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2009Corporate Social Responsibility Report

Three Companies Prosper as One

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CHIMEI INNOLUX 2009 Corporate Social Responsibility Report

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關於封面：

翠綠樹葉有保護生態環境與欣欣向榮

之喻意，三片樹葉象徵本公司將融合三

家公司之特色，豐富其企業社會責任面

向，以達生生不息，永續發展之目標。


Publishing Organization: Chimei Innolux Corporation

Publisher: Hsing-Chien Tuan

Editorial Team: CMI CSR Work Group

Contact: Public Relations Office

Address: No.160, Kesyue Rd., Jhunan Science Park,

Miaoli County 35053, Taiwan (R.O.C.)

Telephone: +886 37 586 000

Website: www.chimei-innolux.com

Date Published: September 2010

All rights reserved. Please obtain permission in writing from the publisher to use or reprint any article or content included in this publication.

This is Chimei Innolux’s first CSR report following the merger of Innolux, CMO and TPO on March 18, 2010. As such, the company has a responsibility to all of its shareholders and business partners to detail the efforts made and successes achieved in realizing sustainable development and social contributions before and after the merger. In future, CMI would issue a CSR report annually.

Scope:This report concentrates on the operational activities

in 2009, including the CSR performances of Fabs in both Taiwan and China. Exceptions will be supplemented with corresponding footnotes. A part of the activities in 2010 would be covered in this report for a better comprehension of the post-merger situation

Compilation Guidelines:This report elaborates on the issues that stakeholders

are interested, including corporate governance, environmental safety, green products, employee care and social contributions. Relevant strategies, directions, measures, objectives of CMI would be disclosed in accordance with industry conventions as published in the Global Reporting Initiative G3 Guidelines.

Note:

All data and statistics provided in this report with regard to 1.

CMI are based on our own surveys and investigations. All

financial figures were compiled based on audited financial

statements .

Regarding any data and statistics not published in this report, 2.

as well as other related news, please visit our website at

www.chimei-innolux.com.

About this Report

About the Cover: The verdant green of the leaves is a

metaphor for thr iv ing prosper i ty and a commitment to environmental protection. The three leaves symbolize the three companies which now make up CMI—having combined their considerable CSR energies, together they continuously strive for sustainable development.

1 About this Report

3 Message from the CEO

7 Business Development

17 Environmental Safety

43 Green Products

53 Employee Care

65 Social Contribution

77 Appendix

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On March 18, 2010, Innolux formally announced its merger with CMO and TPO to become Chimei Innolux Corporation (CMI). As the merger was first announced on November 14, this large-scale undertaking took over four months to complete. The merger not only symbolizes the beginning of a new chapter for the global flat panel industry, but also represents a deep and far-reaching commitment and responsibility to clients, employees, shareholders/investors, suppliers, governments, media, communit ies, and other stakeholders of the newly formed company.

Following the merger, CMI has worked to combine the best practices of each of its three companies to create a synergistic effect in its operations and management. By incorporating corporate social responsibility into our operational strategy, sustainability is now viewed as one of our core values. This has led to the integration of the most effective of all three companies' CSR practices, thus strengthening and fully leveraging our sustainable development efforts on economic, environmental, and social levels.

The re la t ionship between corporate soc ia l responsibility and corporate operations is a mutually supportive one as CMI's interactions with its clients, employees, shareholders/investors, and suppliers have a deep impact on the company's profitability. From an economic standpoint, CMI is committed to integration; i.e., building on its competitive advantages in the successful integration of upstream and downstream resources and the actual ization of a complete

Incorporating CSR in our operational strategy to achieve sustainable business synergies

production line. As well, CMI realizes that sustainability is a powerful tool to lower operating costs and create sales value. With the goal of profitability in any economic environment, our CSR commitment to our customers, employees, shareholders/investors, and suppliers can be realized through the continuing increases in product and service value, as well as improvements in the development of a professional work force.

Drawing on the strengths of each of its three companies in the implementation of environmental protection, CMI emphasizes the importance of planning and implementation in its comprehensive green strategy in order to strengthen the environmental awareness of each of its employees, to further extend a positive corporate influence, and to reduce the burden on the earth’s environment. Since 2007, CMI has been the recipient of the EPA’s Corporate Environmental Award for three years running. We have consistently striven to take “green action” and produce environmentally-friendly products, one example being the creation of the world’s first LCD panel and monitor “product carbon footprint” verification in August and December, 2009, respectively. In the future, CMI will actively work to seize sustainable business opportunities and create profit, placing even greater importance on reducing the impact of our operations on the environment and surrounding communities, in order to realize the goal of harmony between economic growth and environmental protection.

Following the merger, with CMI's greater size, our impact on the surrounding communities and society as a whole has also increased. With regard to social contributions, CMI continues to focus on the dual goals of job creation and environmental protection. CMI’s Quality Management & Sustainability Center, drawing from the resources of its three companies, actively invests in the actualization of social participation through concrete action. Furthermore, with the creation of the Innolux Education Foundation in 2008, under the dual-pronged approach of environmental awareness and cultural promotion, CMI, more than ever, is an active participant in social, environmental, and cultural activities.

This year’s report highlights the combined CSR efforts of the three companies merged to form CMI. Looking forward, we will boost our efforts with regard to sustainable development in the areas of the economy, environment, and society to greater effect. Moreover, we look forward to any valuable suggestions or advice that you, dear reader, might have.

Hsing-Chien Tuan,Vice Chairman and CEO

1 About this Report




43 Green Products

53 Employee Care


77 Appendix

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In the face of climate change and the greenhouse effect, Chimei Innolux(CMI) understands the importance of the connection between business operations and corporate citizenship in reducing the impact of corporate development on the environment. For this reason, we have done our utmost to develop a comprehensive environmental management plan. Through our “To Earth, With L.O.V.E.” program, we have promoted Green Living, Green Operations, Green Value Chain, and Green Environment. In turn, this green vision has become an important tool for the continued creation of company value, leveraging influence within the industry, establishing environmental protection priorities within company management and forging a consensus with stakeholders on the importance of protecting the environment.

CMI’s long term and comprehensive promotion of environmental protection has already borne much fruit. Actively seeking to lower greenhouse gas emissions, CMI succeed in reducing emissions by 8.41 million tons. While in 2009, it saved 288.65 M kWh of energy (equal to a reduction of 179,829 metric tons of CO2 emissions), recycled 41.78 million tons of water, and achieved a company-wide recycling rate of 81.7% in the use of chemical strippers, 85% higher of local recycling rate in Taiwan. CMI’s continued implementation of environmental protection policies has not gone unnoticed. We were the first panel maker to receive the Corporate Environmental Protection Honor Trophy, Corporate Energy Conservation Excellence Award, and the 2009 Enterprise Green Procurement Performance Award.

Attention to corporate social responsibility and sustainability is not just a required response to international trends, but a mindset that can bring new vision to product development and growth. In 2009, CMI introduced the world’s first LCD panel and LCD monitor “product carbon footprint” verification system, thereby ushering in a new era of disclosure and transparency with regard to the carbon footprints of the electronics industry. In its product design, CMI strives to save on materials, reduce energy consumption, and control toxic substances to ensure that in the process of design, manufacturing, and customer service, our products not only continue to be highly competitive, but also meet customer and environmental regulatory requirements.

It is important to learn a lesson from the recent accidents involving international petrochemical companies that have not only caused massive environmental damage, but also jeopardized the reputations of these companies. At CMI, we truly believe that only by taking into account the environmental aspects of sustainability can a company achieve sustainable development. CMI takes seriously the protection and restoration of the environment, and works hard to incorporate sustainability values into the operation and manufacturing of its products. Integrating these values within a series of green production has lead to an improvement in the manufacturing process and product quality. With a competitive advantage thus established, we can improve on profitability while also achieving energy savings and reducing carbon footprint, a vital step to ensuring that humanity and the environment can continue to co-exist in harmony and prosperity.

Environmental protection and a green strategy: the means for creating company value

A company’s operations, aside from its focus on profitability, should more importantly give consideration to how to bring other benefits into the community and the environment. Following the merger on March 18, 2010, from which Chimei Innolux Corporation(CMI) was born, a Quality Management & Sustainability Center was also established. The existence of this center indicates that CMI already views CSR as an important part of its business operations. With the integration of relevant resources of the three companies, CMI is dedicating to an increase in stakeholders interaction and social contribution.

CMI has always believed that our employees are our most important partners. The company’s continued expansion and achievements are due in large part to their hard work, which has also contributed to the company’s ability to pursue sustainable business and development practices. CMI has thus spared no effort in creating a healthy work environment for its employees. Following the merger, with employee numbers the highest in the company’s history, CMI realizes that its influence, and the responsibility that comes with it, is greater than ever. Therefore, we have done our best to give our employees a competitive salary, multi-faceted training systems, a wide range of employee benefits, and a safe and clean work environment where they can maximize their potential. CMI also deeply cares about the physical and mental well-being of its employees and offers a wide spectrum of services in this regard.

International opinion is of the consensus that global warming must be controlled within 2℃. Facing the likelihood of a low carbon society and the direction of future international development, CMI has made a commitment to environmentally-friendly green production. Our efforts focus on energy saving, emissions reduction, facilities greening, and resource recycling, with energy saving at the core of our efforts, because energy saving makes the most environmental as well as economic sense. CMI’s efforts have not only garnered government recognition in the form of several awards but also the first-ever carbon footprint certification for flat panel and monitor.

With regard to social contribution, CMI is deeply involved at many levels. By using its creative, human, financial, and technological resources CMI actively participates in many projects and social works. As an example, in an alliance between CMI, Taiwan’s Family Support Center, and the FamilyMart convenience store chain, a FamilyMart convenience store was opened next to the employee cafeteria attached to CMI Fab T2 in Jhunan Science Park. In what is the first of its kind, this store, run on the FamilyMart model, is staffed by parents and high school students sent over by the Family Support Center. Working in the store provides them with a steady income and a chance to study and learn the management of a convenience store outlet.

In 2009, CMI was involved in a wide spectrum of community projects from education, environmental protection, to arts and culture and charity work. With the support of the Innolux Educational Foundation and Tree Valley Culture Foundation and their hosted events and activities, the power of our efforts is even stronger. CMI believes that companies and their communities are but two sides of the same coin, and that CSR promises are not to be viewed as a duty or burden, but as an ideal way of achieving management innovation, creativity, progress, sustainable development, and mutually beneficial situations.

“What will we leave for our next generation and for others?" is a question that CMI will continue to give great thought to when deciding how carry out our corporate social responsibilities. We hope our decisions will continue to deliver value and positive influences to our community and planet and that both of them will be better off for it.

Benefiting our society through Chimei Innolux’s Existence

Jyh-Chau Wang,President, STSP Branch

S.C. Sheu,Vice President, Quality Management & Sustainability Center

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1 About this Report



Company Overview

Corporate Governance

Business Performance

Communication with Stakeholders


43 Green Products

53 Employee Care


77 Appendix

Originally established in 2003 and publicly listed in 2006, Innolux Display Corp., following its merger with Chi Mei Optoelectronics and TPO Displays Corp., began operating under the name Chimei Innolux Corporation (CMI) in March 2010. Currently, CMI's production bases are distributed around the world, with its main manufacturing plants in Jhunan and Tainan in Taiwan, and overseas plants in Shenzhen, Ningbo, Nanjing and Nanhai in China, and the Netherlands and Czech Republic in Europe. The complete global network gives CMI the proximity and speed to serve its customers, saving logistical and manpower costs and reducing the energy use and carbon footprint of its operations. With products spanning the full range of TFT-LCD panel modules and assembly of end-user LCD systems, including TV panels, desktop monitors and notebook computer panels, small and medium size panels, industrial and medical display panels and LCD televisions, CMI is a world-leading TFT-LCD supplier to cutting-edge information and consumer electronics product makers worldwide.

Strengthened by the merger, CMI has since leveraged its core technology, talents and abundant production capacity to serve the unique needs of different customers worldwide. With its complete small and medium size panel product line, CMI offers its customers the advantages of one-stop shopping and customization, making it a perfect strategic partner for computer and consumer electronics manufacturers. Not simply a traditional panel maker, CMI also provides an integrated product supply chain. Through the innovative business approach of system know-how, solid panel manufacturing capability and vertical integration, CMI provides customers with a complete solution, demonstrating its sophisticated management of process technology and component parts in addition to its solid TFT-LCD foundation and production quality.

As a vital link in the global optoelectronics supply chain, CMI is deeply aware of its corporate duties and responsibilities. At CMI, we also firmly believe that, as aside from pursuing profits, our humanistic values and ideals are the very lifeblood of the company. By providing the most enjoyable visual experience possible and strengthening the influence of Taiwan’s display manufacturing sector on the global market, CMI aims to contribute to the advancement of society as a whole. Through the integration of technology, the arts and the humanities, CMI strives to make a better life for all of us.

Company Overview

Main Products

Company SnapshotDate Established January 2003

Number of Employees

Approximately 100,000 worldwide (as of May, 2010)

Capital NT$73.1 billion (as of May, 2010)

Variety of TFT-LCD(Thin-Film Transistor Liquid Crystal Display)

TFT-LCD panel modules and open cells for:

- Televisions

- Desktop Monitors

- Notebook PCs

- Small and Medium Size Panels

- Medical Display Panels

- Industrial Display Panels

Assembly of end-user LCD systems:

- Desktop monitors

- LCD TVs

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Manufacturing

Sales and Marketing

Product Development

Material Procurement

Manufacturing

Sales and Marketing

Product Development


Manufacturing

Sales and Marketing

Product Development


1 About this Report



Company Overview





43 Green Products

53 Employee Care


77 Appendix

Consistently maintaining corporate governance, protecting shareholder interests, and establishing a strong board of directors are the cornerstones of corporate governance. CMI’s management team and board of directors are made up of experienced professionals, and corporate affairs are monitored and evaluated by an internal audit office. This office assists managers and board members in ensuring that corporate operations are efficient and effective, financial reports are reliable, and regulations are observed.

At the general shareholder meeting of June 29, 2010, a new board of directors and supervisors were elected. Thereafter, a meeting of the board of directors was called in which Ching-Siang Liao was elected the new chairman, while the former chairman, Hsing-Chien Tuan, was elected vice chairman and appointed as CEO. CMI also introduced two independent directors to serve on the board who will take part in all board discussions and resolutions. These two independent directors are Chi-Lin Wei, professor at the NTU Graduate School of Management and Chairman of Paradigm Asset Management Fund, and Ying-Da Liu, Chairman of Modiotex.

Remuneration for directors and supervisors includes direct compensation and profit dividends. The Board is authorized to offer compensation based on the level of participation in company operations and the value of contributions, as well as industry standards. Profit dividends are handled in accordance with Article 21 of the Company’s Charter which states that if the company records profits for a fiscal year, 1/1000 of said amount shall be set aside as part of the remuneration for directors and supervisors. Once the dividends have been provisionally decided upon, they shall be voted on at the Shareholders' Meeting.

The remuneration for the company’s president and vice president is based on salary, bonuses, special expenses, employee bonuses, employee stock options, etc. The Chairman as authorized by the Board of Directors shall consider the nature and scope of their work, as well as the responsibilities and positions undertaken, while also taking into consideration industry standards when deciding on a compensation package. The amount of employee bonuses is first voted on at a Shareholders' Meeting and then allocated in accordance with company procedures.

In order to prevent excessive compensation for the Board and executive management, CMI has implemented the following measures:

1. Based on stipulations for matters listed in Article 14-3


Board of Directorsof the Securities and Exchange Act, as well as stipulations with regard to resolutions of the Board of Directors for which independent directors have expressed disagreement or reserved an opinion and for which a recording or written statement is made requiring that the date, nature, and content of the resolution, the opinion of the independent directors, and how the company handled said opinion be clearly described.

2. In the face of a conflict of interest, a director shall keep a record clearly stating the director’s name, content of motions, reasons for the necessity to recuse oneself, and how those reviewing a motion voted.

3. Recent moves to increase the competency of the board of directors within this and previous years (e.g. the establishment of an audit committee, increasing information transparency, etc.) and its assessment have been undertaken with the goal of making the structure of the board of directors, independent directors mechanisms, and board of directors procedures and its decision making process fully accord with regulations as laid out in the code of corporate governance.

In accordance with the law, every year CMI releases a company annual report which can be found on the Taiwan Stock Exchange website at mops.tse.com.tw. Reviewed by a certified CPA, the report details corporate structure, operation, operational risks management and fiscal conditions.

Board of DirectorsSupervisors

Audit OfficeChairman

CEO

Mobile Device Business Unit

MNT Module Business Unit

Module Business Unit

TFT Business Unit

Quality Management & Sustainability Center

Shareholders' Meeting

Finance & Accounting Center

Operation Infrastructure Management Center

Strategic Procurement Center

Legal & IP Center

Corporate Governance Structure

Chimei Innolux Board of Directors and SupervisorsTitle Name

Chairman Ching-Siang Liao (Chi Mei Corporation Representative)

Vice Chairman Hsing-Chien Tuan

Corporate Director Ting-Chen Hsu (Hong Yang Venture Representative)

Independent Director Chi-Lin Wei

Independent Director Ying-Da Liu

Supervisor De-Cai Huang (Yicheng Investment Representative)

Supervisor Rong-Jhun Lin

Supervisor Guang-Fu Song

Tainan Site

ManufacturingManufacturing

Technology Development

Technology Development

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On November 20, 2009, Innolux, along with Chi Mei Optoelectronics and TPO Displays Corp., passed a resolution at a meeting of the board of directors, giving the green light for the merger of our three companies. This resolution was later passed at an extraordinary meeting of shareholders on January 6, 2010 and at the following board of directors’ meeting of January 11, 2010, where March 18, 2010 was set as the formal merger date. With better integration of resources and an increased diversification of product lines as a direct result, the merger of Innolux with CMO and TPO has led to a noticeable increase in operational performance and has given our customers even more product models and components from which to choose. Below you will find listed several other expectations we have concerning the benefits of this merger:

▌Upgrades in flat panel R&D and manufacturing technologyFollowing the merger, CMI is slated to see improvements

in the quality of its display technology in the widescreen panel market, with upgrades in display colors, viewing angle, responsiveness, etc., all on the horizon. The merger has also been instrumental in helping CMI increase its global market share and further close the gap with Samsung and LG, the world’s top two panel makers. Regarding our mid- and small range panels, with smart phones becoming an increasing important market, CMI, with the acquisition of the high-end flat panel technology, LTPS, is currently poised to enter the high-end mobile phone supply chain. With our current integrated resources and technology thanks to the merger, we have the ability to expand our supply capacity for high-end mobile phone flat panels when necessary, which will be of real benefit in winning orders from first-tier international mobile phone brands.

▌Rapid Expansion of Production CapacityBefore the merger, the scope of Innolux’s production

capacity lagged behind the world’s top panel makers. Even

2009 Revenue NT$ 163.5 billion

2009 Capital NT$ 32.548 billion


Expected benefits of merger

2005-2009 Financial Performance (Note)

CMI Yearly Business Turnover (formerly Innolux)

Unit: 1000 NTD; EPS (net loss) in NTD

Item YearFinancial data for the last 5 years

2005 2006 2007 2008 2009Operating revenue 51,397,647 105,181,739 155,972,394 159,277,011 163,548,260

Gross profit (loss) 2,449,641 7,588,717 20,175,488 9,069,196 146,338

Operating (loss) income 767,778 4,462,099 16,438,063 4,712,316 (4,931,020)Non-operating revenue and interest 158,115 167,717 1,662,637 2,861,532 2,010,019

Non operating expenses and losses -609,507 -1,587,067 -1,134,887 -2,179,108 -432,420

Current (loss) profit 406,386 2,825,251 16,146,840 4,850,950 (2,397,073)

EPS (loss) 0.17 1.09 5.62 1.51 (0.74)

Note: Financial data is for the former Chi Mei Optoelectronics

514

1,052

1,560 1,593 1,635

0

500

1,000

1,500

2,000

2005 2006 2007 2008 2009BusinessTurnover

(in billions of NT$)

Note: CMO 2009 yearly business turnover was approximately NT$285.8 billionTPO 2009 yearly business turnover was approximately NT$23.6 billion

giving itself a period of 2-3 years to close this gap, Innolux estimated that it would be difficult to level the playing field with its larger competitors. The merger, however, has given CMI an enormous boost in its flat panel production capacity, which is currently nearly equal to Samsung and LG in terms of global market share and now greater than its main domestic rival, AU Optronics. In an increasingly competitive environment, this merger has helped CMI avoid having to take the slower path in building production lines to capture market share. With the help of Foxconn, an OEM supplier with immense experience and expertise, we have succeeded in increasing our exports of TV panels. Domestically, with our advantages in panel technology and scale, the landscape has changed with CMI and AU Optronics emerging as Taiwan’s top two panel makers in terms of market share. Internationally, CMI is now the third largest panel maker behind only Samsung and LG and ahead of AU Optronics.

The small and mid-size panel market, because of its relatively lower capital requirements and technological barriers, is a crowded market with no one company having more than 15% of total market share. This is in sharp contrast to the widescreen panel market, where the top three panel manufacturers respectively control at least 20% of total market share. However, strengthened by the merger, CMI is poised to become one of the top three manufacturers of mid- and small panels as well.

▌Sales ProfitabilityWith increases in its scale of operations, as well as

greater product diversification, CMI has made major strides in strengthening the company’s capacity to fulfill demand. We expect that, with an even more complete product line, along with the integration and expansion of our customers and sales channels, we will see rapid expansion among related business operations and continued steady growth in sales revenues. Due to the synergistic effects of the recent merger and integration, we expect to see ongoing benefits year after year.

1 About this Report



Company Overview





43 Green Products

53 Employee Care


77 Appendix

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1. Intellectual property rights litigationWith utmost respect to relevant intellectual property rights,

Chimei InnoLux Corp. (hereinafter “CMI”) follows the principle of maximizing protection of its interests when dealing with all patent litigation cases and has obtained several favorable results. Please refer to the Q1 2010 Quarterly Report for further details of the patent litigation cases involving CMI. The same can be found at CMI’s official website at (http://www.chimei-innolux.com). Also, CMI is actively developing new technologies and procuring patents therefore, which not only are implemented in CMI’s products but also are instrumental to protection of CMI’s interests.

2. Antitrust Cases2-1 Antitrust laws can have a far-reaching impact on many

aspects of large companies’ operations because such companies often have considerable influence on product supply and market price. Following the foot steps of the US, many of the world’s top economies—E.U., China, Japan, Brazil, etc.—have established their own versions of antitrust laws to punish acts of unfair competition. Large companies having considerable market power need to be cautious and ensure that their operations and commercial transactions are in compliance with local antitrust regulations.

2-2 Adherence to the law is CMI’s policy. CMI will comply with all

laws and regulations in countries in which it operates and allow all agreements, contracts, and internal rules and policies to reflect such compliance. All legal documents must be in accordance with the law and all CMI’s employees must observe the law. In order to achieve the foregoing, CMI always comply with the law with the assistance of in-house and outside legal counsel and is willing to implement necessary changes to ensure full compliance.

2-3 In June of 2010, CMI has announced a set of company-wide

internal regulations which require all employees to strictly adhere to local laws and regulations in each country in the performance of their duties, especially when their duties may implicate national anti-trust laws. The set of internal regulations also details acts that could create the appearance of a violation and how employees should behave in each situation, so that CMI’s employees can remain vigilant and apprised of clear directives. Through such publicly announced internal regulations, as well as educational and training certification, CMI’s employees will actively comply with antitrust regulations in all countries and regions.

CMI stakeholders can be divided into 5 major groups: shareholders and investors, customers, employees, suppliers, and society at large. Depending on the nature of the stakeholder and the attending department, CMI has establ ished a var iety of communication channels. Furthermore, the company’s includes dedicated investor relations information, technology cooperation reference, an interactive

Description of litigation involving CMI and its products or customers

Stakeholders

Stockholders Communication Channels

Stockholders and Investors

1. Annual General Shareholder’s Meeting.2. Regular publish the financial reports and annual reports.3. Investor hotline and mailbox; professional personnel dedicated to replying to inquiries.4. Official websites regularly updated with financial statements and the latest news.

Customers

1. The sales team and customer services team charged with handling customer needs. The customer feedback system which allows employees to instantly see the solving progress of customer complaints.

2. Customer audits and questionnaires.3. Customer satisfaction surveys.

Employees

1. Mobilization meetings and the company president’s mailbox.2. Company meetings (labor council, staff welfare committee, meetings with management,

industrial safety meetings).3. Employee questionnaires (satisfaction surveys on company meals, staff activities,

educational training, etc.).4. Employee mailbox provides a channel for employees to feedback suggestions.

Suppliers

1. There is a supplier procurement and supplier management interactive platform.2. Creation of an administrative unit specializing in procurement and supplier management.

The purchasing department and supplier management department charge supply chain management.

3. Aperiodicity meetings between departments and suppliers reflect current conditions.

Communities1. Set up the specific department & personnel with the purpose of communication with

residence.2. Periodic visits our local community to listen to their suggestions.

Government Agencies

1. Well interaction with relevant government agencies; participate in regulatory public hearings and seminars held by relevant government agencies

2. Assist relevant government agencies in water conservation efforts.

NGO1. Participate in NGOs professional forum to obtain outside opinions and industry trends

so that information can be used as reference in company policy and strategies.2. Work with NGOs to support the underprivileged and promote environmental awareness.

CMI Stakeholder Communication Channels:

platform for suppliers, contact windows for sales and product inquiries, media contacts, as well as links to related web pages—all of which are available for use by stakeholders to express their opinions or suggestions. Through these communication channels, departments within CMI can efficiently gather information on topics of concern to stakeholders and quickly formulate a response.

1 About this Report



Company Overview





43 Green Products

53 Employee Care


77 Appendix

15


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CMI is committed to customer satisfaction. Customer requirements are collected and integrated into our quality and service system with the aim of providing customers with superior quality and service. By focusing on quality conditions and feedback on the customer side, we undertake quality improvements and quickly fulfill customer requirements worldwide, which is our goal.

Customers can express their suggestion regarding quality and service to upper management in monthly or quarterly meetings. In addition, every year CMI sends out a customer satisfaction survey, which is used to assess how satisfied customers are with CMI’s service and quality. Areas receiving lower ratings are brought up for discussion, during which response measures for making improvements are proposed.

In order to have an accurate understanding of customer satisfaction as a whole, we work to ensure the communications channels between our customers remain open and easily accessed. CMI views the “best partner ranking” provided by customers as an important customer service performance indicator and regular discussions are held on making improvements with the aim of achieving total customer satisfaction.

A Comprehensive Quality and Service System

Customer Satisfaction Assessments

Continuous Inprovement

Thro

ugh

Team

Wor

k

Best QualityProduct

AccurateInformation

PrfessionalService

Supplier Parthership

Vision

Mission

Strategy

Maximize Customer Satisfaction

Various departments cooperated to gather and organize feedback and suggestions obtained through the following communication channels. The information was analyzed with regard to the level of impact on company operations in terms of the actual situation and importance. From this process we have gleaned five areas which are of particular interest to stakeholders: corporate governance, company performance, environmental protection, green products, employee care, and social contribution. Each of these areas is given its own chapter within this report and stakeholders are invited to read about related company response strategies and performance results.

Issues of interest to stakeholders

CMI also actively works with relevant outside organizations. In addition to being a channel for the contribution of the fruits of our hard work, we hope that such relationships will be a factor in developing future operational advantages.

Relationship between CMI and outside associations and organizations

Name of Association or Organization

Management Level Project Member

Taiwan TFT-LCD Association ▲ ▲ ▲

Chinese Society for Quality ▲

Association of Industries in Science Parks ▲

Taiwan Digital Television Industry Alliance ▲

Taiwan Electrical and Electronic Manufacturer Association

▲

Taiwan Corporate Sustainability Forum ▲

The Industrial Development and Promotion Committee of Miaoli County

▲

Tainan County Industrial Association ▲

1 About this Report



Company Overview





43 Green Products

53 Employee Care


77 Appendix

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Through the operations of its Green Committee, CMI has continued to work towards actualizing environmental protection within its business activities. These efforts have not gone unnoticed and a list of milestones and awards can be seen below.

CMI for many years has been fully engaged in promoting environmental sustainability. In recognition of these efforts, we have been awarded the Annual Enterprises Environmental Protection Award for three consecutive years. Because of our exceptional environmental performance which has even earned the recognition of R.O.C. President Ma Ying-jeou, CMI is the first flat panel maker to be awarded the Corporate Environmental Protection Honor Trophy. Furthermore, the Ministry of Economic Affairs (MOEA), which presented CMI with the Outstanding Voluntary Industrial Greenhouse Gas Reduction Award for three straight years, has applauded CMI’s long-term investment in greenhouse gas reduction. In addition, CMI was awarded the Outstanding Energy Conservation Award_ Superior Distinction for its facilities for three straight years and was also awarded the Corporate Energy Conservation Excellence Award in 2010.

First Flat Panel Maker to Receive Corporate Environmental Protection Honor Trophy and Corporate Energy Conservation Excellence Award

No. Award Remarks

1 2007~2009 The Annual Enterprises Environmental Protection Award, Environmental Protection Agency (EPA), Executive Yuan For 3 straight years

2 2008~2010 Outstanding Energy Conservation Award_ Superior Distinction, Bureau of Economic Affairs, MOEA For 3 straight years

3 2007~2009 Outstanding Voluntary Industrial Greenhouse Gas Reduction Award, MOEA For 3 straight years

4 2008~2009 Industrial Waste and Renewable Resource Disposal and Resource Reduction, Recycling, and Reuse Superior Performance Award, Environmental Protection Agency (EPA), Executive Yuan For 2 straight years

5 2009 EEWH Diamond Level Certification for Green Building Design (The Recreation Center), Ministry of the Interior

6 2009 Green Package Design Award, EPA, Executive Yuan

7 2009 Outstanding Enterprise Award for Green Procurement, EPA, Executive Yuan

8 2009 Energy Conservation & CO2 Reduction Certified Factory, EPA, Executive Yuan

9 2009 EcoLife Performance Excellence Award for Multiple Mobilizations of Volunteers, EPA, Executive Yuan

10 2009 Southern Taiwan Science Park Environmental Protection Model, Science Park Management Bureau

11 2009 Environmental Protection Performance Excellence Award, Science Park Management Bureau

12 2009 Outstanding Enterprise Award for Energy Conservation_ Superior Distinction, Science Park Management Bureau

Milestones in Environmental Protection Excellence

Audience with President Ma Ying-jeou

Outstanding Energy Conservation Award_ Superior Distinction

Outstanding Enterprise Award for Green Procurement

Complete Care for the Environment: To Earth, With L.O.V.E.

CMI’s management philosophy is to become the world’s top flat panel supplier and a company with a corporate society responsibility vision. In order to meet its comprehensive goals for environmental management, CMI has adopted its “To Earth, With L.O.V.E.” principles for future green development rooted in sustainability, harmony between man and the environment, and symbiotic growth. From fostering green lifestyles among employees, implementing green production, promoting

green values within the LCD industry supply chain, and leveraging its

influence within the industry, CMI demonstrates its overarching

commitment to protecting our planet.

Green ProcurementAs a leader in the flat panel industry, CMI believes that it should take the lead in

promoting green consumption and leverage its positive influence on the industry. We have, on our own initiative, signed corporate green procurement letters of intent and participated in the Environmental Protection Agency’s Enterprise and Organization Green Procurement Plan. Internally, we have founded a Green Procurement Committee with personnel from different departments. This group helps ensure preferred procurement of products proved to be environmental friendly, energy and water saving. CMI carries out its corporate responsibilities with regard to sustainability and the environment by conserving the world’s precious resources.

CMI’s green procurement practices cover commodity, stationery, eco-friendly carton, and materials and parts for manufacture process. According to the Environmental Protection Administration statistics, in 2009, 20 companies reported to make green procurement for over NTD 20 million. CMI ranked number 2 for its green procurement totaling NTD 296 million last year . It was also the only LCD flat panel maker to be awarded of the Outstanding Enterprise Award for Green Procurement.

1 About this Report




Environmental Protection

Safety Culture and Risk Management

43 Green Products

53 Employee Care


77 Appendix

19


20

Environmental Safety Management System and Policies

CMI Green Vision: To Earth, With L.O.V.E.

In order to make sustainable development a reality, CMI has comprehensively improved environmental quality and maintained a healthy and safe living environment. With ISO14001, TOSHMS, and OHSAS18001 certification as the foundation of these improvements, CMI has expended great effort to establish, certify, and carry out environmental safety management systems with the aim of creating a reciprocal growth of sustainable green practices and the culture of safety.

CMI’s Safety, Health and Environment Policies: CMI developed diversified environmental management, green

product design and risk management with the goal of overmatching international standards. A safe and healthy working environment is assured. It is aimed to make employees enjoy their work while fostering reciprocal relationships with employees, customers, stockholders, contractors and suppliers. Responsibilities of a global citizen and for sustainable development would be duly performed.

In order to carry out the above goals, CMI promises to:Meet all government environmental protection, safety, and health regulations and strive to comply 1. with international environmental protection, safety and health standards, commit to ongoing improvement of the performance of ESH management. Follow the international environmental protection trends, satisfy the requirements of customers, 2. devote to promote “Green Vision”, strengthen the green product design, and fulfill energy saving, emission reduction, green belting, and recycling in order to reduce the environmental impact from manufacturing and products. Root the culture of corporate risk management, and develop and promote the integrated framework 3. of risk management. Aim at zero accident, zero pollution, and zero occupational disease to minimize operational hazards 4. for employees, customers, vendors and suppliers.Everyone shall fulfill the duty, form the culture, and implement the discipline of occupational safety. 5. Promote healthy activities to improve the well being of employees and to fulfill the duty to the 6. community at large. Provide education and training as well as communications channels to increase employees’ 7. environmental protection, safety and health awareness, and encourage all employees to participate in the environmental, safety and health management.Strive to strengthen readiness to deal with emergencies, and maintains an effective Business 8. Continuity Plan (BCP) that enables the corporation to minimize the impacts from any internal or external discontinuities.

Chimei Innolux Corporation leads to carry out above-mentioned Environmental, Safety and Health Policy, communicate to every staff in and work for our organization, to let all employees deeply

recognize and also in direction to the public.

To earth,with

L.O.V.E.LGreeniving

OGreen

perations

VGreen

alue Chain

EGreen

nvironment

Green Living(Achieving Fulfillment)

Green Environment(Promoting

Environmental Protection)

Green Value Chain(Creating Green Value)

Taking a page from the LOHAS (lifestyles of health and

sustainability) movement and its values, we are committed to creating greener living conditions for our employees and surrounding communities.

Covering product development and design, manufacturing and

shipping, we will make continuous environmental

performance improvements.

Caring for the Earth, we will promote ecological

sustainability.

We are committed to installing the greenest values possible

within our LCD production chain.

Green Operations(Sustainable

Resource Management)

1 About this Report






43 Green Products

53 Employee Care


77 Appendix

21


22

Environment Information

Note:

1. Energy conversion:

Thermal value of natural gas = 8,900 kcal/m3 (Energy Statistics Handbook published by the Bureau of Energy, MOEA)

Thermal value of diesel fuel = 8800 kcal/L (Energy Statistics Handbook published by the Bureau of Energy, MOEA)

1 kWH = 3,600,000 J

2. HCl and VOCs emissions are obtained by converting actual test results to emission density (kg/m2), and then calculating emission volume

on the basis of actual panel area:

Emission density (kg/m2) = discharge pipe emission volume (kg/hr) * 24hr/day/ panel area (m2/day)

Emission volume (ton/yr)= emission density (kg/m2) * panel area (m2/yr) / 1000 kg/ton

3. Waste recycling: Percentage of waste apart from amount sent to final disposal and amount incinerated; final disposal methods shall be

confirmed on the basis of the Regulations Governing Recycling, Clearance and Disposal of General Waste.

4. The foregoing greenhouse gases are to sum of Scope 1 (direct greenhouse gas emissions) and Scope 2 (indirect greenhouse gas

emissions due to energy consumption) emissions.

5. The foregoing data consists of statistical data from CMI's Taiwan plants.

Design R&D

Procurement of raw materials

Customer end

Manufacturing

Glass substrate

Liquid crystal

38.358.5

million m3

tons

Developer

Photoresist liquid

Stripper

4.34.27.8

1,000 tons

1,000 tons

1,000 tonsWastewater

Wastewater 15.5 million m3

Waste

Waste recycling (cyclic use)

Waste 48

86

1,000 tons

Stripper

N-methyl-2-pyrrolidone

Process water

Rainwater

4,530

41,620

160

(recycling rate)

(recycling)

(recycling)

(recycling)

Natural gas

Diesel fuel

MJ

MJ

Power 1.3x1010

3.1x108

7.1x106

MJ

Water consumption

Tap water 20.7 million m3

Inputs CMI Outputs

81.7

Greenhouse gases

VOCs

Hydrogen chloride

2,706134.2

2.7

1,000 tons

tons

tons

%

Main process materials

Main raw materials

Direct energy consumption

Indirect energy consumption

Material Recycling and Reuse

Atmospheric emissions

1,000 tons

1,000 tons

1,000 tons

%

Environmental Accounting

Environmental Accounting

Environmental Benefits

Environmental Costs

Indirect Benefits

Direct Benefits Health Occupational

SafetyEnvironmental

Protection

Lower logistics-end

environmental im

pact

Lower product-end

environmental im

pact

Lower process

environmental im

pact

Improve the use of resource

Control the cost of health

activities

Control the cost of occupational

safety activities

Control the cost of environm

ental protection activities

CMI's Environmental Accounting Framework

Environmental accounting system funding ratio, 2009

Health

0.07% 78.3%

Safety

21.60%


Motivated by the need for sustainability and in line with international development trends, CMI began adopting an environmental accounting system in 2008. This system formally began functioning in January 2009, which made CMI the first firm in Taiwan's optoelectronics industry to comply with the Environmental Protection Administration's "Environmental Accounting Guidelines" by adopting environmental accounting practices.

CMI's environmental accounting system uses a structured approach to account for and disclose all types of environmental protection, workplace safety, and health activities and costs. In addition, the system also classifies cost items in connection with corporate activities and internal management needs, establishes an safety, health and environmental accounting code, expresses costs of the company's complete environmental protection, health, and safety activities, and also assesses, calculates, and discloses both direct qualitative/quantitative benefits, and also indirect economic benefits, facilitating overall analysis, improvement, and management.

1 About this Report






43 Green Products

53 Employee Care


77 Appendix

23


24

Greenhouse Gases Results of adoption of a low-carbon policy

Energy Conservation ResultsWe are motivated by our corporate social responsibilities to continuously conduct

energy conservation activities, and we seek to a production model with minimum energy consumption. We have established energy management organizations reflecting local conditions; for instance, at our Tainan Science Park plant, we have established a dynamic energy conservation committee, and also provide energy conservation training and an extensive incentive system encouraging employees to actively make energy conservation proposals. At our Longhua Plant, we have established a "green energy engineering" energy conservation task force, which contains assembly energy conservation, fab energy conservation, organizational energy conservation, and peripheral energy conservation units; this concrete implementation system will be able to systematically, effectively boost energy conservation performance.

Furthermore, our Interdepartmental Energy Conservation Task Force has increased the breadth of our energy conservation efforts, and performs audits enabling superior energy conservation programs to take root at each of our plants. In addition, we are relying on professional consultants and our technology team to develop new energy conservation technologies, which include improvement of equipment efficiency, rationalization of energy conservation, and tightening of supply specifications. We are employing full-scale review and improvement to achieve the dual goal of boosting our operating performance while conserving energy and cutting carbon emissions.

Procedures of greenhouse gas inventory: The external verification organization for greenhouse gas emissions is SGS Taiwan Ltd. 1. With regard to Scope 2 emissions connected with externally purchased power, the emissions 2. coefficient for plants in Taiwan is the annual power emissions coefficient announced by the Bureau of Energy, MOEA; the emissions coefficients for plants in China are the regional power network emissions coefficients announced by the Clean Development Mechanism in China. Calculations of greenhouse gas emissions from fossil fuels are based on the CO3. 2 emissions coefficient announced by the Bureau of Energy, MOEA in accordance with IPCC 2006.Calculations of greenhouse gas emissions due to FCs are based on IPCC research reports. 4. Due to general considerations connected with ISO 14064-1, internal reporting needs, the 5. expected uses of greenhouse gas inventory data, and national greenhouse gas inventory reporting mechanisms, the operational boundaries of greenhouse gas inventories are provisionally not included Scope 3 (other indirect greenhouse gas emissions).

Relative importance of greenhouse gas emissions sources in 2009

Note: inventory scope: fabs in Taiwan and China

CO2 emissions derived from use of FCs

Other CO2 emissions not derived from FCs

CO2 emissions due to power consumption

84.09%

1.40%14.51%

Reduction in CO2 emissions from SF6 and NF3 before and after LS installation, 2005-2009

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

CO2 emissions after installation of effective LS

CO2 emissions before installation of effective LS

2005 2006 2007 2008 2009(tons)

Cumulative voluntary reductions in greenhouse gas emissions verified by a third party

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2005 2006 2007 2008 2009(tons)

Ever since the Industrial Revolution, pollution of the environment due to human activities has accelerated and expanded in scope. The continuous discharge of large amounts of greenhouse gases has unceasingly intensified the greenhouse effect, harmed the Earth's ecology, threatened the human living environment, boosted temperatures worldwide, and worsened the frequency and intensity of extreme climate conditions. Change in climate has impacted ecological systems worldwide.

The impacts of global climate change, such as challenges to corporate operations brought by storms, floods, and droughts, and the increasingly strict limits on CO2 emissions stipulated by international conventions and domestic laws, will inevitably ,make direct (such as the increase of power consumption in temperature accommodation, the restrictions of upcoming laws and regulations) or indirect (such as the effect of climate change on the prices of raw materials and parts) influence on the company's operations, financial burden, and other risks.

Greenhouse Gas InventoriesCMI has conducted category 1 (direct greenhouse gas emissions)

and category 2 (greenhouse gas emissions) greenhouse gas inventories for each fab in accordance with the standards procedures in ISO 14064. We have compiled complete greenhouse gas emission inventory data from 2005 to 2009, and have passed the third party external verification. In future, we will continue to work with research institutes to develop methods for quantifying category 3 emissions (other indirect greenhouse gas emissions), which encompass emissions caused by employee commute, freight shipment, and the use and disposal of terminal products, in order to make our inventories more complete.

We have taken a positive, proactive attitude towards the issue of greenhouse gas emissions, and have vigorously implemented various voluntary greenhouse gas reduction projects and measures:

In 2004, we became a signatory to the voluntary reduction 1. memorandum of cooperation established between the Taiwan TFT-LCD Association (TTLA) and the Environmental Protection Administration (EPA). We are continuing to invest in the voluntary installation of high-efficiency combustion-type removal equipment (local scrubbers). Actively improve origin process technology and optimize process 2. parameters. Reduce consumption of raw materials and energy. 3. Substitute a part of SF4. 6 with NF3 (with a relatively lower GWP value). Since 2008, we have actively fostered a green low-carbon supply 5. chain and have relied on collaboration with our suppliers to develop green low-carbon products for the purpose of reducing environmental impact and operating cost, and enhancing opportunities. Energy conservation measures and equipment efficiency 6. improvements are descr ibed in detai l in the "Energy Conservation Results" section.

Owing to the active implement action of greenhouse gas reduction measures and significant results in reduction, we have obtained the acknowledgement of a third party inspection organization as having reduced emissions by more than 8,410,000 tons. In addition, we received "Outstanding Voluntary Industrial Greenhouse Gas Reduction Award" from the Industrial Development Bureau, MOEA for three consecutive years (2007-2009).

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43 Green Products

53 Employee Care


77 Appendix

25


26

Improving Efficiency and Reducing Energy Consumption:

Our energy conservation efforts chiefly target user-end reduction and supply-end efficiency improvement. In the case of our process equipment, we have reduced waste of energy through general exhaust recycling, CDA, and control of vacuum and process exhaust during breaks in production. For instance, MAU air conditioning in the clean rooms of Building E4/G18 of the Longhua Plant saves 3.8 million kWh annually.

We have incorporated the green building concept in our energy conservation planning since the establishment of our 6th generation TFT plant at Zhunan in 2008. For instance, we use high-efficiency lamps with T5 energy-saving lamp tubes, LED streetlights, and air compressor waste heat recycling systems, while also adjusting design parameters in view of our new building materials and lamp types to avoid overdesign. We place switches near users in order to encourage employees to turn off unneeded lights. According to statistics, we are saving NT$77.3 million annually and reducing CO2

emissions by 19,950 tons/year.

As for the improvement of equipment efficiency at our plant in the Tainan Science Park, apart from using high-efficiency chiller in our chiller water system, we have also developed our own optimized control system ensuring that the entire system remains in the high-efficiency operating zone. This has reduced power consumption near 9.8million kWh/year, which is equivalent to CO2 emissions by 6,262 tons. In addition, we have further implemented machine exhaust reduction, compression dry air reduction (CDA), and clean room fan filtration unit (FFU) reduction in order to conserve energy. Through recycling, rational machine use, and easing of energy use specifications, we are saving 235.8million kWh annually.

Use of high-efficiency lamps and T5 energy-saving tubes

Use of LED streetlights

Innovative design

Implementing management

Continued improve

Thanks to support from the company's energy conservation policy, highly efficient organizational operations have paid off well, and saved 288.65 million kWh in 2009, which is equivalent to 179,829 tons reduction in CO2 emissions. Our continued attentiveness to energy conservation have earned the government's recognition, and we won the Bureau of Energy's "Outstanding Accomplishment—Superior Energy Conservation Awards" for the third consecutive year in 2008.

Water Conservation ResultsImplementing Source Reduction:

Our utilization of water resources complies with the spirit of sustainability, the 5R (Reuse, Reduce, Regeneration, Recycle, Recovery) methods, and innovation concepts. We are constantly striving to reduce water consumption. We employ green building concepts at the plant development stage, procure low water consumption equipment, develop water-saving equipment designs, reuse low-concentration washing water for high-concentration washing, and extend the pure water back washing/regeneration cycle. At the same time, we have established a task force to broaden the extent of water management, implemented source reduction projects, and conducted an inventory of machinery at all plants. During 2008 and 2009, we inventoried a total of 1,119 machines, implemented idle shower time rationalization, and improved machine water use, which yielded savings of 2.3 million tons of water annually.

Recycling: We recycled a total of 41.78 million tons of water in 2009, and this total

included 0.16 million tons of water saved through the development of alternative water sources (rainwater recycling). We plan flexible operating mechanisms at the plant design stage; for instance, the installation of dual switching drainage pipes on equipment facilitates subsequent diversion of water for recycling. We are also using recycled water for some secondary purposes; for instance, some RO concentrated water is directly routed to the front-end processing stage of the pure water system. We make sure that machine drainage systems have well-planned diversion mechanisms at the plant design stage, and we are employing ozone treatment and wastewater treatment processes to increase water recycling. In addition, apart from making use of conventional recycling technology, we are also adopting high-performance biological treatment recycling technology in our water recycling systems. As a result of these measures, we are using water increasingly efficiently at all our plants. We adopted high-efficiency membrane bioreactor (MBR) technology as early as 2007 to increase water recycling. Our MBR systems are already yielding 2.69 million tons/year in recycled water, and our plans are still gradually broadening their water conservation measures.

Cold water system optimization

Wet bulb temperature



CB

A

Cooling water tower power consumption

chiller power consum

ption

Optimized control points

High efficiency chiller (COP 7.5)

Rainwater recycling system

MBR system

RO system

Activated carbon system

Exhaust recycling

Before improvement

After improvement

Dry Coil

Process Area

FFU

1 About this Report






43 Green Products

53 Employee Care


77 Appendix

27


28

Water Recycling Measures

Air Pollution Reduction Performance

Water Pollution Reduction Results

Each of our new plants is equipped with numerous types of air pollution control equipment, and we are also upgrading air pollution control equipment at our existing plants. We are continuing to boost treatment efficiency, and have installed recycling equipment on the user end of machinery, reducing raw material consumption and overall emissions. Furthermore, in conjunction with a collaborative industrial/academic project, we have researched optimized pollution control technology able to effectively reduce pollution emissions and maintain good environmental air quality in the vicinity of our plants.

Air pollution control equipmentEnvironment air quality monitoring systems: continuous monitoring of • VOC concentration in stack emissionsBag dust collectors: captures particulate pollutants generated by • production processesWet scrubbing towers: removes acids, alkalis, and VOCs generated • by processes Zeolite rotary absorber and incinerator: removes process VOCs • Condenser recycling system: removes VOCs from air• The pollution equivalent of our VOC emissions has decreased steadily • over the years, showing that our continued improvements are yielding significant benefits. For instance, the VOC pollution equivalent per unit chip area fell from 0.0049 kg/m2 in 2007 to 0.0022 kg/m2 in 2009; this represents a 55% drop in VOCs pollution equivalent.

All of our wastewater treatment facilities are staffed by full-time wastewater treatment personnel who can safeguard water quality in real-time, and we have also established on-site testing laboratories. In addition, we also have joint analytical laboratories responsible for regularly measuring water quality indicators, establishing trend management mechanisms, and maintaining optimal treatment processes.

In the area of friendliness to the environment, we are working together with academic collaborators to develop the following items: (1) sulfide pollution control technology, (2) new technology for total phosphorus treatment of wastewater, and (3) optimization of wastewater total nitrogen treatment processes.

Furthermore, we are working together with specialized wastewater treatment firms to adopt the industry's newest pollution reduction technologies. Since 2007, we have adopted anaerobic biological systems and MBR systems in order to achieve our pollution and waste reduction goals. Our wastewater treatment processes include pressurized flotation tanks and final sedimentation tanks, ensuring the quality of final wastewater emissions and maintaining our long-term stable operation.

Wastewater Emissions Improvement Performance

The COD pollution equivalent of our wastewater has • fallen steadily over the years, which again shows the effectiveness of our continued improvements. The COD pollution equivalent per unit chip area has decreased from 0.063 kg/m2 in 2007 to 0.024 kg/m2 in 2009, which represents a fall of 62%.

VOC emission equivalent concentration trend chart

2007

0.00490.0043

0.0022

2008 2009

(kg/m2)

Statistical category: 1. Chip area includes TFT+CF2. 2007-2008: A/B/D plants (Fabs 1/2/3/4/5/7) 2009: A/B/D/E plants (Fabs 1/2/3/4/5/6/7)

Down

55%

Pressurized flotation tank

Final sedimentation tanks

Wastewater COD emissions equivalent trend chart

2007

0.0630.049

0.024

2008 2009

(kg/m2)

Down

62%

Statistics category: 1. Chip area includes TFT+CF2. 2007-2008: A/B/D plants (Fabs 1/2/3/4/5/7) 2009: A/B/D/E plants (Fabs 1/2/3/4/5/6/7)

Water recycling system investments Water saved in 2009High TOC process wastewater recycling system: Bio Polisher and MBR systems; recycles high TOC wastewater.

9.33 million tons/year

Low TOC process wastewater recycling system: activated carbon system. 20.12 million tons/year

Lengthening resin tower regeneration time, multistage regeneration wastewater recycling, ROR wastewater recycling MMF/ACF backwash wastewater recycling, instruments/water seal bucket drainage water recycling.

11.45 million tons/year

MAU condensate water recycling, housekeeping RO concentrated water recycling, reduction of faucet use. 0.65 million tons/year

Rainwater recycling. 0.16 million tons/year

BCCA process wastewater recycling improvements. 0.07 million tons/year

Total amount of conserved water. 41.78 million tons/year

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30

Recycling of Packing materials

Recycling Results

More than 90% of reusable packing materials supplied by upstream vendors are recycled by our Procurements Department. Our Safety, Health, and Environmental Department locates firms that can recycle packing materials that cannot be directly recycled by the vendors. Since 2009, we have actively promoted recycling and reuse of packing materials for products supplied by CMI to downstream customers. This campaign has reduced waste output, enabled the sustainable use of valuable resources, and induced up- and downstream vendors and customers to jointly help the environment by recycling and reusing product packing materials.

Second-hand article trading platform system

Customer's factory

CMI factoryStorage and Shipping

DepartmentManufacturing

Department

Recycling of packing materials. Quality inspection prior to warehousing.

Quality inspection prior to use of recycled packing materials in a shipment .

Schematic diagram of recycling processes

Quality screening of recycled materials prior to the loading.

Recycling and reuse of customer-end product packing materials

The beach is also our home, and it is our responsibility to protect it. Here CMI personnel and family members have volunteered to clean up beaches and protect the ocean environment.

Waste cooking oil was recycled to green soap. The idea of sustainable life was promoted through popularizing the waste-oil-made soap from CMI and primary school nearby.

Raw Materials and Waste Recycling

Recycling and Regeneration of Chemicals

An Internal Second-Hand Article Trading Platform

We manage every stage, from origin procurement to the disposal after process. Vertical management and classification is employed and regenerative chemicals are preferred. We establish our own regeneration facilities or co-operate with suppliers to perform regeneration. Therefore the generated waste per panel area and the recycling rate were always in the leading position of same business.

The panel production process involves large quantities of chemicals. In order to optimize resource use, we have established a stripper recycling system with distillation process to purify chemicals discharged from production processes and make them reused. Company-wide stripper consumption was 36,946 tons in 2009, of which 30,176 tons was recycled, with a recycling rate of 81.7%.

The "Diamond Green Architecture Mark." Our personnel can learn how to make their own lives "greener" from our green architecture and facilities.

To encourage employees to cherish resources and make sure the full use of articles, we have established a trading platform for excess or discarded articles and materials in all departments. By allowing other departments to adopt the released items, this platform ensures optimal use of goods and enhances our material resources.

We encourage employees to participate in clean production activities via our environmental management system and improvement proposal system. The results are outstanding. Our overall recycling rate in Taiwan was as high as 85.8% during 2009, and one plant even achieved a recycling rate of 94.5% for the year. As a result, the EPA recognized our recycling efforts by bestowing the " Industrial Waste and Renewable Resource Disposal and Resource Reduction, Recycling, and Reuse Superior Performance Award " on us in 2008 and 2009.

Gradually Realize Green Living & Concern for the Environment

In the area of green architecture, we have built The Recreation Center to provide employees with green living space. This is the first large sports and leisure center in Taiwan to have won the prestigious "Diamond Green Architecture Mark."

In addition, we have introduced recycled toilet paper, policy of recycling and reuse of household trash, and regeneration of discarded computers provided by employees. The convenience stores in fabs in Taiwan stopped selling bottled mineral water and providing free disposable tableware. To reduce kitchen waste, we encourage employees to take only an appropriate amount of cafeteria food. We are promoting the use of environmentally-friendly soap made from waste oil to lessen the use of environmentally-harmful synthetic chemical cleansers. so as to protect the marine environment. We hope that combining our small efforts in everyday life will make a significant contribution to protecting the Earth.

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53 Employee Care


77 Appendix

31


32

Safety Culture and Risk Management Strategies

Loss Prevention Management Loss Prevention Strategy Categories

Risk Management Strategies

CMI has specifically defined health and safety as core values. With the full support and commitment of our managers, who are dedicated to displaying felt leadership by setting personal examples, we are relying on our long-term safety culture blueprint and the step-by-step implementation of our safety, health and environmental management system to strengthen the core value of safety at the system level, raise it the cultural level, and ultimately make the company's safety culture part of employees' personal qualifications.

We are keenly aware that natural disasters and plant accidents may highly detrimental effects on the company's assets, production operations, and employee life safety. We rely on strict risk assessment, risk engineering control, and implement the safety regulations and guidelines to ensure the effectiveness of risk control measures. We will also continue to monitor the status of high-risk areas to reflect the management performance.

We were the first in the industry to adopt seismic risk assessment and improvement. We conducted a seismic vulnerability study of plant buildings and equipment, etc. in conjunction with insurance broker and consulting companies in 2003; this survey confirmed the ten largest probable maximum losses (PML) involving our plants and assessed the maximum foreseeable losses (MFL). We installed seismic reinforcement the supports and bracings for facility systems and anchoring for production equipments in stages during 2004 and 2005. We drafted post-earthquake recovery plans for FAB and compiled post-earthquake inspection forms for facilities and equipments in 2005. We teamed up with an insurance company in 2006 to implement an earthquake damage risk assessment project, and identified ten vulnerable areas in structures. We compiled post-earthquake structural safety assessment forms based on those used in California, and also produced earthquake emergency response plans and a response commander handbook.

Since the industry has not yet assessed new process hazards or production site flood potential, nor compiled earthquake-resistance specifications for next-generation equipment, apart from formulating preventive strategies, we have also worked together with experts from industry, government, and academic organizations to perform research, revise loss prevention engineering design specifications, and establish HPR standards. This is how we are preventing the occurrence of accidents and protecting the company's assets and the life-safety of our employees. We hope that our HPR guideline will guide similar efforts in the TFT LCD industry.

Architectural structure, Facility and information systems, processes, and equipment safety

Apart from complying with Taiwan's legal regulations, international safety standards such as NFPA, FM, UBC, SEMI), and CMI's plant construction standards, all new plants or plant expansion projects must pass detailed risk assessment and engineering review by the project team, Contractor, and insurance company.

The company has compiled three guidelines for new construction, the first guideline concerns plant layout & Building Construction, the second guideline concerns the Hazardous Production Materials (HPM) Controls, and the third guideline concerns fire protection. These guidelines provide a basis for the new plant hardware risk management and subsequent plant operation software risk management.

Integrating international safety regulations and the industry's

experience.

Protection to HPR

Utility Reliability

Fab designElectrical

safety

HPM safeguards

Toxic gas monitoring

Fire protection

Plant layout

Seismic Protection

Building structure

Life Safety

Post-earthquake structural safety assessment form

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33


34

Life Safety Systems and Emergency Response Centers

In view of inherently safety designs and thorough risk assessment, setup the emergency response centers to monitor with the fire alarm system, gas monitoring system, leakage monitoring, and earthquake accelerometer systems. In addition, we also rely on intensive training, drills and exercises to ensure that our emergency response centers are as effective as possible

Risk Control in High Risk AreasA. Emergency response plans based on scientific analysis

In 2004, after performing a preliminary hazard analysis of HPM at our T3 plant in conjunction with the Industrial Technology Research Institute (ITRI), we completed accident consequence analysis for different possible leak sources and equipment layouts, etc. using Process Hazard Analysis Software Tool (PHAST) software. We also conducted scenario planning in order to devise emergency response procedures, and we have implemented emergency

response training, drills and exercises accordingly since that time.

B. Thermal imaging of electrical equipment

Starting in 2006, we have helped 51 employees obtain international qualified infrared thermal image Level 1 inspector. These personnel provide in-plant lectures on electrical equipment panel inspection and interpretation of measurement results, and assist in the resolution of abnormalities. There are currently more than 200 personnel who are qualified to perform the thermal image inspection. In 2009, electrical elements that were subjected to infrared thermal scan included NFB breakers, SSR solid relays, MC electromagnetic contacts, transformers, SC capacitors, and terminal blocks and terminal core circuits. The inspection rate and abnormality improvement rate are both 100%. Our rigorous efforts to monitor electrical risks and perform measurements have clearly succeeded in preventing accidents involving electrical equipment.

Risk auditThe benefits of risk audits include to establish risk

profile by site, to setup the risk & ESH performance indicators; to identify cost effective strategy for risk elimination or mitigation; to cultivate risk management awareness and build the operation discipline; and to arrange appropriate insurance for effectively risk transfer.

Research projects on new hazardsSince 2000, we have been responding to the

new hazards brought about by the larger glass sizes and changes in process conditions in the TFT-LCD industry, and the potential impact of natural disasters on our operations. After rigorous risk assessment by task force, we propose a research project for new hazard risks. Following study by academic and industry experts, we l adopt improvement strategies resulting from research and analysis in our plants, mitigating the risk and impact of new hazards.

We have further compiled the results of our research on explosion-proof electrical systems and tool seismic anchorage in "explosion-proof electrical wiring standards" and "Specifications for tool seismic anchorage," which have been issued to all plants, allowing them to achieve high protection standards.

High-risk area Risk identification activity code Department Drill date Drill title

Flammable & Combustible solvent storage areas

B00342-09 FAC-2 2008/5/22 N-321 chemical fire drill

B00342-02 FAC-2 2008/6/12 25% TMAH tank truck unloading spill drill

B00342-16 FAC-2 2008/8/22 BHF storage tank chemical leakage drill

B00342-09-002 FAC-2 2008/12/9 FAB 1F chemical room IPA tank leakage drill

Waste liquid storage areas

B00341-04-005 FAC-2 2008/11/21Waste IPA tank truck unloading pipeline leakage with fire drill

B00341-05 FAC-2 2009/4/17Waste aluminum etchant unloading pipeline leakage drill

Chemical storage areas B00342-08-011 FAC-2 2009/5/21 2.5% TMAH chemical leak

drill

Special gas storage areas

CH0020-02 W/H 2008/5/30 Warehouse area drill for gas cylinder lrakage

B00343-13 FAC-2 2008/6/26 Cl2 Cylinder leakage drill

CH0020-02-04 W/H 2009/5/21Drill of N2O Cylinder leakage due to topple& fall during weekend

CVD BA0241-1 TF-1& Array 2008/3/28 TF-1 CVD170 local

scrubber gas leakage drill

Wet Bench BA0230-23-001 ET 2009/11/1 Wet bench tool fire drill

SiH4 B00343-15-11 FAC-2 2008/11/28 SiH4 leakage drill

NH3B00343-16 ERC 2008/12/27 NH3 leakage drill

B00343-31 ERC 2009/4/22 NH3 pipeline rupture drill

Hydrogen plant and LNG station B00343-06-001 FAC-2 2008/7/31 Mass liquid N2 leakage

Drill

Diesel storage tanks and generators

B00313-07-03 FAC-1&2 2008/2/22Drill for contamination of wastewater treatment plant discharge effluent due to diesel leakage

Drill record for ten high-risk areas, 2008-2009

Business Continuity ManagementApart from actively controlling risk through engineering

improvements and emergency response methods, we have also drafted a short-/mid-term business continuity plan specifying the company's overall backup measures for business recovery, and are purchasing property damage and earthquake insurance policy in order to disperse possible business losses in a worst-case scenario.

In order to ensure smooth operations, and mitigate the effect of interruptions in operations, material supply, and other services caused by various types of accidents, we have drafted business continuity plan guidelines. We have also determined the framework of each business continuity plan level on the basis of the severity of possible crises, providing a format to guide the development of various business continuity plans.

To ensure the continuity of production, all of our plants have compiled utility interruption mitigation plans, such as waste water discharge abnormalities, city water supply interruptions, science park wastewater treatment service interruptions, natural gas supply interruptions, power supply interruptions, and DI water system interruptions. In addition, conduct the trainings for all functions, which include business continuity management, tool salvage training, Semi S26 Tool safety requirements, and tool seismic anchorage design, etc.

Since 2006, we have called on relevant functions to draft annual business continuity plans, and we have completed an epidemic disease (bird flu, H1N1) business continuity plan and fire business continuity plan. We are further employing table-top exercise to ensure the effectiveness of these plans.

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36

Occupational Health and Safety Promotion Measures and Performances

For corporate sustainabil i ty, apart from complying with government laws and regulations, we also uniformly require that all internal operations comply with domestic TOSHMS and international ISO 14001 and OHSAS 18001 management systems and customers' safety, health and environmental requirements.

Environmental, Health, and Safety Organization and Implementation Framework

Contractors and Engineering Safety Management

In order to maintain the functioning of our safety, health and environmental management system, we have established ESH Division, which is in charge of company-level ESH risk management department and plant-level ESH management departments.

Our plants all have dedicated ESH management departments, which are responsible for implementation and management of plant safety, health and environmental matters. We rely on biweekly meetings to establish parallel communication mechanisms with each department ESH coordinator. We integrate employee needs relayed by ESH coordinators with ESH tasks implementation on a quarterly basis. Our plants' ESH committees report to their plants' highest managers, other relevant functions, and the labor representatives; and discussion of environmental, health, and safety matters voiced by the labor representatives achieves the goal of vertical communication. Risk management departments bear responsibility for general oversight of safety, health and environmental management directions and integration with other plant operations. Inter-plant conferences further discuss ESH issues, keep tracking the effectiveness of ESH management and risk control of each site, and report to senior management. This organizational framework can effectively perform parallel and vertical in-plant communication, implement the inter-plant integrated ESH management system, and realize vertical communication of ESH management between individual plants and corporate headquarters.

CMI employs many contractors. In order to boost the quality and speed of contractors’ service & management, we have established a unified contractor service window and help contractors perform relevant works. In 2009, we conducted various contractor training sessions, which covered such topics including practical experience, job safety analysis, communication promotion, safety incentives, and hazard notification. Our contractor management efforts have resulted in an 87% reduction

Determination of health and safety protective measures. On-site feasibility analysis of safety standard. Review of anticipated work items.

Drafting of safety strategyOccupational safety improvement Meeting.Monthly progress review Meeting.

System Management

Fall hazard–Opening protection, scaffolding.Electrical safety–Tools and equipment protection.Hoisting safety–Piling tasks,Controlling hoisting with three steps. Weekend safety management.

Review of indicator risk items

Hazard identification education and review

Implementation performance assessment and analysis

Falling hazard31%Electrical safety10%Health and safety facilities5%Scaffolding10%Protective gear0%Self-inspection0%

Fire prevention7%Environmental health0%Mechanical equipment0%Work area maintenance5%Other item27%Superior record points5%

Engineer training.TBM Promotion.

Training and awareness

On-site safety survey of construction projects

Audit of potential hazard factors in the construction working environment.On-site hazard notification.

Joint inspections.Audit by external unit. General safety inspections.

Construction questionnaire survey

End-of-work health and safety meeting.

Inherent hazard identification training for engineers.Review of hazard sources.Safety strategy training.Management and preventive measures training.

Equipment Safety Purchasing ManagementWe have established the "CMI Equipment Purchasing

ESH Standards" to guide equipment vendors and in-plant equipment purchasing buyer. These standards are provided to vendors before equipment is purchased; they prescribe design safety features and also subsequently serve as acceptance standards. We draft purchasing standards on the basis of relevant industrial standards, such as the international standards SEMI, IEC, and ISO, and industry experience, and also the suggestions of the Taichung Precision Machinery R&D Center and industry consultant Omron Global. We also hold interpretation meetings and training sessions for foreign and domestic equipment vendors and in-plant equipment engineers, and engage in face-to-face communication with equipment designers. Beyond boosting the safety of our equipment, these efforts also make a contribution to the industry as a whole.

In order to ensure the safety of new tools and equipments during the purchasing, installation, and operation stages, we perform equipment sign-off (ESO) in three stages. The first stage includes a pre-purchasing safety conference, at which the "CMI Equipment Purchasing ESH Standards" are provided. This stage ensures that tools and equipments incorporate safety

Explanatory meeting on equipment safety

features at the time of design, and achieve the goal of unified design and standards. During the second stage, which occurs after move-in and installation and before hand-over, the ESO audit team checks that all safety features and functions are operating normally before approving partial release. The audit team makes sure that all safety and environmental protection features and markings, including internal interlocks, EMO, fire protection system, and heater protection are in good working condition in this stage. During the third stage, an unbiased third party performs SEMI S9 electrical design testing, and confirms that the machine complies with CMI's standards, also established operating procedures, and completed personnel training. A tool can be released to production only after the third stage has been completed.

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in contractor accidents. Contractor personnel have received health and safety skills training more than 50,000 person-times, and we have provided health and safety-related services roughly 120,000 person-times to 2,528 contracting firms. We have shared our successful experience with the Council of Labor Affairs, and were consequently honored with the Council of Labor Affairs' 1st Safety Partner—Best Partner Award.

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Occupational health protection task force

Risk Measurement

Risk Control

Risk Management

Risk Communication

Risk Identification

Occupational Disease Control

Environmental Protection, Health, and Safety Training

Our Longhua Plant has thoroughly implemented occupational disease laws and regulations, strengthened occupational disease control work, enhanced management of occupational disease, eliminated occupational disease hazards, and taken proactive steps to safeguard the health, safety, and legal rights of employees during their work. Our Longhua Plant established an occupational health protection task force in June 2009, and is undertaking a series of occupational disease control measures, improving the work environment, and strengthening prevention awareness among employees.

We have consistently striven to promote employee training and development in line with the motto "employees are the company's most valuable assets, and training is an investment that will never depreciate." Our safety, health and environmental education and training provide a foundation for the promotion and implementation of our safety, health and environmental management system. We have long poured manpower and resources into education and training. Apart from employees' safety, health and environmental training coursed, our education and training efforts also include practical exercises and business continuity management, which are intended to deeply implant the concepts of prevention and sustainability development. In accordance with department responsibility and job functions, all employees receive environmental protection, health, safety, and fire safety knowledge for their jobs.

The occupational health protection task force performs five major management tasks:

Risk identification: Identification and assessment of potential occupational health risks throughout the entire production process.In 2009, we completed identification of hazard factors and compilation of hazard factor location drawings for 17

plant buildings; performed safety analysis of 31 hazardous work areas and tracked each case until improvements were accoplished; and identified and marked special groups and tasks. In 2010, we plan to perform hazard factor identification and compile hazard factor location drawings for our new plant H3; perform safety analysis of 48 hazardous work areas and track improvement; and make reasonable adjustments to working time in the case of special groups and tasks. Risk measurement:

Assessment of the severity of occupational health risks through continued arrangement of regular occupational health examination, monitor & analyze the concentration of hazardous substances present in the workplace environment.

In 2009, we completed occupational health examination for 5,322 person-times and monitor the workplace environment in 17 plant buildings. In 2010, we plan to monitor the workplace environment in our new plant H3 and perform real-time measurement of new and renovated process environments.Risk control:

Use of various control methods (process controls, job transfer, use of personal protective equipments) to reduce occupational health risk.

In 2009 we improved the ventilation and closure of task area to achieve 100% exhaust efficiency from printing rooms; performed 42 job transfers with follow-up tracking; and helped employees working in hazardous environments to select and correctly wear PPE. In 2010, our Longhua Plant will gradually implement a chemical substitution project to the n-hexane s (which will replace a high-toxicity process with a nontoxic/low-toxicity process) and reduce noise of stamping task. Risk management:

Per PDCA theory to review and perfect the implementation of occupational health protection, to manage risks.The Longhua Plant established an online platform, for occupational physical examine database and medical records

analysis & follow-up , and is continuing to regularly review the implementation of occupational health protection plans with senior management. Risk communication:

Strengthening self-health management through communication and awareness for all employees.The Longhua Plant has carried out a full-scale occupational health training and awareness campaign aimed at all

employees, and has engaged experts to provide consulting services.

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40

Occupational Accident Statistics & Man-hours without Accidents

Emergency Response

Plant T1 T2 T3 PJ FAB1 FAB2 FAB3 FAB4 FAB5 FAB6 FAB7 FAB8 TSOC

FR 0 0 0 0 0 0.59 0.68 0 0.35 0.3 0 0 0

SR 0 0 0 0 0 11 29 0 10 9 0 0 0

Disabling injury statistics for CMI's FABs in Taiwan

* Disabling injury frequency rate (FR): number of disabling injuries × 1 million man-hours / total man-hours* Disabling injury severity rate (SR): cumulative number of days lost due to disabling injuries × 1 million man-hours / total man-hours

0

1

2

3

4

5

6

7

8

9Nanjing(NJ) Shanghai(SH) T3/CN

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Utility knife cuts Glass cuts Number of employees

(Average number of employees)

(Rate per 1,000 personnel)

Q1 Q2

2008 2009Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009Q3 Q4 Q1 Q2 Q3 Q4

With regard to our accident management mechanisms, we use an online information management system to compile occupational accident statistics and causes analysis. We perform notification and investigation for accidents, traffic accidents, and incidents, and near miss improvement, to review accidents causes and corrective actions. We have developed parallel improvement mechanisms in our plants to prevent the recurrence of accidents.

In 2009, according to Council of Labor Affairs' statistics, the occupational accident disabling injury frequency rate (FR) and disabling injury severity rate (SR) in all of our plants were both far less than the averages for the country and for the electronics industry. We will continue to implement safety measures and internal improvements intended to reduce risk and prevent accidents. We have found that three of the five disabling injuries to employees that occurred in 2009 were caused by falls when walking, and did not occur during working. We have increased awareness among employees of how they can prevent accidents by avoiding abrupt, rapid movements. Our ultimate goal is to reduce the FR and SR to zero at all of our plants, and thereby benefit our employees, their families, and the company. The FR and SR are currently zero at more than two-thirds of our plants.

We seek to understand the potential accidents that may occur at each plant and avoid major accidents through the application of Heinrich's "accident pyramid model." When analyzing the medical records of persons injured in so call band-aid incidents kept by the medical offices at our plants, we found that utility knife cuts and glass cuts at our Nanjing and Shanghai plants accounted for more than 70% of band-aid incidents. In order to reduce the incident of cuts, these plants uniformly the use of safety utility knives, introduced cut-prevention tools at work stations, and required the use of anti-cut gloves. We subsequent found that the band-aid incidents per thousand employees fell steadily from 2008 to 2009, and cut near accidents also consistently fell.

We have established emergency response procedures for various types of emergencies and accidents, which provides us with a basis for the handling of actual emergencies and accidents. We are also members of the mutual team and toxic accident mutual team organized by local authority, and provides emergency assistance to other mutual team member firms when necessary. In 2009, we held 422 emergency response training sessions throughout the company, and employees participated in these sessions 33,349 person-times; we also held 565 emergency response exercises.

BCP ExercisesThis year we performed a BCP (Business Continuity Plan) table-top exercise at our Jhunan T3 plant; the scenario of

an electrical panel fire with water damage in the FAB, and involved various relevant functions in the plant. The exercise extended from the time of the accident to the arrival of external support on the scene, and included subsequent clean-up. We have clearly determined the responsibility, actions, and response measures of all functions when a disaster occurs,

and have drafted BCPs specifying the procedures needed to respond to accidents and restore production. As a result, we will be able to take correct actions in the shortest possible time when an emergency occurs. Furthermore, in November, our function managers and coordinators conducting table-top exercise, and examined the reasonableness of response measures in each step. The response measures determined in this project have been included in our emergency response SOPs and

are considered our response guidelines.

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Preventive Health Management and Health Promotion

Workplace Health Protection Management

Employees are the company's most important asset, and only healthy employees can work efficiently and produce high-quality work.

We have established the “I-care” health management information system to manage employees' health risks, and conduct disease treatment and tracking via professional disease case management in accordance with annual health examination results. Employees can find out about their status of health for the year and any health changes via health examination results and fitness analysis. In order to prevent occupational illness and injuries, we conduct regular annual meetings on health and safety management and statistical surveys and analysis, and implement annual hearing, eyesight, and liver protection plans.

As far for mental health, we provide free psychological counseling services to employees, and also help employees overcome psychological problems in strict confidentiality through professional counseling. In addition, we also use the online resources, awareness literature, and educational presentations to provide employees with knowledge on how to lead healthy lives and tackle the many challenges posed by work and family.

In order to provide employees with even better medical services, we have established physician consulting rooms at our plants in cooperation with local hospitals or regional teaching hospitals. The doctors staffing these rooms offer convenient, considerate professional outpatient and consultation services covering such areas as internal medicine, family medicine, metabolism, Chinese traditional medicine, and rehabilitation.

We determine monthly health promotion topics on the basis of health examination results and employee health questionnaire analysis, and provide health information and health education to ensure that employees can find out relevant health techniques and skills. Apart from caring for employees' physical and mental health, we also hope to improve and preserve the health of employees' families, and believe this will boost work morale and work quality. We held close to 300 health promotion activities at our plants in 2009, with 176,000 instances of employee participation.

Noon exercises:1. At our plants in Taiwan and abroad, all employees are in the habit of freely engaging in rhythmic exercises to music at the end of the daily lunch break. Employees participated in these exercises more than 116,000 times during 2009.Seed anti-smoking workshops:2. In cooperation with the government's anti-smoking policy, we strongly encourage employees who smoke to enthusiastically participate. Workshop classes are lively and interesting; apart from physicians, these classes also include stress-reduction exercises led by rehabilitation therapists and smoking-cessation diet advice from nutritionists. We held five anti-smoking workshops in 2009; of the 80 employees participated in these workshops, 23 successfully quit smoking and 23 cut back on their tobacco habits, with an average nicotine reduction rate of over 80%.633 water drinking program:3. This program instructed employees concerning the importance of drinking plenty of water and the best times to drink water. At the same time, we have also spread awareness of opportune times for drinking water at our plants' work safety days. One thousand employees have received training and are qualified to serve as seed personnel. Seed eye health workshops:4. For the production inspection task work with microscope, which requiring good eyesight, we hosted eye health lectures for 1,577 employees. These lectures showed employees how

Plant Year Awards received

Hsinchu Science Park T3 2009

Concerned Company/Corporation Award, World Safety Organization.• 3• rd National Industrial Safety & Health Award, Council of Labor Affairs.Outstanding Radiation Protection Work Award, Atomic Energy Council.•

Tainan Science Park LCM2 2009 Outstanding No Accident Man-hours Record, Council of Labor Affairs •

(17 million man-hours).Tainan Science Park B plant 2009 Outstanding Blood Donation Record Award.•

Tainan Science Park D plant 2009

Outstanding Labor Health and Safety Promotion Organization. • Outstanding Labor Health and Safety Promotion Personnel (Lin Yung-• fen) .Outstanding No Accident Man-hours Record, Council of Labor Affairs • (23 million man-hours).Outstanding Blood Donation Record Award.•

Tainan Science Park E plant 2009 Outstanding Labor Health and Safety Promotion Organization.•

Longhua 2009 Class C Award, 2009 Safety Management Ability Assessment.•

Nanjing 2009

Advanced Safety Production Organization, Jiangning Development • Area.Outstanding Safety Production Management Paper Award, Jiangning • Development Area .Advanced Safety Production Management Individual, Jiangning • Development Area (Chang Ching-chiang).

Ningbo 2009 Advnaced Safety Production Management Organization, Ningbo • Bonded Zone.

Nanhai 2009 Class A company, Foshan City Safety Production Standardization • Assessment.

Our T3 plant was given the 2009 "3rd National Industrial Safety & Health Award" in October 2009; the award-winning companies and individuals met with President Ma Ying-Jeou. The photo shows President Ma with company Vice President Lin Shih-yao.

Senior managers lead a round of healthy exercises at a meeting of the company's Health, Safety, and Environmental Protection Committee.

2009 Award Information

to perform eye relaxation exercises during their breaks. We also provided introductory eye health seed personnel training to 79 persons and advanced eye health training to 51 persons. Diagnostic service by Taiwanese traditional Chinese medicine doctors:5. In order to protect the health of our Taiwanese staff and their families, following negotiation with hospitals cooperating with our overseas plants, in August 2009 these hospitals engaged Taiwanese traditional Chinese medicine (TCM) doctors specializing in internal medicine and children's/women's health to provide medical service to our Taiwanese staff and their families. We will continue to implement this activity in the future.

Apart from providing health consultation services, we strive to perform health and work-related risk management and preventive health care programs.

Our health care activities have earned employees' approval and enthusiastic participation, and have yielded the following notable results:Seed psychological counseling workshops:

We held 56 training sessions for seed psychological counseling personnel in Taiwan and overseas during 2009, training 451 seed personnel. Over the years, we have helped 119 employees in Taiwan and abroad overcome personal difficulties involving family, work stress, or emotional problems.Ergonomics protection project:

We have invited doctors specializing in occupational medicine to participate in this project together with our employees. The project seeks to identify musculoskeletal injury risk factors, and employ work analysis, safety observations, SOPs, improved working postures and methods, use of protective gear, and regular stretching, etc. to prevent the potential hazard of chronic cumulative muscular damage. The project published the paper Practice of Human Factor Improvements in Carrying, Assembling, and Cleaning in the Panel Industry in 2010, providing reference information for the industry.

We invited Mr. Chang Chen-tung, director of the Rehabilitation Department at the Liouying branch of Chi Mei Hospital, to lecture to our in-plant employees concerning correct work posture and provide training in stretching exercises.。

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43 Green Products

Product Carbon Footprint

Green Product Design

Green Product Manufacturing

Green Supply Chain

Green Product Management

53 Employee Care


77 Appendix

2009

2008

2007Ecology profile (EuP Directive)

ISO 14064 greenhouse gas inventory

LCD panel and display pass EPD verification

A low-carbon society: Extension of the carbon footprint concept to MP/NB/TV/MNT products

Product carbon footprint verification (PAS 2050)

The world's first LCD panel and display to pass PAS 2050 verification

Environmental product declaration (EPD)

We at CMI take our corporate social responsibilities extremely seriously, which motivated us to announce our "To Earth, with L.O.V.E." green vision in 2008, and embark on the promotion of sustainability and concern for the Earth. In the area of green operations, we are working together with our supply chain to continuously improve environmental protection throughout the stages of R&D, design, manufacturing, and transport at CMI, upstream and downstream partners, and even related industries.

In order to establish a foundation for the realization of green operations, a green industry supply chain, and green design, we are vigorously implementing carbon information management, and are disclosing CDP and EICC carbon information, as well as obtaining verification of our greenhouse gas emissions. We began to be concerned about product carbon footprint in 2009, and completed the first carbon footprint verification for LCD panel and LCD display in the same year. We are thus leading the electronics industry into the age of "product carbon footprint" disclosure.

In 2007, we signed a voluntary greenhouse gas emission reduction agreement with the MOEA on behalf of the Taiwan LCD Association, and committed considerable manpower to a greenhouse gas inventory. Since that time, we have continued to undertake many carbon reduction measures. In 2008, we began a product life cycle inventory in an effort to establish a green supply chain. In 2009, we issued type III environmental declaration – "environmental product declaration" – and assumed a leadership role by embarking on a "product carbon footprint" project. In August 2009, we passed the first-ever PAS 2050 product carbon footprint certification for LCD panel, and obtained the first carbon footprint label issued by the Taiwan Electrical and Electronic Manufacturers Association.

We are using the carbon footpr int inventory procedures prescribed in the PAS 2050 international standards in conjunction with product l i fe cycle assessment (LCA) to est imate greenhouse gas emissions generated by the manufacture and production of major raw materials, TFT panels, LCD modules, and LCD displays. The scope of this inventory encompasses greenhouse gas categories 1, 2, and 3 (other indirect greenhouse gas emissions), and the inventory includes supply chains, employee business trips and waste, and outsourced waste treatment and transport, etc. We received a statement of a reasonable level of assurance from a third-party independent verification organization in December 2009. Having completed the world's first PAS 2050 product carbon footprint and type III "environmental product declaration" verification, we have become the first company in Taiwan to offer display products with

Green Products Product Carbon Footprint

First-ever carbon footprint label issued by the Taiwan Electrical and Electronic Manufacturers Association

Flat Panel Display International 2009 (FPD International 2009) in Yokohama, Japan

independently-verified complete carbon emissions information.

In 2009, apart from exhibiting our newest products, we also set up a special product carbon footprint display area at Flat Panel Display International 2009 (FPD International 2009) in Yokohama, Japan. This gives a glimpse of our determination to develop green products and make low-carbon production a reality, and we plan to make further progress toward a low-carbon society in 2010.

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46

In l ine with our philosophy of sustainabil i ty, we have established a green product policy in the spirit of "reduction of greenhouse gas emissions," "control of hazardous substances," and "optimization of resource use." We have taken material reduction, energy savings, and use of toxic-free materials as our main strategies, and adopted eco-design, a quality management system, and a hazardous substance management system. Our goal is to ensure the products meet the requirements of customers and environmental protection laws and regulations throughout the design, production, and service stages, and we have taken international standards and customer requirements as our benchmarks.

In the area of material reduction design, we completed the following designs in 2009:

A.We used LEDs instead of CCFLs in high

aperture ratio designs, and employed an optical composite material to reduce optical film use and lower the consumption of materials.

B.We reduced raw material use in iron fixtures by

using a thinner backlight panel in backlight modules.

C.In the area of electronic parts, we seek to

reduce the number of electronic components used in products and shrink PCBA (printed circuit board module) size. For instance, our use of integrated ICs (MEMC+TCON) has effectively reduced overall component quantity; the use of fewer Gamma voltage units reduces number of connector pins; SIP technology lets us reduce T-con size and number of pins; and we use PCBA single-sided driver designs. All of these design methods can reduce the number of components on PCBs and PCB size.

D.Reduction of display system component

thickness, and also reduction of component weight.


Material-Reduction Green Design

Original PCB module

PCBA single-sided driver design

New design

MEMC

Panel Panel

MEMCTcon

Conventional 22mm

Conventional 35mm

Narrow Bezel 9mm

Ultra Slim14mm

2008 2009Chassis thickness(Chassis) 0.8mm 0.7mm

Plastic molded part thicknes(Bezel & Rear-cover) 2.5mm 2.2mm

Optical composite material

Up Diffuser

Down Diffuser

BEF

Down Diffuser

Hi-gain BEF

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In 2009 our R&D team pursued energy saving through improvement of panel, backlight module, and electronic component design. The following are some example design methods:

A.Our high aperture ratio panel designs increase RGB

transmission area and the use of low-pressure liquid crystals reduces power consumption.

B.We have replaced CCFLs with LEDs in a new backlight

module design, and simultaneously used new technology to reduce the quantity of LEDs, lessening power losses by 30%-40%. This design will be used in all products in 2010.

We prohibit the use of all substances that are harmful to humans or the environment, and whose use is prohibited or restricted by law, in our products. While prohibiting the use of substances, we are also eliminating these substances through promotion of green purchasing, and we require vendors to provide only products containing no substances prohibited by CMI. We have thus strengthened our management of prohibited/restricted chemicals at the source.

With regard to halogen-free products, electronic waste and plastic products containing halogens such as bromine and chlorine will generate large amounts of smoke when heated or burned, and will also release such hazardous substances as acidic gases, dioxin, etc. As a consequence, we comply with our customers' requirements and the international halogen-free specifications defined in IEC 61249-2-21, and we also conduct inventories of halogens our products. Apart from establishing baseline data for various parts via a halogen-free action plan, we are also implementing halogen replacement plans together with vendors. In the case of LCD modules, our Hsinchu Science Park plant began introducing new halogen-free products in 2009, and will produce only halogen-free new products in 2010. At the same time, halogen-free new IT module products account for more than 50% of such products made at our Tainan Science Park plant. In order to fulfill our environmental responsibility, we pledge to gradually shift to the use of halogen-free materials in all our products.

In addition, in order to reduce the amount of the highly-toxic substance mercury in our products, we are gradually replacing CCFLs with LEDs in our new product designs. Our 2009 NB products used 70% LEDs, and we will increase this to 100% in 2010. In addition, we began using arsenic-free glass in our new products for 2009, and we plan to switch entirely to arsenic-free glass by the end of 2010.

Energy Saving Green Design Toxic-Free Green Design

Increased RGB transmission area in a high aperture ratio panel design

Transmission area

MVA Super MVA AGT(DJITO)

*sub pixel in brightness state

100% 110% 125%

C.Our dynamic backlight modules (Dynamic BLU)

allow for the dynamic, local adjustment of LED backlight intensity according to the content of the images played, reducing power consumption.

D.In the area of electronic components, we are

striving to reduce component energy consumption. For instance, we are improving driver IC design to reduce internal power losses during operation; shrinking the TCON process from 0.18 μm to 0.13 μm, which decreases working voltage; and designing layout routing in panels so as to change driver polarity, which can reduce panel power consumption and conserve energy.

We have spared no effort to promote energy saving in 2009. Apart from preparing to meet the energy saving requirements of the EPA, ErP, and international standards bodies, we also plan to upgrade our technology in 2010 and beyond, and continue to introduce products that go beyond international energy saving standards in order to satisfy our customers' needs.

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C.The use of composite paper pallets reduces wood

consumption and protects forest resources; this also ensures compliance with California's E1-E0 restrictions on formaldehyde in composite board in imported products

D.Our use one-piece corrugated cardboard packaging

instead of EPS polystyrene, and use of recyclable one-piece corrugated cardboard packaging, provides cushioning in the outer carton itself. Both the raw materials and finished product will quickly biodegrade after being discarded, resulting in zero environmental pollution.

In connection with the foregoing green design concepts, in 2009 we designed the world's lightest and thinnest 19" width high-resolution (1680×1050) LCD panel. This product is only 85% the thickness of its predecessor, employs LED backlighting to reduce power consumption by 80%, and possesses a stylishly slender appearance. It can readily be used in terminal product designs. Furthermore, our 55" high-resolution LCD television panels can reduce power consumption by more than 50% compared with other similar products on the market, and have the lowest mercury content of any products in their class.

The 57" high-resolution panel we displayed at FPD Taiwan 2009 uses a white light LED progressive scan backlight module, and employs a zone driver approach to save power. It also supports 240 Hz dynamic image persistence suppression technology.

The outstanding products we have designed employing energy and material conservation techniques earned considerable domestic and foreign recognition in 2009, and provided consumers with high quality and enhanced enjoyment. Such outstanding products as our 42", 47", and 55" 120 Hz Full HD panels bear our exclusive "AGT" energy saving mark; these products can reduce power consumption by over 40% and have only 30% of the mercury content of competing products. High-definition AGT energy-saving panels can easily handle the load of blu-ray DVDs, and their breathtakingly realistic images can unlock the boundless possibilities of consumers' home theaters.

In line with our green vision of "To Earth, with L.O.V.E.," we have designed packing materials possessing the three major attributes of "conserving resources," "ease of recycling," and "low pollution."

We led the panel industry in the development of packaging employing environmentally-friendly molded pulp. This material is produced from waste newspaper and cardboard; it is nontoxic, lead-free, degradable, and non-polluting. It is produced using a high-temperature pressure molding process requiring no adhesives; it is easy to shred, and can be recycled.

Our product packaging design team has designed new packaging structures taking advantage of molded pulp's light weight and good cushioning ability. These packages can withstand a heavy load when stacked, minimize packing material consumption and volume, and increase the number of panels that can be loaded in each crate. This uses container space more effectively, reducing fuel oil consumption and cutting carbon dioxide emissions.

We have made the following design improvements in connection with LCD product packing materials:

A. To reduce weight, we try to increase the foaming rate of

polystyrene foam as much as possible, while still allowing the material to pass verification.

B.To reduce volume and increase container load, we try to increase

the cushioning value of polystyrene foam as much as possible, while still allowing the material to pass verification.

Packaging Material Green Design

2009 AwardGreen product award Awarded by

17th Taiwan Innovalue Award (55", 23.6," 19" W, and 21.3" panel for medical use all received • this award). Board of Foreign Trade, MOEA

17th Taiwan Excellence Award, gold & silver awards (world's thinnest 19" width LCD panel).• Board of Foreign Trade, MOEA

Type 3 environmental product declaration.• Environment and Development Foundation

Flat panel display industry green quality assessment.• Industrial Development Bureau, MOEA

Outstanding Technology Award, Flat Panel Display Component Product Technology Awards.• Industrial Development Bureau, MOEA

12th Outstanding Optoelectronic Product Award.• Photonics Industry & Technology Development Association

55" and 47"AGT LCD television panel are awarded the "Energy Star".• China Video Industry Association

The world's first "product carbon footprint" certification for a LCD panel (PAS 2050:2008).• DNV

19" display carbon footprint certification (PAS2050).• DNV

19" display environmental product declaration (EPD).• DNV

Use of the environmentally-friendly packaging molded pulp molding for 18.5" panels is • awarded the Excellence Award in the industrial packaging category of the EPA's "2009 Green Packaging Design Awards".

EPA, Executive Yuan

The Taiwan Electrical and Electronic Manufacturers Association's first batch of carbon label • certificate.

Taiwan Electrical and Electronic Manufacturers Association

CMI's "green supply chain e-learning web site" is awarded the Bronze Medal for Best Learning • Achievements in the "Best Results of a Learning Program" category.

Brandon Hall e-learning research organization

Composite material Single material

TFT-LCD module container loading ratio

Containerloading

ratio(%)

0

20

40

60

80

100

2006 2007 2008 2009

19”

26”

31.5”

46”

47”

Composite paper pallets

One-piece corrugated cardboard packaging

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43 Green Products




Green Supply Chain


53 Employee Care


77 Appendix

51


52

As the Earth's climate changes, glaciers will melt, the sea level will rise, torrential rains will fall, storms and droughts will occur with great frequency, and biodiversity will gradually be lost. The dramatic events unfolding before our eyes should remind us that global climate change has already become one of the greatest challenges faced by mankind. And these changes are accompanied by increasingly stringent greenhouse gas emission reductions laws and regulations worldwide.

Supp ly cha in management presents many opportunities to reduce carbon dioxide emissions, and we are finding new ways of effectively curbing carbon discharges in the stages of product design, selection of parts and materials, purchasing, production, shipping, use, and recycling. Starting in 2010, we have assessed our supply chain management on the basis of cost, service, quality, and carbon emissions, rather than just cost, service, and quality. We have incorporated our carbon reduction mission in our overall supply chain management strategies, and are relying on the establishment of a low-carbon green supply chain to reduce the carbon footprint of our products and enhance their competitive advantage.

We are using IT technology to establish vendor management systems and green parts database information platforms. Our comprehensive, transparent, real-time green supply chain platforms enable vendors to promptly obtain CMI's requirements, international environmental laws and regulations, and the newest standards from large foreign brands. This ensures that vendors have the same commitment to the environment as we do, and rely on materials acknowledgement procedures to ensure that the materials they provide comply with legal regulations and the requirements of CMI and its customers.

Addressing the RoHS directive, REACH, and other international laws, regulations, and standards intended to eliminate or reduce the use of various hazardous substances, we are relying on the implementation of green product management to plan and control processes and achieve long-term stability. We have integrated product and process management, and incorporate green operations, while also using systematic methods to undertake full-scale response measures preventing the use of prohibited/restricted substances in our products, avoiding sales losses, and achieving the goal of no hazardous substance use.

Accordingly, we have adopted IEC QC080000 Hazardous Substance Process Management (HSPM) certification. The QC080000 standard is a hazardous substance process management standard approved by the IEC Quality Assessment System for Electronic Components (IECQ), which is under the International Electrotechnical Commission (IEC), in October 2005. QC080000 prescribes systematic management of hazardous substances in products and processes to

Green Product Manufacturing Future Outlook

Green Supply Chain

Green Product ManagementCMI

MFGtesting

IQCtesting

OCQtesting

GQMfinished product

inspection

Inspection standards/inspection instruments & abnormality handling procedures

Design changes in a new product

development project

Laws and regulations/customers/

CMI GP specifications

Materials/parts (vendor)

Finished product (customer end)

Certificate of compliance/

survey form tasks

Purchasing/vendor

management

Identification and marking/

process control

Secondary material

management (packing materials)

GP policy/GP implementation

process

Parts acknowledgement

procedures

In order to protect the global environment, we avoid using environmentally-harmful substances or components in our products. We have integrated product design, materials selection, vendor management, manufacturing control, and inspection and testing aspects in order to establish an effective management system for controlling prohibited/restricted substances.

Beyond avoiding or limiting use of toxic raw materials in the green product production process, we also go right to the source in order to minimize harm from discharged substances. Apart from making sure at the source that parts are green parts, we check the GP status of finished products on the basis of our own or customers' specifications. We perform regular random testing of products, and ensure compliance with green product requirements through checkpoints at different levels.

We are also actively helping vendors to perform rigorous testing of manufactured materials, process controls, and packing materials. Apart from ensuring compliance with green product standards, we are facilitating the continued improvement of vendors' products specifications, helping them keep pace with major international firms' requirements.

We use the foregoing system to collect information on the substances contained in the parts and materials purchased from vendors. We compile the resulting information in a database, which is used during the design stage to select green parts and materials.

Thanks to our green supply chain platform unifying up- and downstream partners, we speak the same common green manufacturing language as our customers and vendors. Because standards and specifications are consistent and unified, we can readily provide customers 100% satisfying service from acceptance of an order to fulfillment of the customer's green product requirements.

minimize products' environmental impact.The majority of our production facilities possess

IECQ QC 080000 certificates, which clearly indicates that our hazardous substances management system complies with international standards. Certification of our hazardous substance process management system by credible international third-party organizations ensures that we can state unequivocally to our customers that we possess effective measures to ensure that we can provide superior green products. In 2010, we will continue to adopt the IECQ QC 080000 management system at our newest production facilities.

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Green Supply Chain


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77 Appendix

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53 Employee Care

Employee Overview

Employee Insurance and Benefits

Employee Well-Being

Employee Education and Personal Development

Labor Relations


77 Appendix

Employee NumbersAs of May 31, 2010 CMI had 22,385 employees in the

Taiwan region (compared to 22,772 in 2009), including both direct and indirect labors. Direct labors consist of production line workers, most of whom have high school or associate degree level educations and who make up 60% of the workforce. Indirect labors include people working in the R&D, equipment services, QA, and logistics departments, most of whom have 4 year college degree or higher and who make up 40% of the work force.

CMI believes in treating every employee equally, and makes decisions regarding employment, compensation, and promotions without regard to race, religion, political affiliation, race, gender, or marital status. Illegal child labors are prohibited, and contracts are signed only after mutual agreement has been reached.

CMI believes that employees are company’s most important partners – companies advance and grow only when they have the sufficient numbers of high quality employees – and therefore the company str ives to create an exceptional working environment. In addition to competitive salaries, abundant educational opportunities, generous benefits, and a safe and healthy working environment, CMI provides employees and their families with comprehensive healthcare and health promotion services. These measures help increase team spirit, raise work quality targets, and allow employees to rest assured about the well-being of their families and focus on their work.

Since its founding, CMI has quickly grown into a leading global TFT-LCD manufacturer with operations around the world. Whether in terms of technical exchange, communication with suppliers, or cooperation with coworkers in other countries, CMI employees are given plenty of room to learn and grown, and are expected to continually absorb new knowledge to help the company stay afloat in the intensely competitive global market.

CMI believes that protecting and respecting employees’ rights helps attract and retain talent and increase productivity. All of CMI’s human rights related policies are in compliance with local laws and consistent with the spirit of the Electronic Industry Code of Conduct (EICC).

Employee OverviewCMI and Its Employees

High Quality EmployeesCMI has highly educated employees: 99.9% of them have

high school diplomas, and 98.67% of indirect labors have four year college degrees.

Educational round of Employees Indirect labor (IDL) educational background

26.0%

56.3%

17.2%High school/Vocational diploma

High school/Vocational diploma

Bachelor’s/Associate’s degree

Master’s

0.1%

Elementary/Junior school0.4%

Ph.D Ph.D

1.3%

54.9%

42.9%

0.9%

Bachelor’s/Associate’s degree

Master’s

40%

60%

Indirect labor

Direct labor

Note: this data is for the Taiwan region only

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56

Age and Gender Distribution CMI is a young and energetic team with employees at average

age around 26-35 years old, equally divided between males and

females. All employees are treated equally and fairly regardless of

age or gender.

Hiring Practices CMI provides numerous opportunities for

people with mental and physical disabilities. As

of May 31, 2010 the company employed 117

disabled employees.

CMI cares about its employees and their welfare. In order to attract and retain talent, compensation is based on educational background, professional experience, personal achievement, and market standards, without regard for gender. Starting salaries for new employees are not affected by race, religion, political views, gender, marital status, or union affiliation. CMI also awards yearly bonuses based on company performance and personal performance, and includes employees in profit sharing.

All CMI employees join employment insurance, health insurance, disability insurance, and social insurance, as well as free group insurance. Employees’ spouses and children are provided with life, accident, and health insurance and employees’ parents are also eligible for accident and healthcare insurance, allowing workers to relax and focus on their work, and make the greatest possible contribution to the company and to society. CMI’s retirement system provides complete retirement benefits in compliance with relevant laws.

Employee RightsIn 2009 CMI added the principles of the Electronic

Industry Code of Conduct (EICC) to its corporate code of social responsibility. To ensure that all employees


Employees by Age Group

Indirect labor (IDL) age distribution

0.01%

74.1%

15.0%

0.1%

9.9%1.0%

36~45

16~25

26~35

46~55

56~65

66~

0.01%

70.0%

25.0%

0.3%3.0%

2.0%

36~45

16~25

26~35

46~55

56~65

66~

are treated with respect, the company also established a multifunctional Social & Environmental Responsibility Committee (SER) to handle social responsibility planning in compliance with the EICC.

CMI’s social responsibility policies clearly prohibit the use of child labor or coerced labor, as well as any behavior that could result in the use of child labor or coerced labor. During recruitment, identification documents are examined and kept on file. No employee is subject to discrimination based on race, gender, age, political affiliation, or religious beliefs. As of 2009 no complaints had ever been lodged with the company regarding discrimination or coercion. CMI’s Suppliers are also required to follow the company’s hiring and employment practices.

Male/Female ratio

55%

45%

Male employees

Female employees

Note: this data is for the Taiwan region only

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Employee Overview


Employee Well-Being


Labor Relations


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58

Salary and BenefitsCMI offers competitive compensation and has established an

employee welfare committee to create benefit systems, ensures a high quality working environment, host activities, promote community outreach, and help ensure that employees enjoy all around health and happiness.

▌ Generous Incentives and Compensation Competitive salaries• Bonuses based on personal appraisal and performance• Holiday cash bonuses and vouchers, birthday vouchers•

▌ Exceptional Benefits Delicious meals (including noodles/set meals/vegetarian etc.)• Non - deduction allowance• Office shuttle bus• Employee discounts at STSP clinic/Chi Mei Medical Center• Free annual physical exam and psychological counseling• Emergency assistance•

▌ Exceptional Work EnvironmentGreen Waters Tree Valley Recreation Center equipped with • basketball / tennis / badminton / billiards facilities, health center, and heated indoor pool. All sites equipped with Chi Mei coffee shops / convenience • stores (with employee discounts) / employee break rooms / health centers.Chi Mei Museum STSP Branch• Well appointed employee dormitories• CMI believes that a pleasant and comfortable work environment • brings out the best in its employees and makes people’s lives better.

▌ Comprehensive Compensation PackageComplete insurance coverage (including group / labor / health / • social insurance)Generous leaves• Recognized by the Council of Labor Affairs as an Outstanding • Place for Women to Work

▌ Customized Recreational ActivitiesLectures on physical / mental health and development• Free admission to Chi Mei Culture Foundation’s cultural • activitiesFree admission to the Chi Mei Museum and group arts • instruction (violin, mandolin)Subsidies for employee group activities and travel•

▌ Happy Family PledgeBonus / subsidies for marriage / childbirth / children’s education• Reserved parking for pregnant women, nursing rooms in health • centersLiving Water Bilingual Daycare Center• Educational lectures for new mothers•

Employee Emergency AssistanceOn August 8, 2009 Typhoon Morakot devastated

Southern Taiwan, which many CMI employees and their families located in. CMI instructed managers to immediately identify employees who were in need of assistance, and it was discovered that six hundred employees were directly affected by the disaster, including a number actually living in the affected area. CMI provided immediate direct assistance, including relief funds, and mobilized resources to help employees rebuild their homes. These efforts reflect the concern that CMI shares for all its employees.

Lecture SeriesIn 2008 the Hsinchu Science Park plant began

hosting talks by successful people from all walks of life, who shared their experiences and provided CMI employees with new ideas on harnessing creativity in the workplace and achieving professional and personal freedom. In 2009, ten different speakers shared their secrets and experiences with CMI employees.

The Southern Taiwan Science Park hosted a variety of speakers in 2009 as well, providing employees with new thinking on health, home life, and education. Events included the CMI Happy Seed New Mother Workshop; Happy Chi Mei, Healthy You Part II; Sustainable Health Lectures; and DIY Home Maintenance. These activities help employees live happier, healthier, more fulfilling lives.

Living Water Day Care CenterThe company does not only provide employee

benefits such as financial assistance to cover wedding and childbirth expenses, school scholarships, and a Happy Family Day, but has also devoted over NT$100 million to the construction of the bilingual “Living Water Day Care Center" to make it easier for employees with children to balance work and family. At the center the children are taught by a team of professional early childhood educators. At fixed times every day a school bus takes the children to the day care center and brings them back home, relieving parents from the time-consuming burden of driving their kids to and from school. Moreover the day care center offers free extended hours services so that parents who cannot finish work on time or need to work overtime do not need to worry about their children's wellbeing.

Living Water Day Care Center

2009 Sensible Person Lecture Notice

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60

Hsinchu Science Park Plant Activity Hall The Employee Recreation Center is one of the most popular

features of the Hsinchu plant. It includes an open activity space of over 300 square meters, a variety of exercise equipment, and a professional quality fitness center, all in a relaxing and soothing environment. Since its grand opening on July 1 2009, the center has provided employees with a place to meet, sweat, and socialize.

STSP Green Waters Tree Valley Recreation Center

Funded by CMI and managed by Linklinear Development, the Green Waters Tree Valley Recreation Center opened in September 2008 to provide recreational facilities to CMI employees and local residents. The center is located next to the Sinshih Township Tree Valley Park Visitor Center and is committed to promoting active, healthy, and happy lifestyles. The center is integrated into the surrounding natural environment and includes an indoor swimming pool, sauna, multipurpose gymnasium, jogging track, health center, aerobics room, children’s activity center, and arts center. Nearby Tree Valley Park also includes a bike trail, boating facilities, nature center, and history center providing a wide variety of water sports, exercise, recreation, and family activities. The Green Waters Tree Valley Recreation Center is committed to environmental protection and energy conservation, and was built using green architecture and environmentally friendly materials. It is certified as a Diamond Level Green Building under Taiwan’s EEWH standards, making it the first large scale recreational facility in Taiwan to be so honored.

Employee Well-Being Activities for Personal GrowthCMI organizes a wide array of cultural and

artistic events such as free arts exhibitions and free violin and mandolin concerts by the Chi Mei Culture Foundation to provide its employees with opportunities for physical and spiritual well-being. We also hold lectures on physical and mental health, provide financial assistance for employee trips and club activities and encourage our employees to participate in various activities. We also nurture artistic talent for the Chi Mei Museum and train employees to work there as volunteers.

CMI cares deeply about employees’ learning and development, and has invested abundantly in creating a formal training system to improve the quality of manpower and achieve corporate goals.

Training Based on Corporate Policies and Personal Work NeedsCMI’s annual training is generated from company policies, performance evaluation and competency assessment.

Employees are provided with individual develop plans which combined corporate goals and training plans, increase employees’ competitiveness and productivity, and help employees manage their personal career development.

Employee Trainings and Human Resource Development

Hsinchu Plant Employee Recreation Center “Activity Hall”

CMO Employee Clubs

Table tennis club Cycling club

Ballroom dancing club Mountaineering club

Nature studies club Quilting club

Drawing club Flower arrangement club

Hot spring club Tennis club

Badminton club Fishing club

Taiji club Music club

Aerobics dance club Diving club

Zen Buddhism club Shrimping club

Photography club Softball club

Generate customized Individual Development Plan (IDP)

Identify Competency Deficiencies

Implement Competency Assessment

Establish Job descriptions / competency model

Develop Competency related Training Courses

Green Waters Tree Valley Recreation Center

Book FairIn order to encourage employees to share good books, CMI

offers books at a discount and occasionally holds book fairs on the company premises. Aware that employees are busy with their work we want to provide convenient access to books inside the company

and create a library atmosphere.

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Hsinchu Plant Learning 365 Online College

A total of 86,515 hours of training was provided by at the Hsinchu plant last year, an average of 17.95 hours per employee. Avai lable courses include industrial management, quality control, manufacturing management, operations management, general management, personal growth, and general knowledge. In addition, CMI’s internal lecturer system trains lecturers to ensure that valuable knowledge is passed on to new employees, while saving money on new courses and raising the efficiency of training investments.

With the comprehensive online training offered by Learning 365, employees have more flexibility in course selection. With 3,500 hours of customized courses to choose from, including complete training for employees in each department, and advanced training using both domestic and foreign course materials, Learning 365 allows both new employees and senior experts to hone their professional skills at their convenience, any time.

STSP Plant Chi Mei University 2009 Employee Training Statistics

Courses Sessions AttendanceEngineering Mgt. College 127 155 4,217

Quality Control College 35 94 3,702

Production Mgt. College 33 39 768

Operations Mgt. College 62 120 19,893

Total 257 408 28,580

Management Training

Operations Management

College New Employee Training

Professional Training

Quality Control College


Production Management

College

“On the Job” Training (OJT)


Manyfacture Management

College

Self Development

Training

Honors and Awards

CMI has long been committed to Human Resource Development, and has established a PDDRO cycle training system (Plan, Design, Do, Review, Outcome) based on the TTQS model. The company has also introduced e-learning tools to reduce barriers to learning, which has greatly increased training efficiency. In recognition of these efforts, in 2008 CMI was awarded a gold medal by the Executive Yuan Council of Labor Affair as part of the Individualized HR Training Project; and in 2009 was named an Outstanding Professional Training Partner by the Tainan Bureau of Employment and Vocational Training. CMI subsequently shared its experiences with Tainan area companies at the Quick Recharge Project press conference.

Complete New Employee Orientation and Trainings

New employees are given employment training plans that convey CMI’s corporate culture, mission and goals, explain regulations and corporate social responsibility principles and policies, and help new employees adapt to the new environment and create a sense of belonging. Trainings related to basic engineering, operations, and management procedures are also provided to assist employees develop confidence in their new roles as soon as possible.

Internal Lecturers and Professional TrainingsCMI’s Internal Lecturer Training Program helps employees

become outstanding lecturers and pass on professional knowledge and skills to coworkers. In order to ensure that future development needs are met, CMI is always working to develop innovative trainings, increase management capabilities at all levels, and balance professional and managerial competencies.

Learning and Certification SystemsA rich variety of learning opportunities as well as computer

based training and certification systems allow employees to receive training towards their annual learning objectives, and acquire annual certification promotion.

STSP Plant’s Chi Mei University Founded in 2006, Chi Mei University consists

of three original divisions – engineering, QA, and management – plus the newly added logistics division opened in 2008. Courses covering engineering, materials, R&D, QA, marketing, and customer relations help CMI employees reach their personal and professional development goals. In 2009 Chi Mei University courses were attended a total of 67,558 person / times.

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CMI’s corporate culture has always sought to promote harmonious in industrial relations and does not restrict employees’ rights to join associations. On the contrary, CMI encourages employees to come together to share ideas and create communication networks that allow employees and management to overcome conflicts and achieve win-win for both parties.

The Employee Mobilization Meeting and Labor – management meeting are held quartly at the Hsinchu Science Park plant allow high level managements to interact directly with employees and middle level management, and build a strong mutual understanding about the company’s overall direction.

Meetings concerning the rights and interests of management and labor are held each quarter in compliance with corporate policy. Management are represented by corporate delegates and labor by representatives chosen by each department based on size. The meetings focus on promoting management labor relations and mutual cooperation, discussing labor contracts and benefits, and increasing labor efficiency. CMI has always enjoyed excellent labor relations and has never had any labor related disputes.

CMI also makes use of IT to improve the quality and effectiveness of communication with employees. For example, messages sent to each computer on startup ensure that employees stay up to date on important company news and announcements, while online surveys collect employee feedback and ideas to be used for future activities.

The STSP plant has instituted comprehensive communication channels including a general manager’s mailbox and suggestion box for each department, and an 880 (Help You) mailbox (in China), allowing employees to receive prompt answers to their questions, which can be asked anonymously. In addition, representatives of upper management and labor meet face to face once a quarter for talks.

Decisions made by the Labor Management Committee and Employee Welfare Committee are forwarded to relevant

CMI is committed to helping less privileged members of society and those affected by disasters in the spirit of brotherhood and charity.

The Hsinchu plant has always focused on helping Miaoli. In addition to helping rural schools, in December 2009 CMI partnered with the Love of Life Foundation and World Peace League to show its concern for poor children, who were asked to send in their Christmas lists. CMI employees then got a chance to play Santa, collecting a total of 150 gifts and distributing them among needy children. This project reflects CMI’s sense of compassion and social responsibility, and willingness to go the extra mile to help.

In 2009 Typhoon Morakot devastated Taiwan. CMI responded quickly, the T3 plant collected money and clothing on August 12 which was handed over to the Hsu Chao-Ying Foundation to help people affected by the disaster make a quick recovery.

The STSP plant hopes its employees find happiness, and encourages them to participate in charity activities to help those less fortunate find happiness as well. To this end, each year the company hosts a donation drive, a volunteer visit to a reform school, blood drives, and “Take an Orphan Home Day”.

Labor Relations

Social Responsibility

CEO Hsing-Chien Tuan talks to managers during the Management Summit

depar tments fo r de l ibera t ion and ac t ion . Departments also host their own monthly meetings, collective discussions, and free talks to collect employee opinions, promote communication, and help the company achieve sustained growth. CMI also hosts Global Outlook Forums to help employees from around the world understand the company’s current status and future plans, and the bimonthly Chi Mei Magazine is also another important way to develop CMI’s corporate culture and corporate image.

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CMI believes that sustainable growth comes not only from corporate profits, but from doing ones best to help customers, shareholders, employees, society, and the environment. CMI has always tried to be an excellent corporate citizen, and has actively participated in environmental, charity, community, cultural, and educational projects and activities, as well as supporting the Innolux Education Foundation and Tree Valley Culture Foundation in order to be a good corporate citizen and make good on its promise to society.

Note 1: The Innolux Education Foundation was established in late 2008 by CMI CEO

Hsing-Chien Tuan in order to give back to society. With a focus is on “Environmental

Education” and “Cultural Outreach”, the Foundation has created explicit plans and fiscal

management policies and actively participates in social, environmental, and cultural

activities.

Note 2: The Tree Valley Culture Foundation was established in early 2008 as part

of Chi Mei Group’s pledge to make Tree Valley open to the public and to promote

environmental sustainability. The Foundation exists to promote environmental

protection, sustainable industry, to protect cultural assets. Creating a sustainable

operational model will help protect the environment for future generations, and creating

a sustainable ecological park will promote sustainable social and environmental

development. By raising awareness of the reciprocal relationship between man and

nature, the Foundation can develop a sense of oneness with nature and recognize its

true value.

Corporate Citizenship Giving Back to Society

To earth,with

L.O.V.E.LGreeniving

OGreen

perations

VGreen

alue Chain

EGreen

nvironment

CMI believes that the true value of a corporation can be measured by how much it gives back to society. This belief drives CMI’s corporate responsibility related programs. In 2009 CMI partnered with educational institutions to train the next generation of optoelectronics talent, and help increase Taiwan’s impact in the global display industry market. CMI also initiated the ‘To Earth, With L.O.V.E.’ project to promote green living, green operations, green value chain and green environment for peaceful coexistence between man and nature. CMI’s cultural initiatives include support for cultural activities and projects promoting spiritual and artistic development, charity projects focused on disaster relief, and aid to underprivileged people. In the future CMI will continue giving back to society and living up to its promise of corporate social responsibility.

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Education

Protecting the Environment

Culture and Arts

Charitable Service

77 Appendix

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Education


Culture and Arts

Charitable Service

77 Appendix

Chiao Tung University’s Chi Mei Building

CMI and Chi Mei Corporation jointly donated NT$440 million to National Chiao Tung University to build the Chi Mei Building, which covers a ground area of roughly 20 thousand square meters, and during the first phase will house 3 research institutes and 2 research centers. Chiao Tung University’s Tainan campus is located in Shalun Village Gueiren Township near the Tainan high speed rail station. It will cover 50 hectares, and will contain Taiwan’s first college of optoelectronics, which in turn will consist of an optoelectronics research institute, illumination and energy optoelectronics research institute, and imaging and biomedicine optoelectronics research institute, as well as an optoelectronics technology research center, biomedicine engineering research center. The Chi Mei Building opened at the end of August 2009, in time for the beginning of the fall semester 2009. CMI has developed close research ties with Chiao Tung University that are helping drive the development of optoelectronics research in southern Taiwan. In the future Chiao Tung will increase its patent holdings, increase its intellectual property transfer ratio, and commercialize the results of its industry partnerships. This will help academia, industry, and governmental authorities and will build STSP into the world’s largest optoelectronics bases, and increase Taiwan’s competitiveness.

Partnerships with National Taiwan University and Cheng Kung University

In 2009 CMI partnered with National Taiwan University to undertake six different projects involving four departments and institutes. In December 2004, CMI also partnered with Cheng Kung University to create the Cheng Kung-Chi Mei Partnership Planning Committee, which appraises advanced R&D proposals. This came at the same time as the donation of funds to build the Chi Mei Building on the Cheng Kung University campus. In 2009, four different departments and institutes from Cheng Kung were involved in five different projects with the company. CMI’s close cooperation with Cheng Kung and National Taiwan University has created excellent opportunities for exchange and has served as a model for other companies and academic institutions, providing proof that industry-academic cooperation helps produce world class talent.

Scholarships for Science and Engineering Students from NTU and Chiao Tung

CMI encourages science and engineering graduates from National Taiwan University and Chiao Tung University to engage in TFT-LCD R&D and consider careers in these fields. To this end the company provides NT$300 thousand scholarships to eligible master’s degree students in exchange for a work commitment of 2 years, or NT$600-900 thousand for Ph.D. students in exchange for a work commitment of 3 to 4 years. In 2009, sixteen master’s degree students from NTU and Chiao Tung University participated in this program.

The Chimei AwardIn 2006 CMI partnered with the Image Display Technology

Talent Promotion Office to host the Chimei Award in order to promote ‘Innovative R&D and Technological Self Sufficiency’ and bring together the worlds of industry and academia. The competition brings academic researchers together with industry insiders to tackle tough problems in display related technology and manufacturing. Professors are encouraged to undertake innovative research in display related technology, and the next generation of talent receives the training they need to help make Taiwan the optoelectronics capital of the world. In addition, CMI has specially created the Technology Consulting and Mentoring Desk, where senior researchers provide participating teams with invaluable assistance and insights. The third annual Chimei Award competition attracted 177 students and professors in 39 teams, and involved NT$3.2 million in award money. Winners were announced in June of 2009. The NT$ 1 million first prize was awarded to a team from the Department of Materials Engineering at National Chung Hsing University for their work on ‘The Design and Manufacturing of Advanced Backlight Materials’. Their new framework restructures the relationship between LED and LGP technology with a manufacturing process that will not diminish the efficiency and lifespan of LED, and paves the way for further advances in backlight technology.

The Fourth Chimei Award – Outstanding Master’s Thesis

In October 2009 the Fourth Chimei Award of Outstanding Thesis was announced. The competition focused on image display technology and industry research, and was open to students graduating with master’s degrees in 2008 or 2009. A total of 111 students participated, and seven prizes were awarded, including one grand prize, one second prize, one outstanding advisor award, and 4 special judges prizes. CMI provided the judges and asked An Bang Wang from the Ministry of Education Advisory Office to select three external judges, making the competition a prestigious and popular optoelectronics event in Taiwan.

Education

The Fourth Chimei Award Ceremony

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70

Sponsoring ecological restoration in Chung Hsing University’s Huisun Forest

To promote forest restoration and water catchment protection, in 2009 CMI began providing financial support to Chung Hsing University’s Huisun Forest, located in the mountains of Renai Township, Nantou County, Taiwan. The funding supports ecological restoration projects in areas affected by landslides. In the future, these projects will be promoted in other areas in Taiwan towards the goal of a “disaster-free homeland”. The project involves the planting of 3,500 Sapindaceae (Soapberry) and other native trees, as well as coffee bush seedlings on 2.5 hectares of landslide-damaged coffee plantation. Furthermore, it will promote soil and water conservation while raising the aesthetic, environmental and economic value of the area and creating a hybrid business model for agriculture and forestry through sustainable forest management. In addition, working with the Innolux Education Foundation, CMI is co-sponsoring a second-stage project to monitor debris flow and disaster education park facilities. Through cooperation with the Chung Hsing University Soil and Water Conservation Experimental Forest, this project not only develops preventative strategies for soil erosion, but also establishes a landslide monitoring station to provide warning of impending landslides and also collect long-term debris flow data. The entire development process will be documented and filmed to be used as educational materials, in conjunction with course books, for future soil and water conservation education, helping people learn to live in harmony with nature. In the future, the Huisun Forest landslide area will be used as the site for the establishment of an outdoor landslide education park. These outdoor education facilities and data collected from long term monitoring will provide a comprehensive landslide and environmental education resource.

Supporting Innolux Education Foundation’s “Earth in Our Hands: Caring for Huisun” reforestation activity

Since 2009, CMI has joined in National Chung Hsing University’s ecological restoration projects in landslide-damaged Huisun Forest in Nantou County, and supported Innolux Educational Foundation’s documentary film for forest restoration . Future plans will promote the experience of this restoration in other regions, pursuing a vision of a “disaster-free homeland”. On April 24, 2010, the Innolux Education Foundation celebrated Earth Day by combining CMI’s reforestation and water conservation efforts to stage the “Earth in Our Hands: Protecting Huisun” tree planting activity in the Huisun Forest’s landslide zone. CMI staff and their families, along with university presidents and officials from the Ministry of Education, came together to reforest the area, and promote landslide prevention.


Liyutan Reservoir forestation area conservation education activity

Global warming is contr ibut ing to abnormal climate phenomena. Research indicates that a one-degree annual increase in temperature results in a 6% increase in rainfall. Due to Taiwan’s geographic location and topography, rainfall has increased to five times average levels, resulting in water resource conservation becoming an important issue for the future. In view of the importance of water resources to citizens and industry, from 2009 CMI has sponsored forest preservation and reforesting efforts at Liyutan Reservoir in Miaoli, adopting an area over 15 hectares, and directly creating reforestation jobs for the local aboriginal population. In 2010, CMI joined the Innolux Education Foundation in co-sponsoring the production of a documentary film on the area’s ecology. The completed film will be suitable for use in elementary schools and will be provided to schools to raise ecological awareness.

Protecting the source: Upstream conservation at the Yongheshan Reservoir

The source of the Yongheshan Reservoir provides the people of the northern Miaoli area and the industries of the Jhunan region with water. In 2009, CMI adopted the Yongheshan Reservoir catchment area to explore possible conservation measures. In terms of water resource protection activities, CMI plans to expand the project to the surrounding environment and water catchment area of the reservoir starting in 2010. In terms of the physical environment, CMI strengthened maintenance work using the existing infrastructure for several important rivers, annually providing local teams with basic equipment for patrolling fisheries, and providing environmental volunteers with adequate resources to ensure the long-term sustainability of local fish populations. The company focuses on improving

environmental education and providing training for ecological tours under the auspices of the office of Tri-Mountain National Scenic Area and Nanjuang Public Works Department. In the long run, this project will improve training in ecological education and protection, and raise local residents’ awareness of ecology and habitat restoration and conservation. Besides, this project including effective ecological explanation will bring a deeper significant to Nanjuang-area tourism, disseminate environmental education concepts, and raise tourist awareness of environmental protection and further preserving the area’s natural beauty and resources.

Innolux Education Foundation produces the “NPO Youth Republic” ecological education program

Created to promote civic education, the Innolux Education Foundation first teamed up with the IC Broadcasting Company to produce an ecological education program called “NPO Youth Republic”, working with a network of domestic non-prof i t ecological conservation organizations and their volunteers throughout Taiwan. The host brought young volunteers to ecological preserves and research stations, sharing their experiences through the program and also providing insight on how to get involved in future service work. The Foundation hopes that the program will help strengthen the ecological concerns of Taiwan youth, improve community development, and raise awareness, leading young people to find their own place in the ecological movement.

Innolux Education Foundation’s "Reflections on Global Warming" environmental program

To e x p r e s s i t s s u p p o r t a n d c o n c e r n f o r environmental protection, energy conservation and corporate social responsibility, at the end of 2009 the

Innolux Education Foundation’s “Earth in Our Hands: Caring for Huisun” reforestation activity

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Innolux Education Foundation sponsored the Discovery Channel’s “Reflections on Global Warming” program. The program investigated global warming issues, alternative energy and the concepts and actions that global citizens should have. In November of 2009, the Foundation actively sponsored Commonwealth Magazine’s January 2010 “The World is Hot, Flat and Crowded” lecture series by Thomas L. Friedman, bringing together more than 3,000 participants from business and youth groups. The series not only raised Taiwan’s international visibility and strengthened corporate consensus on Taiwan’s green energy future, but also raised environmental concerns and awareness among the younger generation.

Treasuring the soil with organic vegetables

Since 2008, CMI began to develop the idea of developing a long-term relationship with organic farms, directly purchasing organic produce for use in the company’s canteen and providing employees with healthful vegetables. Starting with two hectares in 2008, the land under organic cultivation to supply CMI was expanded to 4.8 hectares in 2009, and raising monthly deliveries from 200 kg to 3000 kg, and helping organic farms achieve economies of scale. Starting in 2010, CMI began cooperating with farms and local government agencies in the Yongheshan Reservoir upper catchment area, gradually helping farmers to switch to organic methods and helping reduce agricultural pollution in the source waters of the Yongheshan reservoir.

Establishing organic culture at the Innolux Happy Farm

In addition to providing our staff with organic vegetables daily, CMI in 2009, working with Chienfu Organic Farms, co-founded the Innolux Happy Farm. At the farm, CMI staff can adopt organic vegetable garden plots where they can be personally involved in the organic food production process, thus raising their awareness of the work that goes into organic farming, along with the benefits of organic farming to the environment and nature. Additionally, to give CMI staff a chance to visit many organic farms and understand the different types of organic farming, CMI is planning a tour of organic farms to allow staff members to interact with organic farmers and benefit from their insights and experience, giving them an understanding of the benefits of organic farming and lifestyle.

Supporting the Innolux Education Foundation’s sponsorship of the “Paper Windmill Children’s Art Project” tour

In the training of a new generation of cultural development talent, it’s important that parents and children learn together. In 2009, CMI supported the Innolux Education Foundation in sponsoring “the Paper Windmill Children’s Art Project” in Jhunan. The first two performances attracted an audience of over 5,000, bringing joy not only to the children involved in the activities, but also bringing the pleasure broadened exposure of performing arts to the people of Miaoli. The program encourages and supports local arts in Taiwan.

Sponsoring the Chi Mei Culture FoundationThe CMI sponsors the Chi Mei Culture Foundation which administers the Chi Mei Museum, purchasing art works and

promoting art appreciation and creation to promote a balance between physical and spiritual well-being. Established in April 1992, the Chi Mei Museum provides free admission to an average of 400,000 annual visitors. Many experts have called the museum’s collection of Western art works one of the richest private collections of paintings and sculptures in the world. In addition, the museum boasts a rich collection of antique weaponry and musical instruments, and a significant natural history exhibit, making it one of Asia’s most prominent museums in terms of both the quality and quantity of its collection, which has earned it a reputation for excellence.

Culture and Arts

Supporting the Innolux Education Foundation’s sponsorship of the “Paper Windmill Children’s Art Project” tour.

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The "Chimei Sends Love to Southern Taiwan" Program

On August 8, 2009, Typhoon Morakot devastated

parts of Tainan and Kaohsiung Counties in southern

Taiwan. CMI and member companies of the Chi Mei

Group actively participated in relief efforts, donating

NT$100 million to central and local government

agencies to carry out rescue and relief activities. The

Chi Mei Medical Center sent a medical team into the

disaster areas to provide medical services, and 200

employees from the various Chi Mei Group companies

formed volunteer teams to enter the affected areas

to survey immediate and long-term needs, and to

develop a plan for the long-term care of the affected

aboriginal communities. In addition, CMI joined in Hon

Hai Group's donation of NT400 million for local and

central government disaster relief. In August 2009, CMI

also kicked off a fundraising effort, raising donations of

money and clothing to be distributed through the Chao

In Hsu Foundation’s Welfare and Charity Fund, and

providing disaster victims with immediate assistance.

Charitable Service

Chi Mei volunteer group’s involvement in the Hope Campus program

Chi Mei Group founder Mr. Wen-Lung Shi was personally involved in the Hope Campus program

"A Dollar a Day, Learn for a Year" student assistance project

The "Hope Campus" Program

On August 8, 2009 Typhoon Morakot hit southern

Taiwan, inflicting serious damage on five elementary

and junior high schools in Taoyuan Township of

Kaohsiung County and disrupting the education

of over 400 students. CMI and Chi Mei Group

member companies invited the Tree Valley Culture

Foundation and Outward Bound Taiwan to jointly

promote a Hope Campus program for schools and

students affected by the disaster. CMI sponsored

the Tree Valley Culture Foundations “A Dollar a

Day, Learn for a Year” project, providing financial

assistance for school children, health care subsidies

and living allowances. CMI STSP Branch President

Jyh-Chau Wang, acting as the head of CMI’s

volunteer team, led over 100 volunteer missions

in 2009 to support the growth and education of

affected children and help them achieve their

dreams. The Chi Mei volunteer team and the Taiwan

Overseas Development Education Foundation led

the development of the Hope Campus program,

including extracurricular activities, holiday family

camps, and school renovation. The Hope Campus

program also provided front line school services

with Taiwan Overseas Development Education Fund

and CMI volunteers leading classes in Taoyuan

Township elementary schools four afternoons a

week, exploring diverse activities through lively

theme-based instruction, accompanying the children

in afternoon enrichment activities, and also allowing

teachers to rest and take part in professional

development workshops. Additionally, in October

2009, a volunteer group composed of high-level Chi

Mei Group executives launched the Hope Campus’

first Tree Valley Weekend Camp, jointly experiencing

the lush natural environment of the Tree Valley

area and, guiding curriculum development through

experiential learning, helping children develop their

courage, convictions and self-esteem.

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Sponsoring Child Welfare League’s "Young Sailors Program"

Since 2008, CMI has sponsored the Child Welfare League’s "Young Sailors Program" (development projects for disadvantaged children in remote areas). In 2008, the company donated NT$500,000, followed by NT$1.5 million in 2009 to help children from disadvantaged families by supporting psychological counseling services along with academic and learning skills development opportunities. In 2009, the program assisted children in 119 disadvantaged families, including preschool assistance for 47 children, after school tutoring for 23 children, and development assistance for 49 children with potential talent. CMI expects that its support will help the Child Welfare League continue to run these programs, assisting disadvantaged children and youth achieve their dreams through increased education and learning opportunities.

Bringing Employees Together(1) Stress rel ief through relaxing massages

performed by blind massage therapists: The health center at CMI’s Southern Taiwan Science Park branch arranges for specially-trained blind massage therapists to visit the company to help employees manage work stress. (2) Blood drive: CMI staff enthusiastically support three regularly-scheduled blood drives per year, with annual collection rising from 173 pints in 2000 to 2,469 pints in 2009, earning the company recognition

and praise from the Ministry of the Interior. (3) General Uniform Invoice collection drives and volunteer work: The company collects invoices from staff and the tax administration raffle proceeds are donated to the Tree Valley Cultural Foundation and the Hsinlu Foundation to support charitable activities and assist disadvantaged groups.

Supporting the underpriviledged(1) Sponsorship of the underpriviledged groups:

in 2009, CMI sponsored charities working with the underpriviledged groups including the Credit Suisse Foundation for Children's Medicine, the Tainan Youming Association for the Visually Impaired, and the Nanking Charitable Federation. (2) Care for the elderly: since 2008, CMI has donated traditional Dragon Boat Festival holiday treats to the Miaoli County’s Nursing home for distribution to elderly residents, increasing from 400 articles in the first year, to 500 in 2010. (3) “Recycled Computers – Hope Engineering” program: In March 2009, CMI began cooperation with ASUS and the Tzu Chi organization to jointly promote the “Recycled Computers – Hope Engineering” program, working together to develop a recycling-oriented society through refurbishing thousands of scrap computers and donating them to the underpriviledged groups, thus reducing the digital divide.

2009 blood drive

CMI employees joined in charity activities.

Sponsoring Child Welfare League’s "Young Sailors Program"

CMI, Home Help Center and FamilyMart work together to create a store that helps the underpriviledged

When CMI Fab T2 planed to establish an on-site convenience store, management intended to created a mutually beneficial arrangement that not only provided excellent services, but also helped the underpriviledged. therefore, the franchise was granted to groups working with the underpriviledged . In April 2009 the first convenience store franchise, operated by a social services network group the Miaoli Home Help Center, was established. Store staff are those who have been as part of family counseling cases by the Center, and the earnings are returned to the Center. It is expected that the employees not only develop self-reliance, but also provide other underpriviledged families with further assistance.

Sponsoring neighborhood watch groups

To help improve neighborhood security, CMI sponsored neighborhood watch teams, providing NT$100,000 in 2009 to provide equipment to support neighborhood watch patrols in Jhunan, Miaoli. This sponsorship continued in 2010, with the gradual addition of new equipment, reflecting the importance of neighborhood safety to provide security for local residents.

Sponsoring Guide MothersI n 2009 , work ing coun ty government and

participating schools, CMI jointly designed specialized uniforms for Miaoli’s County’s 600 Guide Mothers to wear when performing their volunteer work. When these Guide Mothers are on duty, the uniforms not only makes them easier to identify, but also acknowledges the hard work these volunteers perform.

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Self-Reporting GRI G3 Application Levels

According to the requirements of the 2006 Global Reporting Initiative Guideline (2006-G3 GRI), this report contains issues of concern to stakeholders, and disclosure regarding the company’s economic, environmental and social performance.

According to the GRI G3 Application Level table, in 2009 CMI's self-reported corporate responsibility report meets the GRI G3 application level "A".

GRI Index GRI Index Supplement ExplanationArticle Supplement

2.9Major organization change: for information regarding major changes in the company’s chairman, chief executive and other personnel changes, please visit http://www.chimei-innolux.com/opencms/cmo/media_center/News/index.html?news_no=5&__locale=zh_TW

3.7 Report category restrictions: Some issues and statistics are incomplete. Explanatory text has been added.

3.8Joint ventures, subsidiaries, and other reporting agencies: Please refer to the company's Annual Report (available on the company's official website at http://www.chimei-innolux.com/opencms/cmo/Investor_relations/financials/annual_reports.html?__locale=zh_TW

3.13 External guarantee: None.

EC 4Receipt of government financial assistance: The company’s Jhunan plant received tax advantages under the “”Two Free, Three Cut Half” program under the “Corporate Investment in Resource-Poor or Slow-Developing Rural Areas Tax Credit Plan”

EC 6 Policies, implementation and expenditure ratio for purchasing from local suppliers: suppliers are chosen in accordance with supplier assessment specifications.

EN 11 Location and coverage in biodiversity-rich and protected areas: Our factories are located in science parks and industrial areas. Environmental impact assessments conclude no effect on biodiversity.

EN 12 Impact of activities, products and services on biodiversity rich and protected areas: Our factories are located in science parks and industrial areas. Environmental impact assessments conclude no effect on biodiversity.

EN 19 Emissions of ozone-depleting substances: The company is not subject to the Montreal Protocol for the use of ozone-depleting substances.

EN 20 NOx and SOx and other significant gas emissions: in 2009 Taiwan’s Environmental Protection permit requirements were 1.918T for nitrogen oxide and 0.019T for sulfur oxide.

EN 21Waste water volume and end point: Wastewater from CMI’s manufacturing processes is processed through wastewater treatment system to standards overmatched those required by local laws and regulations for sewage and industrial zone wastewater treatment plants.

EN 23 Number of major overflow incidents: None.

EN 28 Violations of environmental laws and regulations incurring financial penalties or sanctions: The company had no violations, as disclosed in the annual report.

EN 30 Environmental expenditure and investment: Costs related to environmental protection measures in 2009 totaled NT$3,518,820,000.

LA5 Minimum notice of major changes: According to local laws and regulations.

HR 1 Significant investments in human rights agreements: The company is in full compliance with all relevant provisions governing human rights laws.

SO 2 Resources devoted to corruption risk analysis: Corruption risk is not a separate unit. Contact and transactions between employees and suppliers are monitored.

SO 3 Ratio of staff having received anti-corruption training: Company employees are forbidden from engaging in bribery or corruption, which is covered in employee orientation.

SO 4 Anti-corruption action: Any instances of corruption, bribery, extortion or embezzlement are strictly prohibited.

SO 5Public policy and positioning, and participation in public policy formulation and lobbying: In terms of industrial development CMI participates under its own name in TFT industry associations, and represents its perspective and provides relevant suggestions on environmental legislation.

SO 8 Legal violations resulting in non-monetary sanctions or penalties: The company was found to be in violation of U.S. antitrust laws. The company agreed to pay a fine, as noted in the Annual Report (see Annual Report P101-102).

PR6Standards for compliance with marketing and communications laws: CMI is in full compliance with all laws related to marketing communications, marketing, public relations, sponsorships, advocacy and the provision of products and services.

PR8Customer privacy: CMI provides its customers with different types of software (including technical documentation), hardware and related intellectual property (including electronic media information) through our command and control system. Confidentiality agreements are signed with customers to protect the user’s rights and responsibilities and prevent unauthorized leaks. No specific complaints have been made against the company for invasion of privacy.

PR 9 Product-related violations resulting in significant fines: the company was found to have violated U.S. antitrust laws, and the company agreed to pay a fine as noted in the annual report (see Annual Report P101-102).

ReportApplicaition Level

Disclosures outp

utou

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outp

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Report on:1.12.1-2.103.1-3.8, 3.10-3.124.1-4.4, 4.14-4.15

Not RequiredManagement ApproachDisclosures For each Indicator Category

Management ApproachDisclosed For eachIndicator Category

Report on a minimum of 10Performance Indicators, indudingat least one from each of : Economic, Social, and Environment.

Report on a minimum of 20Performance Indicators,at least one from each of:Economic, Environment,Human rights, Labor, Society,Product Responsibility.

Respond on each core G3and Sector Supplement*indicator with due regard to the materiality Principleby either. (a)reporting on the indicator or (b)explaining the reason for its omission.

Report on all criteria listed for Level C plus:

1.23.9, 3.134.5-4.13, 4.16-4.17

Same as requirementfor Level B

Repo

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nally

Ass

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Repo

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Ass

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Repo

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xter

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Ass

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C C+ B B+ A A+

Stan

dard

Dis

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G3 ManagementApproach

Disclosures

G3 PerformanceIndicators &

Sector SupplementPerformance Indicators

GRI G3 Application Level Report :

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GRI-G3 Content IndexSubject Article Page

Strategy and Analysis

1.1 CEO statement 4

1.2 Description of key impacts, risks and opportunities 12

Organizational Profile

2.1 Name of the organization 7

2.2 Primary brands, products and services 8

2.3 Operational structure 102.4 Headquarters location 72.5 Countries of operation 72.6 Nature of ownership and legal form 92.7 Markets served 7/82.8 Scale of organization 8

2.9Significant changes during the reporting period regarding size, structure or ownership

7/12

2.10 Awards received during the reporting period 18/50

Report Parameters

3.1 Reporting period 23.2 Date of most recent previous report 23.3 Reporting cycle 23.4 Contact 23.5 Profess for defining report content 23.6 Boundary of the report 2

3.7 Limitations of the scope or boundary of the report 2

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that would affect comparability

78

3.9 Data measurement techniques and assumptions 78

3.10Explanation of the effect of any restatements of information provided in earlier reports

2

3.11

Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the report

2

3.12 GRI content index 78

3.13Policy and current practice with regard to seeking external assurance for the report

78

Governance

4.1 Governance structure 9

4.2Indicate whether the Chair of the highest governance body is also an executive officer

9

4.3

State the number of members of the highest governance body that are independent and/or non-executive members

9

4.4

Mechanism for shareholders and employees to make recommendations or direction to the board

14

4.5

Linkage between compensation for members of the board, senior manager and executive and the organization’s performance

10

4.6Processes in place for the board to ensure conflicts of interest are avoided

10

4.7

Process for determining the qualifications and expertise of the members of the board for guiding the organization’s strategy on economic, environmental and social topics

9

4.8

Statements of mission or values, codes of conduct, and principles relevant to economic, environmental and social performance and the status of their implementation

7

4.9

Board procedures for overseeing the organization’s identification and management of economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles

10

4.10 Processes for evaluating the board’s own performance 10

4.11Explanation of whether and how the precautionary approach or principle is addressed by the organization

32

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses

17/44/53

4.13

Memberships in associations and/or national/international advocacy organizations in which the organization has positions in governance bodies; participates in projects or committees; provides substantive funding beyond routine dues; or views membership as strategic

15

4.14 List of stakeholder groups engaged by the organization 14

4.15 Basis for identification and selection of stakeholders with whom to engage 14

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group

14

4.17

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting

14

Management Approach

Economic management approach 9Environmental management approach 17Labor training and reasonableness management policy 60

Human rights management approach 56Social management policy 65Product liability management policy 52

Economic Performance Indicators

EC 1

Economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and governments

12

EC 2

Financial implications and other risks and opportunities for the organization’s activities due to climate change

23

EC 3 Coverage of the organization’s defined benefit plan obligations 56

EC 4 Significant financial assistance received from government 78

EC 6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation

78

EC 7

Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation

54

EC 8

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro-bono engagement

66

EN 1 Materials used by weight of volume 22

EN 2 Percentage of materials used that are recycled input materials 22

Environmental Performance Indicators

EN 3 Direct energy consumption by primary energy source 22

EN 4 Indirect energy consumption by primary source 22

EN 5 Energy saved due to conservation and efficiency improvements 24

EN 8 Total water withdrawal 22

EN10 Percentage and total volume of water recycled and reused 22

EN 11

Location and size of land owned, leased, managed in or adjacent to, protected areas and areas of high biodiversity value outside protected areas

78

EN 12

Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

78

EN 16 Total direct and indirect greenhouse gas emissions by weight 23

EN 17 Other relevant indirect greenhouse gas emissions by weight 23

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 24

EN 19 Emissions of ozone-depleting substances by weight 78

EN 20 NOx, SOx and other significant air emissions by type and weight 22/78

EN 21 Total water discharge by quality and destination 78

EN 22 Total weight of waste 29/30

EN 23 Total number and volume of significant spills 78

EN 26Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation

47/48

EN 27Percentage of products sold and their packaging materials that are reclaimed by category

29

EN 28

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

78

EN 30Total environmental protection expenditures and investments by type

78

Reasonableness Indicators

LA 1 Total workforce by employment type, employment contract and region 54

LA 2Total number and rate of employee turnover by age group, gender and region

55/56

LA 3Benefits provided to full-time employees that are not provided to temporary or part-time employees

56

LA 4 Percentage of employees covered by collective bargaining agreements 56

LA 5

Minimum notice period(s) regarding operations changes, including whether it is specified in collective agreements

78

LA 7

Rates of injury, occupational diseases, lost days and absenteeism, and number of work-related fatalities by region

40

LA 8

Education, training, counseling, prevention and risk-control programs in place to assist workforce members, their families or community members regarding serious diseases

41/42

LA 10 Average hours of training per year per employee by employee category 62

LA 11

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

61/62

LA 13

Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership and other indicators of diversity

54

LA 14 Ratio of basic salary of men to women by employee category 56

Human Rights Performance Indicators

HR 1

Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

78

HR 2

Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken

36

HR 4 Total number of incidents of discrimination and actions taken 56

HR 5

Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights

56

HR 6

Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor

56

HR 7

Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor

56

Social Performance Indicators

SO 1

Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

66

SO 2Percentage and total number of business units analyzed for risks related to corruption.

78

SO 3Percentage of employees trained in organization’s anti-corruption policies and procedures.

78

SO 4 Actions taken in response to incidents of corruption. 78

SO 5Public policy positions and participation in public policy development and lobbying.

78

SO 8Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

78

Product Responsibility Performance Indicators

PR 1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

48

PR 3

Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

48

PR 5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

16

PR 6

Programs for adherence to laws, standards and voluntary codes related to marketing communications including advertising, promotion and sponsorship

78

PR 8

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

78

PR 9

Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

78

Chimei Innolux CorporationAddress: No.160, Kesyue Rd., Jhunan Science Park, Miaoli County 35053, Taiwan (R.O.C.)Tel: +886 37 586 000 Fax: +886 37 584 622Website: www.chimei-innolux.com

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