Explanation of Sharp Investment Losses

Subject:Explanation of Sharp Investment Losses Recognized in First Half Financial Report

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In accordance with ROC GAAP No. 34 "The Accounting Principle in Dealing with the Derivative Product", the Company recognized the losses in an amount around NT$4.5 billion (NT$0.38/per share before tax) on its June 30 financial statements in connection with the signing of the Capital Injection Agreement (the "Investment Agreement") between the Company and Sharp Corporation on March 27, 2012. Despite the recognition of the losses on June 30, the Company,however, has reversed such losses on July 31, 2012 because of the failure of obtaining ROC government authorities' approvals for investment into Sharp.Therefore, the Company, as of July 31, 2012, does not suffer any losses caused by the signing of the aforesaid Investment Agreement.