Creditor BorrowerSilver StarDevelopmentsLimitedSystem GloryInt’l Ltd.″ Pacific ChinaCorp.″ MiTAC (U.K.)Ltd.″ MioInternationalLtd.″ Start WellTechnologyLtd.″ MiTAC StarService Ltd.″ Dynamic StarInvestmentLtd.″ SoftwareInsights Ltd.″ MiTACComputer(Kunshen) Co.,Ltd.″ MagicmateGroup Ltd.″ Huge ExtentLtd.″ NavmanTechnologyNZ Ltd.″ NavmanTechnologyAustralia PtyLtd.″ NavmanEurope Ltd.″ BoomingEnterprisesLtd.GeneralledgeraccountAffiliatedloansreceivableMaximumoutstandingthe EndingbalanceInterestrateNature ofloan~158~Amount oftransactionwithborrowerReason ofshort-termfinancingCollateralAllowancefordoubtfulaccounts Item ValueLimit on loans grantedto a singly partyCeiling on totalloans granted$77,152 $ - - Note 1 - Operations $ - None $ - N/A $11,809,140″ 2,307,054 2,242,810 - ″ - ″ - ″ - - ″″ 48,220 47,013 - ″ - ″ - ″ - - ″″ 456,344 - - ″ - ″ - ″ - - ″″ 665,520 389,316 - ″ - ″ - ″ - - ″″ 798,624 778,632 - ″ - ″ - ″ - - ″″ 33,276 17,844 - ″ - ″ - ″ - - ″″ 143,090 139,508 - ″ - ″ - ″ - - ″″ 228,172 - - ″ - ″ - ″ - - ″″ 3,697 3,605 - ″ - ″ - ″ - - ″″ 266,208 259,544 - ″ - ″ - ″ - - ″″ 33,276 - - ″ - ″ - ″ - - ″″ 93,173 - - ″ - ″ - ″ - - ″″ 33,276 - - ″ - ″ - ″ - - ″″ 26,415 25,954 - ″ - ″ - ″ - - ″(Note 2)

Creditor BorrowerHot LinkTechnology Ltd.MainpowerInternational Ltd.Pacific MetalDevelopmentsLtd.ACEContinentalIndustries Ltd.SuzhouMiTACPrecisionTechnologyCo., Ltd.MainpowerInternationalLtd.GeneralledgeraccountMaximumoutstandingNote 1: The borrowers required short-term capital.the EndingbalanceInterestrateNature ofloanAmount oftransactionwithborrowerReason ofshort-termfinancingCollateralAllowancefordoubtfulaccounts Item ValueLimit on loans grantedto a singly partyCeiling on totalloans granted″ $ 301,646 Note 3 - ″ - ″ - ″ - $ 1,707,307 $ 1,707,307″ 249,359 Note 3 - ″ - ″ - ″ - 1,707,307(Note 2)″ 249,359 Note 3 - ″ - ″ - ″ 1,707,307Note 2: Equal to the net worth based on the financial statements audited by independent accountants.Note 3: MiTAC Technology merged with MiTAC Precision Technology Co., Ltd and assumed its subsidiaries.(Note 2)1,707,307(Note 3)1,707,307(Note 2)~159~

(3) Endorsements and guarantees provided during the year ended December 31, 2007:Endorser / guarantorParty being endorsed/ guaranteedSilver Star Developments Ltd. MiTAC Computer(Shunde) Corp.MiTAC Computer (Shunde)Corp.″ MiTAC Computer(Kunshan) CO., Ltd.″ Suzhou MiTACPrecisionTechnology Co., Ltd.″ MiTAC Research(Shanghai) Ltd.MiTAC Precision TechnologyCo., Ltd.MiTAC Computer(Kunshan) Co., Ltd.Pacific MetalDevelopment″ MiTAC PrecisionTechnology VietnamCo., Ltd.″ Hot Link TechnologyLtd.Hot Link Technology Ltd. MiTAC PrecisionTechnology(Kunshan) Co., Ltd.″ Suzhou MiTACPrecisionTechnology Co., Ltd.Relationship with theendorser / guarantorLimit onendorsements /guarantees providedfor a single partyMaximumoutstandingendorsementsguarantee amountduring 2007the Outstandingendorsements /guarantees amount atDec.31, 2007the Amount ofendorsements /guarantees withcollateral placedRatio of accumulatedendorsements /guarantees amount tonet asset value of theCompanyCeiling on totalamount ofendorsements /guarantees providedSubsidiaries $11,809,140 $866,976 $580,156 $64,886 4.91% $11,809,140(Note 1)″ ″ 876,670 361,400 356,873 3.06% ″Joint venture investeeCompany″ 83,225 83,225 - 0.70% ″Subsidiaries ″ 134,533 134,533 134,533 1.14% ″Business relationship 3,048,132 306,426 - - - 3,048,132(Note 1)(Note 3) 4,911,830 2,963,642 - - - 4,911,834(Note 2)″ ″ 164,010 - - - ″″ ″ 162,850 - - - ″Joint venture investeecompanyNote 1: Equal to the net worth based on the financial statements audited by independent accountants.Note 2: Equal to the 150% net worth based on the financial statements audited by independent accountants.Note 3: MiTAC Technology Corp. merged with MiTAC Precision Technology Co., Ltd. and assumed it the subsidiaries.1,707,307 81,490 - - - 1,797,307(Note 1,3)″ ″ - - - - ″~160~

(4) Marketable securities as held of December 31, 2007:Security held by TypeName of marketablesecuritiesRelationship with the issuer General ledger accountNumber ofsharesDecember 31, 2007Book value PercentageMarket valueTsu FungStocks Synnex TechnologyNone Available-for-sale financial 2,994,282 $242,5538 0.28% $242,538Investment Corp.International Corp.assets″ ″ UPC Technology″ ″ 6,156,701 112,052 0.77% 112,052Corporation″ ″ Lien Hwa Industrial″ ″ 1,097,680 20,308 0.15% 20,308Corp.″ ″ MiTAC InternationalMajor stockholder ″ 19,583,322 623,729 1.39% 623,729Corp.″ ″ Linpus Technology Corp. None Financial assets carried at 1,105,615 2,396 17.97% 2,396cost″ ″ Harbinger Venture″ ″ 238,460 479 19.99% 479Management Co., Ltd.″ ″ 3Probe Technologies″ ″ 6,000 30 0.13% 30Corp.″ ″ Cirocomm Technology″ ″ 2,500,000 37,500 6.36% 37,500Corp.″ ″ Lien Yung Investment″ ″ 9,015,254 87,967 19.99% 87,967Corp.″ Bonds Tatung Corp. ″ Financial assets at fair 25,000 2,468 - 2,468value through profit orloss-current″ ″ FCE Corp. ″ ″ 50,000 4,150 - 4,150″ Stock Mio Technology Corp. Tsu Fung’s investee company Long-term investment 500,000 18,279 100.00% 18,279accounted for under the equitymethods.accounted for under theequity method.″ ″ MiTAC Technology Corp. Share board chairman ″ 21,395,741 507,132 4.01% 507,132Mio TechnologyCorp.Silver StarDevelopmentsLtd.Stock DLC Technology Corp. Mio Technology’s investeecompany accounted for under theequity methodStock Brilliant Star HoldingsLtd.SSDL’s investee companyaccounted for under the equitymethod(Note 1)″ 100,000 (15,500) 100% (15,500)Long-term investmentaccounted for under theequity method7,115,000 246,355 15.29 246,355″ ″ Harbinger II (BVI)″ ″ 1,457,850 46,921 49.96% 46,921Venture Capital Corp.″ ″ Synnex Corp. ″ ″ 8,652,824 5,363,029 27.34% 5,502,182″ ″ Suzhou MITAC Precision″ ″ (Note 4) 264,355 35.78% 264,355Technology Co., Ltd.″ ″ Mainpower InternationalLtd.″ ″ 500,000 13,509 50.00% 13,509~161~

Security held by TypeSilver starDevelopmentsLtd.Name of marketablesecuritiesStock Mainpower InternationalLtd.Relationship with the issuer General ledger accountSSDL’s investee company Financial assets carried atcost~162~Number ofsharesDecember 31, 2007Book value PercentageMarket value(Note 1)5,000,000 $162,215 (Note 3) $162,215″ ″ Gapura Inc. None ″ 630,635 - 5.55% -″ ″ Budworth Investments″ ″ 4,744,000 90,616 14.83% 90,616Ltd.″ ″ Global Strategic″ ″ 1,000,000 22,797 1.26% 22,797Investment Inc.″ ″ Panasas Inc. ″ ″ 1,391,354 - 0.99% -″ ″ Cirocomm Technology ″ ″ 2,500,000 36,957 6.36% 36,957″ ″ Pacific MetalAffiliated company ″ 5,100,000 154,024 50%154,024Developments Ltd.(Note 3)″ ″ MiTAC International MiTAC’s investee company Available-for-sale financial 2,657,597 84,644 0.18% 84,644Corp.accounted for under the equitymethodassets″ ″ Ono Sanyo ″ ″ 219,900 29,805 0.99 29,805″ GDR Synnex International SIC’s chairman is SSDL’s director ″ 2,222,381 180,013 0.21% 180,013Corp.″ Stocks Silicon StorageNone ″ 290,909 28,219 0.28% 42,766Technology Inc.Note 1: The market value of investments accounted for under the equity method was based on the net asset value of the investee company, while the market value of investmentaccounted for under cost method was based on acquisition cost if not listed or the average closing price during the last day of the year if listed.Note 2: The investor provided 2,083 thousand shares as collateral.Note 3: Investing in non-cumulative, convertible preferred stock without right of voting.Note 4: It’s a limited company.(5) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2007:InvestorSilver StarDevelopmentLtd.MarketablesecuritiesSynnex Corp. Long-terminvestmentsaccountedfor under theequitymethodGeneralledgeraccount CounterpartyRelationshipwith theCompanyBalance as at January 1,2007 Addition DisposalNumberof shares(inthousands) AmountNumberof shares(inthousands) AmountNumber ofshares (inthousands)SellingpriceBookvalueGain (loss)on disposalBalance as at December 31,2007Number ofshares (inthousands)Third party None 9,122 $5,120,034 - - 469 $334,770 $263,259 $71,511 8,653 $5,363,029(6) Real estate acquired exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2007: None.Amount

(7) Real estate disposed exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2007: None.(8) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2007:The companybuying/sellingproductsSilver StarDevelopmentsLtd. (SSDL) andits subsidiariesName ofrelated partiesMiTACInternationalCorp.″ MiTACInternationalCorp.″ MiTACPrecisionTechnologyCo., Ltd. andits subsidiaries″ MiTACTechnologyCorp. and itssubsidiariesMiTACPrecisionTechnology Co.,Ltd. and itssubsidiariesMiTACInternationalCorp.″ MiTACTechnologyCorp. and itssubsidiaries″ Silver StarDevelopmentsLtd. and itssubsidiariesMio TechnologyCorp.MiTACInternationalCorp.″ SynnexTechnologyInternationalCorp.Tyan Computer MiTACInternationalCorp.Relationship withcounterparty Purchase / Sales AmountSSDL’s parentcompanyTransactions~163~the Reason and situation ofhaving different transactionterm between related partiesand others Accounts and notes receivable (payable)Percentage ofpurchase /sales Credit Term Unit price Credit Term BalanceSales $33,063,724 61.63% Note 1 Note 3 Note 1 $7,914,709 69.59%″ Purchases 14,647,047 29.45% Note 2 Note 3 Note 2 (6,526,617) 44.95%Affiliated company ″ 2,262,996 4.52% Note 2 Note 3 Note 2 - -MPT’s parentcompany (Note 4)″ Purchases 2,170,545 4.05% Note 2 Note 3 Note 2 (593,589) 4.09%Sales 1,355,658 17.83% Note 1 Note 3 Note 1 - -Affiliated company ″ 483,942 6.46% Note 1 Note 3 Note 1 - -″ ″ 2,262,996 30.22% Note 1 Note 3 Note 1 - -MIC’s Investeecompany accountedfor under the equitymethod″ 282,785 100% Note 1 Note 3 Note 1 (25,238) 100%Affiliated company Sales 104,785 33.97% Note 1 Note 3 Note 1 11,280 27.16%MIC’s Investeecompany accountedfor under the equitymethodPurchases 278,358 18.07% Note 2 ″ Note 2 (122,593) 88.11%″ ″ ″ Sales 176,665 9.13% Note 1 ″ Note 1 - -Percentage ofaccount Note

Note 1:The collection period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,respectively. The collection period for regular customers is approximately 90 days after shipping date.Note 2:The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,respectively. The payment period to regular supplies is approximately 90 days after purchase date.Note 3:The selling price to overseas related parties is based on market value. The selling price to domestic related parties is based on common domestic price.Note 4:MiTAC Technology Corp. merged with MiTAC Precision Technology Co., Ltd. and continues its rights and obligation.(9) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2007:Balance of receivables from related party Overdue receivableName of theCompany NamecounterpartySilver Star MiTACDevelopments Ltd. Internationaland its subsidiaries Corp.″ MiTACTechnology Corp.and itssubsidiariesRelationship withthe counterpartySSDL’s parentcompanyAffiliatedcompanyNotes / AccountsTurnover rateSubsequentOther receivables TotalAmount Collection methodreceivable(times)amount receivedBad debtallowanceprovided$7,914,709 $629,660 $8,544,369 3.44 $ - N/A $3,221,853 $ -108,268 184,686 292,954 7.75 - ″ 55,708 -~164~

(10) Information on derivative transactions:December 31, 2007:SSDL and its subsidiariesItem Notional Amount (in thousands) Contract Period Contract termSales of forward foreign exchange US$ 4,200 2007.07.19~2008.05.08 Note 1December 31, 2006:Item Notional Amount (in thousands) Contract Period Contract termMiTAC Precision Technology Co., Ltd. andits subsidiaries (Note 2)Sales of forward foreign exchange US$ 2,000 2006.12.01~2007.01.22 Note 1Sales of forward foreign exchange JPY 57,990 2007.12.20~2007.04.20Note 1: Future cash flow: the company will receive (pay) cash or sale (purchase) contracts at settlement dates.Note 2: MiTAC Technology Corp. merged with MiTAC Precision Technology Corporation and continues its rights and obligation~165~

C. Relevant Information Regarding Investments In Mainland China:a) Basic information, change in investment balance and profits/losses recognized from the direct investment:Name of investeein Mainland ChinaMiTAC Computer(Shunde) Corp.MiTAC Computer(Kunshan) Co.,Ltd.MiTAC PrecisionTechnology(Shunde) Ltd.MiTAC Service(Shanghai) Co.,Ltd.MiTACTechnology(Kunshan) Co.,Ltd.MiTAC Computer(Shen Zhen) Co.,Ltd.Catac Electronic(Zhong-Shan) Co.,Ltd.MiTAC Research(ShangHai)Ltd.-MRCSuzhou MITACPrecisionTechnology Co.,Ltd.Mio Technology(Chengdu) Ltd.NaviartInformationTechnolgoy(Shanghai) Co.,Ltd.Main activities ofinvesteeManufacturing ofcomputer cases andmonitors, etc.Sales andmanufacturing ofcomputer accessories,hardware, softwareand related services.Manufacturing ofmainboard, desktopcomputers, interfacecards, etc.Manufacturing,assembling computersand provide test,maintenance andservice for relatedproduct.Sales andmanufacturing ofcomputer accessories,hardware, softwareand related service.Trading andwarehousing servicesof computer andrelated accessories.Sales andmanufacturing ofPCB.Design andmanufacturing ofcomputers and relatedaccessoriesManutacturing ofmainboard, desktopcomputers, interf arecards, etc.Manufacturingassembling computersand provide test, maintenance and servicefor related productsManufacturingassembling computersand provide test,maintenance andservice for relatedproductsMethod ofCapital investment$2,382,825 Invest inMainlandChina throughinvestingcompany inthird areaBeginning balance ofremittance in 2007Amount of remittanceout in 2007Remittanceout~166~RemittanceinEnding balance ofremittance fromTaiwan onDecember 31, 2007Shares held bythe Company(Direct/indirect)Profit/lossrecognized in2007 (Note 1)Ending balance of book valueon December 31, 2007Ending balance ofprofit remittance intoTaiwan$2,327,795 $ - $ - $2,327,795 100.00% $131,305 $3,193,527 $ -1,014,334 ″ 966,311 - - 966,311 100.00% 311,648 1,469,210 -1,527,701 ″ 161,188 - - 161,188 (Note 3) 102,844 154,204 -33,770 ″ 34,180 - - 34,180 100.00% 7,956 46,442 -33,936 ″ 34,695 - - 34,695 100.00% 10,287 51,042 -13,548 ″ 13,548 - - 13,548 - - - -1,150,101 ″ 240,901 - - 240,901 15.29% (9,964) 209,258 -169,088 ″ 166,094 - - 166,094 100% 27,141 232,197 -724,353 ″ 172,226 264,712 - 436,938 50.00% (11,040) 673,219 -7,520 ″ - 7,445 - 7,445 100.00% 349 8,160 -11,882 ″ - 3,274 - 3,274 100.00% (20,034) (10,093) -

Name of investeein Mainland ChinaTyan ComputerTechnology(Shanghai) Corp.Mio TechnologyLtd.Shenyang HedaComputer Co.,LTd.Main activities ofinvesteeDesign electronicproductsSales computeraccessories and relatedservice.Design andmanufacture ofcomputer accessoriesMethod ofCapital investment$ 46,326 Invest inMainlandChina throughinvestingcompany inthird areaBeginning balance ofremittance in 2007Amount of remittanceout in 2007RemittanceoutRemittanceinEnding balance ofremittance fromTaiwan onDecember 31, 2007Shares held bythe Company(Direct/indirect)Profit/lossrecognized in2007 (Note 1)Ending balance of book valueon December 31, 2007Ending balance ofprofit remittance intoTaiwan$ - $ 14,560 - $14,560 100.00% $ 49,930 $ 20,499 $ -8,109 ″ - 8,149 - 8,149 100.00% 920 1,983 -13,120 ″ 4,260 - - 4,260 34.21% - - -Note 1: Profit/Loss recognized based on the unaudited financial statements, except for MiTAC Computer (Shunde) Corp., MiTAC Precision Technology (Shunde) Ltd., MiTACResearch (Shanghai) Co., Ltd-MRC., Catac Electronic (Zhong-Shan) Co., Ltd. and MiTAC Computer (Kunshan) CO., Ltd.Note 2: Investing in non-cumulative, convertible preferred stock without right of voting.Ending balance of investment from Taiwan onDecember 31, 2007$4,522,614(US$136,074)Approved investment amount by Ministry ofEconomic Affairs R.O.C.$4,889,569(US$147,349)The ceiling amount of the Company for investment inMainland China$8,298,418~167~

) Major transactions with the subsidiaries in third region and Mainland China:1) PurchasesThe Company’s purchases from Mainland China subsidiaries:2007 2006MITAC Computer (Shunde) Corp. $ 35,342,412 $ 43,572,705MITAC Computer (Kunshan) Co., Ltd. 27,386,002 23,525,306$ 62,728,414 $ 67,098,011Note: The above purchase amounts included raw materials and supplies andprocessing over head charged to the Company since the Companycommissioned in the Mainland China subsidiaries to process products for it. Inaddition, some of the Company’s transactions with MiTAC Computer (Kunshan)Co., Ltd. were conducted indirectly through Mio International Ltd. located at thethird territory which amounted to $23,994,521 and $16,472,801 for the yearsended December 31, 2007 and 2006, respectively.The purchase prices from Mainland China subsidiaries are negotiated based on thematerial and manufacturing cost. The payment period is 150 days after offsettingcertain receivables and payables according to the payment terms.The purchase prices that the Company purchase from regular suppliers are negotiatedbased on local market value. The payment period is approximately 90 days fromshipping date.As of December 31, 2007, the unrealized intercompany gain due to upstream sales is $0.2) SalesThe Company sales to Mainland China subsidiaries:2007 2006MiTAC Computer (Shunde) Corp. $ 16,034,967 $ 17,178,642MiTAC Computer (Kunshan) Co., Ltd. 13,995,687 11,829,486Others 61 5,986$ 30,030,615 $ 29,014,114The sales prices to Mainland China subsidiaries are negotiated based on the productcost. The collection period is 150 days after offsetting certain receivables andpayables according to the collection terms.The sales prices to regular customers are negotiated based on local market value. Thecollection period is approximately 90 days from shipping date.As of December 31, 2007 and 2006, the unrealized intercompany gain due to downstream sales is $0 and $32, respectively.~168~

3) Property transactions:In 2007 and 2006, the Company sold equipment and molds to third region andMainland China subsidiaries amounting to $3,306 and $148,659, respectively. Thetotal disposal gain was $258 and $6,151, respectively.In 2007 and 2006, the Company purchased equipments and molds from third regionand Mainland China subsidiaries amounting to $182,364 and $839, respectively.4) Accounts receivable:The Company from Mainland China subsidiaries:December 31,2007 2006Suzhou MiTAC Precision Technology Co., Ltd, $ - $ 105) Accounts payable:The Company to Mainland China subsidiaries:December 31,2007 2006MiTAC Computer (Shunde) Corp. $ 4,733,336 $ 5,615,372MiTAC Computer (Kunshan) Co., Ltd. 3,181,373 3,367,818Others - -6) Loans to third region and Mainland China subsidiaries: None.$ 7,914,709 $ 8,983,1907) The endorsements and guarantees provided by the Company to Mainland Chinasubsidiaries:i) As of December 31, 2007 and 2006, the Company guaranteed and endorsed thebank loans of MiTAC Computer (Shunde) Corp. through Silver StarDevelopments Ltd. amounting to $580,156 and $801,140, respectively.ii) As of December 31, 2007 and 2006, the Company guaranteed and endorsed thebank loans of MITAC Computer (Kunshan) Co., Ltd. through Silver StarDevelopments Ltd. amounting to $361,460 and $515,210, respectively.iii) As of December 31, 2007, the Company guaranteed and endorsed the bank loansof Suzhou MiTAC Precision Technology Co., Ltd. through Silver StarDevelopments Ltd. amounting to $83,225.iv) As of December 31, 2007, Silver Star Developments Ltd. has provided timedeposits of $134,533 as guarantee for the bank loans of MiTAC Research(ShangHai) Ltd.8) Other significant transactions which affect current income or financial conditions:i)In 2007 and 2006, the Company paid warranty expense to the subsidiaries inMainland China amounting to $254,024 and $181,633, respectively.~169~

D) The relation of business and important transactions between the Company and its subsidiaries2007Company NameName of the counterpartyMiTAC International Corp. MiTAC Precision TechnologyCo.,Ltd. and its subsidiaries" Silver Star Developments Ltd.(SSDL) and its subsidiaries~170~TransactionRelationship with thecounterparty (Note 1) General Ledger Account Amount Transaction termsPercentage of consolidated total operatingrevenue or total assets (Note 2)(1) Purchases $ 1,335,658 Note 4 1.48%(1) Sales 14,647,247 Note 3 16.64%" " (1) Purchases 33,063,724 Note 4 36.65%" " (1) Accounts receivable 6,526,617 Note 3 9.68%" " (1) Accounts payable 7,914,709 Note 4 11.74%" " (1) Warranty expense 834,917 Note 4 0.93%" " (1) Accrued expenses / Other payables 629,660 Note 4 0.93%" " (1) Endorsements and guarantees 1,027,355 1.52%" " (1) Other receivables 74,032 Note 3 0.11%" Tsu Fung Investment Corp. andits subsidiaries(1) Sales 284,496 Note 3 0.32%" " (1) Accounts receivable 39,395 Note 3 0.06%" " (1) Other receivables 11,624 Note 3 0.02%" " (1) Accrued expenses 1,981 Note 3 0.00%" " (1) Endorsement and guarantees 310,000 0.46%" Foreground Technology Ltd. andits subsidiaries(1) Sales 179,030 Note 3 0.31%" " (1) Accounts receivable 122,593 Note 3 0.18%" " (1) Other receivables 699 Note 3 0.00%" " (1) Purchases 78,232 Note 4 0.09%Silver Star Developments Ltd.(SSDL) and its subsidiariesMiTAC International Corp. (2) Sales 33,063,724 Note 3 36.65%" " (2) Accounts receivable 7,914,709 Note 3 11.74%" " (2) Purchases 14,647,247 Note 4 16.64%" " (2) Unrealized gain or loss 126,750 - 0.14%" " (2) Accounts payable 6,526,617 Note 4 9.68%" " (2) Other Sales 843,917 Note 3 0.32%" " (2) Accounts receivable 629,660 Note 3 0.93%" " (2) Other payables 74,032 Note 4 0.11%" MiTAC Precision TechnologyCo., Ltd. and its subsidiaries(3) Purchases 2,262,996 Note 3 2.51%

Company NameSilver Star Developments Ltd.(SSDL) and its subsidiariesName of the counterpartyMiTACPrecision Technology Co.,Ltd. and its subsidairies" Foreground Technology Ltd. andits subsidiaries~171~TransactionRelationship with thecounterparty (Note 1) General Ledger Account Amount Transaction termsPercentage of consolidated total operatingrevenue or total assets (Note 2)(3) Sales $ 82,133 Note 3 0.09%(3)Sales 29,978 Note 4 0.03%" " (3) Accounts payable 10,182 Note 3 74,84%" " (3) Other payables 4,160 Note 3 0.03%" " (3) Accounts receivable 29,948 Note 3 0.04%MiTAC Precision Technology Co.,Ltd and its subsidiariesMiTAC International Corp. (2) Sales 1,335,658 Note 3 1.48%" Silver Star Developments Ltd.(SSDL) and its subsidiaries(3) Sales 2,262,996 Note 3 2.51%" " Purchases 82,133 Note 3 0.09%Foreground Technology Ltd. andits subsidiariesMiTAC International Corp. (2) Purchases 179,030 Note 3 0.31%" " (2) Accounts Payable 122,593 Note 4 0.18%" " (2) Other payables 699 Note 3 0.00%" " (2) Sales 78,232 Note 3 0.09%" Silver Star Developments Ltd.(SSDL) and its subsidiaries(3) Purchases 29,978 Note 3 0.03%" " (3) Accounts Receivable 10,182 Note 3 0.02%" " (3) Accounts Payable 29,948 Note 3 0.04%" " (3) Other receivables 4,160 Note 3 0.03%Tsu Fung Investment Corp. and itssubsidiariesMiTAC International Corp. (2) Purchases 284,496 Note 4 0.32%" " (2) Accounts payable 39,395 Note 4 0.06%" " (2) Other receivables 11,624 Note 4 0.02%" " (2) Accounts receivable 1,981 Note 4 0.00%Note 1: The relationship with the transaction parties are as follows:(1)The Company to the consolidated subsidiary.(2)The consolidated subsidiary to the Company.(3)The consolidated subsidiary to the consolidated subsidiary.Note 2: Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenue.Note 3: The collection period is 150 days after offsetting certain receivables and payables according to collection terms to overseas related parties. The sales price to related parties isbased on market value.Note 4: The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The purchase price from related partiesis based on market value.

2006Company NameName of the counterpartyMiTAC International Corp. MiTAC Precision TechnologyCo.,Ltd. and its subsidiariesTransactionRelationship with thecounterparty (Note 1) General Ledger Account Amount Transaction termsPercentage of consolidated total operatingrevenue or total assets (Note 2)(1) Purchases $2,814,065 Note 4 3.07%" " (1) Accounts payable 505,420 Note 4 0.72%" " (1) Accrued expenses / Other payables 136,458 Note 4 0.20%" Silver Star Developments Ltd(SSDL) and its subsidiaries(1) Sales 7,534,168 Note 3 8.22%" " (1) Purchases 40,142,339 Note 4 43.78%" " (1) Accounts receivable 1,760,461 Note 3 2.52%" " (1) Accounts payable 9,210,622 Note 4 13.19%" " (1) Warranty expense 583,645 Note 4 0.64%" " (1) Accrued expenses / Other payables 450,222 Note 4 0.64%" " (1) Endorsements and guarantees 1,536,365 2.20%" " (1) Other receivables 46,015 Note 3 0.07%" Tsu Fung Investment Corp. andits subsidiaries(1) Sales 306,226 Note 3 0.33%" " (1) Accounts receivable 58,959 Note 3 0.08%" " (1) Endorsements and guarantees 420,000 0.06%Silver Star Developments Ltd(SSDL) and its subsidiariesMiTAC International Corp. (2) Sales 40,142,339 Note 3 43.78%" " (2) Accounts receivable 9,210,622 Note 3 13.19%" " (2) Purchases 7,455,924 Note 4 8.13%" " (2) Unrealized gain or loss 78,234 - 0.09%" " (2) Accounts payable 1,760,461 Note 4 2.52%" " (2) Sales 583,645 Note 3 0.64%" " (2) Accounts receivable 450,222 Note 3 0.64%" " (2) Other payables 46,015 Note 4 0.07%" MiTAC Precision TechnologyCo., Ltd and its subsidiaries(3) Purchases 5,882,820 Note 4 6.42%" " (3) Accounts payable 1,096,293 Note 4 1.57%" " (3) Sales 156,617 Note 3 0.17%" " (3) Accounts receivable 109,677 Note 3 0.16%" " (3) Other receivables 99,587 Note 3 6.14%~172~

Company NameMiTAC Precision Technology Co.,Ltd and its subsidiariesName of the counterpartyTransactionRelationship with thecounterparty (Note 1) General Ledger Account Amount Transaction termsPercentage of consolidated total operatingrevenue or total assets (Note 2)MiTAC International Corp. (2) Sales $2,814,065 Note 3 3.07%" " (2) Accounts receivable 505,420 Note 3 0.72%" " (2) Other receivables 136,458 Note 3 0.20%" Silver Star Developments Ltd.(SSDL) and its subsidiaries(3) Sales 5,882,820 Note 3 6.42%" " (3) Accounts receivable 1,096,293 Note 3 1.57%" " (3) Purchases 156,617 Note 4 0.17%" " (3) Accounts payable 109,677 Note 4 0.16%" " (3) Other payables 99,587 Note 4 0.14%Tsu Fung Investment Corp. and itssubsidiariesMiTAC International Corp. (2) Purchases 306,226 Note 4 0.33%" " (2) Accounts payable 58,959 Note 4 0.08%Note 1: The relationship with the transaction parties are as follows:(1)The Company to the consolidated subsidiary.(2)The consolidated subsidiary to the Company.(3)The consolidated subsidiary to the consolidated subsidiary.Note 2: Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenue.Note 3: The collection period is 150 days after offsetting certain receivables and payables according to collection terms to overseas related parties. The sales price to related parties isbased on market value.Note 4: The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The purchase price from related partiesis based on market value.~173~

12. SEGMENT INFORMATION1) Operations in different industries:The Company operates principally in one industry. The Company’s major operation isthe design, manufacture, sales and services of micro-computers and related products.2) Operations in different geographic areas:2007Asia Others TaiwanAdjustments andEliminations ConsolidationRevenue from third parties $ 6,282,719 $ 15,595,022 $ 69,732,221 $ - $ 91,609,962Revenue from parent andconsolidated subsidiaries 97,386,829 769,115 15,659,494 ( 113,815,438 ) -Total $103,669,548 $ 16,364,137 $ 85,391,715 ( $ 113,815,438 ) $ 91,609,962Income per area $ 1,130,661 ( $ 20,193 ) $ 5,407,198 ( $ 306,820 ) $ 6,210,846Interest expense ( 326,803 )Investment income 1,006,576Income before income tax $ 6,890,619Identifiable assets $ 26,858,947 $ 8,134,100 $ 43,555,119 ( $ 21,324,699 ) $ 57,223,467Long-term investments 10,196,690Total assets $ 67,420,157In order to reconcile the amounts of segment information and the amounts shown on theconsolidated financial statements, the following adjustments and eliminations havebeen made:A. Revenue from parent and consolidated subsidiaries: $113,815,438.B. Income from parent and consolidated subsidiaries: $306,820, which is equal to therevenues from the parent and consolidated subsidiaries of $113,815,438 less therelated costs and expenses of $113,508,618.2006Asia Others TaiwanAdjustments andEliminations ConsolidationRevenue from third parties $ 8,197,364 $ 8,068,216 $ 76,324,855 $ - $ 92,590,435Revenue from parent andconsolidated subsidiaries 94,308,707 162,743 14,429,168 ( 108,900,618 ) -Total $102,506,071 $ 8,230,959 $ 90,754,023 ( $ 108,900,618 ) $ 92,590,435Income per area $ 926,805 $ 122,802 $ 5,376,342 ( $ 99,956 ) $ 6,325,993Interest expense ( 442,636 )Investment income 667,995Income before income tax $ 6,551,352Identifiable assets $ 43,492,227 $ 3,488,868 $ 46,288,221 ( $ 31,721,568 ) $ 61,547,748Long-term investments 8,277,617Total assets $ 69,825,365In order to reconcile the amounts of segment information and the amounts shown on theconsolidated financial statements, the following adjustments and eliminations havebeen made:A. Revenue from parent and consolidated subsidiaries: $108,900,618.B. Income from parent and consolidated subsidiaries: $99,956, which is equal to therevenues from the parent and consolidated subsidiaries of $108,900,618 less therelated costs and expenses of $108,800,662.~174~

3) Export sales2007 2006North America $ 27,108,878 $ 33,782,697Europe 22,061,769 24,435,331Asia and Australia 18,475,813 20,250, 4204) Major customers$ 67,646,460 $ 78,468,448List of customers which accounted for more than 10% of total sales:Customer nameSales amountFor the year ended December 31, 2007Percentage oftotal salesSales departmentE customer $ 18,732,410 21% Total companyA customer 10,412,897 12% Total companyCustomer nameSales amountFor the year ended December 31, 2006Percentage oftotal salesSales departmentE customer $ 21,523,512 23% Total companyA customer 14,206,545 15% Total company~175~

VIII. Assessment of financial conditions, operational result,and potential risks1. Financial status, discussion, and analysisUnit: NT$ ThousandYearDifferential2006 2007ItemAmount %Current assets 36,117,501 35,901,473 (216,028) (0.60)Fixed assets 2,220,427 2,239,867 19,440 0.88Intangible assets - 613,095 613,095 -Other assets 1,219,528 1,152,041 (67,487) (5.53)Total assets 57,792,348 62,278,377 4,486,029 7.76Current liabilities 24,121,951 26,219,092 2,097,141 8.69Long-term debt 5,021,478 1,510,983 (3,510,495) (69.91)Total liabilities 30,076,653 28,316,288 (1,760,365) (5.85)Capital 12,797,594 14,565,380 1,767,786 13.81Capital reserves 3,118,583 4,202,512 1,083,928 34.76Retained earnings 11,012,564 13,628,008 2,615,444 23.75Total shareholder equity 27,715,695 33,962,089 6,246,394 22.54(1) Analysis of changes in assets, liabilities, and shareholder’s equity in the most recenttwo years (changes over 20% and NT$10 million):1) Long-term debt: Primarily due to that in 2007 the Company’s convertible corporatedebenture bond within one year is classed as an current liabilities, which makes adeduction of long-term liabilities in response.2) Capital reserves: The capital reserves is increased mainly because the Company hasmerged Tyan Computer Corp. and issued new shares in 2007.3) Retained earnings: Due to an increase in sales during this period, net profit rose,leading to an increase in retained earnings.4) Total shareholder equity: Due to an increase in capital reserves and retainedreserves.(2) The aforementioned changes do not have significant impact on the Company’soperation.2. Analysis of business resultsUnit: NT$ ThousandYearAmount of Change in2006 2007Itemchange percentage %Total operating revenue 84,470,112 85,567,363 1,097,251 1.30Less: Sales return and allowance (1,587,749) (3,493,466) 1,905,717 120.03Net operating revenue 82,882,363 82,073,897 (808,466) (0.98)Operating costs (73,802,761) (71,942,987) (1,859,774) (2.52)Gross profit 9,079,602 10,130,910 1,051,308 11.58Operating expenses (4,121,296) (5,556,398) 1,435,102 34.82Operating income 4,958,306 4,574,512 (383,794) (7.74)Non-operating income and gains 1,482,530 2,137,177 654,647 44.16Non-operating expenses andlosses (310,042) (219,517) (90,525) (29.20)Pre-tax net income from continuingoperations 6,130,794 6,492,172 361,378 5.89~176~

YearAmount of Change in2006 2007Itemchange percentage %Income tax expense (747,182) (843,910) 96,728 12.95Accumulated effect of changes inaccounting principles (124) - 124 100.00After-tax net income from continuingoperations 5,383,488 5,648,262 264,774 4.921) Analysis of changes in percentage increases/decreases (changes less than 20% areexempted):a. Sales returns and allowance: Due to the change of product combination, salesreturns and allowances showed a corresponding rise.b. Operating expense: Due to the change of product combination, sales expensesand increase of marketing costs (delivery service or others) showed acorresponding rise.c. Non-operating income: Due to the equity method of evaluation of investmentgains increase, current non-operating income and gains rose than last year.d. Non-operating expenses and losses: Due to the loss of investing valueimpairment loss, which has reduced the non-operating expenses and losses thanformal year.2) Reasons for changes in the Company’s businesses: The Company did not changeits major businesses.3) Forecasts for sales volumes in the next year and major factors affecting theirgrowth or decline:MiTAC followed the 2007 top management’s year plan and assessment tofuture environment to positive customer-made products and x86 work stationproducts; meanwhile, the Company also are concentrating on the varied marketscopes, such as kids PC and MID for mobile Internet users, etc., to balance thepersonal characteristic development on computer tools. In terms of enterprisesystem product development, in addition to developing the server industry furtherfor upholding the competition advantage continuously, the mission is to have themass production of new customers and products arranged. In terms of high-levelserver products, regarding the high-speed computers and cluster computingapplication, we are going to develop more different kinds of high-density andpower-saving rack-based servers barebone. In terms of wireless communications,MiTAC will apply collective resources for the development and production ofconverged devices, using perfectly planned navigation graphical software andcombining Internet applications to develop in the direction of value-addedconnected PND, and launch the customer-made products and improve theconvenience and smoothness of operating interface; in addition, MiTAC willdevote to the completeness of graphical data and products with varied applications;continuously enhance our competition advantage by means of application,integration, innovation, production quality, cost control. MiTAC will expand newmarket through our strategic alliances, the internationally famous vendors, inhardware, software and communication services. We predict that the deliveryamount of PND will increase than last year.~177~

3. Cash flow analysisInitial cashbalanceNet cash flow fromoperationsCash outflowsfor the fullyearCash surplus(shortfall)Unit: NT$ ThousandMeasures for rectifyingcash shortfallInvestment Financingplans plans8,367,454 5,233,441 (4,270,817) 9,330,078 - -(1) Analysis of cash flow for the current yearA. Operations: Due to revenue and profitability increases in the current period, andsound management of operating funds, operations result in a net cash inflow.B. Investing activities: Due to an increase of long-term investment, fixed assets anddeferred expense for business operation, investing activities result in a net cashoutflow.C. Financing activities: Due to the reimbursing of part of bank loan, buying treasurystocks and distribution of cash dividends and employee bonuses, financingactivities result in a net cash outflow.(2) Remedy for cash shortfalls: N/A(3) Liquidity analysis within one yearUnit: NT$ ThousandMeasures for rectifyingInitial cash Net cash flow Cash outflows Cash surplus cash shortfallbalance from operations for the full year (shortfall) Investment Financingplans plans9,972,213 4,192,291 (6,085,350) 8,079,154 - -1) Analysis of changes in cash flow in the recent year:A. Business operation: It is forecast that revenues and profits for 2008 will beequivalent to 2007, with the result that in the next year there will be a netcash inflow from business operations.B. Investing activities: Projected increases in long-term investments, purchasesof molds and fixed assets.C. Financing activities: Projected redeeming the convertible corporate bonds,distribution of cash dividends and employee bonus.2) Remedies for cash shortfalls: N/A4. Influence of major capital expenditures in the most recent year on financialcondition: None5. Reinvestment policy in the most recent year, causes for reinvestment income and loss,remedial measures and the investment plan within the year:(1) Major reason to earn profits or losses caused by the reinvestment policy in the mostrecent year:~178~

ItemSilver StarDevelopments Ltd.Investmentamount in2007Policy1,485,099 Elevate product’sadvantages and make efforton market. Enhance overallcompetition capability bylong-term putting resourceon it.Major reason causingprofits or lossesReinvested businesses aregrowing up steadily andearn profit consistently.ImprovementplanN/AFuture investmentplanFollow thecompany’soperating strategyto perform globalinvestment plan.(2) Investment plan within the year:Follow the company’s operating strategy to perform global investment plan.6. Risk management(1) Organization structureResponsible unitsFinance CenterMS CenterLegal Affairs CenterResourcesDevelopmentTasks and missionsResponsible for business decision planning, mid-term and long-term investmentassessment, financial coordination and operation, risk hedge establishment, makingreliable financial statements, business performance, efficiency, and obedience inorder to minimize finance, tax, and strategy risk..Responsible for planning, constructing, and maintaining the safety control andfirewall of Internet and information software and hardware equipment or system;also, measuring Internet and system quality to minimize the risk of Internet andsystem safety.Responsible for regulatory risk control, obeying governmental supervision policyand handling agreement and litigation dispute to minimize regulatory risk.Responsible for personnel risk control and real estate risk management of thecompany; also, obeying governmental regulations to secure the on going concernand property safety of the company.(2) Influence of interest rates, exchange rate fluctuations, inflation on the Company’sprofits or losses in 2007 & 2008, and future responses:1) Influence of interest rates, exchange rate fluctuations, inflation on the Company’sprofits or losses in the duration from Jan 1 2007 to Mar 31 2008Unit: NT$ Thousand2007 2008/3/31(Audited by accountant) (Note 1)Amount Share of Amount Share of salessalesItem (NT$ Thousand) revenue (%) (NT$ Thousand) revenue (%)Interest expense 202,166 0.25 45,276 0.30Exchange gain/loss 19,394 0.02 (28,817) (0.19)Gain on valuationof financial asset(292) 0.00 72,592 0.48Note 1: To the end of quarter prior to the publication date of this annual report.Note 2: Inflation was negligible.~179~

2) MiTAC’s substantial measure to respond the variation of interest & exchange rateand inflation are:A. All accounts receivable and payable are received and paid in USD in as toreduce the influence to overall profit earning from variable currencyexchange rate.B. At present, the trading of derivatives products are a tool to get away frominflation risk, which is processed per the “Procedure of Trading in theDerivatives Products” by means of regularly evaluating the profit; as in theprospect of reducing the influence to overall profit earning from variablecurrency exchange rate.C. Daily collect currency exchange rates, bank interests rate and marketinformation; timely report to the top management an emergency statusoccurs and take a responding measure.D. Regularly evaluates interest rates on bank loans, working closely with banksin order to obtain favorable terms of loan interest, lessening the potentialimpact of interest rate fluctuations on the Company’s profit/loss.E. Due to the advance of crude oil and raw material against inflation hasbecome a crucial subject in operation. MiTAC respond it by means ofdistributing the purchasing sources, seeking for substitute materials andmass purchase. Also, the Company is dedicated in improving process,researching new products and controlling cost; as a way against the negativeinfluence to MiTAC profits /losses from inflation effect.(3) For the most recent year, policies regarding participation in high-risk, highlyleveraged investments, loans to other parties; endorsements, guarantees, andderivatives; major reasons for gains or losses, and future responsive measures:1) The Company did not pursue high-risk, highly leveraged investments, norprovided loans to other parties. In compliance with relevant laws, the Companyhas already established “Procedure for Lending Money to Other Parties.”2) The Company provides guaranties in conformance with “Procedure for Guarantyof Outside Parties.” The maximum for guaranties provided by the Company atthe end of 2007 and on April 30, 2008 were NT$31,541,976 thousand andNT$33,658,145 thousand, respectively. The balance of guaranties amounted toNT$1,337,355 thousand and NT$1,287,355 thousand at the end of 2007 and onApril 30, 2008.3) The Company has derivatives transactions conducted according to “Procedure ofTrading in the Derivatives Products.”(4) Future R&D projects and projected R&D expenditures:1) In the current year (2008), R&D expenditures are projected to be NT$ 1,950,837thousand.2) Future R&D projectsA. Client system business products‧Personal computers with integrated digital appliance business features anddiversified styling and application design.‧Personal computers interoperable with home appliances.‧Personal computers that integrate wired or wireless networking features.‧High-performance low-cost dual-core processor-based workstations.~180~

‧Integrated hardware platform for web-based AV content services.‧System protocol and integration of simplified terminal computers & servers.‧R&D of all-In-One LCD computer technologies.‧Web-centric digital appliance business and end-user storage products.‧Work with service organizations in fields such as television, video, education,and healthcare to provide end-user with digital service systems.B. Enterprise products‧High-performance workstations based on RISC/CISC processors.‧High-performance servers.‧High-density servers.‧Servers for communications applications.‧Technology for storage devices.C. Wireless communications products‧Technology for integrating computers and communications.‧Integration of data access, voice, and wireless broadband communicationsfunctionality.‧Technologies for developing web-centric personal computers, IA products,communications devices, and storage solutions.‧Technology for multimedia applications.‧Wireless communications and networking technologies.‧Technology for wireless communications equipment.‧Development of new digitalized multimedia technologies to create newbusiness opportunities and the foundation for related products.‧Operating systems and application software.‧Virtual reality software development and applications.‧VOIP communications products.‧GPS and electronic navigation technologies and location based service.D. Channel servers products‧High-performance servers (four-socket or eight-socket HPC server platform).‧R&D of high-density servers.‧High-density blade servers.‧Technology for storage devices.E. Others‧ High-density, high frequency electronics architectures and automatedproduction testing technologies.‧ High-yield product design approach (DFM).‧ Product design and manufacturing that address environmental concerns andmeet ISO 14000 standards.‧ High-speed PC architecture and heat flow technologies.(5) The impact of major changes in domestic or foreign government policies and laws in~181~

ecent years on the Company’s financial condition and business, and the Company’sresponsive measures:According to the order of ROC Accounting Research & Development Foundationissued in Mar 2007, enterprises shall make employee bonus a regular expense ofcompany expenditure since 2008 rather than a earning distribution. This newregulation makes insignificant influence to MiTAC; the new-added expense is to bebalanced by elevating company’s operating efficiency.(6) Technology changes in the most recent year – Their influence on the Company’sfinances and sales, and the Company’s responses:1) Desktop computer:Due to rapid price declines and intense competition in computer hardwareproducts, profits are being squeezed despite growth in unit sales. The appropriateresponse is developing lower-cost products and speeds up their development,create product differentiation, and shorten the time needed to ramp-up to massproduction.The digital appliance products are new industry; yet, since they are directlyconnecting to consumable electronic products, the challenge is at high quality andlow price. To respond it, vendor shall develop products with even lower cost in theway of creating discrepancy to products and speeding up the R&D and massiveproduction of new products.2) Enterprise products:Due to the effects of an unfavorable economic environment, companies areinvesting less in technology. As a result, the revenues that a single new productcan contribute are correspondingly diminished. In addition, vendors are cuttingprices in order to obtain orders, putting pressure on profit margins. Therefore, agreater number of R&D workers must be assigned to a greater number ofdevelopment projects for new products in order to achieve the same level ofrevenues and profits. The advent of ultra-dense server products should increaseaverage per-unit prices and production value.3) Wireless communications products:Wireless communications products development is towards lower powerconsumption, integration of a greater range of functionality, and ever-faster speedsfor data communications. Product development is with a plea for light, thin, andcompact, fashionable ID design, integrated quality, and easy-to-use interface; also,combine advanced technology R&D for the development of wireless link,hand-free, and voice identification. MiTAC plans to integrate the wirelessbroadband technology into the hand-free device and with built-indual-communications design for the most popular online digital service. The R&Dand production of satellite navigation phone and smart phone that is with built-incamera will help MiTAC develop great market share and bring business and profitto the company.4) Channel server products:So far the mainboard market is getting mature and Taiwan’s production amountof mainboards share about 90% of global market demanding. Suppliers shall holdthe mainboard market and develop other new products concurrently. Such asFoxConn, Gigabyte and ASUS that have built R&D department to develop server,bare-bones and other products that threaten MiTAC’s current operation.~182~

Response: since servers are different to PC; the application environmentdifference between these two fields is big; although the market demanding amountof servers are less than PC product market, yet, the former one asks for higherquality level; shipments of some server mainboards are only 1,000~2,000 pieces orless and under customer-design model to develop and produce, which is relativelynon-profitable investment to a major mainboard manufacturer in Taiwan withmillions of mainboard shipments per month. MiTAC always focuses on the designof skill-oriented servers and workstation products; we follow market demandingand technological trend to launch new productlines for various applications andrequirements to fully meet OEM clients, system integration (SI) suppliers andsolution providers for high availability and high performance needs. The hightechnical demanding of server software management system becomes a thresholdand key factor for hardware producers regarding whether it can cut in the servermarket or not. At present suppliers who can pass through this threshold most areforeign vendors; for PC mainboard suppliers, it is relatively difficult to pass thistechnological threshold and enter the server mainboard market.MiTAC has worldwide famous OEM or ODM operating model, and plays acrucial role in server mainboard supplying market. We consistently launchcharacteristically leading products to market and master the server softwaremanagement system technologies. Moreover, MiTAC has expanded the productsand production skills to the applications of embedded computers and supercomputer; in the software integration, service supporting and design configurationaspects, and MiTAC uses complete integration idea to maintain competitioncapability in market.(6) The impact of changes in the Company’s image during recent years on its crisismanagement capabilities, and relevant responsive measures: None(7) Projected benefits and possible risks of acquisitions:MiTAC has merged Tyan Computer and so far is in the transition stage ofintegration adjustment. After this transition stage is over, we will be capable tointegrate the products of enterprise servers, high-end mainboards and bare-bonessystem products to provide customers multifunctional products, which is good forenhance MiTAC’s market competition capability; the merge effort will appeargradually.The risk of the merger with Tyan is on the business integration. We areconfidence that the business risk could be minimized with MiTAC’s years ofexperience in business and management.(8) Projected benefits and possible risks of factory expansion and relevant responsivemeasures: None(9) Risks faced in taking deliveries and making sales:Taking deliveries:Most deliveries taken are finished products provided by the Company’s Chinesesubsidiaries, and thus there are no administrative risks involved. MiTAC’ssubsidiaries in Mainland China are its processing factories; therefore, it is notnecessary to purchase finished goods from them. MiTAC expects no materialcontrol risk from the 100% wholly owned subsidiaries. MiTAC’s procurementpolicy is to maintain at least two suppliers and spread out the source of materialsupply; moreover, MiTAC has maintained a long-term relationship with allsuppliers to ensure a safe source of material supply.~183~

Sales:The Company is without concentration of revenues from a single customer, sothat there are no relevant risks in this area. MiTAC is free of a centralized practice;moreover, the sales ratio to each customer has been kept under 30% in the last threeyears. Based on the strong R&D and production capability, MiTAC has maintaineda long-term relationship with the existing customers; also, has striven to developnew customers in order to expand the source of customers. Therefore, MiTACexpects no risk from a centralized practice.(10) Impact and risks associated with large transfers or conversions of equity bydirectors, supervisors or major shareholders holding a stake in excess of 10%:MiTAC is aware of the major shareholders and the final controller of the majorshareholders; therefore, the holdings of the Directors, Supervisors, and the top tenshareholders are reported according to the Stock Exchange Law.(11) Impact and risks associated with a change in the Company’s ownership: None(12) Litigation and non-litigations disputes:In the most recent year and the present year to the publication date of this annualreport, the Company and the Company’s directors, supervisors, General Manager,Personnel-in-charge, major shareholders holding a stake in excess of 10%, and thesubsidiaries have not been involved in any litigation or non-litigious disputes thatmight have a significant impact on shareholder rights or stock prices, as defined inArticle 20, item 6, Part 12 in “Criteria Governing Information to be Published inAnnual reports of Public Companies.”(13) Other important risks and responsive measures: None7. Other important events: None~184~

1. Information on affiliates(1) Consolidated operational statement for affiliates1) Organization chart to affiliatesIX. Special events of recordMiTAC International Corp.100%100%100%Tsu FungInvestmentCorp.Silver Star DevelopmentsLtd.Foreground Technology Ltd.100%100% 100% 100% 100%Mio Technology Corp.100%Pacific China Corp.Top SheenEnterprisesLtd.TyanComputerCorporation -USATyanComputerCorporation -GMBHDLC Technology Corp.100% 100% 100%100% 100% 100% 100% 100%HugeExtend Ltd.Dynamic StarInvestmentLtd.Start WellTechnologyLtd.MitacService(Shanghai)co., Ltd.Mitac StarServiceLtd.SoftwareInsight Ltd.TyanComputerTechnology(Shanghai)Corp.TyanComputerCorporation -JAPAN100% 100% 100%MitacTechnology(KunShan)Co., Ltd.MitacComputer(KunShan)co., Ltd.MitacComputer(Shunde)Ltd.MitacResearch(Shanghai)Ltd.~185~

MiTAC International Corp.100%Silver Star Developments Ltd.100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%NavmanEurope Ltd.Naviart Ltd.(H.K)MiTACAustralia PtyLtd.NavmanTechnologyNZ Ltd.MitacBeneluxN.V.BoomingEnterprisesInc.MagicmateGroup Ltd.MioInternationalLtd.Mitac U.S.A.Inc.Mitac JapanCorp.Mitac U.K.Ltd.ECland Ltd.System GloryInternationalLtd.Mitac Pacific(H.K.) Ltd.Best Profit Ltd.100% 100% 100% 100% 100% 100% 100%Naviart IT(Shanghai) Co.,Ltd.MioTechnologyUSA Ltd.MioTechnologyKoreaMioTechnology(Cheng Du)Ltd.MioTechnologyLtd.(Shuzhou)Sky UniverseEnterprisesLimitedBright CrownManagement Ltd.100%Scalable ServersCorp.-USA~186~

2) Affiliated companies – basic data:Unit: Thousand dollarsCompany Name Date established Address Paid-in capital Main business or production itemsTsu Fong Investment Corp. Feb. 16, 1998 10/F, 77, Minsheng East Road, Section 3, Taipei NT$596,700 General investmentSilver Star Developments Ltd. Jun. 05, 1990 P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands US$215,495 General investmentMiTAC U.S.A. Inc. Mar. 15, 1993 47988 Fremont Blvd, Fremont, CA 94538 U.S.A.Computer peripherals, software and hardware,US$2,750and associated productsMiTAC Japan Corp. Apr. 30, 1983 1-2-8 Showajima, Ohta-Ku, Tokyo, Japan 143-0004Computer peripherals, software and hardware,YEN 50,000and associated productsMiTAC Benelux N.V. Sept. 13, 1993 Brusselsesteenweg 307B, 1785 Brussegem, BelgiumComputer peripherals, software and hardware,EUR 1,618and associated productsMiTAC (UK) Ltd. Nov. 21, 2000 Synnex House, Nedge Hill, Telford, Shropshire TF3 3AH, U.K.Computer peripherals, software and hardware,GBP 500and associated productsECLand Ltd. Jul. 10, 2000 Synnex House, Nedge Hill, Telford, Shropshire TF3 3AH, U.K.Computer peripherals, software and hardware,GBP 0MiTAC Pacific (H.K.) Ltd. Jun. 13, 1991 Room 1221, 12/F, Leighton Centre, 97 Leighton Rd. Causeway Bay, HK US$10System Glory International Ltd. Oct. 25, 1995 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentPacific China Corp. Dec. 27, 1996 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentMiTAC Star Service Ltd. Jan. 12, 2001 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$50,500 General investmentSoftware Insights Ltd. Jul. 18, 2000 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$900 General investmentand associated productsComputer peripherals, software and hardware,and associated productsProduces computers and peripheralMiTAC Computer (KunShan) Co., Ltd. Nov. 01, 2000 Kunshan Export Processing Zone, Jiangsu Province, China RMB 247,474 equipment, hardware and software and relatedproducts; sales of own manufactured productMiTAC Service (Shanghai) Ltd. Oct. 11, 2001 2 Fl. No. 129, Fute Rd., (N.), Waigaoqiao Free Trade Zone, Shanghai, China RMB 8,277MiTAC Computer (ShunDe) Ltd. Jan. 18, 1993No. 1, ShunDa Rd., Lunjiao Town, ShunDe City, Guangdong Province,ChinaRMB 616,837MiTAC Research (Shanghai) Ltd. Nov. 23, 2004 213, Jiang Chang 3rd Road, Zha-Bei District, Shanghai RMB 43,040Start Well Technology Ltd. Apr. 20, 2000 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$9,900 General investmentDynamic Star Investments Ltd. Nov. 28, 2001 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentMio Technology Corp. Jan. 17, 2000 2/F, 77, Minsheng East Road, Section 3, Taipei NT$5,000softwareMiTAC Technology (Kunshan) Co.,Ltd.Jan. 28,2002 Kunshan Export Processing Zone, Jiangsu Province, China RMB 8,277Warehousing, distribution, testing, repairs,displays of calculator components and relatedproducts; technical support and after-salesservice for related products.Manufactures computer, mainboards,interface cards, monitors, power supplies,keyboards, related pressed metal parts, plasticcomponents; mainboard repair servicesR&D and manufacture of computer software;sales of own manufactured product andprovision of related technical support serviceData processing services, wholesales andretail sales of electronic communicationsTesting, repairs, and displays of calculatorcomponents and related products; technicalsupport and after-sales service for relatedproducts.~187~

Unit: Thousand dollarsCompany Name Date established Address Paid-in capital Main business production itemsMio International Ltd. Feb. 06, 2004 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin IslandsComputer peripherals, software and hardware,US$0and associated productsMagicmate Group Ltd. Jul. 27, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentMio Technology Korea Jul. 27, 2006 53-5, 7F, ChungJin BD., Wonhuyro3 ga, Youngsan Gu, Seoul, KoreaComputer peripherals, software and hardware,KRW 100,000and associated productsHuge Extent Limited Jun. 22, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentMiTAC Technology (Cheng Du) Ltd. Oct. 24, 2006 2f, Building A7, Tian-Fu Software Park, Gao-Xin District, Cheng Do ChinaR&D and manufacture of computer software;RMB 1,757 sales of own manufactured product andprovision of related technical support serviceBooming Enterprises Inc. May. 18, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentMio Technology USA Ltd. Jul. 17, 2006 47988 Fremont Blvd, Fremont, CA 94538 U.S.A. US$800 Computer peripheralsMiTAC Australia Pty Ltd. Mar. 06, 2007 Suite 2, 408 Victoria Rd, Gladesville NSW 2111 Australia A$127 Computer peripheralsNavman Technology NZ Ltd. Mar. 06, 2007 7-11 Kawana Street, Northcote, PO Box. 36 173, Northcote Auckland, New Zealand NZ$140 Computer peripheralsNaviart IT (Shanghai) Co., Ltd. Mar. 15, 2006Room 22301-1041, Building 14, Pu Dong Software Park, No. 498, Guo-Shou-Jing Rd.,Zhang-Jiang High-Tech Park, Shanghai, ChinaComputer peripheralsRMB 2,770Naviart Limited Mar. 03, 2005 15F, Hutchison House, 10 Harcourt Rd., Central, H.K. US$5,647 Computer peripheralsNavman Europe Limited May. 10, 2001Navman Europe Ltd, 4G Gatwick House, Peeks Brook Lane, Horley, Surrey RH6 9ST, UnitedKingdomComputer peripheralsGBP 10DLC Technology Corp. Jul. 18, 2007 2F, No.26, Lane 513, Rui Guang Rd., Neihu District, Taipei City NT$1,000 Computer peripheralsMio Technology (Shuzhou) Ltd. Dec. 04, 2003International Business Building, No.8, Zhao Feng Rd., International Business Zone, Economic& Technologies Development District, Kunshan City, ChinaRMB 1,960Foreground Technology Limited Jun. 05, 2002 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$9,045 General investmentTyan Computer Corporation - USA Jul. 17, 1989 3288 Laurelview Ct., Fremont, CA 94538 US$17 Computer peripheralsTyan Computer Corporation - GMBH Dec. 03, 1998 Einsteinstr. 14 85716 Unterschleißheim Germany EUR 26 Computer peripheralsTop Sheen Enterprises Ltd. Mar. 24, 2003 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$440 General investmentRun and agent for import & export ofcommodities and technologies.Computer peripherals, software and hardware,Tyan Computer Corporation - JAPAN May. 27, 2002 WIZEM Building 5F 3-3-8, Ueno, Taito-ku, Tokyo 110-0005, Japan JPY 10,000and associated productsR&D and manufacture of computer software;Tyan Computer TechnologyMar. 07, 2001 No. 199B, Jiang Chang W. Rd., Shanghai, China RMB 11,468 sales of own manufactured product andCorporation (Shanghai)provision of related technical support serviceBest Profit Ltd. Jan. 03, 2007Scotia Centre, 4th Fl., P.O. Box 2804, George Town, Grand Cayman KY1-1112, CaymanIslandsUS$0 General investmentBright Crown Management Ltd. Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentSky Universe enterprises Ltd. Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investmentScalable Servers Corp. Apr. 17, 2007 47436 Fremont Blvd, Fremont, CA 94538 US$03) Shareholders of the affiliates or subsidiaries: NoneComputer peripherals, software and hardware,and associated products~188~

4) Business operation of and relation with the affiliates:Type of business Name of affiliated company Relations with business of affiliated companyManufacture andsales ofcomputerproductsInvestmentholding companyTechnicalservicesTradingMiTAC Computer (Kunshan) Co., Ltd.Production and sales of MiTAC International products, provision ofafter-sales serviceMiTAC Computer (ShunDe) Ltd.Production and sales of MiTAC International products, provision ofafter-sales serviceSilver Star Developments Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales serviceSystem Glory Int’l Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Pacific China Corp.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Software Insights Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Start Well Technology Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.MiTAC Star Service Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Dynamic Star Investments Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Magicmate Group Ltd.Investment in overseas subsidiaries for sales of MiTAC InternationalProducts, provision of after-sales service.Huge Extent LimitedInvestment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Booming Enterprises Inc.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Foreground Technology LimitedInvestment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Top Sheen Enterprises Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Best Profit Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Bright Crown Management Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Sky Universe Enterprises Ltd.Investment in overseas subsidiaries, for production and sales of MiTACInternational Products, provision of after-sales service.Tsu Fong Investment Corp.General investmentMiTAC Research (Shanghai) Ltd.Computer software R&D and production, sales of own products, provisionof associated technology query servicesTyan Computer Technology (Shanghai) Computer software R&D and production, sales of own products, provisionCorp.of associated technology query servicesMio Technology (Cheng Du) Ltd.Computer software R&D and production, sales of own products, provisionof associated technology query servicesMiTAC Technology (Kunshan) Co., Ltd. Provision of after-sales service to MiTAC International productsMiTAC Service (Shanghai) Co., Ltd.ECLand Ltd.MiTAC Pacific (H.K.) Ltd.DLC Technology Corp.Mio Technology Corp.MiTAC U.S.A. Inc.MiTAC Japan Corp.MiTAC Benelux N.V.Mio International Ltd.MiTAC (UK) Ltd.Mio Technology KoreaMio Technology Ltd. (Suzhou)Mio Technology USA Ltd.MiTAC Australia Pty Ltd.Navman Technology NZ Ltd.Naviart IT (Shanghai) Co., Ltd.Naviart LimitedNavman Europe LimitedProvision of after-sales service to MiTAC International productsSales of MiTAC International productsSales of MiTAC International productsSales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.~189~

Tyan Computer Corporation - USATyan Computer Corporation - GMBHTyan Computer Corporation - JAPANScalable Servers Corp.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.Sales of MiTAC International products, provision of after-sales service.5) Directors, supervisors, General Managers of affiliated companiesCompany name Title Name or RepresentativeHoldingsShares StakeTsu Fong Investment Corp. Chairman MiTAC International Corp. representative 59,670,040 100%Billy HoDirector MiTAC International Corp. representative 59,670,040 100%Crystal YangDirector MiTAC International Corp. representativeJessica Chai59,670,040 100%Supervisor MiTAC International Corp. representative 59,670,040 100%C.S. ChenSilver Star Developments Director Billy Ho 0 0%Ltd.Director Crystal Yang 0 0%Director James Yuan 0 0%MiTAC U.S.A. Inc. Director Crystal Yang 0 0%Director Billy Ho 0 0%MiTAC Japan Corp. Director Billy Ho N/A 0%Director Crystal Yang N/A 0%Director Iida N/A 0%Supervisor Vicky Hsieh N/A 0%MiTAC Benelux N.V. Director Billy Ho 0 0%Director Crystal Yang 0 0%MiTAC (UK) Ltd. Director Billy Ho 0 0%Director Crystal Yang 0 0%ECLand Ltd.Director Billy Ho 0 0%Director Crystal Yang 0 0%MiTAC Pacific (H.K.) Ltd. Director Billy Ho 0 0%Director Crystal Yang 0 0%System Glory International Director Billy Ho 0 0%Ltd.Director Crystal Yang 0 0%Director James Yuan 0 0%Pacific China Corp. Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%MiTAC Star Service Ltd. Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%Software Insights Ltd. Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%MiTAC Computer Chairman Start Well Technology Ltd. representativeN/A 100%(KunShan) Co., Ltd.Samuel WangDirector Start Well Technology Ltd. representativeBilly HoN/A 100%Director / General Start Well Technology Ltd. representativeN/A 100%MiTAC Service (Shanghai)Co., Ltd.Manager C.P. LeeChairman Pacific China Corp. representativeN/A 100%Billy HoVice Chairman / Pacific China Corp. representativeN/A 100%General Manager Percy ChenDirector Pacific China Corp. representative C.P. Lee N/A 100%~190~

Company name Title Name or RepresentativeMiTAC Computer (ShunDe)Ltd.MiTAC Research (Shanghai)Ltd.Mio Technology Corp.Start Well Technology Ltd.Dynamic Star Investments Ltd.MiTAC Technology (Kunshan)Co., Ltd.Mio International Ltd.Magicmate Group Ltd.Mio Technology KoreaHuge Extent LimitedMio Technology (Chang Du)Ltd.Booming Enterprises Inc.SharesHoldingsStakeChairman MiTAC Star Service Ltd. representativeN/A 100%Billy HoDirector MiTAC Star Service Ltd. representativeN/A 100%C.S. ChenDirector MiTAC Star Service Ltd. representativeN/A 100%Matthew MiauDirector MiTAC Star Service Ltd. representativeFrancis TsaiN/A 100%General Manager Stone Lin N/A 0%Chairman Software Insights Ltd. representativeN/A 100%Samuel WangDirector Software Insights Ltd. representativeN/A 100%N. Y. YehDirector Software Insights Ltd. representativeN/A 100%Billy HoChairman Tsu Fong Investment Corp. representative 500,000 100%Billy HoDirector Tsu Fong Investment Co., Ltd. representative 500,000 100%James YuanDirector Tsu Fong Investment Co., Ltd. representative 500,000 100%Percy ChenSupervisor Tsu Fong Investment Co., Ltd. representative 500,000 100%C.S. ChenGeneral Manager Samuel Wang 0 0%Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%Chairman Dynamic Star Investments Ltd. representativeN/A 100%Billy HoDirectorDynamic Star Investments Ltd. representativeJing-Ping LeeN/A 100%Director/President Dynamic Star Investments Ltd. representativeN/A 100%Han-Tong ChenDirector Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%Director Billy Ho 0 0%Director Crystal Yang 0 0%Director James Yuan 0 0%Director Billy Ho 0 0%Director Crystal Yang 0 0%Director Samuel Wang 0 0%Director Yang Hsiang Yun 0 0%Director Ho Jhi Wu 0 0%Director Yuan Chi-Ying 0 0%DirectorMio International Ltd. representativeN/A 0%Samuel WangDirectorMio International Ltd. representativeDi-Yuan YeN/A 0%Director Mio International Ltd. representative Billy Ho N/A 0%Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director James Yuan 0 0%~191~

Company name Title Name or RepresentativeSharesHoldingsMio Technology USA Ltd. Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director Samuel Wang 0 0%MiTAC Australia Pty Ltd. Director Billy Ho 0 0%Director Samuel Wang 0 0%Director Liu Fung Kiu 0 0%Navman Technology NZ Ltd. Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director Samuel Wang 0 0%Naviart IT (Shanghai) Co., Ltd. Director Naviart Ltd. representative Billy Ho N/A 0%Director Naviart Ltd. representative N. Y. Yeh N/A 0%Director Naviart Ltd. representative Samuel Wang N/A 0%Naviart LimitedDirector Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director Samuel Wang 0 0%Navman Europe Limited Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director Samuel Wang 0 0%DLC Technology Corp. DirectorDirectorDirectorMio Technology Corp. representativeJames YuanMio Technology Corp. representativeHo Jhi-WuMio Technology Corp. representative100,000100,000100,0000%0%0%Yang Hsiang-YunMio Technology (Suzhou) Ltd. Chairman/PresidentDirectorDirectorMio International Ltd. representative Samuel WangMio International Ltd. representative Billy HoMio International Ltd. representative C.P. LeeN/AN/AN/A0%0%0%Foreground TechnologyLimitedDirectorDirectorDirectorYang Hsiang-YunBilly HoJames YuanTyan Computer Corporation - Director Yang Hsiang-Yun 0 0%USA Director Billy Ho 0 0%Tyan Computer Corporation - Director Yang Hsiang-Yun 0 0%GMBH Director Billy Ho 0 0%Top Sheen Enterprises Ltd. Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director James Yuan 0 0%Tyan Computer Corporation - Director Iida 0 0%JAPANDirector Billy Ho 0 0%Tyan Technology (Shanghai)Co., Ltd.Best Profit Ltd.Bright Crown Management Ltd.Sky Universe Enterprises Ltd.Scalable Servers Corp.000StakeDirector Yang Hsiang-Yun 0 0%DirectorTop Sheen Enterprises Ltd. representativeN/A 0%Chang Tung SimonDirectorTop Sheen Enterprises Ltd. representativeEric ChoN/A 0%DirectorTop Sheen Enterprises Ltd. representativeN/A 0%Teresa ChenDirector Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director James Yuan 0 0%Director James Yuan 0 0%Director Ho Jhi-Wu 0 0%Director Yang Hsiang-Yun 0 0%Director James Yuan 0 0%Director Ho Jhi-Wu 0 0%Director Yang Hsiang-Yun 0 0%Director Billy Ho 0 0%Director Yang Hsiang-Yun 0 0%0%0%0%~192~

6) Operations overview of affiliated companies:Company name Capital Total assetsTotalliabilitiesNet valueOperatingrevenuesOperatingprofitNet income(after tax)Earnings pershare (NT$)(after tax)MiTAC International Corp. 14,565,380 62,278,377 28,316,288 33,962,089 82,073,897 4,574,512 5,648,262 4.07Tsu Fong Investment Corp. 596,700 1,764,727 44,580 1,720,147 0 (6,161) 260,517 4.37Silver Star Developments Ltd. - Consolidated 6,991,317 34,123,782 19,265,704 14,858,078 54,446,089 144,439 1,142,623 5.30MiTAC U.S.A. Inc. 89,219 478,985 390,600 88,385 1,094,838 25,787 22,312 16.75MiTAC Japan Corp. 14,485 216,619 191,427 25,192 862,991 (202) 2,493 2.49MiTAC Benelux N.V. 77,382 2,166,352 1,764,766 401,585 8,014,045 47,769 75,616 1,158.86MiTAC(UK)Ltd. 32,395 90,930 88,626 2,304 167,522 (1,714) 1,996 3.99ECLand Ltd. 6 6 0 6 0 0 0 0.00MiTAC Pacific (H.K.) Ltd. 324 144,925 142,763 2,161 0 (148) 1,858 185.81System Glory International Ltd. 0 331,001 72,422 258,579 0 (2) 112,185 112,184,561.87Pacific China Corp. 0 2,331,322 2,246,054 85,268 0 0 18,181 18,180,843.59MiTAC Star Service Ltd. 1,638,372 2,434,868 778,632 1,656,236 0 0 8 0.00Software Insights Ltd. 29,199 142,306 139,508 2,798 0 0 1 0.00MiTAC Computer (KunShan) Co., Ltd. 1,098,785 5,039,515 3,570,305 1,469,210 24,943,587 272,634 311,648 N/AMiTAC Service (Shanghai) Co., Ltd. 36,751 59,229 12,786 46,442 92,191 12,198 7,956 N/AMiTAC Computer (ShunDe) Ltd. 2,738,755 9,314,207 6,120,680 3,193,527 34,034,323 149,826 131,305 N/AMiTAC Research (Shanghai) Ltd. 191,098 439,929 207,731 232,197 378,866 11,829 27,141 N/AMio Technology Corp. 5,000 50,448 48,670 1,778 320,257 5,587 (11,581) (23.16)Start Well Technology Ltd. 321,186 991,566 410,856 580,711 0 0 262,749 26.54Dynamic Star Investments Ltd. 0 32,451 17,844 14,607 0 0 14,788 14,787,582.72MiTAC Technology (Kunshan) Co., Ltd. 36,750 96,706 45,664 51,042 135,992 16,115 10,287 N/AMio International Ltd 0 1,972,697 1,971,651 1,046 26,462,569 0 0 0.00Magicmate Group Ltd. 0 3,610 3,605 5 0 0 5 5,347.26Mio Technology Korea 3,540 11,592 6,493 5,099 39,070 1,876 1,377 68.83Huge Extent Limited 0 259,544 259,544 0 0 0 (0) (32.84)Mio Technology (Chang Du) Co., Ltd. 7,801 15,521 7,361 8,160 36,505 716 349 N/ABooming Enterprises Inc. 0 25,954 25,954 0 0 0 (0) (32.84)Mio Technology USA Ltd. 25,954 3,139,744 3,151,679 (11,935) 2,196,458 (23,652) (38,357) (38,357.49)MiTAC Australia Pty Ltd. 3,632 836,147 889,465 (53,318) 1,588,835 (129,816) (54,833) (431.76)Navman Technology NZ Ltd. 3,528 197,755 166,657 31,098 435,788 44,956 26,437 188.84Naviart IT (Shanghai) Co., Ltd. 12,300 12,686 22,779 (10,093) 18,691 (19,874) (20,034) N/ANaviart Limited 183,194 54,388 2,094 52,294 26,212 19,337 19,337 0.48Navman Europe Limited 648 1,614,609 1,591,849 22,759 4,423,441 (173,072) (130,259) (13,025.86)DLC Technology Corp. 1,000 3,159 18,659 (15,500) 5,038 (16,476) (16,500) (165.00)Mio TechnologyLtd. (Suzhou) 8,702 735,452 733,470 1,983 2,347,880 (4,412) 920 N/AForeground Technology Limited 293,463 516,671 48 516,623 236,086 9,852 7,063 0.78Tyan Computer Corporation - USA 544 605,506 116,627 488,879 1,957,925 36,175 45,247 2.39Tyan Computer Corporation - GMBH 1,222 32,280 3,900 28,379 31,340 7,258 4,697 N/ATop Sheen Enterprises Ltd. 14,261 12,291 35 12,257 0 (2) (1,381) (3.14)Tyan Computer Corporation - JAPAN 2,897 3,231 5,835 (2,604) 10,765 (4,525) (4,085) (20,425.95)Tyan Computer Technology (Shanghai) Corp. 50,918 18,957 0 18,957 52,793 4,803 49,930 N/ABest Profit Ltd. 0 628 624 5 0 0 5 4,566.24Bright Crown Management Ltd. 0 0 0 0 0 0 0 0.00Sky Universe Enterprises Ltd. 0 0 0 0 0 0 0 0.00Scalable Servers Corp. 0 2,575 29,531 (26,956) 8,350 (27,290) (27,289) (27,288,749.67)Note 1: If the affiliated enterprise is a foreign company, relevant figures are quoted in NT Dollars and are calculated based on the exchangerate on the day they were reported.Note 2: Based on exchange rates at end of 2007: Month-end AverageUS$: 32.443 32.844British Pounds: 64.790 65.760EURO: 47.820 45.008Japanese Yen: 0.290 0.279People’s Republic of ChinaRMB:4.440 4.318Korean Yen: 0.035 0.035AUD: 28.600 27.537NZD: 25.200 24.165~193~

(2) Consolidated financial statements of the affiliatesMiTAC International Corp.Declaration of the Consolidated Financial StatementsThe companies that were to be included in the affiliates consolidated financial statements in2007 (January 1 ~ December 31, 2007) according to the “Affiliates Consolidated BusinessReport, Affiliates Consolidated Financial Statements, and Relation Report Standard” and thecompanies that were to be included in the parent-subsidiary consolidated financial statementaccording to the “Finance & Accounting Standard Communiqué No. 7” were identical;moreover, the information to be disclosed in the affiliates consolidated financial statementwas disclosed in the aforementioned parent-subsidiary consolidated financial statements;therefore, the affiliates consolidated financial statements would not be prepared separately.Sincerely yours,Company: MiTAC International Corp.Business owner: Matthew MiauApr 1, 2007(3) Relationship report: None~194~

SubsidiarySilver StarDevelopmentsLtd.Tsu FongInvestmentCorp.2. Subscription of marketable security in the most recent year and up to the publicationof this annual report: None3. MiTAC’s stock shares held or disposed by subsidiaries in the most recent year and upto the publication of this annual reportCapitalcollectedUS$215,495596,700SourceOffundSelfsufficientfund andloansSelfsufficientfund andloansHoldingsofMiTAC100%100%Acquisition ordisposition dateOct 16, 20072008 up to thepublication ofthe annualReport.Aug 6, 2007Oct 16, 20072008 up to thepublication ofthe annualReport.Stock sharesand valueacquired2,657,597shares$77,002(Note)Stockshares andvaluedisposedReturnoninvestment- -- - -1,255,621shares(earnings)2,478,908shares$67,254(Note)- -- -- - -Shares andvalue holdingsup to thepublication ofthe annualreport2,657,597shares$77,00219,583,322shares$276,084Unit: NT$ Thousand; shares; %MortgageEndorsementamount forMiTAC’ssubsidiaryLoans toMiTACsubsidiary- 514,320 -- 260,000 -(Note) MiTAC merged Tyan Technology Co., Ltd. and reinvested the Tsu-Fong Investment Corp. and SILVER STAR DEVELOPMENTS LTD,which hold MiTAC common shares from the merger.4. Supplementary disclosure: None5. In the most recent year and the present year to the publication date of this annualreport, occurrence of events that might have a significant impact on shareholderrights or stock prices, as defined in Article 36, item 2, Part 2 in “Stock ExchangeLaw”: MiTAC has reselected directors, the new directors are over one third changed fromformer ones; yet, no significant impact is made on shareholder rights or stock prices fromit.~195~