corPorAte GoVernAnce rePort - VIS · VIS 2008 Annual Report VIS 2008 Annual Report corPorAte...

VIS 2008 Annual Report � VIS 2008 Annual Report �VIS 2008 Annual Report � VIS 2008 Annual Report �

corPorAte GoVernAnce rePort

Legal Accounting

Finance

PR & IR

Quality Reliability Assurance

Internal Auditing

President

Chairman

Wafetr Production FAB1

Computer Int. Mfg.

Product Eng.

Operation Planning& Material Mgt.

Risk & Env. Safety Mgt.

Marketing

Sales

Customer Engineering

Sales Planning

IP Management

Design Service

Information Tech. & E-commerce

Technology

Human Resources Finance Operation & Env. Safety Marketing & Sales Engineering Service

Wafetr Production FAB2

1. company organization1.1 Organizational chart:


1.2 Function Description

VP of Finance

President

VP of Engineering Service

Sr. Director of Operation & Environment Safety

VP of Marketing and Sales

Human Resources Div.

General Counsel

Internal Auditing

Quality Reliability Assurance Div.

Corporate Accounting, Finance, PR & IR department. Responsible for the company’s finance and accounting operation, as well as BOD, establishing the company's external communication channel, and maintaining the company's corporate image, CI systemrelated business.

Management of company-wide operations. Establish VIS business strategy and target.

Corporate Marketing and sales, Customer. Engineering, Sales Planning. Planning of company products, including sales and marketing for these products. Responsible for product service, market analysis and development, and establishing and execution of sales plan.

Technology Division, IP Management, Information Technology & e-Commerce, and Design Service. Responsible for the technology development , provide support in IP resources, information system, MASK, CAD, and layout.

Corporate Wafer Production, Material Management Div., Industrial Engineering, Production Control, Risk & Env. Safety Management, Operation Planning & Material Mgt., Computer Int. Mfg., Product Eng.. Improve operation efficiency, and ensure timely delivery of high quality product to customers, investment analysis, and long-term investment planning.

Recruiting the most qualified and suitable talents, providing employee training & development programs to meet company's growth, and establishing an effective & innovative personnel management system and work environment in order to attract and retain talents.

Responsible for execution and strategic planning of intellectual property & corporate legal affairs, including contract review and providing legal opinion for each department. Also setting up Board of Directors meetings and preparing meeting agenda.

Review and evaluate company’s operating process and effectiveness of internal control, and provide suggestions for improvement.

Manages Assurance, Reliability Assurance, Quality System Management, and In charge of product check, quality control, and promoting quality policy in VIS.

From Left to Right:Lee Chen / General Counsel

Yih-J Chang / Vice President, Engineering ServiceLeuh Fang / PresidentChuan Lin / Chairman

Robert Hsieh / Vice President, FinanceThomas Chang / Vice President, Maketing and Sales

Chan-Jen Kuo / Senior Director, Operation & Environment Safety


2. information on the company’s directors, supervisors, general manager, assistant general managers, deputy assistant general managers, and the chiefs of all the company’s divisions and branches2.1 Directors and Supervisors:

Chairman

Director

Director

Supervisor

Director

Director

Chuan Lin

Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)

Representative:C. S. Hsu

Ching-I Eli Wang

Jen-Chau Wendell Huang

Representative:K. H. Hsiao

Lu-Pao Hsu

National Development Fund, Executive Yuan

2006.05.11

2008.06.13 2009.05.10

2006.05.11

2006.05.11

2006.05.11

1994.11.10

1999.03.01

2003.06.05

0

616,240,459(437,890,988)

433,590,490

135,557

0

628,223,493

274,029,592

138,962

0

36.22(27.14)

26.87

0.01

0

37.05

16.16

0.01

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

13,893

- - -

- - -

- - -

- - -

- - -

3

3

3

3

3

2006.05.11 2006.05.113

3

PhD, Economics, University of IllinoisMinister of FinanceMaster of Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan

Supervisor, BOD of TaiMed Biologics

Ph.D., Physics, Columbia UniversityVice President, TSMC

M.S.A., University of Illinois, U.S.A.Chairman & Managing Partner, T N Soong & Co., CPAs

M.B.A., Cornell University, U.S.A.Deputy Director, Finance Division, TSMC

Ph.D. Program in Agricultural Economics, National Taiwan UniversityMaster's Degree in Agricultural Economics, National Taiwan UniversityDirector, Department of Sectoral Planning, CEPD, Executive YuanSenior Specialist, Department of Economic Research, CEPD, Executive Yuan

B.S., Physics Dept., National Cheng Kung UniversityExecutive Vice President, Philips TaiwanDirector, BOD of TSMCSupervisor, BOD of Delta Electronics Inc.

President, VIS Director, VIS Associates Inc. Director, VIS Investment Holding, Inc.Director, VIS Singapore Pte Ltd.Director, VIS Micro Inc.

Director C. C. Wei 2006.05.11

2006.05.11

2006.05.11

- - - - - - -Ph.D., Electrical Engineering, Yale UniversityVice President, TSMCSenior Vice President, Chartered Semiconductor Manufacturing Ltd.

Senior Vice President, TSMC

Counselor, Council for Economic Planning and Development, Executive Yuan Executive Secretary, National Development Fund, Executive Yuan

Director Tze-Kaing Yang - - - - - - -Ph.D. in Business Administration, National Chengchi UniversityMBA, University of Illinois at Urbana-Champaign, USAPolitical Deputy Minister of FinanceChairmen, Bank of TaiwanPresident, China Development Industrial Bank

Director, Taiwan Stock Exchange CorporationIndependent Director, ASROCK IncorporationIndependent Director, AU Optronics CorpSupervisor, ASUSTeK Computer Inc.Director, RITEK CorporationChairman, Yangtze Associates Director, Huiyang Private Equity Fund Co., Ltd Director, Bridgewell IncorporationDirector, EZ Travel Co., LtdDirector, FAT Venture CapitalDirector, eTurboTouch Technology Inc.

Chairmen, Philips Taiwan Quality FoundationDirector, Winbond Electronics CorporationDirector, BOD of Corporate Synergy Development CenterDirector, BOD of ZyXEL Communications CorporationIndependent Director, BOD of Diodes Incorporated

0 00 0

- - - - - -

Director, Finance Division, TSMCDirector, TSMC Europe B.V.Director, InveStarDirector, InveStar (II)

Managing Partner, Eli C. Wang & Co. CPAsDirector, BOD of Yuan Ze UniversityDirector, BOD of Mirle Automation Corp.Supervisor, BOD of Asia Cement Corp.Supervisor, BOD of Sino Pac Holdings.

Title Name Education &Selected Past Positions Selected Current PositionsDateElected

Tenure(Year)

Date First Elected

Shareholding when Elected

Shares %

Current Shareholding Spouse & Minor Shareholding

Shareholding by Nominee Arrangement

Managers Are Spouse or Within Second-degree Relative of

Consanguinity to Each Other

Shares Shares Shares% % % Title Name Relation

December 31, 2008


Chairman

Director

Director

Supervisor

Director

Director

Chuan Lin

Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)

Representative:C. S. Hsu

Ching-I Eli Wang


Representative:K. H. Hsiao

Lu-Pao Hsu


2006.05.11

2008.06.13 2009.05.10

2006.05.11

2006.05.11

2006.05.11

1994.11.10

1999.03.01

2003.06.05

0

616,240,459(437,890,988)

433,590,490

135,557

0

628,223,493

274,029,592

138,962

0

36.22(27.14)

26.87

0.01

0

37.05

16.16

0.01

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

13,893

- - -

- - -

- - -

- - -

- - -

3

3

3

3

3

2006.05.11 2006.05.113

3

PhD, Economics, University of IllinoisMinister of FinanceMaster of Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan

Supervisor, BOD of TaiMed Biologics

Ph.D., Physics, Columbia UniversityVice President, TSMC

M.S.A., University of Illinois, U.S.A.Chairman & Managing Partner, T N Soong & Co., CPAs

M.B.A., Cornell University, U.S.A.Deputy Director, Finance Division, TSMC

Ph.D. Program in Agricultural Economics, National Taiwan UniversityMaster's Degree in Agricultural Economics, National Taiwan UniversityDirector, Department of Sectoral Planning, CEPD, Executive YuanSenior Specialist, Department of Economic Research, CEPD, Executive Yuan

B.S., Physics Dept., National Cheng Kung UniversityExecutive Vice President, Philips TaiwanDirector, BOD of TSMCSupervisor, BOD of Delta Electronics Inc.

President, VIS Director, VIS Associates Inc. Director, VIS Investment Holding, Inc.Director, VIS Singapore Pte Ltd.Director, VIS Micro Inc.

Director C. C. Wei 2006.05.11

2006.05.11

2006.05.11

- - - - - - -Ph.D., Electrical Engineering, Yale UniversityVice President, TSMCSenior Vice President, Chartered Semiconductor Manufacturing Ltd.

Senior Vice President, TSMC

Counselor, Council for Economic Planning and Development, Executive Yuan Executive Secretary, National Development Fund, Executive Yuan

Director Tze-Kaing Yang - - - - - - -Ph.D. in Business Administration, National Chengchi UniversityMBA, University of Illinois at Urbana-Champaign, USAPolitical Deputy Minister of FinanceChairmen, Bank of TaiwanPresident, China Development Industrial Bank

Director, Taiwan Stock Exchange CorporationIndependent Director, ASROCK IncorporationIndependent Director, AU Optronics CorpSupervisor, ASUSTeK Computer Inc.Director, RITEK CorporationChairman, Yangtze Associates Director, Huiyang Private Equity Fund Co., Ltd Director, Bridgewell IncorporationDirector, EZ Travel Co., LtdDirector, FAT Venture CapitalDirector, eTurboTouch Technology Inc.

Chairmen, Philips Taiwan Quality FoundationDirector, Winbond Electronics CorporationDirector, BOD of Corporate Synergy Development CenterDirector, BOD of ZyXEL Communications CorporationIndependent Director, BOD of Diodes Incorporated

0 00 0

- - - - - -

Director, Finance Division, TSMCDirector, TSMC Europe B.V.Director, InveStarDirector, InveStar (II)

Managing Partner, Eli C. Wang & Co. CPAsDirector, BOD of Yuan Ze UniversityDirector, BOD of Mirle Automation Corp.Supervisor, BOD of Asia Cement Corp.Supervisor, BOD of Sino Pac Holdings.

Title Name Education &Selected Past Positions Selected Current PositionsDateElected

Tenure(Year)

Date First Elected

Shareholding when Elected

Shares %

Current Shareholding Spouse & Minor Shareholding

Shareholding by Nominee Arrangement

Managers Are Spouse or Within Second-degree Relative of

Consanguinity to Each Other

Shares Shares Shares% % % Title Name Relation

December 31, 2008

VIS 2008 Annual Report �0 VIS 2008 Annual Report ��VIS 2008 Annual Report �0 VIS 2008 Annual Report ��

Information on directors that are representatives of juridical person shareholders:

Juridical person shareholders

ADR-Taiwan Semiconductor Manufacturing Company, Ltd. 20.88%

National Development Fund, Executive Yuan 6.29%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Capital World Growth and Income Fund Inc. 2.50%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Saudi Arabian Monetary Agency 1.94%

Koninklijke Philips Electronics N.V. 1.46%

JPMorgan Chase Bank N.A. Taipei Branch in custody for EuroPacific Growth Fund 1.40%

Cathay Life Insurance Co., Ltd. 1.34%

JPMorgan Chase Bank N.A. Taipei Branch in custody for The Investment Company of America 1.10%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Capital Income Builder, Inc. 0.92%

JPMorgan Chase Bank N.A. Taipei Branch in custody for Oppenheimer Developing Markets Fund 0.84%

Not applicable

Top 10 shareholders of juridical person shareholders

Taiwan Semiconductor Manufacturing Co., Ltd.


July 22, 2008

Independence Analysis of Board Members under Taiwan SFC Criteria:

Over 5 years of working experience

College Instructor or higher level in Business, Legal, Finance, Accounting or company business related area

Court Judge, Prosecutor, Lawyer,Accountant, or other Certified Professionalexpert related tocompany business

Business, Legal, Finance,Accountingor company businessrequired working experience

Name

Chuan Lin

C. S. Hsu

Ching-I Eli Wang

K. H. Hsiao

C. C. Wei

Tze-Kaing Yang

Lu-Pao Hsu


Criteria（Note）

Note

1

2

1

2 3 4 5 6 7

Note : 1. Not an employee of affiliated companies of the company and company.2. Not a director, supervisor of affiliated companies of the company and company.3. Not a natural person shareholder directly or indirectly owning more than 1% of the Company’s outstanding shares, nor one of the Company’s top 10 natural person shareholders. 4. Not a spouse or a first-or-second-degree relative to any person specified in Criteria 1~3.5. Not a director, supervisor or employee of a shareholder of juridical person of the Company directly or indirectly owning more than 5% of the Company's outstanding shares, nor one of the Company's top five share-holders of juridical person. 6. Not a director, supervisor, manager or shareholder holding more than 5%of the outstanding shares of certain companies or institutions that have financial or business relationship with the Company.7. Not an owner, partner, director, supervisor, manager of any sole proprietor, partnership, company or institution and his/her spouse, or the specialist and his/her spouse, that provides finance, commerce, legal consultation and services to the Company or affiliated companies within one year. 8. Not a spouse or first-or-second-degree relative to any other director.9. Not a juridical person or its representative as defined in Article 30 of Company Law.10. Not a juridical person or its representative as defined in Article 27 of Company Law.

8 9 10


2.2 Executive Officers:

NameTitle DateElected

CurrentShareholding

Shares % Shares Title Name Relation% Shares %

February 28, 2009

Selected Current Positions

Managers Are Spouse or Within Second-degree Relative of Consanguinity

to Each OtherEducation &Selected Past Positions

MS, Materials Science and Engineering, University of WashingtonFab Director, Taiwan Semiconductor Manufacturing Company, Ltd.Vice President, SSMC

Director, IMU Solutions,Inc.

MBA, National Taiwan UniversityVice President, Country Banking Head, Bank of America, NTSA

MS, Electrical Engineering, University of CincinnatiVice President, Mosel Vitelic Inc.

Spouse & Minor Shareholding

Shareholdingby Nominee Arrangement

President

Vice President,Finance

Vice President,Marketing& Sales

LeuhFang

RobertHsieh

ThomasChang

2009.2.20

1995.2.1

2003.8.22

- ---00

0.05862,325

0.02347,068

0.01150,000

0.02355,222

- ---

- ---

- ---

-

-

-

-

-

-

-

-

-

Director, VIS Associates Inc.Director, VIS Investment Holding, Inc.Director, VIS Micro Inc.Director, Specialty TechFarm, Inc.Director, Walton Advanced Engineering Inc.Supervisor, CMSC Inc.Supervisor, INNO-TECH Co., Ltd.

Director, VIS Micro Inc.Director, Linear Artwork, Inc.Director, Specialty TechFarm, Inc.Director, International Semiconductor Technology Ltd.Director, INNO-TECH Co., Ltd.Director, Layer Walker Technology Inc.Director, SkyTraq Technology Inc.Director, CMSC Inc.

Director, CMSC Inc.Director, VIS Singapore Pte Ltd.

-

PhD, Electrical Engineering, University of Southern CaliforniaVice President, Toppdy Optoelectromics Corp.

Vice President,EngineeringService

Yih-JauChang

2007.3.1 - - -

- --- MS, Electrical Engineering, National Tsing Hua University


Chan-Jen Kuo

2007.5.21 - - -

Note: President Leuh Fang is nominated as president on February 20, 2009.

VIS 2008 Annual Report �� VIS 2008 Annual Report ��VIS 2008 Annual Report �� VIS 2008 Annual Report ��

2.3 Remuneration to Directors, Supervisors & Managers

2.3.1 Remuneration to Directors:

Title Name

Remuneration (A)

Remuneration to Directors Employee Profit Sharing

Retirementpay (B)

A+B+C+Das % of 2008Net Income

Chairman

Director

Chuan Lin

7,619 7,619 0 0 1.62% 1.62% 0 0 0 0 2.06% 2.06% None0 01,313 1,3137,053 7,053 2,206 2,206 3,232 3,232

Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)Representative: C. S. Hsu

Director Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)Representative:Ching-I Eli Wang

Director Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)Representative: C. C. Wei

Director National Development Fund, Executive YuanRepresentative: K. H. Hsiao

Director Tze-Kaing Yang

Director Lu-Pao Hsu

Director(resigned)

National Development Fund, Executive YuanYing Jay Yang

Remunerationto Directors

from Allocated Earnings (C)

Transportation (D)

VIS VIS VIS VIS VIS VIS VIS VIS VISVIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

Salary & Bonus (E)

Number of Employee

StockOptionsGranted

in 2008 (H)

Retirementpay (F)

Employee Profit Sharing (G)

Cash Stock Cash Stock

VIS & Affiliates

VIS

A+B+C+D+E+F+G as % of 2008

Net IncomeOther

Remune-ration

Unit: NT$ thousand

Note 1: The BOD adopted a proposal for 2008 compensation to VIS' directors and supervisors in the amount of NT$9,377 thousands at the meeting in Feb. 20. The proposed compensation will be effected upon the approval of shareholder at the annual shareholder meeting in June 10.Note 2: Chauffer compensation is at NT$ 717 thousand.


Range of Remuneration to Directors (NT$)

Name of Director

>2,000,000

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

>100,000,000

Total 8 8 8 8

Tze-Kaing YangLu-Pao Hsu

Taiwan Semiconductor Manufacturing Co., Ltd.Representative:C. S. HsuChing-I Eli WangC. C. Wei

National Development Fund, Executive YuanRepresentative:K. H. HsiaoYing Jay Yang(resigned)

Chuan Lin Chuan Lin Chuan Lin

Taiwan Semiconductor Manufacturing Co., Ltd.Representative: C. S. Hsu

Chuan Lin

Taiwan Semiconductor Manufacturing Co., Ltd.Representative: C. S. Hsu


Taiwan Semiconductor Manufacturing Co., Ltd.Representative:C. S. HsuChing-I Eli WangC. C. Wei


VIS VIS & Affiliates


Taiwan Semiconductor Manufacturing Co., Ltd.Representative:Ching-I Eli WangC. C. Wei



Taiwan Semiconductor Manufacturing Co., Ltd.Representative:Ching-I Eli WangC. C. Wei



A+B+C+D A+B+C+D+E+F+G

2.3.2 Remuneration to Supervisors:

Title Name

Remuneration to Supervisors

A+B+C+D as % of 2008Net Income

OtherRemuneration

Supervisor Taiwan SemiconductorManufacturingCo., Ltd. (TSMC)Representative:Jen-ChauWendell Huang

0 0 0 0 02,325 2,325 350 350 0.26 0.26Supervisor National

DevelopmentFund, Executive YuanRepresentative:Lai-Shou Su (resigned)

Remuneration to Directors from

Allocated Earnings (C)

Remuneration (A)

Retirementpay (B)

Transportation((D)

VIS VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS VIS VIS VIS VIS &Affiliates

Unit: NT$ thousand


Range of Remuneration to Supervisor (NT$)

Name of Supervisor

>2,000,000

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

>100,000,000

Total 2 2

Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)Representative:Jen-Chau Wendell HuangNational Development Fund, Executive YuanRepresentative:Lai-Shou Su (resigned)

Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC)Representative:Jen-Chau Wendell HuangNational Development Fund, Executive YuanRepresentative:Lai-Shou Su (resigned)


A+B+C+D

2.3.3 Remuneration to President and Vice Presidents:

Title Name

Salary (A) Retirement pay (B)

A+B+C+D as % of2008 Net Income

ESOP SharesGranted in 2008 Other

Remune-ration

President

Vice President, Finance

Leuh Fang

Robert Hsieh

Vice President,Marketing & Sales

Thomas Chang

Vice President,Engineering Service

Yih-Jau Chang


Chan-Jen Kuo

Employee Profit Sharing(D)（Note 1）

VIS

Stock StockVIS VIS

Bonus (C)

VIS VIS VIS VIS &Affiliates

VIS &Affiliates

VIS &Affiliates

VIS & AffiliatesVIS &

AffiliatesVIS &

Affiliates Cash Cash

Unit: NT$ thousand

Note 1: Approved 2008 employee profit sharing for President and Vice Presidents derived from 2007 numbers. No actual number is available by the releasing of this report. It will be amended to this report and updated in Market Observation Post and company website when available.

16,055 18,144 0 3,431 3,431 3,916 0 3,916 2.25 2.450 0 0 None0


Range of Remuneration toPresident and Vice President (NT$)

Name of President and Vice President

>2,000,000

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

>100,000,000

Total 5 5

Leuh FangLeuh Fang

Thomas Chang

Robert Hsieh, Yih-Jau Chang, Chan-Jen Kuo Robert Hsieh, Thomas Chang, Yih-Jau Chang, Chan-Jen Kuo


Employee Profit Sharing Granted to Management Team in 2008:

Title Total Total as % of 2008 Net Income

ManagementTeam

President

Vice President, Finance

Vice President, Marketing & Sales

Vice President, Engineering Service


Name

Leuh Fang

Robert Hsieh

Thomas Chang

Yih-Jau Chang

Chan-Jen Kuo

CashStock

February 28, 2009

Note: President Leuh Fang is nominated as president on Feb 20, 2009.

3,916 3,916 0.380

2.4 Comparison and Description of all Company Paid Remuneration to Net Income Ratio Analysis and Company Remuneration Policy, Pattern, Procedures and Ties to the Operational Result

2.4.1 Analysis of Remuneration to Net Income Ratio in the last two years for Company Directors, Supervisors and Executive Officers:

Title

Directors

4,321,071

53,766

39,923

8,855

1.24

0.20

0.92

2,675

16,878

0.26

1.62

2.4525,491

1,041,953Supervisors

President and Vice Presidents

Remuneration as % of Net Income

Remuneration Net Income Remuneration as% of 2007 Net Income

Remuneration Net Income Remuneration as% of 2008 Net Income

2007 2008

Unit: NT$ thousand

Note: Approved 2008 employee profit sharing for President and vice Presidents drived from 2007 result. Final number is not available yet at the releasing time of thie report.


2.4.2 Company Remuneration Policy, Pattern, Procedures and Ties to the Operational Result:

The compensation policy for board directors and supervisors is regulated in company policy. Based on the general pattern in the industry, it is further adjusted by profit

distribution approved by board and shareholder meetings. It is heavily influenced by company operational result.

Executive compensation and bonus situation is set by adjustable company rules, education and experience level, and comparison with industry peers. It is further

adjusted by profit distribution approved by board and shareholder meetings. It is heavily influenced by company operational result.

3. implementation of corporate Governance3.1 Implementation of Board Meeting:

The Board convened eight meetings in 2008 Meeting attendance was as follows:

Title Name No. of MeetingsAttended

No. of MeetingsSubstituted

Attendance Rate

100%8

Note

Chairman Chuan Lin

100%5

1

2

1

Director C. S. Hsu C. S. Hsu assumed the position on 6/13/2008

K. H. Hsiao assumed the position on 7/10/2008.

C. C. Wei assumed the position on 6/13/2008.

Resigned

Resigned

Resigned

88%7 1Director Tze-Kaing Yang

88%7 1Director Lu-Pao Hsu

100%8Director Ching-I Eli Wang

75%3Director K. H. Hsiao

40%2Director C. C. Wei

75%3Director Mei-Ling Chen

100%1Director Ying Jay Yang

67%2Director Y. G. Quintin Wu

88%7Supervisor Jen-Chau Wendell Huang

Resigned100%8Supervisor Lai-Shou Su

Supplement Notes: 1. No Security and Exchange Law Article 14-3 item to report for the fiscal year and upon this annual report date. No opposition or dissenting opinions held by independent director on record or with announcement in document for resolutions passed by the board of directors.2. Recusal of directors due to conflicts of interests: None

Dissenting opinions held by directors and supervisors in respect of important resolutions passed by the board directors: none.


The State of Participation in Board Meetings by the Supervisors

The Board convened eight meetings in 2008 Meeting attendance was as follows:

Title Name No. of Meetings Attended Attendance Rate

88%7

Note

Supervisor Jen-Chau Wendell Huang

100%8Supervisor Lai-Shou Su Resigned

Other information that shall be disclosed:1. VIS names two supervisors, both of them are Quasi-Audit Committee members of the board of directors. They exercise supervision duties according to government regulations and the articles of associations of Quasi-Audit Committee. They are also in attendance of the board of directors meetings as supervisors. No dictums held in this year’s meetings. 2. The supervisors came to the Company to review and discuss in details the financial reports with the accounting managers. Only after they are convinced that all information are correct, will they agree to submit the reports to the Quasi-Audit Committee to review.3. The Quasi-Audit Committee meetings are held regularly. In addition to hearing the internal auditor‘s briefings, they also hold closed-door meetings with the accountants to communicate issues regarding VIS’s financial and business conditions. 4. VIS employs an opinion box which encourages all employees to report misconduct that are against the code of business ethics to the Quasi-Audit Committee for dispositions. 5. Supervisors attend VIS‘s shareholders’ meetings to hear inputs from the shareholders and communicate when needed.

3.2 Implementation of Audit Committee Meeting:

The Audit Committee convened 6 regular meetings in 2008. Meeting attendance was as follows:

Title Name No. of Meetings Attended No. of Meetings Substituted Attendance Rate

100%6

Note

Director Ching-I Eli Wang

100%6 0

0

Director Tze-Kaing Yang

100%6

5

0Supervisor Jen-Chau Wendell Huang

83%1Supervisor Lai-Shou Su Resigned

Supplement Notes :1. In the latest fiscal year Quasi-Audit Committee has no Security & Exchange Law Article 14-5 items to report; nor resolutions approved by two thirds of board members without Audit Committee approval.2. No refusing case for Quasi-Audit Committee in the latest fiscal year.3. Whenever the accountants audit/review Company’s financial and business status, they also communicate with the accounting and interior auditing personnel. Quasi-Audit Committee holds review meeting to audit company financial reports. In addition to hearing the internal auditor’s briefings, they also hold closed-door meetings with the accountants to communicate issues regarding VIS’s financial and business conditions.


3.3 Taiwan Corporate Governance Implementation as Required by SFC:

Reason for Non-Implementation

Implementation StatusItem

1. Shareholding Structure & Shareholders' Rights(1) The way of handling shareholder suggestions or Disputes

(2) The Company's possession of major shareholder's list and the list of ultimate owners of these major shareholders

(3) Risk Management Mechanism and Fire Wall between the Company and its affiliates

2. Composition and Responsibilities of the Board of Directors1. Independent Directors

2. Regular evaluation of external auditors' independency

3. Communication channel with stakeholders

4. Information Disclosure(1) Establishment of corporate website to disclose information regarding the Company's financials, business and corporate governance status

(2) Other information disclosure channels (e.g. English website, appointing responsible people to handle information collection and disclosure, appointing spokesperson, webcasting investor conference)

5. Operations of the Company's audit committee and other committees of the Board of Directors

-

Although VIS did not employ independent directors, we have hired two external directors, whose functions have nothing different to independent directors.

-

-

-

-

-

-

6. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe discrepancy between the policies and their implementation.

8. Description of the results, suggestions, and improvement from self evaluation report or other assessment report conducted by outside agencies, if any.

7. Other important information for better understanding of the Company's corporate governance practices

VIS always takes employees benefits seriously. To take care of employees’ health, VIS provided well-rounded medical plans and services. VIS employees not only can see the doctors in the office building, take advantage of the annual health inspection, they can also make the most of the female healthcare, cancer screening, gym facility, and weight control consoling programs. Since 2006, VIS hired visual handicaps masseurs to provide in-company massage services. We have hired as many as ten licensed masseurs who were also heavy visual handicaps to provide job opportunities to handicaps and pay our corporate citizen responsibility. VIS was awarded Honorable Labor Education Promotion Award (1998), Human Resource Development & Training (1998), Outstanding Employee Publication (1998), Outstanding Employee Benefits (1999), Business with the Best Employment Environment for Women (2002), and The First Energetic Enterprise Award from the Executive Yuan (2006). In 2007, VIS took place in Healthy Workplaces, which is a voluntary certification program put on by the Department of Health, and was granted the premium prize, Sustainable Health Award, together with HP Taiwan, Du Pond Taiwan, and TSMC. This award was given as recognition of VIS’s over decade-long efforts to create a sustainable, healthy workplace. VIS aggressively participates in community welfare events, and feedbacks to the society in actions. To assist the rebuilt project of Cloud Gate Dance Theater of Taiwan, VIS donated NT$3 million. We also donated NT$1.6million to DDM Social Welfare and Charity Foundation so that they could help victims from the 2008 Sichuan earthquake rebuild their hometown. Moreover, on weekends, VIS Guide Volunteers, formed by VIS employees and their spouses, serve as guides for the IC Exhibition in the National Museum of Natural Sciences in Taichung City. They guide the visitors throughout the exhibition by telling knowledge and applications of the semiconductors, as a token to feedback to the society. A total of 282 Guide Volunteers in 2008 was on-duty at the National Museum of Natural Sciences. VIS’s BOD members and supervisors are all proficiency with working experiences and expertise. They also take training courses listed in the Guidelines for Promotion of the Education of the BOD Members and Supervisors of Public Companies. In 2008, the BOD members took 21 external training classes, while the supervisors took 3.The risk management policy, aiming at zero risk and zero loss, was assembled under the operations plan approved by the BOD, which put together potential risks in operations, finance and public health and environmental safety. Each department set up the regulations according to their functionalities to control risks. Articles regarding risks in finance include the Guidelines for Derivatives Trading, Operating Procedures and Endorsement to Loan Funds to Others, Guidelines for Credit Management, and Guidelines for Cash Investment. Articles in operations risk management include Manual for Safety, Health and Environmental Management, Emergency Response Program, Guidelines for Management of the Toxic Chemical Substances, and Guidelines for Environmental Monitoring. VIS has purchased liability insurance for the BOD members and supervisors to reduce and diverse the risk of them causing significant losses to the Company and the shareholders due to mistakes or negligence.

VIS has not established corporate governance policies. However, the Company has listed in related articles regulations regarding corporate governance (such as articles of incorporation, rules of procedure for the shareholders’ meeting, rules of procedure for the BOD meeting, detailed rules for safekeeping and retrieval of the BOD meeting video and voice recording files, rules of procedure for the Audit Committee, rule of procedure for the Compensation Committee, content management of the company website, etc) to protect shareholders’ rights, enhance the BOD functionality, give full scope to the supervisors, respect to the rights of the stakeholders, and enhance information visibility. VIS participated in the 2008 Corporate Governance Assessment initiated by Taiwan Corporate Governance Association. The judges reviewed item by item the state of the company's implementation of corporate governance with the Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies, and found no significant departure of such implementation. VIS was certified with high scores.

Since the fifth Board of Directors, for better corporate governance, VIS has established the Compensation Committee in compliance with the government regulation. Compensation Committee is chartered to propose to the BOD the overall company compensation policies and structure, the compensation implementation for BOD (including the Chairman) and executives (including the President), and the bonus and incentive implementation for executives including the President.

VIS has launched company website (www.vis.com.tw) with regular updates to reveal the latest finance and corporate governance information.VIS has launched bilingual (Chinese and English) websites and has assigned the related departments to collect and reveal company information, while the Public and Corporate Investor Relation department is in charge of the renewal and the integrity of the website information.VIS has assigned spokesman and acting spokesman as regulated, and revealed their names and contact information on company website.Every quarter, VIS hold investors conferences. The briefing materials in the conference were also revealed on company website. We also make the voice recording file of the latest investors conference available on company website for inquiries.

To enhance communications with stakeholders, VIS not only publically announces the contact windows and contact information of the related departments on company website, but also holds regular seminars for corporate investors, and pays visits to major customers to understand any product issues and their future needs. Within the Company, we set up suggestion boxes for employees to provide inputs to the President, Vice Presidents and managing directors, we hold communication meetings every quarter for better communications, the Quasi-Audit Committee under the board of directors also opens up an opinion box for employees to report misconduct that are against the code of business ethics for dispositions.

Since the fifth Board of Directors, VIS employed Quasi-Audit Committee for corporate governance enhancement. The Quasi-Audit Committee consists of two board directors and two supervisors, who are all proficiency with their responsibilities and none of them are direct or in-direct stakeholders of VIS. Their responsibility domain and operations are similar with independent directors to ensure the objectiveness of their judgments. VIS Quasi-Audit Committee members regularly hold meetings every year to evaluate the objectiveness of the Certified Public Accountant(CPA). They will also report their conclusions to the board of directors for re-confirmation to ensure the objectiveness of the CPA.

VIS assigns departments including Public and Corporation Investor Relations, Legal, Secretariat of the Board of Directors to handle suggestions or arguments from the shareholders. We also list contact windows of the VIS finance department and the common stock transfer agency on company website, under the investor relations section to respond to any suggestions or arguments in time. VIS assembles shareholders’ meeting every year, and take in proposals of the shareholders as is regulated. During the shareholders’ meeting, VIS assigns reasonable time for discussion, and for shareholders to speak up. VIS has already built up a mechanism to monitor any shareholding changes from the board members, supervisors, managers and the shareholders that own over 10% of the company’s common stocks, and report to the management for updated shareholding structure. All VIS subsidiaries are mainly in semiconductor business investment and IC sales services. VIS has established proper organization control structure to monitor the major financial and business operations in any of the subsidiaries. VIS also follows the internal control regulations to review related businesses of the subsidiaries regularly so as to effectively control risks.

VIS participated in the 2008 Corporate Governance Assessment System initiated by Taiwan Corporate Governance Association. The judges reviewed item by item the state of the company's implementation of corporate governance with the Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies. They conducted on-site investigations (including on-site self-evaluation and open questions), and put into consideration the results from the Information Disclosure and Transparency Ranking System. Through the evaluation committee’s assessments, VIS was presented CG6004 Corporate Governance Assessment Certificate, the General Copy. The evaluation committee’s positive comments include (1) VIS takes corporate governance seriously. We invited experts from a wide range of professional and industry backgrounds as external BOD members. (2) Under VIS BOD, we have Quasi-Audit Committee and Compensation Committee to enhance functionality of the BOD. (3) VIS Quasi-Audit Committee hold regular meetings and interact well with internal control and management. (4) In compliance with internal control policy and standard procedure, the managers perform regular self assessment. Regarding the suggestions made by the evaluation committee, VIS will put into consideration the government regulations and actual practice in the industry to gradually build up rules for the enhancement of corporate governance performances.


3.4 Disclosure of Company Governance Principles and Regulations

Vanguard has not subscribed company governance principles and regulations.

3.5 Other Important Information Disclosed for Better Understanding of Company Governance

VIS has been actively planning business strategies with company governance fundamentals ever since its inauguration, ensuring company capability to maximize

investor’s return with effective company governance mechanism and sound operations. VIS re-elected the fifth board on May 11, 2006, has set up the Quasi- Audit

Committee and Compensation Committee directly under the board in compliance with the regulation changes and company governance requirements from the

government. BOD also updated Organic Regulations of Quasi Audit Committee and Organic Regulations of Compensation Committee based on the stipulation

examples government provided, constituted Board Meeting Standing Orders in accordance to government guidance, in order to effectively improve and achieve the

important company governance principles overall.

VIS has established and effectively implemented a comprehensive internal control system. All departments are required to conduct regular internal evaluation for daily

operation. Further, BOD and the management review the evaluation reports and reports from internal audit department regularly to ensure the operational efficiency,

the accuracy of financial reporting and compliance to all regulations.

Quasi-Audit Committee

Quasi-Audit Committee is set up to enhance the supervising function of the board. The purpose of this committee is to supervise the proper presentation of company

financial report; the selection, termination, independence and performance of certifying accountant; the effectiveness of company internal control process; the company

compliance of laws, regulations and legal terms; and the existing or potential risk management of the company.

Quasi-Audit Committee is chartered to audit the regulation, adjustment and effectiveness of the company internal control system, and to audit the annual and

semi-annual financial report. It is also chartered to supervise the transactions of major business asset or derivatives; the major financial activities such as loans,

endorsements, and guarantees; the interest concerns of BOD members; the authorization, termination and compensation for the certifying accountants; the appointment

and termination of company heads in financial, accounting, and internal auditing functions.

Compensation Committee

Compensation Committee is to assist the board to perform its responsibilities related to corporate compensation and benefit policies, plans and programs to attract and

retain talent for the company.

Compensation Committee is chartered to propose the overall company compensation policies and structure, the compensation implementation for BOD and Chairman;

the compensation implementation for executives including the President, the bonus and inspiration implementation for executives including the President, and other

issues authorized by the board.


3.6 Internal Control:

Vanguard International Semiconductor Corporation

Internal Control Statement Date: February 20, 2009

The Company states the following with regard to its internal control system during the period from January 1, 2008 to December 31, 2008, based on the findings of a

self-evaluation:

1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management.

The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of

operations (including profits, performance, and safeguard of asset security), reliability of financial reporting, and compliance with applicable laws and regulations.

2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance

of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or

circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a

deficiency is identified.

3. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the

Establishment of Internal Control Systems (hereinbelow, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide

internal control into five elements based on the process of management control: 1. control environment, 2. risk assessment, 3. control activities, 4. information and

communications, 5. monitoring. Each element further contains several items. Please refer to the Regulations for details.

4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

5. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that during the stated time period its internal control system

(including its supervision of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency

objectives, reliability of financial reporting, and compliance with applicable laws and regulations, was effectively designed and operating, and reasonably assured the

achievement of the above-stated objectives.

6. This Statement will become a major part of the content of the Company’s Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or

other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

7. This statement has been approved by the Board of Directors Meeting held on February 20, 2009. All of the 7 attending directors affirmed the content of this

Statement.

Vanguard International Semiconductor Corporation

Chairman Chuan Lin

President Chung-Shih Hsu


3.7 Penalty, major defects and improvement in internal control violation:

No such violation incidents from 2008 uo to the publication date of this annual report.

3.8 Major Resolutions of Shareholders Meetings and Board Meetings:

Review of Shareholder Meetings

The 2008 Regular Shareholders’ Meeting was held in the auditorium of the Company located at 123, Park Ave-3rd, Science-based Industrial Park, Hsinchu on June 13,

2008.

Review of Board Meetings

The Board held eight meetings in 2008. Major resolutions adopted are summarized as below:

1. Agreed to convene the 2008 regular shareholders meeting and related issues.

2. Approved 2007 annual business and operation report.

3. Approved 2007 annual financial report and consolidated financial statement.

4. Approved the semi-annual consolidated financial statements and financial report for the first half of 2008.

5. Approved 2007 profit distribution plan

6. Approved the capitalization of 2007 dividends, 2007 employee profit sharing and capital surplus.

7. Approved plan to buy back and cancel shares.

8. Amended Internal Control Systems.

9. Amended the rules of procedure for meetings of its board of directors.

10. Approved the capitalization of ESOP exercising.

11. Approved 2007 Internal Control System Statement.

12. Concluded company 2009 company audit plan.

13. Approved 2009 operation plan and capital expenditure budget plan.

14. Amended the charter of compensation committee.

3.9 Dissenting Opinions Held by Directors and Supervisors in Respect of Important Resolutions Passed by the Board of Directors:

No dissenting opinions held by directors and supervisors in respect of important resolutions passed by the board of directors from 2008 to publish of this annual report.

3.10 Personnel Termination Summary Related to Annual Financial Report:

Date Subject Result

2008.06.13 Approved the 2007 business report and financial statements

Approved the removal of non-competition restrictions on Board of Director who is elected in the shareholders’ meeting.

All passed

The proposal for profit distribution All passed

The proposal for capitalization of 2007 profits and capital surplus. All passed

By-election of Board of Directors for the 5th Term Mr. C.S. Hsu was elected, and he will act as a representive of TSMC.

All passed

Implement state

Implement as approved

Implement as approved

Set July 29, 2008 as recording date for dividend distributionAug 12, 2008 send out cash dividend

Set July 29, 2008 as recording date for stock split.Aug 12, 2008 send out new stock certificates

Deference to election result

Title Name Note

President C.S. Hsu Replace by Leuh Fang due to C.S. Hsu retired.


4. Accountant Professional feeThe non-auditing fee of NT$400,000 VIS paid for certifying accountants, certifying accounting agency and its related business for was business registration and service.

This is less than 25% of the total auditing fee.

5. Information on Replacement of Certified Public AccountantThere is no replacement of certified public accountant in 2008.

6. company chairman, President, financial or Accounting Head has Worked for Certifying Accounting Firm or Its Affiliate Business in the Past Year : None

7. information on net change in Shareholding and net change in Shares Pledged by directors, Supervisors, Management and Shareholders of 10% Shareholdings or More:

Title Name

Chairman

Director

President

Vice President

Vice President

Chuan Lin

Director National Development Fund, Executive YuanRepresentatives: K. H. Hsiao

Director

Tze-Kaing Yang

Lu-Pao Hsu

DirectorDirectorDirectorSupervisor

Ching-I Eli WangC.S. HsuC.C. WeiJen-Chau Wendell Huang

Taiwan Semiconductor Manufacturing Co., Ltd.(TSMC)Representatives:

C.S. Hsu (Retried on Feb. 20, 2009)

Thomas Chang

Vice President Robert Hsieh

Yih-Jau Chang

Senior Director Chan-Jen Kuo

Net Change inShareholding

Net Change inShares Pledged

Net Changein Shareholding

Net Change inShares Pledged

2008 01/01/2009 ~ 02/28/2009

0000

274,029,592001,375,559

00011,983,034

000697

0000

000401,513

000148,600

President Leuh Fang 0000

000150,989

000150,000

000165,954

Stock Trade with Related Party: None

Stock Pledge with Related Party: None


8. top 10 shareholders relation

Name

Top 10 shareholders withthe relation of SFAS No.6 Note

Taiwan Semiconductor Manufacturing Co., Ltd.(TSMC)Representatives:Director:Ching-I Eli WangDirector:C.S. HsuDirector:C.C. WeiSupervisor:Jen-Chau Wendell Huang

628,223,493 37.05% 0 0 0 0 National DevelopmentFund, Executive YuanRepresentatives:Director:K. H. Hsiao

Direct of TSMC

Nan Shan Life Insurance Co., Ltd. 87,024,000 5.13% 0 0 0 0 None

Cathay Life Insurance Co., Ltd. 37,805,057 2.23% 0 0 0 0 None

Chunghwa Post Co., Ltd. 31,125,994 1.84% 0 0 0 0 None

USI Corporation 22,228,201 1.31% 0 0 0 0 None

Fubon Insurance Co., Ltd. 22,000,000 1.30% 0 0 0 0 None

Deutsche Bank Trust Company Americas as Trustee for Genesis Group Trust for Employee Benefit Plans Emerging Market Fund

20,339,278 1.20% 0 0 0 0 None

China Life Insurance Co., Ltd. 20,032,157 1.18% 0 0 0 0 None

Genesis Emerging Markets Investment Company 14,664,122 0.86% 0 0 0 0 None

Spouse & Minorshareholding

Shareholding

% %

Shareholding by nominee arrangement

Share % Name RelationShare Share

National Development Fund, Executive YuanRepresentatives:Director:K. H. Hsiao

274,029,592 16.16% 0 0 0 0 Taiwan Semiconductor Manufacturing Co., Ltd.(TSMC)Representatives:Director:Ching-I Eli WangDirector:C.S. HsuDirector:C.C. WeiSupervisor:Jen-Chau Wendell Huang

Investee of NDF

9. ViS Long-term investment ownership

Long-Term Investment

VIS Associates Inc. 6,000,000 100% - - 6,000,000 100%

Walton Advanced Engineering Inc. 37,512,263 8% 55,042 0.01% 37,567,305 8%

International Semiconductor Technology Ltd. 7,293,440 2% - - 7,293,440 2%

Megica Corporation 204,654 2% - - 204,654 2%

United Industrial Gases Co., Ltd. 3,356,585 2% 16,782,937 10% 20,139,522 12%

Cadence Methodology Service Company (CMSC) 9,902,000 25% - - 9,902,000 25%

Direct/Indirect Ownership by Directors, Supervisors, and Management

Ownership by VIS

% %

Total Ownership

Shares % Shares Shares

As of February 28, 2009; Unit: shares；%

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