AU Optronics Corporation

Prospectus

(draft version for registration for issuance of new shares due to merger)

1.	The name of the company : AU Optronics Corporation

2.	The prospectus is prepared for the purpose of issuing the following securities : issuance of new shares due to merger

(1)	Source of new issue :	Quanta Display Incorporated (hereinafter referred to as “QDI”) merged with and into AU Optronics Corporation (hereinafter referred to as “AUO”), AUO will be a surviving company.
(2)	types of new shares : registered share certificates, NT10 par value stocks
(3)	number of shares : 1,304,006,649 shares
(4)	value of shares : NTD 13,040,066,490
(5)	conditions of the issue :

	a.	3.5 shares of common stock of QDI will be canceled and extinguished and converted into one share of common stock of AUO. With respect to a fraction of a share of new issued AUO’s common stocks for conversions. AUO will pay an amount of cash (rounded down to the nearest whole NT dollar below) in proportion to such fraction based on par value, and AUO authorizes the chairperson of Board of Directors to request specific persons to undertake to procure the aforesaid fractions of AUO’s common stocks. Total number of paid in-capital of the extinguished company before merger is 5,164,023,274 shares. Among those 4,564,023,274 shares were publicly issued while 600,000,000 shares were issued through private placement. The company will issue 1,304,006,649 new shares for the conversion of the extinguished company’s publicly issued shares. The same conversion ratio shall apply for the conversion of private placement shares of the extinguished company into private placement shares of the surviving company.
	b.	Rights and obligations of the newly issued shares shall be the same as previously issued shares.

(6)

the public underwriting ratio, and manner of underwriting and sale allocation : Not Applicable

3.	Summary of the purpose of the capital application plan and the projected possible effect thus created : Not Applicable

4.	The effective registration of the securities may not be cited in an advertisement as proof of the veracity of registration particulars, or to guarantee the value of the securities.

5.	If the prospectus contains false or omitted information, the issuer and its responsible person and all other persons who sign or affix their seal on the prospectus shall be held liable in accordance with laws.

6.	Investors must carefully read the content of the prospectus and take note of the company's risks : Please refer to page 3 in the prospectus.

7.	The web addresses for enquiry about the prospectus :	http://newmops.tse.com.tw
		http://www.auo.com

AU Optronics Corporation prepared

July 28, 2006

* THIS IS A TRANSLATION OF THE DRAFT CHINESE PROSPECTUS OF AU OPTRONICS CORP. (“AUO”) FOR REGISTRATION FOR ISSUANCE OF NEW SHARES DUE TO MERGER. THE DRAFT CHINESE PROSPECTUS IS PREPARED PURSUANT TO R.O.C. REGULATIONS. THE TRANSLATION IS FOR REFERENCE ONLY. IF THERE IS ANY DISCREPANCY BETWEEN THE ENGLISH VERSION AND CHINESE VERSION, THE CHINESE VERSION SHALL PREVAIL.

1. Sources of the paid-in capital before the current issue

sources of the paid-in capital	amount (NT Dollars)	ratio compared with the paid-in capital amount
Capital of corporation	500,000,000	0.86%
cash capital increase	23,300,000,000	39.96%
capitalization of retained earnings	12,381,647,750	21.24%
capitalization of capital reserve	625,000,000	1.07%
capital increase in connection with a merger	15,122,816,070	25.94%
conversion of convertible bonds	6,376,007,500	10.93%
Total Amount	58,305,471,320	100.00%

2. The prospectus distribution plan :

(1) the places for displaying the prospectus : Taiwan Stock Exchange Corporation, GreTai Securities Market, Chinese Securities Association, Securities and Futures Institute, AUO and AUO’s agent for stock affairs

(2) ways of distribution : According to Taiwan Stock Exchange Corporation regulation.

(3) methods for requesting and obtaining the prospectus : Please request AUO’s agent for stock affairs with an addressed envelope or download through the internet.

(http://newmops.tse.com.tw)

3. Name, address, website uniform resource locator (URL), and telephone number of the securities underwriter :

Name : KGI Securities Co., Ltd.

Address : 700 Ming Shui Road, Taipei Telephone number : 886 2 2181-8888

Website : http://www.kgi.com.tw

4. Name, address, website URL, and telephone number of the corporate bonds guarantor : Not Applicable

5. Name, address, website URL, and telephone number of the corporate bonds trustee : Not Applicable

6. Name, address, website URL, and telephone number of share or corporate bonds certification institution : Not Applicable

7. Name, address, website URL, and telephone number of the entity handling shares transfer and recordation :

Name : Sinopac Securities Corporation’s stock registration division

Address : 3rd Fl.,No. 53 Po Ai-Road, Taipei Telephone number : 886 2 2381-6288

Website : http://www.sinotrade.com.tw

8. Name, address, website URL, and telephone number of the credit rating institution : None

9.	Firm names, addresses, website URLs, telephone numbers, and the names of the certifying lawyer and certified public accountant for the corporate bonds : Not Applicable

10.	Firm name, address, website URL, telephone number, and the name of the certified public accountant who attested the most recent year's financial report :

Name of the CPA : Mei-Yu Tseng and Chung-Hwa Wei Website : http://www.kpmg.com.tw

Firm name : KPMG Certified Public Accountants Telephone number : 886 2 2715-9999

Address : 6th Fl.,No. 156, Sec. 3, Min-Sheng East Road,Taipei

11. Name, address, website, and telephone number of the reviewing attorney :

Name : Chin-Hung Lin

Firm name : Chin-Hung Lin Law Office Telephone number : 886 3 347-2266

Address : 15F., No.545, Zhongshan Rd., Taoyuan City, Taoyuan Website : None

12.	Names, titles, contact telephone numbers, and e-mail addresses of the spokesperson and deputy spokesperson

Spokesperson : Hsuan Bin (H.B.) Chen Titles : President

Telephone numbers : 886 3 500-8800 e-mail addresses : auo@auo.com

Deputy spokesperson : Max Cheng, Jerry Liu Titles : Chief Financial Officer, Director of Finance Div.

Telephone numbers : 886 3 500-8800 e-mail addresses : auo@auo.com

13. Company website URL : http://www.auo.com

AUO’s prospectus summary

paid-in capital : NT$58,305Mn		addresses : No. 1, Li-Hsin Road 2 Science-Based Industrial Park Hsinchu		Tel : 886 3 500-8800
Date of establishment : August 12,1996			Website : http://www.auo.com
Date of listing on TSEC : September 8,2000	Date of listing on GTSM : -		Date for public issuance : February 25,1999		Date for managed stocks : -
Responsible person : Chairman : Kuen-Yao (K.Y.) Lee President : Hsuan Bin (H.B.) Chen			Spokesperson : Hsuan Bin (H.B.) Chen (President) Deputy spokesperson : Max Cheng (CFO) Jerry Liu (Director of Finance Div.)
Name of agency handling shares transfer : Sinopac Securities Corporation’s stock registration division			Tel : 886 2 2381-6288	Website : http://www.sinotrade.com.tw
			Address : 3rd Fl.,No. 53 Po Ai-Road, Taipei
Name of the underwriter : KGI Securities Co., Ltd			Tel : 886 2 2181-8888	Website : http://www.kgi.com.tw
			Address : 700 Ming Shui Road, Taipei
CPA of last year : Mei-Yu Tseng and Chung-Hwa Wei			Tel : 886 2 2715-9999	Website : http://www.kpmg.com.tw
			Address : 6th Fl.,No. 156, Sec. 3, Min-Sheng East Road,Taipei
Name of reviewing attorney : Chin-Hung Lin			Tel : 886 3 347-2266	Website : -
			Address : 15F., No.545, Zhongshan Rd., Taoyuan City, Taoyuan
Credit rating institution : None			Tel : -	Website : -
			Address : -
Date of credit rating : -			Subject of the rating : -	Credit rating result : -
Date of the election of directors : April, 2004 The term of office : 3 years			Date of the election of supervisors : April, 2004 The term of office : 3 years
The percentage of shareholdings of all the directors : 12.56% (June 30,2006)			The percentage of shareholdings of all the supervisors : 12.97% (June 30,2006)

Titles	Name	The percentage of stake		Titles	Name	The percentage of stake
Chairman	Kuen-Yao Lee	0.15	%	director	Huey-Juan Hsieh	0	%
director	Hsuan Bin Chen	0.09	%	director	T.J. Huang	0	%
director	Hsi-Hua Lee (note 1)	12.29	%	director	Cheng-Chu Fan	0	%
director	Po-Yen Lu (note 1)	12.29	%	supervisor	Chieh-Chien Chao	0	%
director	Hui Hsiung (note 1)	12.29	%	supervisor	Ko-Yung Yu (note 1)	12.29	%
director	Chin-Bing Peng (note 2)	0.03	%	supervisor	Shin Chen (note 3)	0.68	%
note 1:	Representing BenQ
note 2:	Representing Darly II Venture Ltd
note 3:	Representing CDIB

Factory address : Fab L1 : No. 3, Gongye E. Road 3 Science-Based Industrial Park Hsinchu Fab L3A : No. 5, Li-Hsin Road 6 Science-Based Industrial Park Hsinchu Fab L3B : No. 1, Li-Hsin Road 2 Science-Based Industrial Park Hsinchu Fab L3C : No. 23, Li-Hsin Road Science-Based Industrial Park Hsinchu Fab L4A/L5A/L5B : 1 Xinhe Road, Aspire Park Lungtan Taoyuan Fab L6A/L5C/L7A : 1 JhongKe Rd. Central Taiwan Science Park Taichung			Tel : (03) 500-8800
Major products : TFT-LCD		market structure : import 38% export 62%		The page number in the prospectus
				Page 48
Risks	Please refer to page 3 in the prospectus			The page number in the prospectus
				Page 3
Last year (2005)	Sales : NT$217,295,128 thousands Trading : NT$ 0 thousands Processing : NT$ 0 thousands Manufacturing : NT$217,295,128 thousands Income before tax : NT$16,100,420 thousands　　EPS : NT$2.86			Page 201

Types and value of the subject offering and issuing plan	Please refer to the front cover of the prospectus
Conditions of issue	Please refer to the front cover of the prospectus
Use of proceeds and expected returns	Not Applicable
The publication date : July 28,2006		Purpose of printing : issuance of new shares due to merger
Abstract of other important contents and the page number in the prospectus : Please refer to the prospectus index

AU Optronics Corporation

Prospectus index

Section I Company Summary	1
1. Brief company description	1
(1) Date of incorporation	1
(2) Addresses and telephone numbers of the head office, branches and factories /plants	1
(3) Company history	1
2. Risks	3
(1) Risk factors	3
(2) Litigious and non-litigious matters	6
(3) If a company director, supervisor, its general manager, or a major shareholder with a stake of more than 10% has experienced financial difficulties or lost creditworthiness within the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall note the effect on the company's financial status.	6
(4) any other important matters	7
3. Company organization	7
(1) Organization system	7
(2) Chart of affiliated enterprises	9
(3) General manager, vice general manager, assistant vice general manager, and the manager of each department and branch institution	11
(4) Directors and supervisors	13
(5) Promoters	19
(6) Remuneration to directors, supervisors, general manager, and vice general manager	20
4. Capital and shares	25
(1) Types of shares	25
(2) Formation of capital	25
(3) Status of recent dispersal of shareholding	27
(4) The per share market price, net worth, profit, dividend and relevant information for the past two fiscal years	30
(5) Company dividend policy and implementation status	30
(6) The effect of dividend distributions contemplated for the current fiscal year on company operating performance and earnings per share	31
(7) Employee bonuses and compensation of directors and supervisors	31
(8) Status of company buyback of corporate stocks	33
5. The description of the status of issue and private placement of "corporate	33

bonds" (including overseas corporate bonds)
6. The description of the status of issue and private placement of "preferred shares"	37
7. The description of the status of participation in the issue and private placement of "overseas depositary receipts"	38
8. The description of the status of issue and private placement of employee stock option certificates	38
9. The description of the status of mergers and acquisitions	38
10. The description of the status of issues of new shares in connection with acquisition of shares of another company	39
Section II Operation Summary	40
1. Operation of the company	40
(1) Business content	40
(2) Summary of market and production/sales	48
(3) Number of employees for the most recent two years	54
(4) Information on environmental protection expenditures	54
(5) Labor relations	56
2. Fixed assets and other real properties	58
(1) Self-owned assets	58
(2) Rental properties	62
(3) Each factory's current condition and facility productivity ratio for most recent two years	62
3. Investments in other companies	63
(1) A general description of companies that have been invested in	63
(2) Consolidated stake	64
(3) The status of those subsidiaries of companies listed on the stock exchange or traded on an OTC market who held or disposed of shares of this company during the most recent two years and up to the prospectus' publishing date and the status of the shares pledged	64
(4) Any occurrences of the situations of Article 185 of the Company Act, or transferring part of the business operation or results of the research and development to a subsidiary during the most recent two years and up to the prospectus' publishing date	64
4. Important contracts	65
Section III Issuance Plans and Implementation Status	66
1. Analysis of the previous cash capital increase, merger or acquisition, issue of new shares in connection with the acquisition of shares of another company, or plan of utilization of capital from issuance of corporate bonds	66
2. The plan for the current cash capital increase, issuance of corporate bonds, or issuance of employee stock option certificates	76

3. the current issue of new shares in connection with acquisition of another company's shares	76
4. the current issue of new shares in connection with acquisition or merger	76
Section IV Financial Summary	109
1. Summary financial data for the most recent 5 fiscal years	109
(1) Condensed balance sheet and income statement	109
(2) Matters of material significance which affected the comparability of the above-mentioned financial statements	110
(3) The names and auditor's opinions of the attesting certified public accountant for the most recent five years	111
(4) Financial analysis	111
(5) Description of major variations of accounting items	115
2. Financial statements	116
(1) The financial statements and a certified public accountant audit report for the two years	116
(2) A consolidated financial statement for the parent company and its subsidiaries for the most recent fiscal year, audited and attested by a CPA	116
(3) During the period after the issuer has registered (or applied for) the offering and issuance of securities and until the prospectus' printing date, if there exists any updated certified public accountant audited/attested financial statement, it shall also be disclosed.	116
3. Financial summary and other important matters	116
(1) If the company or an affiliated enterprise has encountered any financial difficulties in the most recent two years or during the current fiscal year up to the date of the prospectus's printing, the impact on the company's financial condition shall be set forth.	116
(2) Any of the events in Article 185 of the Company Act has occurred within the most recent two years or up to the date of the prospectus's printing	117
(3) Subsequent events	117
(4) Other matters	117
4. Review and analysis of financial condition and operating results	117
(1) Financial condition	117
(2) Operating results	118
(3) Cash flows	119
(4) The impact of any material capital expenditures over the most recent fiscal year upon the company's financial and operating condition	121
(5) The company's policy for the most recent fiscal year on investments in other companies, the main reasons for profit/losses resulting therefrom, plans for improvement, and investment plans for the coming year	122

III


(6) other important matters	123
Section V Special Items to be Included	124
1. Summary of the internal control system	124
2. Those who have retained an FSC-approved or -recognized credit rating institution to conduct a credit rating/evaluation shall disclose the credit rating/evaluation report issued by the credit rating institution.	124
3. Summary opinion from the securities underwriter's assessment	124
4. Attorney's legal opinion	124
5. Summary opinion stated in the case checklist schedule written by the issuer and reviewed by a certified public accountant	124
6. The improvement status of the items notified to be corrected, if at the time the company registered (or applied for approval of) the previous offering and issuance of securities the FSC had notified it to make self-correction on certain items.	124
7. The items notified to be further disclosed, if at the time the company registered the current offering and issuance of securities the FSC had notified it to make supplemental disclosure on certain items.	124
8. The statement or promised items disclosed in the prospectus from the company's registration (application) for offering and issuance of securities for the first time, the preceding time, and within the most recent three years, and the current state of fulfillment of such.	125
9. The major content of any dissenting opinion of any director or supervisor regarding any material resolution passed by the board of directors, where there is a record or written statement of such opinion, for the most recent five years and up to the date of printing of the prospectus.	125
10. Status of private placements of common shares in the three most recent fiscal years	125
11. Any legal sanctions against the company or its internal personnel, or any disciplinary action taken by the company against its own personnel for violation of internal controls, during the most recent fiscal year or during the current year up to the date of printing of the prospectus; and a description of the main shortcomings in the company's internal control system as well as an indication of measures for improvement.	125
12. Other necessary items to be supplemented and explained	125
13. The state of implementation of corporate governance	125
Section VI Important Resolutions	127

Section I Company Summary

1. Brief company description

(1) Date of incorporation : August 12, 1996

(2) Addresses and telephone numbers of the head office, branches and factories/plants

Headquarters	:	No. 1, Li-Hsin Road 2 Science-Based Industrial Park Hsinchu
Tel	:	(03)500-8800
Fab L1	:	No. 3, Gongye E. 3 Road Science-Based Industrial Park Hsinchu
Tel	:	(03)500-8800
Fab L3A	:	No. 5, Li-Hsin Road 6 Science-Based Industrial Park Hsinchu
Tel	:	(03)500-8800
Fab L3B	:	No. 1, Li-Hsin Road 2 Science-Based Industrial Park Hsinchu
Tel	:	(03)500-8800
Fab L3C	:	No. 23, Li-Hsin Road Science-Based Industrial Park Hsinchu
Tel	:	(03)500-8800
Fab L4A, L5A&L5B	:	1 Xinhe Road, Aspire Park Lungtan Taoyuan (Taoyuan Branch)
Tel	:	(03)407-8800
Fab L6A, L5C&L7A	:	1 JhongKe Rd. Central Taiwan Science Park Taichung (Taichung Branch)
Tel	:	(04)2460-8800

(3) Company history :

1999	Feb.	Applied for the supplemental public issuance from SEC
	Mar.	Exhibition of the 42" PDP at the CeBIT in Hannover, a product developed domestically without foreign assistance.
	Apr.	Mass production of Taiwan’s first G3.5 TFT-LCD line
	Jul.	Mass production of 13.3” TFT-LCD
	Aug.	Broke ground at Taiwan’s first TFT-LCD G4 line in Lungtan Aspire Park
	Oct.	42”PDP awarded as the “Innovative Product Award” by Science

		Park Administration
	Dec.	Cash capital increase of NT$ 3 billion ; paid-in capital reached NT$ 11 billion.
2000	Apr.	Mass production of 14.1” TFT-LCD
	May	Successful development and launch of 17” TFT-LCD
	Sep.	Initial public offering in Taiwan
	Dec.	Awarded the Research and Development Investment Award by the Science Park Mass production of 15” TFT-LCD
2001	Jan.	Successful development and pilot production of the mass production of the technology of wide viewing angles on TFT-LCD.
	Feb.	Mass production of G4 TFT-LCD line. Another Taiwan first.
	May	The resolution to merge with Unipac was passed at the Shareholder’s Meetings of both ADT and Unipac. Company name changed to AUO Ltd..
	Sep.	The merger with Unipac; Merger Closing Date set as Sep. 1^st ; the paid-in capital after merger reached NT$ 29.7 billion.
	Nov.	Issuance the First Domestic Unsecured Corporate Bond with the amount of NT$ 10 billion.
2002	May	Successful launch of ADR in NYSE under ticker “AUO”.
	Jul.	Suzhou Module Plant (S1) mass production, first in China
	Aug.	Output of small/medium TFT-LCD panels exceeds one million per month.
	Sep.	Recognized by the Taiwan Ministry of Economic Affairs (MOEA) with the Industrial Technology Advancement Award. Winner of five awards for The 2002 Gold Panel Display Awards for leading competitiveness and self-developed technologies.
	Dec.	Taiwan’s first G5 technology panel light-up
2003	Feb.	Taiwan’s first 26” LCD TV panel produced by G5 technology
	Mar.	AU Optronics established extensive collaboration with Fujitsu Display Technologies Corporation (“FDTC”) in LCD Technology.
	May	AUO and Universal Display Corporation demonstrated the world’s first amorphous silicon TFT OLED using UDI’s high efficiency phosphorescent OLED technology at SID conference
	Jul.	Winner of the Gold Panel Award in 2003 as well as the Best Technology Award and Outstanding Personnel Award.

		Construction of fabrication L10 at the Central Taiwan Science Park starts. It is the first G6 fabrication in Taiwan and AUO’s third location on the island.
	Aug.	Launch of the 30”LCD TV monitor, outpacing industry standards. Ranked first in the Hardware Category of Asia’s Best Management Company 2003 by Asiamoney.
	Sep.	Launch of the 12 ms Response Time display, taking the global lead in response time. Launch of the 46 inch HDTV wide screen LCD TV monitor, Taiwan’s first manufacturer of large-sized LCD TV monitors of 40 inches and over.
2004	Apr.	Reelection of the Directs and Supervisors in the Annual Shareholder’s Meeting
	May	Winner of the ‘Gold Panel Award 2004’
	Oct.	Launch of the Double-Sided AMOLED
2005	Jan.	Successfully turned-on Taiwan’s first 32”LCD TV via the G6 TFT-LCD line
	May	Honored as Distinguished Paper at the SID Technical Symposium
	Oct.	Ranked as the 13^th in the Asian Business Week 50

2. Risks

(1) Risk factors

a. The impact upon the company's balance sheet of inflation and changes in interest and exchange rates, and the measures the company plans to adopt in response

The low interest rate environment is beneficial for cutting borrowing costs. However, as the global economy recovers and as the FED continues to raise interest rates, it may be necessary to engage in interest rate swap transactions when appropriate to counter the uncertainties of a rising interest rate and avoid interest rate fluctuation risk.

With respect to exchange rate during recent financial turbulence, foreign exchange risk has been reduced with market instruments such as forward exchange contracts to avoid currency exchange loss. Hedging transactions will continue to be adopted in the future to reduce the impact of exchange rate fluctuations on profits.

b. High-risk investments, highly leveraged investments, loans to other parties,

endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and responsive measures to be taken in the future.

There are currently no loans to other parties. Endorsements are limited to the company’s invested subsidiaries. Derivative instruments are being engaged to hedge market risk. In the future, regular evaluation and necessary adjustments will be made to the hedging strategy with respect to changing market trends and the company’s operations

c. Future research and development projects, and expenditures expected in connection therewith

Refer to the “Technology and research & development summary” in the “Operation Summary” section.

d. The impact upon the company's financial operations of important policy and legal developments at home and abroad, and the measures the company plans to adopt in response

The AUO continues to pay close attention to important policy and legal development at home and abroad and adopt according measures to respond to the above changes. Up to the printed date of the prospectus, no policy or regulations has had material impact upon the company’s operations.

e. The impact on the company's financial operations of developments in science, technology, and industry, and the measures the company plans to adopt in response

The worldwide trend for flat panel displays in recent years is reflected by sales of products, such as notebooks, monitors, communication electronics, and consumer electronics. The flat panel display industry has witnessed cuts in production costs and, in turn, prices with continued investment on expansion of production capacity and technological innovations. Consequently, price reductions have boosted the demand for flat panel displays.

In response to growing demand and the globalization trend, AUO has set up marketing and customer service sites in major countries around the world. There is also a backend modular assembly plant in mainland China. It is hoped that close collaboration between production and marketing will offer better chances of success.

f. The impact of changes in the company's image upon its crisis management, and the measures the company plans to adopt in response

AUO recognizes the possibility of external matters exerting negative impact on the company’s image. AUO’s crisis management rules are formulated in accordance with the company’s emphasis on integrity and product quality and collectively managed by the board of directors and high-level managers. In the event of such crises, AUO shall establish an emergency taskforce to handle the situation as well as its consequences. The emergency taskforce shall adopt necessary measures to ensure the safety of its staff and nearby surroundings as well as the smooth operation of the production process.

AUO is currently listed at the TAIEX and the NYSE under the supervision of authorities in both places. AUO continues to observe legal regulations in both places.

g. The expected benefits and potential risks of any merger or acquisition

Please refer to section three: issuance plan. The main risk of this merger lies in the post-merger integration process. However, AUO has many years of experience in business management and an excellent track record in managing mergers and acquisitions, which should help to lower the risks involved.

h. The expected benefits and potential risks of any plant expansion

AUO continues to expand its plants and procure new generation production facilities to build a comprehensive line-up of products. This sets AUO apart from its competitors, creates market differentiation, and helps to respond to changes in market demand and supply.

i. The risks associated with any consolidation of sales or purchasing operations

There is no consolidation of sales or purchasing operations at AUO.

j. Effect upon and risk to the company if a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands

Up to the printed date of the prospectus, there is no such issue.

k. Effect upon and risk to the company associated with any change in governance personnel or top management

AUO's management team continues to strive to maximize shareholders’ interests. The management structure remains stable and is in no risk of immediate change. AUO’s operation continues to achieve excellent results and positive feedback.

l. Other important risks : none.

(2) Litigation and non-litigation matters

a. If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigation proceeding, or administrative dispute involving the company that was finalized or remained pending during the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall disclose the facts in dispute, amount in dispute, commencement date, main parties involved, and current status of the case.

The Commissariat à l'Energie Atomique (CEA) instituted civil action against AUO in April 2004 to the U.S. District Court of Delaware, alleging infringement against the CEA’s American patents related to the AUO’s manufacturing and selling of LCDs. The proceedings have now moved to the stage of discovery. Up to March 31st 2006, management believe that the aforementioned legal proceedings will not have a material effect on the company’s operations.

b. If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigation proceeding, or administrative dispute involving a company director, supervisor, general manager, de facto responsible person, or major shareholder with a stake of more than 10%, and the matter was finalized or remained pending during the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall disclose the information set forth in sub-subparagraph (1) above : none.

c. The prospectus shall note the occurrence of any event set forth under Article 157 of the Securities and Exchange Act that involves a company director, supervisor, its general manager, or any major shareholder with a stake of more than 10%, provided the event occurred in the most recent two years or during the current fiscal year up to the printing date of the prospectus. The prospectus shall also note how the company is currently handling the matter : none.

(3) If a company director, supervisor, its general manager, or a major shareholder with a stake of more than 10% has experienced financial difficulties or lost

creditworthiness within the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall note the effect on the company's financial status : none.

(4) Any other important matters : none.

3. Company organization

(1) Organization system

a. Organizational structure

b. The business in which each major department engages

Departments	Function
Auditing Office	Management of business processes and examination of internal affairs
President Office	Corporate strategic planning, investment and operation analysis, legal and IP affairs, and internal audit
Technology Center	Research and development of advanced technologies and new products
Business Headquarters	DD, MD, TV and AV product development, marketing and customer services
Operation Headquarters	Planning and management of material and products, backend product manufacturing process and product manufacturing
Environment, Safety and Health	Management of safety, sanitation, environmental protection and contingency plans
Administration	HR, general affairs and industrial safety
Finance	Planning, execution and management of tax, accounting and finance issues
Information Technology	Design and maintenance of IT platforms and integration of new IT technologies
Technical Office	Manages intellectual property and patent rights
Legal Affairs Office	Handles corporate legal affairs

(2) Chart of affiliated enterprises

a. Chart of affiliated enterprises

March 31, 2006

b. Information of affiliated enterprises

March 31, 2006; Unit: NT$ thousands; shares (in thousands)

name of the affiliated enterprises	relationship between the company	numbers of shares held	shareholding ratios	actual investment amounts
AU Optronics (L) Corp.	Subsidiary	180,655	100%	6,081,711
AU Optronics Corporation America.	Investee	1,000	100%	US$1,000
AU Optronics Corporation Japan.	Investee	1.8	100%	US$800
AU Optronics (Suzhou) Corp.	Investee	-	100%	US$170,000
AU Optronics Europe B.V.	Investee	50	100%	US$59
AU Optronics Korea Ltd.	Investee	-	100%	US$155
AU Optronics (Shanghai) Corp.	Investee	-	100%	US$1,000
Darwin Precisions (L) Corp.	Investee	7,500	50%	US$7,500
Darwin Precisions (Suzhou) Corp.	Investee	-	100%	US$10,054
Konly Venture Corp.	Subsidiary	100,000	100%	1,200,000

No cross-shareholding situation between AUO and stated affiliated enterprises.

(3) General manager, vice general manager, assistant vice general manager, and the manager of each department and branch institution

06/30/06; Unit: shares (in thousands); %

Position	Name	Job Commence-ment Date	Shareholding		Spouse and Minor Shareholding		Shareholding under the name of other parties		Education and Selected Past Position	Selected Current Position	Spouses of or First or Second-degree Relatives to the Managers			Acquisition of Employee Stock Option Certificates
Position	Name	Job Commence-ment Date	shares	%	shares	%	shares	%	Education and Selected Past Position	Selected Current Position	Position	Name	Relation-ship	Acquisition of Employee Stock Option Certificates
Chairman & CEO	Kuen Yao Lee	03/27/03 (note1)	8,542	0.15	1,278	0.02	-	-	M.B.A., International Institute for Management Development, Switzerland B.S., Electrical Engineering, National Taiwan University Chairman, BenQ Corp. Vice President, Acer	Chairman & CEO of BenQ Director of Darfon Electronics Corp.; Director of Daxon Technology Inc. Chairman of Darly Venture, Chairman of DarlyII Venture	-	-	-	-
President	Hsuan Bin Chen	08/12/96	5,230	0.09	396	0.01	-	-	B.S., Communications Engineering, National Chiao Tung University, Managing Director for Acer Technologies Sdn. Bhd. Malaysia	Chairman of Wellypower Optronics Corporation Director of BenQ	-	-	-	-
EVP	Po-Yen Lu	03/27/03 (note1)	2,517	0.04	10	-	-	-	Ph.D., Chemical Engineering, University of Illinois, Urbana-Champaign Bachelor, Chemical Engineering, National Taiwan University Deputy Director, Electronics Research & Service Organization, Industrial Technology Research Institute Technical Manager, Bell Lab	Director of Cando Corporation; Director of Sita Technology Corp.	-	-	-	-
EVP	Hui Hsiung	03/27/03 (note1)	3,120	0.05	-	-	-	-	Ph.D., Physics, University of California, Berkeley B.S., Physics, National Taiwan University Senior Research Staff, DuPont Company	none	-	-	-	-
SVP	C.Y. Lin	03/27/03 (note1)	966	0.02	-	-	-	-	Ph. D., Chemical Engineering, Carnegie-Mellon University Technical Manager, Bell Laboratories	Director of Cando Corporation; Supervisor of Daxon Technology Inc.	-	-	-	-
VP	David (Feng Cheng) Su	03/27/03 (note1)	1,794	0.03	54	-	-	-	Ph. D., State University of New York Vice President, Product Development, Unipac	none	-	-	-	-
VP	L.J. Chen	03/27/03 (note1)	818	0.01	-	-	-	-	Ph. D degree from National Tsing-Hua University Manager, Electronics Research & Service Organization, Industrial Technology Research Institute	none	-	-	-	-
VP	Paul	03/27/03	1,368	0.02	406	0.01	-	-	MBA ,UK Heriot-Watt University	none	-	-	-	-

06/30/06 ; Unit: shares (in thousands) ; %

Position	Name	Job Commence-ment Date	Shareholding		Spouse and Minor Shareholding		Shareholding under the name of other parties		Education and Selected Past Position	Selected Current Position	Spouses of or First or Second-degree Relatives to the Managers			Acquisition of Employee Stock Option Certificates
Position	Name	Job Commence-ment Date	shares	%	shares	%	shares	%	Education and Selected Past Position	Selected Current Position	Position	Name	Relation-ship	Acquisition of Employee Stock Option Certificates
VP	Peng	(note1)							Vice President, Acer Display Technology	none
VP	F.C. Hsiang	03/27/03 (note1)	2,003	0.03	139	-	-	-	M.S, Mechanical Engineering, National Cheng Kung University Factory Director, Featron Director, Acer Display Technology	none	-	-	-	-
VP	Fang-jen Lo	03/27/03 (note1)	1,434	0.02	181	-	-	-	Ph.D., .E.E., Northwestern University Vice President,Unipac	none	-	-	-	-
VP	C.T. Liu	03/27/03 (note1)	856	0.01	-	-	-	-	PhD, Electronic Engineering, Princeton University B.S., E.E., National Taiwan University Technical Manager, Bell Laboratories	none	-	-	-	-
VP	Kuo-long Wu	03/27/03 (note1)	3,050	0.05	-	-	-	-	M.S., Mechanical Engineering, National Cheng Kung University Vice President,Acer Display Technology Director, BenQ	none	-	-	-	-
VP	Max Cheng	03/27/03 (note1)	922	0.02	4	-	-	-	M.B.A. in Accounting, Northern Illinois University Director, Acer Display Technology	Supervisor of Cando Corporation	-	-	-	-
AVP	Ming-ren Chen	03/27/03 (note1)	102	-	-	-	-	-	B.S., Chemical Engineering, National Taiwan University Manager, Quality Control, Philips	none	-	-	-	-
AVP	Hsin-lung Wang	08/01/03	496	0.01	1	-	-	-	B.S., E.E., National Chiao Tung University Director, Teconano	none	-	-	-	-
AVP	Shui-chi Lien	08/04/03	413	0.01	-	-	-	-	Ph. D., E.E., University of Minnesota IBM Research Staff Member	none	-	-	-	-
AVP	Yong-hung Lu	02/11/04	589	0.01	-	-	-	-	Ph. D., Applied Chemistry, National Chiao Tung University	none	-	-	-	-
AVP	Shi-fang Hsie	02/12/04	777	0.01	92	-	-	-	B.S., Chemistry,National Tsing-Hua University Manager, Merck Electronic Chemicals Factory Director,Unipac	none	-	-	-	-
AVP	Bing-de Liu	07/01/05	505	0.01	2	-	-	-	Ph. D., E.E., National Taiwan University Manager, Electronics Research & Service Organization, Industrial Technology Research Institute	none	-	-	-	-
AVP	Chi-hsiung Hsu	11/21/05	-	-	-	-	-	-	B.S., Industrial Technology, National Taiwan University of Science and Technology Vice President, Philips	none	-	-	-	-
AVP	Yu-hsia	12/01/05	90	-	-	-	-	-	B. A., Fu Jen Catholic University	Supervisor of ColyTech	-	-	-	-

06/30/06 ; Unit: shares (in thousands) ; %

Position	Name	Job Commence-ment Date	Shareholding		Spouse and Minor Shareholding		Shareholding under the name of other parties		Education and Selected Past Position	Selected Current Position	Spouses of or First or Second-degree Relatives to the Managers			Acquisition of Employee Stock Option Certificates
Position	Name	Job Commence-ment Date	shares	%	shares	%	shares	%	Education and Selected Past Position	Selected Current Position	Position	Name	Relation-ship	Acquisition of Employee Stock Option Certificates
	Hsiao								Manager, BenQ CFO, Daxon
AVP	Kuo-hsin Tsai	12/01/05	775	0.01	86	-	-	-	B.A., National Cheng Kung University Manager, Mag Technlogy	none	-	-	-	-
AVP	Kun-yu Lin	12/01/05	31	-	25	-	-	-	B.S., Photonics, National Chiao Tung University	none	-	-	-	-

Note1 : Pursuant to the SEC 03/27/03 Tai Tsai Cheng (3) Tzu No.0920001301 to take up the manager position.

(4) Directors and supervisors

a. Name, work experience (educational background), amount and nature of shareholdings

06/30/06 ; Unit: shares (in thousands) ; %

Title

Name

Date Elected

Term

Date First Elected

Shareholding when Elected

Current Shareholding

Spouse and Minor Shareholding (Note 4)

Education and Selected Past Position

Selected Current Position

Managers are Spouse or Within Second-degree Relative of Consaguinity to Each Other

Title

Name

Relationship

Chairman&CEO

Kuen-

Yao Lee

04/30/04

3 years

04/30/04

6,338

0.15

8,542

0.15

1,278

0.02

M.B.A., International Institute for Management Development, Switzerland

B.S., Electrical Engineering, National Taiwan University

Chairman, BenQ Corp.

Chairman & CEO of BenQ Director of Darfon Electronics Corp.; Director of Daxon Technology Inc.

Chairman of Darly Venture, Chairman of DarlyII Venture

Director & President

Hsuan Bin Chen

04/30/04

3 years

04/23/99

4,289

0.10

5,230

0.09

396

0.01

B.S., Communications Engineering, National Chiao Tung University, Managing Director for Acer Technologies Sdn. Bhd. Malaysia

Chairman of Wellypower Optronics Corporation

Director of BenQ Corp.

Title	Name	Date Elected	Term	Date First Elected	Shareholding when Elected		Current Shareholding		Spouse and Minor Shareholding (Note 4)		Education and Selected Past Position	Selected Current Position	Managers are Spouse or Within Second-degree Relative of Consaguinity to Each Other
Title	Name	Date Elected	Term	Date First Elected	shares	%	shares	%	shares	%	Education and Selected Past Position	Selected Current Position	Title	Name	Relationship
Director	Hsi-Hua Sheaffer Lee (note1)	04/30/04	3 years	07/18/96	626,067	14.38	716,534	12.29	-	-	B.S., Electrical Engineering, National Cheng Kung University, CEO, BenQ Corporation Director, Marketing, Acer U.S.	President & COO, BenQ Corp. Director, BenQ Corp. Director,Gallant Precision Machining Co., Chairman, Darfon, Director, Darly Venture, Director, BenQ Asia	-	-	-
Director&EVP	Po-Yen Lu (note1)	04/30/04	3 years	07/18/96	626,067	14.38	716,534	12.29	-	-	Ph.D., Chemical Engineering, University of Illinois, Urbana-Champaign Bachelor, Chemical Engineering, National Taiwan University Deputy Director, Electronics Research & Service Organization, Industrial Technology Research Institute Technical Manager, Bell Lab	Director, Cando Corp, Director of Sita Technology Corp	-	-	-
Director&EVP	Hui Hsiung (note1)	04/30/04	3 years	07/18/96	626,067	14.38	716,534	12.29	-	-	Ph.D., Physics, University of California, Berkeley B.S., Physics, National Taiwan University Senior Research Staff, DuPont Company	none	-	-	-
Director	Chin-Bing Peng (Note2)	04/30/04	3 years	04/30/04	832	0.02	1,525	0.03	-	-	M.B.A., National Chengchi University B.A.,Accounting, National Chengchi University SVP&CFO, Acer Incorporated	CEO, SoftCapital, Director, BenQ Corp.	-	-	-

Title

Name

Date Elected

Term

Date First Elected

Shareholding when Elected

Current Shareholding

Spouse and Minor Shareholding (Note 4)

Education and Selected Past Position

Selected Current Position

Managers are Spouse or Within Second-degree Relative of Consaguinity to Each Other

Title

Name

Relationship

Director

Huey-

Juan Hsieh

04/30/04

3 years

04/30/04

Ph. D. in Finance, University of Houston

Director, Direct Investment & Corporate Finance, China Development Industrial Bank

Senior Director, Corporate Finance, China Development Industrial Bank

Advisory, Asset Management, China Development Industrial Bank

Director, Chin Hsin Hsin Steel

CEO, Taiwan Cooperative Asset Management

Professor, National Taiwan University of Science and Technology

Director

Cheng-

Chu Fan

04/30/04

3 years

04/30/04

B.S., E.E., National Taiwan University

President, WK Technology Fund

CEO&President, Microsoft Taiwan

VP of HP, Taiwan

Independent Director, Advantech

Director, Transcend

Director, Supreme Electronics Co.

Independent Supervisor,Compal Communication

Director

T.J. Huang

04/30/04

3 years

04/30/04

Ph.D., Computer, University of Wisconsin

B.S., Mathematics, National Taiwan University

Chairman, Systex Co., Chairman, Sysware Co., President, Asia Vest Partners TCW/YFT (Taiwan) Ltd., Director, Concord System Management, Independent Supervisor, Formosa International Hotel Co., Director, Taiwan Hopax Chemicals MFG.Co., Independent Director, Digital United Inc., Independent Director, Yulon Nissan Motor Co., Chairman , Systex Invesment、Director, SysJust

Title	Name	Date Elected	Term	Date First Elected	Shareholding when Elected		Current Shareholding		Spouse and Minor Shareholding (Note 4)		Education and Selected Past Position	Selected Current Position	Managers are Spouse or Within Second-degree Relative of Consaguinity to Each Other
Title	Name	Date Elected	Term	Date First Elected	shares	%	shares	%	shares	%	Education and Selected Past Position	Selected Current Position	Title	Name	Relationship
Supervisor	Chieh- Chien Chao	04/30/04	3 years	04/30/04	-	-	-	-	-	-	CEO, Chiao Tung Bank, Chairman, China Farmer Bank, Chairman, Small and Medium Business Credit Guarantee Fund	Adjunct Professor, International Business, National Taiwan University	-	-	-
Supervisor	Ko-Yung (Eric) Yu (Note1)	04/30/04	3 years	07/18/96	626,067	14.38	716,534	12.29	-	-	M.B.A., University of Strathclyde V.P., BenQ Corp.	V.P. BenQ Co.,Chairman, Daxon, Director, Gallant Precision Machining Co., Supervisor, Dafon Director, Airoha Technology	-	-	-
Supervisor	Shin Chen (Note3)	04/30/04	3 years	04/30/04	55,178	1.27	39,546	0.68	-	-	Ph. D. in Business Administration, Nova University in Fort Lauderdale, Florida M.B.A., California State University, Long Beach M.S., Agriculture Economics, National Taiwan University CEO, Central Investment Holdings Company CEO, Chinatrust Venture Capital Co.	Executive Vice President, China Development Industrial Bank	-	-	-

Note1: Representatives of BenQ Corp.

Note2: Representatives of DarlyII Venture

Note3: Representatives of China Development Industrial Bank

Note4: The Directors and Supervisors of AUO have no share held under the name of other parties

Main shareholders of the Directors/Supervisors that are representatives of corporate shareholders

04/15/06

Juristic Person Shareholder (Note1)	Main Shareholders of the Juristic Person Shareholder (Note2)
BenQ Corporation	No shareholder owned more than 10%
DarlyII Venture	BENQ Corporation
China Development Industrial Bank	China Development Financial Holding

Note 1 : In the case that a director or supervisor is the representative of a juristic person shareholder, the name of the juristic person shareholder shall be noted.

Note 2 : The names of the shareholders who hold more than 10% of the shares of such juristic person shareholder, or those who rank in the top 10 in shareholdings.
The following table should be filled out if before-mantioned main shareholder is a juristic person shareholder.

Juristic Person shareholder (Note1)	Main Shareholders of the Juristic Person Shareholder (Note2)
BenQ Corporation	No shareholder owned more than 10%
China Development Financial Holding	China Development Industrial Bank, China Life Insurance, KGI Securities, Taiwan Bank, National Financial Stabilization Fund, ICBC, Council of Labor Affairs, HSBC custodianship of Morgan Stanley International, Cross Century Investment Company, Shin Kong Life Insurance

Note 1 : The name of the juristic person should be noted if the main shareholder listed in the previous form is a juristic person shareholder again.

Note 2 : The names of the shareholders who hold more than 10% of the shares or those who rank in the top 10 in shareholdings of such juristic person shareholder.

b. Independence Criteria of Directors and Supervisors

		Criteria (Note 1)
Criteria 　Name	Over Five Years of Experience in Business, Finance, Legal or Areas Required by the Company	1	2	3	4	5	6	7	Remark (Note2)
Kuen-Yao Lee	yes			P			P	P	-
Hsuan Bin Chen	yes		P	P			P	P	-
Representatives of BenQ Corp. : Hsi-Hua Sheaffer Lee	yes		P	P			P		-

Representatives of BenQ Corp. : Po-Yen Lu	yes		P	P			P		-
Representatives of BenQ Corp. : Hui Hsiung	yes		P	P			P		-
Representatives of DarlyII Venture : Chin-Bing Peng	yes		P	P			P		-
Vivien Huey-Juan Hsieh	yes	P	P	P	P	P	P	P	-
Cheng-Chu Fan	yes	P	P	P	P	P	P	P	Concurrently serves as Independent Director of other two companies and Independent Supervisor of another one company
T.J. Huang	yes	P	P	P	P	P	P	P	Concurrently serves as Independent Director of another company and Independent Supervisor of another one company
Chieh-Chien Chao	yes	P	P	P	P	P	P	P	-
Representatives of BenQ Corp. : Ko-Yung (Eric) Yu	yes		P	P			P		-
Representatives of China Development Industrial Bank : Shin Chen	yes	P	P	P	P	P	P		-

Note 1 : The ”P” indicates the Director or Supervisor meets conditions specified above

(1) Neither an employee of the Company nor a director, supervisor or employee of affiliated companies, but concurrently serve as the Independent Director/Supervisor of the Company’s parent company or subsidiary could be exempted.

(2) Neither a natural person shareholder directly or indirectly owning more than 1% of the Company’s outstanding shares nor one of the Company’s top ten natural person share-holders.

(3) Neither a person nor first or second-degree relative to any person specified in previous two columns.

(4) Not a director, supervisor, or employee of a juristic person shareholder directly or indirectly owning more than 5% of the Company’s top five juristic person shareholders.

(5) Neither a director, supervisor, manager or shareholder holding more than 5% of the outstanding share of certain companies nor institutions that have financial or business relationship with the Company.

(6) In the past year, the director/supervisor or his/her spouse did not provide finance, commerce, legal consultation and services to the company as an expert, nor was an owner, partner, director, supervisor or manager of any sole proprietorship, partnership, company or institution that provide such service.

(7) Neither a juristic person nor its representative as defined in Article 27 of Company Law.

Note 2 : For Independent Director/Supervisor who concurrently serves as the Independent Director/Supervisor of other companies, the numbers of those companies should be listed.

(5) Promoters : Not Applicable

(6) Remuneration to directors, supervisors, general manager, and vice general manager

a. Remuneration and transportation allowances paid to directors and supervisors for the most recent fiscal year

Remuneration Paid to Directors

Unit: NT$ thousands;shares (in thousands)

Title

Name

Transportation Allowances

Compensation

Compensation from Profit Distribution

(note 1)

Employee Profit Sharing(note 2)

Total Compensation

Total Compensation as % of Net Income

Number of Employee Stock Option Granted

Other Compensation

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

AUO

Consolidated Subsidiaries

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

Cash

Stock

Cash

Stock

Price (NTD)

Value

Price (NTD)

Value

Chairman

Kuen-Yao Lee

420

16,242

46.58

(note3)

46.58

(note3)

16,662

0.11%

Director

Hsuan Bin Chen

Director

Representatives of BenQ Corp. : Hsi-Hua Sheaffer Lee

Director

Representatives of BenQ Corp. : Po-Yen Lu

Director

Representatives of BenQ Corp. : Hui Hsiung

Director

Representatives of DarlyII Venture : Chin-Bing Peng

Director

Vivien Huey-Juan Hsieh

Director

T.J. Huang

Director

Cheng-Chu Fan

	Number of Directors
	2005
	AUO	Consolidated Subsidiaries
Under NT$ 2,000,000	8	8
NT$ 2,000,000~ NT$ 5,000,000	1	1
NT$ 5,000,000~ NT$ 10,000,000	0	0
NT$ 10,000,000~ NT$ 50,000,000	0	0
Over NT$ 50,000,000	0	0
Total	9	9

Note 1: Proposed amount of director remuneration to be distributed in the earning distribution proposal for 2005. If the representative of a juristic person is elected as director, the remuneration is distributed to the juristic person.

Note 2: Proposed employee bonus to be distributed to directors currently serving as employee or managerial positions excluding general manager and vice general manager.

Note 3: The weighted average of closing price in December 2005 is used for calculating the ‘market value’ of bonus shares.

Remuneration Paid to Supervisors

Unit: NT$ thousands; shares (in thousands)

Title

Name

Transportation
Allowances

Compensation

Compensation from
Profit Distribution(note 1)

Total Compensation

Total Compensation as %
of Net Income

Other Compensation

AUO

Consolidated
Subsidiaries

AUO

Consolidated
Subsidiaries

AUO

Consolidated
Subsidiaries

AUO

Consolidated
Subsidiaries

AUO

Consolidated
Subsidiaries

AUO

Consolidated
Subsidiaries

Supervisor

Chieh-Chien Chao

100

4,855

4,955

0.03%

Supervisor

Representatives of
BenQ Corp.: Ko-Yung
(Eric) Yu

Supervisor

Representatives ofChina Development
Industrial Bank : Shin
Chen

	Number of Supervisors
	2005
	AUO	Consolidated Subsidiaries
Under NT$ 2,000,000	3	3
NT$ 2,000,000~ NT$ 5,000,000	0	0
NT$ 5,000,000~ NT$ 10,000,000	0	0
NT$ 10,000,000~ NT$ 50,000,000	0	0
Over NT$ 50,000,000	0	0
Total	3	3

Note 1: Proposed amount of supervisor remuneration to be distributed in the earning distribution proposal for 2005. If the representative of a juristic person is elected as supervisor, the remuneration is distributed to the juristic person.

b. The total sum of the compensation, rewards, special allowance and bonus paid to the general manager and vice general manager for the most recent fiscal year.

Unit: NT$ thousands; shares (in thousands)

Title

Name

Salary

Bonus

Employee Profit Sharing (note1)

Total Compensation

Total Compensation as % of Net Income

Number of Employee Stock Option Granted

Other Compensation

AUO

Consoli-dated Subsi-diaries

AUO

Consoli-dated Subsi-diaries

AUO

Consolidated Subsidiaries

AUO

Consoli-dated Subsi- diares

AUO

Consoli-dated Subsi- diares

AUO

Consolidated Subsidiaries

AUO

Consolidated Subsidiaries

Cash

Stock

Cash

Stock

Price (NTD)

Value

Price (NTD)

Value

Chairman & CEO

Kuen-Yao Lee

28,422

17,189

4,600

46.58

(note2)

214,268

4,600

46.58

(note2)

214,268

259,879

1.66%

President

Hsuan Bin Chen

EVP

Po-Yen Lu

EVP

Hui Hsiung

SVP

C.Y. Lin

David (Feng Cheng) Su

L.J. Chen

Paul Peng

F.C. Hsiang

Max Cheng

Fang-jen Lo

Jun-ting Lui

Kuo-long Wu

	Number of President and Vice President
	2005
	AUO	Consolidated Subsidiaries
Under NT$ 2,000,000	0	0
NT$ 2,000,000~ NT$ 5,000,000	0	0
NT$ 5,000,000~ NT$ 10,000,000	0	0
NT$ 10,000,000~ NT$ 50,000,000	13	13
Over NT$ 50,000,000	0	0
Total	13	13

Note 1: Proposed amount of employee bonus to be distributed to general manager and vice general manager in the earning distribution proposal for 2005. This proposed amount has not yet been determined up to the printed date of the prospectus.

Note 2: The weighted average of closing price in December 2005 is used for calculating the ‘market value’ of bonus shares.

Employee Profits Sharing Granted to Management Team

Unit: NT$ thousands; shares (in thousands)

	Title	Name	Stock (note1)			Cash (note1)	Total	Total Profit Sharing as % of Net Income
	Title	Name	Shares	Price (NTD)	Value	Value	Total	Total Profit Sharing as % of Net Income
Manager	Chairman& CEO	Kuen-Yao Lee	6,100	46.58 (note2)	284,138	0	284,138	1.82%
	President	Hsuan Bin Chen
	EVP	Po-Yen Lu
	EVP	Hui Hsiung
	SVP	C.Y. Lin
	VP	David (Feng Cheng) Su
	VP	L.J. Chen
	VP	Paul Peng
	VP	F.C. Hsiang
	VP	Fang-jen Lo
	VP	C.T. Liu
	VP	Kuo-long Wu
	VP	Max Cheng
	AVP	Ming-ren Chen
	AVP	Hsin-lung Wang
	AVP	Shui-chi Lien
	AVP	Yong-hung Lu
	AVP	Shi-fang Hsie
	AVP	Bing-de Liu
	AVP	Chi-hsiung Hsu
	AVP	Yu-hsia Hsiao
	AVP	Kuo-hsin Tsai
	AVP	Kun-yu Lin

Note 1: Proposed amount of employee bonus to be distributed to management team in the earning distribution proposal for 2005. This proposed amount has not yet been determined up to the printed date of the prospectus.

Note 2: The weighted average of closing price in December 2005 is used for calculating the ‘market value’ of bonus shares.

c. Analysis of the ratio of the total sum of the remuneration paid to directors, supervisors, and the general manager and vice general manager of the company and all the affiliated companies listed in the consolidated financial report as a proportion of after-tax net income for the most recent two fiscal years. Also, the payout policy, standard, package, the determination process, and association between results of the company’s operation

(a) The ratio of the total sum of the remuneration paid to directors, supervisors, and the general manager and vice general manager as a proportion of after-tax net income for fiscal years 2005 and 2004 are 2.87% and 2.63%, respectively. The amount of remuneration are determined in accordance with the company’s articles of incorporation and remuneration management regulations.

(b) None of the affiliated companies listed in the consolidated financial report has remuneration paid to directors, supervisors, and the general manager and vice general manager during the past two fiscal years.

4. Capital and Shares

(1) Types of shares

06/30/06; Unit: shares

Types of shares	Authorized Capital			Remark
Types of shares	Outstanding Shares“Note”	Unissued Shares	Total	Remark
Common Stock	5,830,547,132	1,169,452,868	7,000,000,000	-

Note: Listed Shares

(2) Formation of capital

Unit: shares; NT$

Month/ Year	Price	Authorized		Paid-in		Remark
Month/ Year	Price	Shares	Amount	Shares	Amount	Sources of Capital	Capital Increase by Assets other than Cash	Date/ Document No. of Approval
08/96	10	200,000,000	2,000,000,000	50,000,000	500,000,000	Founding	-	Note 1
06/97	10	200,000,000	2,000,000,000	200,000,000	2.000,000,000	Cash Offering	-	Note 2
07/98	10	800,000,000	8,000,000,000	500,000,000	5,000,000,000	Cash Offering	-	Note 3
12/98	10	800,000,000	8,000,000,000	800,000,000	8,000,000,000	Cash Offering	-	Note 4
12/99	10	1,400,000,000	14,000,000,000	1,100,000,000	11,000,000,000	Cash Offering	-	Note 5
03/01	10	1,400,000,000	14,000,000,000	1,250,000,000	12,500,000,000	Cash Offering	-	Note 6

09/01	10	5,000,000,000	50,000,000,000	2,970,581,607	29,705,816,070	Capitalization of Profit, Capital Surplus and Merge	-	Note 7
06/02	10	5,000,000,000	50,000,000,000	3,470,581,607	34,705,816,070	Cash Offering (ADR)		Note 8
08/02	10	5,000,000,000	50,000,000,000	3,976,397,079	39,763,970,790	Conversion of CB		Note 9
11/02	10	5,000,000,000	50,000,000,000	4,003,048,921	40,030,489,210	Conversion of CB		Note 9
01/03	10	5,000,000,000	50,000,000,000	4,024,194,453	40,241,944,530	Conversion of CB		Note 9
02/03	10	5,000,000,000	50,000,000,000	4,025,833,686	40,258,336,860	Conversion of CB		Note 9
08/03	10	5,800,000,000	58,000,000,000	4,270,445,386	42,704,453,860	Conversion of CB	-	Note 9
08/03	10	5,800,000,000	58,000,000,000	4,270,445,386	42,704,453,860	Capitalization of Profit	-	Note 10
11/03	10	5,800,000,000	58,000,000,000	4,352,237,241	43,522,372,410	Conversion of CB	-	Note 9
06/04	10	5,800,000,000	58,000,000,000	4,658,040,897	46,580,408,970	Capitalization of Profit	-	Note 11
07/04	10	5,800,000,000	58,000,000,000	4,958,040,897	49,580,408,970	Cash Offering (ADR)	-	Note 12
08/05	10	7,000,000,000	70,000,000,000	5,830,547,132	58,305,471,320	Capitalization of Profit	-	Note 13
08/05	10	7,000,000,000	70,000,000,000	5,830,547,132	58,305,471,320	Cash Offering (ADR)	-	Note 14

Note 1 : Science Park Administration 1996.08.12(85)Yuan Shang Tzu No. 13629.

Note 2 : Science Park Administration 1997.06.05(86) Yuan Shang Tzu No.10528.

Note 3 : Science Park Administration 1998.07.06(87) Yuan Shang Tzu No.016400.

Note 4 : Science Park Administration 1998.12.23(87) Yuan Shang Tzu No.030560.

Note 5 : Science Park Administration 1999.02.23(88) Yuan Shang Tzu No.004099; 1999.09.28(88) Yuan Tou Tzu No. 020212 and SFC 1999.09.28(88) Tai Tsai Cheng (1) Tzu No.85852.

Note 6 : Science Park Administration 2000.09.04(89)Yuan Tou Tzu No. 020002; SFC 89.12.15(89) Tai Tsai Cheng (1) Tzu No.83046 an 2000.12.26(89) Tai Tsai Cheng (1) Tzu No.102695.

Note 7 : Science Park Administration 2001.04.26(90) Yuan Tou Tzu No.010897 and SFC 2001.07.20(90) Tai Tsai Cheng (1) Tzu No.14566.

Note 8 : SFC 2002.01.31(90) Tai Tsai Cheng (1) Tzu No.180178; 2002.05.06(90) Tai Tsai Cheng (1) Tzu No.121435; 2002.05.09(91) Tai Tsai Cheng (1) Tzu No.125871 and 2002.05.17(91) Tai Tsai Cheng (1) Tzu No.127312.

Note 9 : SFC 2001.08.24(90) Tai Tsai Cheng (1) Tzu No.144602; 2001.11.06“90”Tai Tsai Cheng (1) Tzu No.164505; Science Park Administration 2001.06.21(90) Yuan Tou Tzu No.015666; 90.12.06“90”Yuan Shang Tzu No.030892.

Note 10 : SFC 2003.06.13 Tai Tsai Cheng (1) Tzu No.0920126135; 2003.08.11 Yuan Shang Tzu No.0920019428.

Note 11 : SFC 2004.05.11 Tai Tsai Cheng (1) Tzu No.0930118773; Science Park Administration 2004.06.23 Yuan Shang Tzu No.0930016501.

Note 12 : SFC 2004.05.25 Tai Tsai Cheng (1) Tzu No.0930120132; Science Park Administration 2004.07.16 Yuan Shang Tzu No.0930018382.

Note 13 : SFB 2005.06.24 Jin Guan Zheng(1) No.0940125411; Science Park Administration 2005.08.25 Yuan Shang Tzu No.0940023097.

Note 14 : SFB 2005.07.13 Jin Guan Zheng(1) No.0940126580; Science Park Administration 2005.08.25 Yuan Shang Tzu No.094002309.

(3) Status of recent dispersal of shareholding

a. Shareholder structure

04/15/06

types	Government Agencies	Financial Institutions	Other Juristic Persons	Domestic Natural Persons	Foreign Institution & Natural Persons	Total
Number of Shareholders	9	59	496	230,956	830	232,350
Shareholding	32,866,262	196,666,919	1,023,669,404	1,552,165,431	3,025,179,116	5,830,547,132
Holding Percentage (%)	0.56%	3.37%	17.56%	26.62%	51.89%	100.00%

b. Status of dispersal of shareholding

04/15/06; Par Value NT$ 10

Shareholder Ownership	Number of Shareholders	Ownership	Ownership (%)
1 ~ 999	76,843	17,749,756	0.30
1,000 ~ 5,000	103,092	224,307,354	3.85
5,001 ~ 10,000	23,689	171,927,690	2.95
10,001 ~ 15,000	10,391	125,007,540	2.14
15,001 ~ 20,000	4,604	82,721,533	1.42
20,001 ~ 30,000	4,874	119,273,321	2.04
30,001 ~ 50,000	3,639	142,530,075	2.44
50,001 ~ 100,000	2,642	184,142,923	3.16
100,001 ~ 200,000	1,207	168,426,508	2.89
200,001 ~ 400,000	583	163,186,091	2.80
400,001 ~ 600,000	207	101,560,424	1.74
600,001 ~ 800,000	116	81,503,644	1.40
800,001 ~ 1,000,000	83	75,586,665	1.30
Over 1,000,001	380	4,172,623,608	71.57
Total	232,350	5,830,547,132	100.00

Note: No preferred Shares issued

c. List of Major Shareholders

04/15/06

Ownership Name	Number of Shares	Ownership
BenQ Corporation	716,533,779	12.29%

d. The status that directors, supervisors and shareholders holding more than 10% of outstanding shares had waived their subscription right to the cash capital increase during the past two years and in the current year. : Not applicable. In the ADR offering during the past two years and in the current year all shares were issued publicly as AUO’s shareholders waived their subscription right approved by the shareholders’ meeting.

e. The status of changes that directors, supervisors and shareholders holding more than 10% of outstanding shares had transferred and pledged their shares during the past two years and up to the prospectus' publishing date.

(a) The changes in shares of directors, supervisors and shareholders holding more than 10% of outstanding shares

Unit: Shares (in thousands)

Title	Name	2004		2005		Up to 06/30/06
Title	Name	Net Change in Shareholding	Net Change in Shares Pledged	Net Change in Shareholding	Net Change in Shares Pledged	Net Change in Shareholding	Net Change in Shares Pledged
Chairman & CEO	Kuen-Yao Lee	1,092	-	1,541	-	(580)	-
Director, Supervisor and Shareholder with ownership more than 10%	Representatives of BenQ Corp. : Hsi-Hua Sheaffer Lee, Po-Yen Lu, Hui Hsiung and Ko-Yung (Eric) Yu	31,303	-	59,163	-	-	-
Director	Representatives of DarlyII Venture : Chin-Bing Peng	67(Note 1)	-	126	-	-	-
Supervisor	Representatives of China Development Industrial Bank : Shin Chen	2,184 (Note 1)	-	(6,322)	-	-	-
Director	Vivien Huey-Juan Hsieh	-	-	-	-	-	-

Unit: Shares (in thousands)

Title	Name	2004		2005		Up to 06/30/06
Title	Name	Net Change in Shareholding	Net Change in Shares Pledged	Net Change in Shareholding	Net Change in Shares Pledged	Net Change in Shareholding	Net Change in Shares Pledged
Director	Cheng-Chu Fan	-	-	-	-	-	-
Director	T.J. Huang	-	-	-	-	-	-
Supervisor	Chieh-Chien Chao	-	-	-	-	-	-
Director & CEO	Hsuan Bin Chen	819	-	888	-	(840)	-
EVP	Po-Yen Lu	810	-	1,062	-	(335)	-
EVP	Hui Hsiung	707	-	1,145	-	(290)	-
EVP	C.Y. Lin	412	-	125	-	(540)	-
VP	David (Feng Cheng) Su	474	1,130	313	-	(510)	-
VP	L.J. Chen	415	-	194	-	(190)	-
VP	Paul Peng	449	-	459	-	(240)	-
VP	F.C. Hsiang	274	-	753	-	(50)	-
VP	Fang-jen Lo	249	-	224	-	(430)	-
VP	C.T. Liu	424	-	383	-	(150)	-
VP	Kuo-long Wu	539	-	817	-	(120)	-
VP	Max Cheng	223	-	481	-	(390)	-
AVP	Ming-ren Chen	40	-	52	-	(50)	-
AVP	Hsin-lung Wang	185	-	275	-	(64)	-
AVP	Shui-chi Lien	205	-	244	-	(140)	-
AVP	Yong-hung Lu	335 (Note2)	-	112	-	(150)	-
AVP	Shi-fang Hsie	302 (Note3)	-	276	-	(45)	-
AVP	Bing-de Liu	269 (Note2)	-	354	-	-	-
AVP	Chi-hsiung Hsu	-	-	0(Note 5)	0(Note 5)	-	-
AVP	Yu-hsia Hsiao	-	-	0(Note 6)	0(Note 6)	-	-
AVP	Kuo-hsin Tsai	-	-	0(Note 6)	0(Note 6)	-	-
AVP	Kun-yu Lin	-	-	0(Note 6)	0(Note 6)	-	-

Note 1 : Net change in shareholding or shares pledged from 04/30/04 to 12/31/04

Note 2 : Net change in shareholding or shares pledged from 02/11/04 to 12/31/04

Note 3 : Net change in shareholding or shares pledged from 02/12/04 to 12/31/04

Note 4 : Net change in shareholding or shares pledged from 02/20/04 to 12/31/04

Note 5 : Net change in shareholding or shares pledged from 11/21/05 to 12/31/05

Note 6 : Net change in shareholding or shares pledged from 12/01/05 to 12/31/05

(b) Information of shares transferred. If the counter party of such transfer of shares is a related person : None

(c) Information of shares pledge. If the counter party of such pledge of shares is a related person, the name of such counter party : None

(4) The per share market price, net worth, profit, dividend and relevant information for the past two fiscal years.

Unit: NTD

Year Item				2004	2005	Up to 03/31/06
Market Price Per Share	Highest			79.5	56.4	55.2
	Lowest			33	34.8	45.55
	Average			51.53	47.47	49.70
Net Worth Per Share	Before Distribution			26.4	26.7	27.84
Net Worth Per Share	After Distribution			22.58	25.2	-
Earnings Per Share	Weighted average shares(thousand shares)			4,802,708	5,638,760	5,830,547
	Earnings Per Share		Un-adjusted	5.82	2.77	1.14
	Earnings Per Share		Adjusted	5.25	2.65	-
Dividend Per Share	Cash Dividend			1.2	1.2	0.3
	Stock Dividend	Dividends From Retained Earnings		0.05	0.09	0.03
	Stock Dividend	Dividends From Capital Surplus		-	-	-
	Cumulated and Unpaid Dividends (Note3)			-	-	-
Return on Investment	Price/Earnings (P/E) Ratio (Note 4)			8.85	17.14	-
	Price/Dividend (P/D) Ratio (Note 5)			42.94	39.56	165.67
	Cash Dividend Yield (Note 6)			2.33%	2.53%	0.60%

Note1 : The profit distribution proposal of 2005 has been approved by the 06/15/06 shareholders, meeting.

Note2 : In the case of issuance of bonus shares which makes adjustment to EPS necessary, both of the un-adjusted and adjusted EPS should be listed. Use the number of the outstanding issued shares at year end as the basis to calculate the respective net worth per share (shareholder's equity) before and after the distribution.

Note3 : For any security which allows undistributed dividends to be accumulated to profitable years, the accumulated unpaid dividends should be disclosed. If there are any cumulated and unpaid dividends, their amount shall also be disclosed.

Note4 : Price/Earnings Ratio =Average Market Price/ Adjusted Earnings Per Share

Note 5 : Price/Dividend Ratio =Average Market Price/ Cash Dividend Per Share

Note6 : Cash Dividend Yield = Cash Dividend Per Share/ Average Market Price

(5)Company dividend policy and implementation status

a. Dividend Policy

The Company's dividend policy will be to pay dividends from surplus. Upon

consideration of factors such as the Company's current and future investment environment, cash requirements, competitive conditions inside and outside of the R.O.C. and capital budget requirements, the shareholders' interest, maintenance of a balanced dividend and the Company's long term financial plan, the Board shall propose the profit allocation each year subject to relevant laws, then submit such proposal to the shareholders' meeting for approval. In principle, no less than 10% of the total dividend to be paid with respect to any fiscal year shall be paid in the form of cash.

b. Implementation Status

Based on the resolution of the shareholder’s meeting, held on June 15th 2006, a cash dividend of NT$ 0.3 per share and a stock dividend of NT$ 0.3 per share shall be distributed.

(6) The effect of dividend distributions contemplated for the current fiscal year on company operating performance and earnings per share

Not applicable as the AUO has not made financial forecasts for 2006.

(7) Employee bonuses and compensation of directors and supervisors

a. The percentages or ranges with respect to employee bonuses and director/supervisor compensation, as set forth in the company's articles of incorporation

According to Article 15 in the company’s Articles of Incorporation, after-tax net income shall first recover losses from previous years. 10% of the remaining amount, or distributable earnings, shall be set aside as legal reserve (retained earnings), followed by a special legal reserve as stipulated by the law or the authorities. Based on the outcome, the remaining balance of distributable earnings is then appropriated as employee bonuses, director/supervisor compensation, and shareholder dividend.

(a) 5% to 10% of annual distributed earnings shall be distributed as employee bonuses.

(b) No more than 1% of annual distributed earnings shall be distributed as director/supervisor compensation.

AUO follows the residual dividend policy for dividend distribution. A

dividend distribution proposal that takes the following issues into consideration, including current and future investment opportunities, funding requirements, the competitive situation both at home and abroad, and capital budgeting, as well as shareholder interest, a balanced dividend policy that pays both cash and stock dividends, and the company’s long term financial plans, shall be drafted by the board of directors and submitted to shareholder’s meeting for approval each year, in accordance with relevant legal regulations. In principle, the cash dividend payout ratio shall be no less than 10% of the total dividend to be distributed that year.

b. If a profit distribution proposal has been approved by the board of directors but not yet passed by shareholders' meeting, the prospectus shall indicate : Not applicable.

c. Where a profit distribution proposal has already been passed by shareholders' meeting :

(a) The value of any employee cash/stock bonuses and director/supervisor compensation to be distributed pursuant to shareholders' resolution:

The value of employee cash bonuses approved by shareholders' meeting to be distributed is NT$379,735,891, stock bonuses NT$ 886,050,410, and director/supervisor compensation NT$21,096,438.

(b) The number of shares to be distributed in any employee stock bonus to be distributed pursuant to shareholder's resolution, and the size of such distribution as a percentage of capital increase through capitalization of retained earnings : 33.62%.

(c) The effect upon imputed earnings per share that will result from distribution of the employee bonuses and director/supervisor compensation : NTD 2.54.

d. Status of employee bonuses and director/supervisor compensation paid out of earnings from the previous fiscal year

Unit: NTD

Profit Distribution (2005)	Actual Distribution	Board Resolution	Discrepancy
Directors & Supervisors Compensation (Cash)	21,096,438	21,096,438	-
Employee Profit Sharing (Cash)	379,735,891	379,735,891	-
Employee Profit Sharing (Stock)	886,050,410	886,050,410	-

(8) Status of company buyback of corporate stocks

06/30/06

Term	The Second
Purpose	Transfer to Employee
Time Period	From 12/17/02 to 2/16/03
Price Range	NTD17.5~23.5 per share; Buyback would be proceeded when stock price falls below the lower bound of the price range.
Categories and Number of Stocks Bought Back	12,000,000 shares
Dollar amount of stocks bought back	NTD 250,786,300
Number of Stocks Canceled and Transferred	12,000,000 shares
Accumulated Number of Treasury Stocks	-
Accumulated Number of Treasury Stocks to Total Issued Stocks%	-

5. The status of issue and private placement of "corporate bonds" (including overseas corporate bonds)

(1) Status of issued corporate bonds

Up to 06/30/06

Issuance	The first issuance of domestic secured straight bond in 2004	The first issuance of domestic secured straight bond in 2005	The second issuance of domestic secured straight bond in 2005
Issuing Date	April 23^rd 2004 and April 24^th 2004	June 6^th, 7^th, 8^th, 9^th, 10^th, and 13^th 2005	Mar 21^st 2006
Denomination	NT$ 10 million	NT$ 5 million	NT$ 10 million
Issuance & Listing	Not applicable	Not applicable	Not applicable
Offering Price	Full face value	Full face value	Full face value

Total Amount	NT$6 billion; divided into bond types A, B, C, D, and E according to tenure, coupon rate, and interest rate structure. Total amount for type A, B, C, D, and E are NT$500 million, NT$2 billion, NT$1.5 billion, NT$1 billion, NT$1 billion, respectively.	NT$6 billion; divided into 12 different bond types according to issuing date and coupon rate with issuing amounts of NT$500 million per type of bond.	NT$5 billion
Coupon Rate	See note 1	Coupon rate for type A are 2.00 % (annual rate); type B 1.9901 %; both fixed rate coupons paying interest amount as stated on the coupons.	Coupon rate 1.948% (annual)
Tenure	Type A Bonds: three years. A-A from April 23^rd 2004 to April 23^rd 2007; A-B from April 24^th 2004 to April 24^th 2007. Type B, C, D, E bonds: five years, from April 23^rd 2004 to April 23^rd 2009.	Type A-A and B-A from June 6^th 2005 to June 7^th 2010; type A-C and B-C from June 8^th 2005 to June 8^th 2010; type A-D and B-D from June 9^th 2005 to June 9^th 2010; type A-E and B-E from June 10^th 2005 to June 10^th 2010; type A-F and B-F from June 13^th 2005 to June 13^th 2010.	Five years from March 21^st 2006 to March 21^st 2011.
Guarantor	12 banks including ICBC, Chiao Tung Bank, Landbank of Taiwan, First Commercial Bank, Hua Nan Bank, Taipei Bank, Taiwan Bank, Citibank Taiwan, ABN AMRO Taiwan, Chang Hwa Bank, HSBC, Bank of America	9 banks including ICBC, Taiwan Bank, Chiao Tung Bank, Chinatrust, HSBC, ABN AMRO Taiwan, Taipei Fubon Bank, Calyon Corporate and Investment Bank, and Sumitomo Mitsui Banking Corporate.	7 banks including Mizuho Corporate Bank Ltd, Taipei Branch, Bank of Tokyo Mitsubishi UFJ, Taipei Branch, Chiao Tung Bank, Calyon Corporate and Investment Bank, Bank SinoPac, Cathay United Bank, and Industrial Bank of Taiwan.
Trustee	Trust Department, Chinatrust	SinoPac Commercial Bank	Cooperative Bank
Underwriter	none	none	none
Legal Counsel	Hsiendai Law Firm Kuo Hui-ji Attorney at law	Hsiendai Law Firm Kuo Hui-ji Attorney at law	Hsiendai Law Firm Kuo Hui-ji Attorney at law
Auditor	KPMG Shing Hai Wei & Kuen Huei Chen	KPMG Kuen Huei Chen & Mei-Yu Tseng	KPMG Mei-Yu Tseng & Chung-Hwa Wei

Repayment		Type A bonds: 100% repayment 3 years after the issuing date; Type B-A~F bonds, Type C-A, C-B, C-E, C-F, D-A, D-B bonds shall repay 10/60, 25/60, and 25/60 of the principal at the end of the 3^rd, 4^th, and 5^th year, respectively. For type B-G, B-H, C-C, C-D, D-C, D-D, and E-A~F bonds, 50% of the principal shall be repaid at the end of the 4^th and the 5^th year, respectively.	Repayment starts from the 4^th year after the issuing date. 50% of the principal shall be repaid at the end of the 4^th and the 5^th year, respectively.	Repayment starts from the 4th year after the issuing date. 50% of the principal shall be repaid at the end of the 4th and the 5th year, respectively.
Outstanding		NT$6 billion	NT$6 billion	NT$5 billion
Redemption or Early Repayment Clause		none	none	none
Covenants		none	none	none
Credit Rating		none	none	none
Other Rights of bondholders	Conversion to Shares, ADR or Any Other Securities	none	none	none
Other Rights of bondholders	Issuance (and Conversion) Rules	none	none	none
Dilution Effect and Adverse Effects on Existing Shareholders		none	none	none
Custodian		none	none	none

Note 1:

Type A Bonds -coupon rate 1.43%, simple interest rate calculation every half-year after the issuing date

Type B bonds: coupon type A : 2.6000%*n/N;

coupon type B : 2.60001%*n/N;

coupon type C : 2.60002%*n/N;

coupon type D : 2.60003%*n/N;

coupon type E : 2.60004%*n/N;

coupon type F : 2.60005%*n/N;

coupon type G : 2.5000%*n/N;

coupon type H : 2.50001%*n/N

n=total number of days 90-day CP≧interest rate floor or ≦ interest rate ceiling during the interest period

N=total number of days in the interest period

Interest collars for Type B bonds, coupon type A~F: 1st year 0.75%≦90-day CP≦1.45%; 2nd year 0.85%≦90-day CP≦1.70%; 3rd year 0.90%≦90-day CP≦2.00%; 4th year 0.95%≦90-day CP≦2.25%; 5th year 1.00%≦90-day CP≦2.50%.

Interest collars for Type B bonds, coupon type G and H: 1st year 0.75%≦90-day CP≦1.60%; 2nd year 0.90%≦90-day CP≦1.85%, 3rd year 1.00%≦90-day CP≦2.15%, 4th year 1.25%≦90-day CP≦2.40%; 5th year 1.50%≦90-day CP≦2.65%.

The 90-day CP is determined by the fixing rates of the 90 day TWD CP, provided by Moneyline Telerate, page 6165, at 11:00 am of the Taipei business day on each interest rate determination date. If it is not a Taipei business day then 90-day CP for the previous Taipei business day shall apply.

Type C bonds: coupon type A : 3.50%*n/N;

coupon type B : 3.5001%*n/N;

coupon type C : 3.50%*n/N;

coupon type D : 3.50001%*n/N。

coupon type E : 1^st year : 3.00%;2^nd to 5^th year : 3.00%*n/N;

coupon type F : 1^st year : 3.0001%;2^nd to 5^th year : 3.00%*n/N。

n=total number of days 6M LIBOR≧interest rate floor or ≦ interest rate ceiling during the interest period

N=total number of days in the interest period

Interest collars for Type C bonds, coupon type A and B: 1st year 1.05%≦6M LIBOR≦2.00%; 2nd year 1.15%≦6M LIBOR≦2.17%; 3rd year 1.30%≦6MLIBOR≦2.52%; 4th year 1.30%≦6M LIBOR≦2.70%; 5th year 1.30%≦6M LIBOR≦2.85%.

Interest collars for Type C bonds, coupon type C and D: 1st year 1.05%≦6M LIBOR≦2.00%; 2nd year 1.15%≦6M LIBOR≦2.15%; 3rd year1.25%≦6MLIBOR≦2.50%; 4th year 1.30%≦6M LIBOR≦2.75%; 5th year 1.30%≦6M LIBOR≦2.90%

Interest collars for Type C bonds, coupon type E and F: 2nd year 0.75%≦6M LIBOR≦2.00%; 3rd year 1.00%≦6MLIBOR≦2.50%; 4th year 1.25%≦6M LIBOR≦3.00%; 5th year 1.50%≦6M LIBOR≦3.50%.

The 6M LIBOR is determined by the fixing rates of the USD 6-Month LIBOR, provided by Moneyline Telerate, page 3750, at 11:00 am of the London business day on each interest rate determination date. If it is not a London business day then 6M LIBOR for the previous London business day shall apply. The 6M LIBOR five London bank business days before the interest payment date is determined by the 6M LIBOR on the 5th day before the interest payment date.

Type D bonds: coupon type A : coupon rate =6M LIBOR when 6M LIBOR<1.10%; coupon rate= 2.20% when 1.10%£6M LIBOR£2.00%; coupon rate=4.50%-6M LIBOR when 6M LIBOR>2.00% (interest floor 0%)

coupon type B : coupon rate =6M LIBOR+0.001% when 6M LIBOR<1.10%; coupon rate = 2.20% when 1.10%£6M LIBOR£2.00%; coupon rate =4.50%-6M LIBOR when 6M LIBOR>2.00% (interest floor 0%)

coupon type C : coupon rate =6M LIBOR when 6M LIBOR<1.10%; coupon rate = 3.20% when 1.10%£6M LIBOR£2.00%; coupon rate =4.00%-6M LIBOR when 6M LIBOR>2.00% (interest floor 0%)

coupon type D : coupon rate =2.50% when 6M LIBOR<2.30%; coupon rate =4.00%-6M LIBOR when 6M LIBOR≧2.30% (interest floor 0%)

The first interest determination is two business days before the issuing date. The interest is recalculated semiauunally two business days before the semiannual interest rate reference date at the 6M LIBOR. Interest is paid on a simple interest basis. The interest rate should not be less than 0% (business day refers to a London bank business day. The previous business day is used in the case of holidays.) The 6M LIBOR is determined by the fixing rates of the USD 6-Month LIBOR, provided by Moneyline Telerate, page 3750, at 11:00 am on the London business day.

Type E bonds: coupon type A : coupon rate =1.80% when 90-day CP≦1.60%; coupon rate = 3.35% – 90-day CP when 90-day CP>1.60% (interest floor 0%)

coupon type B : coupon rate =1.80001% when 90-day CP≦1.60%; coupon rate = 3.35002% – 90-day CP when 90-day CP>1.60% (interest floor 0%)

coupon type C : coupon rate =1.80002% when 90-day CP≦1.60%; coupon rate =3.35001% – 90-day CP when 90-day CP>1.60% (interest floor 0%)

coupon type D : coupon rate =1.80% when 90-day CP<1.45%; coupon rate = 3.30% – 90-day CP when 90-day CP≧1.45% (interest floor 0%)

The first interest determination is two business days before the issuing date. The interest is recalculated quarterly two business days before the quarterly interest rate reference date at the 90-day CP. Interest is paid on a simple interest basis. The interest rate should not be less than 0% (business day refers to a London bank business day. The previous business day is used in the case of holidays.) The 90-day CP is determined by the fixing rates of the 90-day TWD CP, provided by Moneyline Telerate, page 6165, at 11:00 am on the Taipei business day. The interest calculating bank for bond types B, C, D and E-A, E-B, E-C are Chinatrust Bank. The interest calculating bank for bond type E-D is ABN AMRO Taiwan Taipei Branch.

(2) Corporate bonds maturing within one year

The amount of corporate bonds maturing within one year is NT$1 billion. The funding used to pay off the aforementioned bonds shall be budgeted each year under the appropriate items and allocated to the agent bank for capital and interest

repayment one working day before the due repayment date.

(3) Status of issued convertible corporate bonds : None

(4) Status of issued exchangeable corporate bonds : None

(5) Status of issued of common corporate bonds company with the categorical reporting method : None

(6) Status of issued corporate bonds with warrants : None

(7) Status of private placements of corporate bonds in the three most recent fiscal years : None

6. Status of issue and private placement of preferred shares : None

7. Status of participation in the issue and private placement of overseas depositary receipts

Issue Date			05/29/02	06/23/04	07/22/05	07/31/03、07/12/04、08/26/05 (Note)
Issuance & Listing			NYSE
Total Amount (USD)			659,490,000	480,000,000	506,550,000	-
Offering Price Per ADR (USD)			11.57	16	15.35	-
Units Issued			57,000,000	30,000,000	33,000,000	12,737,054
Underlying Securities			AUO common shares
Common Shares Represented			570,000,000	300,000,000	330,000,000	127,370,549
Rights and Obligations of ADR Holders			Same as those of common share holders
Trustee			none
Depositary Institution			Citibank,N.A.-New York
Custodian Institution			Citibank,N.A.-Taipei Branch
ADRs Outstanding up to 2006/06/30 (Units)			97,291,058
Apportionment of Expense for the Issuance and Maintained			Issuance expense shall be apportioned according to the actual ratio of shares issued between the company and the selling shareholders. After issuance, unless otherwise agreed by the Company and the depository institution, all maintenance expense of the overseas depository receipts shall be borne by the Company.
Terms and Conditions in the Deposit Agreement and Custody Agreement			See deposit agreement and custody agreement for details
Closing price per ADS (USD)	2003	High	14.80
		Low	5.05
		Average	11.38
	2004	High	27.51
		Low	9.77
		Average	15.43
	2005	High	16.59
		Low	10.93
		Average	14.06
	01/01/06~ 06/30/06	High	17.56
		Low	12.16
		Average	15.19

Note: Stock dividends distributed form profit capitalization.

8. Status of issue and private placement of employee stock option certificates : None

9. Status of mergers and acquisitions :

Please refer to section three for more information on issuance of new shares regarding the merger of QDI into AUO.

10. Status of issues of new shares in connection with acquisition of shares of another company : None

Section II Operation Summary

1. Operation of the company

(1) Business content

a. Scope of business

(a) Main line(s) of business engaged in by the company and its percentage out of the entire company business

AUO is a manufacturer of flat panel displays. AUO’s strong technological capability is its greatest competitive edge. AUO is dedicated to the research and development, design, manufacturing, and sale of small- to large-sized flat panel displays. AUO’s main line of business if thin film transistor liquid crystal display (TFT-LCD) panels, which accounts for 100% of the company’s total sales in 2005.

(b) Company's current products

AUO’s TFT-LCD panels are used in information technology products including notebook computers, desktop monitors, and consumer electronic products including DSC, DVC, car TVs, and car navigations systems, portable DVD players, LCD TVs and other applications.

Going forward, AUO will continue to develop TFT-LCD applications. Building on its current technological base on large size displays, AUO plans to strengthen its research and development of wide screen format panels, industrial application displays and a variety of high performance LCD TV panels. In terms of small and medium size displays, AUO will be dedicated to developing Low Temperature Polysilicon (LTPS), Organic Light Emitting Diode or Organic Light Emitting Display (OLED), Transflective MVA, as well as RGBW Pixels. AUO will offer a variety of sizes to fit diverse products, from mobile phone, Smart Handheld Device, DSC, DVC, car display, portable DVD, play station and in-car audio-visual entertainment devices.

b. Industry summary

(a) Industry's current condition and development

The development of the flat panel display industry in recent years is dominated by TFT-LCD monitors. TFT-LCD panels has emerged as the

world’s most widely used flat panel display technology thanks to its technological advantages, wide product application, scope of economy, and the ability to meet the demands of all-in-one information product applications in the digital age. According to the display market research and consulting firm DisplaySearch’s Quarterly Desktop Monitor Shipment and Forecast Report, released in the fourth quarter of 2005, total output value of TFT-LCD panels amounts to US$44 billion for year 2005, equivalent to a 25% year-on-year growth.

Many domestic manufacturers have joined the TFT-LCD industry since AUO’s predecessor Unipac established Taiwan’s first TFT-LCD fabrication facility in March 1993, followed by successful test production of Taiwan’s first 4-inch TFT-LCD module in April of the same year. DisplaySearch’s report pointed out that the output value of Taiwan’s TFT-LCD industry reached US$17.5 billion, approaching Korea’s US$20 billion. The flat panel display industry also plays a critical role in the Ministry of Economic Affairs’ Trillion-NT Dollar and Twin Stars Industries Development Plan.

Past developments of the TFT-LCD industry is marked by its cyclical downturns and upturns and capital and technology intensive features. Major TFT-LCD players include Taiwan, Korea, and Japan. According to statistics in DisplaySearch’s 2005 Q4 report, Taiwan’s production capacity of Active Matrix TFT-LCD is on a par with Korea, accounting for 43% of global capacity. In terms of output volume Taiwan leads by accounting for 45% of global output, followed by Korea’s 41%.

With increasing availability of all-in-one digital information products, TFT-LCD’s role as a key component allows it to assume a strategic position in the flat panel display supply chain. Not only does it lead the technical advances and growth in the upper-stream components industry, it also lends support to open up new possibilities in lower stream applications for the global information and electronics industry. As the six domestic TFT-LCD manufacturers begin mass production, the industry cluster effect is starting to unfold, boosting the growth of upper stream material and component suppliers. Taiwan’s global market share in Backlight Units, Color Filters, Driver IC, and Polarizar climbs every year. It is expected that the integration of the global competitive advantages enjoyed by Taiwan’s TFT-LCD and IT industry as well as ODM manufactures will help to strengthen collaboration between upper,

middle, and lower stream manufacturers and build Taiwan as a major global TFT-LCD industry cluster.

(b) Relations with industries upstream, downstream and at the same level

Since the invention of the first cathode ray tube (CRT) in 1897, the display industry has been dominated by CRT for decades thanks to the mature technology and competitive price. Liquid crystals technology was first developed by IBM and later applied by Japanese manufacturers. Since the launch of the first LCD display in 1972 by Japanese manufacturers, the market has prospered as the result of its committed investments in research and development and commercial production facilities. This was followed by Korean and Taiwanese firms, who sought to enter the industry through technology transfer and developing their own technologies. The subsequent decline of LCD prices and with its thin, lightweight, stylish design, low power consumption, and no radiation features, TFT-LCD swiftly replaced traditional

CRT and emerged as the dominating technology in the display industry. With the arrival of the wireless Internet age and the growing popularity of portable products, notebooks are now emerging as the No.2 application for LCD panels, falling only behind LCD monitors. The ever-increasing demand for visual quality shall take TVs from the age of analog TV to the age of digital transmission and superb image quality. After taking technological developments and cost into consideration, among the wide range of digital TVs on offer at the moment, LCD TVs measuring less than 40 inches diagonally are expected to dominate the display market within the next few years.

c. Technology and research & development summary

(a) Technological arrangement in business operations, research & development and successfully developed technologies or products

AUO’s mission is to become a world-leading manufacturer in the display industry. AUO’s company vision is to ‘Enrich Digital Lifestyle with Optronic Innovations’. AUO is dedicated to technical innovations, research and development. In 2005, AUO ranked first in R&D investment in the domestic optronics industry. The number of patents AUO applied for in the United States saw an annual increase of 98% in 2005. AUO was the fifth fastest growing patent applicant in the U.S. in 2005. With respect to the number of patents AUO ranks No. 4 in Taiwan and has filed the highest number of patent applications in the domestic flat panel display industry.

AUO’s position as industry leader is the result of its commitment to technological innovation, research, and development and its dedication to develop new technology, new production process, new products, and ways to improve the quality of its products. AUO successfully developed many advanced LCD technologies covering applications from mobile phones, DSCs, notebooks, desktop monitors, industrial application monitors to TVs. AUO’s advanced technological breakthrough involves four major categories: product design, production process, material and key components, and computer-assisted design platform.

A large portion of AUO’s production process is automated for enhanced production efficiency and product quality and to reduce the possibility of human errors. The Computer Integrated Manufacturing (CIM) system monitors every step of the production process. With respect to the automated

manufacturing process, AUO applies the Tape Automated Bonding (TAB) module production process. In addition, due to AUO’s research and development strength, it is able to apply the Chip On Glass (COP) production process, 0.63mm and 0.5mm glass substrates, and the One Drop Fill (ODF) process. Highly efficient mass production technology, advanced facilities, and excellent production capacity are the factors behind AUO’s leading position in next generation production process in Taiwan.

In addition to production facilities at Hsinchu and Lungtan, AUO has set up a third production facility located at the Central Taiwan Science Park in Taichung. Each generation of AUO’s fabrication facilities was Taiwan's first and the world’s third to start mass production. AUO designed and constructed G4, G5, and G6 fabrications with its own efforts. Following the success of its G3.5, G4, and G5 fabrications facilities in entering mass production ahead of many of AUO’s competitors, its G6 TFT-LCD fabrication facility, the first in Taiwan, started mass production in the first quarter of 2005. AUO’s third G5 TFT-LCD fabrication facility started mass production in the third quarter of 2005.

AUO is dedicated to developing advanced production processes and committed to the investment of the application of flat panel display technologies. AUO also continues to work on its product design for added value. Take response time for example. AUO was the first to introduce 16ms, 12ms, 8ms, and 5ms fast response times. In 2005 AUO developed the 4ms response time technology. Other technological achievements include MVA, high aperture ratio, high brightness, dynamic motion image quality, reflective, transflective, active-matrix, Organic Light Emitting Diode or Organic Light Emitting Display(OLED), Low Temperature Polysilicon (LTPS), as well as recent developments such as RGBW pixel, white light LED, Gate Driver on Array, High Dynamic Contrast LCD, high color saturation, thin LED backlight, FFL, SPD, and AMVA, all of which reflect AUO’s capability to set product standards in the global market.

AUO is also a leading player in terms of patents related to flat panel display technology. The number of pending and approved patent applications almost doubled within a year of the company’s establishment. In 2003 AUO and Fujitsu Display Technologies signed a patent licensing agreement. Through this agreement AUO was entitled to use Fujitsu’s intellectual property. AUO

obtained approval for 452 patent applications in 2005, all of which were invention patents. The company has more than 3300 approved and pending patents at year end 2005. AUO continues to lead with the largest number of patent applications in the optoelectronic industry in Taiwan. AUO also ranks first in R&D investments in the local optoelectronic industry with more than NT$4.8 billion invested in 2005.

AUO has always held technological innovation and development and the nurturing of optoelectronic talents as its corporate mission. Therefore, in November 2002, AUO decided to establish the AUO Technology Center (ATC), the largest optoelectronics research and development facility in Taiwan. The ATC opened in the fourth quarter in 2004. It is equipped with excellent R&D facilities and accommodates more than a thousand R&D staff. The ATC is dedicated to product development, technology platform process, and advanced technology. The purpose is to consolidate R&D resources, develop innovative new technology, accelerate the development of new products through division of labor, and introduce advanced technology for AUO’s long-term success. In order to practice AUO’s ‘keeping its roots in Taiwan’ principle, a second technology center was set up at the Central Taiwan Science Park in 2004. The aim was to establish a research and development facility close to the next generation fabrications at the Central Taiwan Science Park as well as to recruit R&D talent in central and southern Taiwan. Looking forward beyond 2006, AUO will continue to strengthen R&D capability at its technology centers and recruit more experienced engineers to develop new technology.

Based on AUO’s competitive advantage of world-leading technology, AUO continued to direct its efforts to expand its product line and customer base and boost its market position in 2005. The introduction of the G6 TFT-LCD production process helped to establish a comprehensive TFT-LCD technical platform, provide support to customers around the world, and respond to market demand for products.

R&D Expenditure and Results for the last two years

Items	2004	2005
R&D Expenditure	NT$5,011,547 thousands	NT$4,861,233 thousands
Number of patents granted	984	1,787
Number of patents pending	2,214	3,347

Major raw materials	Major Suppliers
Glass Substrate	Corning, NEG, ASASHI
Driver IC	Novatek, Toshiba, Matsushita, Taiwan Satori
Liquid Crystals	Itochu Plastics, Merck, Sojitz Taiwan
Polarizer	Nitto Denko, Optimax
Backlight Units	Coretronic, Forhouse, Fuchi Electronics
Color Filters	Toppan, DNP, Cando Co., AMTC

Item year	Net Sales	Cost of good sold	Operation profit(loss)	Gross margin	gross margin growth(%)
2003	97,610,121	75,289,562	22,320,559	22.87%	-
2004	164,603,464	125,809,250	38,794,214	23.57%	3.06%
2005	217,295,128	189,750,849	27,544,279	12.68%	(46.20%)

Year Region		2005		2004
Year Region		Value	%	Value	%
Domestic		82,469,375	38	68,274,878	41
Exports	Asia	120,529,200	55	88,070,838	54
Exports	Others	14,296,553	7	8,257,748	5
Total		217,295,128	100	164,603,464	100

	Change in Gross Profit	Breakdown by factors for changes
	Change in Gross Profit	sales price variance	cost price variance	sales mix variance	volume variance
Operation profit(loss)	(11,249,935)	(49,064,037)	24,307,239	(7,567,157)	21,074,020

item	2004				2005				2006 up to March 31
item	Name	monetary amount	proportion of total procurements (%)	relation with the issuer	Name	monetary amount	proportion of total procurements (%)	relation with the issuer	Name	monetary amount	proportion of total procurements (%)	relation with the issuer
1	A	8,693,162	13.57	none	A	12,416,640	13.18	none	A	4,359,460	14.55	none
2	B	7,362,773	11.49	none	C	9,068,565	9.62	none	C	2,985,747	9.96	none
	Others	48,005,742	74.94		Others	72,748,773	77.20		Others	22,624,453	75.49
	Net procurements	64,061,677	100.00		Net procurements	94,233,978	100.00		Net procurements	29,969,660	100.00

Year Main products	2004			2005
Year Main products	Capacity (note)	Output	Value	Capacity (note)	Output	Value
TFT-LCD	3,922	58,019	87,687,598	4,763	89,107	129,882,480

Year		2004	2005	2006 up to June 30
Number of employees	Administration	595	733	775
	Engineer	3,775	4,381	4,959
	Direct labor	6,174	8,400	9,486
	Total	10,544	13,514	15,220
average age		28.96	29.1	29.19
average years of service		2.4	2.5	2.57
Educational background breakdown (%)	Ph. D.	0.50	0.60	0.66
	Master	25.8	19.4	20.18
	Bachelor	52.6	49.3	49.03
	High School	20.5	27.0	27.14
	Under High School	0.60	3.70	2.98

Item	Requirements	Title and Content of Permit	Anti-pollution fees
Fixed air pollution resource	Emission Permit/Responsible department or person	Permit for fixed air pollution resource installation and operation	1,535,960
Water pollution control	Emission Permit/ Responsible department or person	Emission permit	2,556,770

Name	Quantity	acquisition date	Investment cost	non-depreciated balance amount	the use purpose and the possible effects to be produced
Dust collection system	4	1998~2003	32,947,163	4,587,268	Reduce emission of waste gas pollutants
Waste water treatment system	37	1998~2006	1,683,204,731	1,279,100,187	Reduce emission of waste water pollutants and sludge
Noise cancellation system	3	2003~2006	19,259,639	17,568,452	Cancel noise
Zeolite wheel, incinerator system, and wet scrubber	44	1996~2006	2,231,581,891	1,484,373,439	Reduce emission of waste gas pollutants

name	unit	quantity	acquisition dates	acquisition cost	revaluation gain	non-depreciated balance amount	current status of use			Insurance	status of pledge or other restrictive provision
name	unit	quantity	acquisition dates	acquisition cost	revaluation gain	non-depreciated balance amount	user	rented	unused	Insurance	status of pledge or other restrictive provision
Land	set	1	94	2,774,612		2,774,612	Taoyuan			no	no
	set	1	87	153,472		153,472	Hsinchu			no	no
	set	1	94	655,928		655,928	Hsinchu			no	no
Buildings	set	3	93	8,453,822		8,177,919	Taichung			insured	no
	set	3	94	12,127,549		11,930,616				insured	no
	set	1	95	589,853		585,998				insured	no
	set	1	89	153,000		59,500	Taoyuan			insured	pledged
	set	3	89	470,455		419,720				insured	no
	set	5	90	1,015,579		721,216				insured	pledged
	set	7	90	2,255,008		2,027,565				insured	no
	set	4	92	3,034,467		2,866,283				insured	pledged
	set	1	92	868,677		821,699				insured	no
	set	1	94	319,542		316,409				insured	no
	set	2	87	465,887		328,691	Hsinchu			insured	no
	set	1	88	966,482		667,339				insured	pledged
	set	2	88	1,773,926		1,530,446				insured	no
	set	2	89	1,477,990		1,081,539				insured	no

name	unit	square measure	location	acquisition dates	acquisition cost	revaluation gain	non-depreciated balance amount	announced land current value or assessed value(12/31/05)	future disposing or developing plan
Land	M²	26,064	Chu-Nan	2000	303,147	-	303,147	283,837	-
				2002	138,413	-	138,413		-
				2000	36,654	-	36,654		-
Building	M²	50,831	Chu-Nan	2001	544,421	-	496,028	621,317	-

Item factory	square measure of the building (M²)	number of employee	product line	current status of use
Science-Based Industrial Park, Hsinchu L3A/ L3B/ L3C	343,045	4,527	TFT-LCD	good
Aspire Park Lungtan, Taoyuan	276,965	4,957	TFT-LCD	good
Central Taiwan Science Park, Taichung	854,659	5,736	TFT-LCD	good

Year Product	2004				2005
Year Product	Capacity (note)	Output	Capacity utilization (%)	Value	Capacity (note)	Output	Capacity utilization (%)	Value
TFT-LCD	3,922	58,019	80~95%	87,687,598	4,763	89,107	80~95%	129,882,480

name (note1)	line(s) of business	cost of investment	book value	shares held		net equity value	market value	accounting practices	2005 gain (loss)		number of shares held by the invested company
name (note1)	line(s) of business	cost of investment	book value	number	percentage of stake	net equity value	market value	accounting practices	gain (loss)	distributed cash dividends	number of shares held by the invested company
AU Optronics (L) Co.	holding company	6,081,711	6,518,316	180,655	100.00%	6,518,316	-	equity method	908,733	0	-
BENQ Co.	production and sales of PC and communication related products	3,862,877	3,037,135	131,198	5.00%	3,037,135	3,535,773	equity method	(571,594)	0	-
Konly Venture Co.	holding company	1,200,000	1,450,771	100,000	100.00%	1,450,771	-	equity method	21,284	0	-
CANDO Co.	production and sales of Color Filters	1,042,543	806,065	71,252	11.93%	806,065	-	equity method	(38,792)	0	-
Patentop, Ltd.	patent right license	50,873	-(note2)	1,640	41.00%	-(note2)	-	equity method	(11,294) (note3)	0	-

names	number of shares held by AUO		number of shares held by the company's directors, supervisors, general managers and the entities directly or indirectly controlled by AUO		consolidated shareholding percentage
names	number of shares	percentage of stake	number of shares	percentage of stake	number of shares	percentage of stake
AU Optronics (L) Corp.	180,655	100.00%	-	-	180,655	100.00%
BENQ Co.	131,198	5.00%	29,074	1.11%	160,272	6.11%
Konly Venture Co.	100,000	100.00%	-	-	100,000	100.00%
CANDO Co.	71,252	11.93%	78,550	13.15%	149,802	25.08%
Patentop, Ltd.	1,640	41.00%	-	-	1,640	41.00%

type of contracts	the party	commencement and termination date of the contract	major content	restrictive provision
Syndicate Agreement	Chinatrust et al.	04/2000~09/2007	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Chinatrust et al.	12/1999~12/2005	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Chinatrust et al.	12/2000~12/2007	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Chinatrust et al.	11/2002~04/2010	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Chinatrust et al.	11/2003~05/2011	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Taiwan Bank et al.	06/2004~12/2011	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Syndicate Agreement	Taiwan Bank et al.	07/2005~12/2012	Loan for purchase of LCD manufacturing equipments	Machinery Collateral
Technology Transfer and Patent Licensing Agreement	Fujitsu Limited	03/2003~undecided date	TFT-LCD technology transfer and license	-
Patent Licensing	Semiconductor Energy Laboratory Co., Ltd.	09/2003~12/2008	TFT-LCD patent cross licensing	-
Patent Licensing	Hitachi Display	11/2004~06/2009	TFT-LCD patent cross licensing	-
Patent Licensing	Samsung Electronics Co., Ltd.	01/2006~the termination date of the contract pursuant to the contract	TFT-LCD and OLED related patent cross licensing	-
Patent Licensing	Sharp Corporation	pursuant to the contract	TFT-LCD patent cross licensing	pursuant to the contract
Merger Agreement	Quanta Display Inc.	04/07/2006	See the Merger Agreement	-

Project	Expected Completion Date	Required Capital	Projected Schedule of Use of Proceeds
			2002		2003
			3Q	4Q	1Q	2Q
To purchase machinery equipment	June 2003	21,000	1,680	6,300	10,710	2,310

Year	Item	Production Volume	Sales Volume	Sales	Gross Profit
2003	TFT-LCD	1,653	1,653	13,693,050	193,970
2004	TFT-LCD	3,888	3,888	32,192,640	7,302,120
2005	TFT-LCD	4,131	4,131	34,204,680	9,257,050
2006	TFT-LCD	4,131	4,131	34,204,680	9,257,050

Project	Implementation Status			Reason of progress in advance or backwardness and Improvement plan
Property, facility and plants and to purchase machinery equipment	Required capital	Projected	70,000,000	Newly signed payment terms for machinery and equipment purchase were more favorable than previously expected.
		Actual	57,999,066
	Implementation progress %	Projected	100.00
		Actual	82.86

Project	Expected Completion Date	Required Capital	Projected Schedule of Use of Proceeds
			2003			2004				2005				2006				2007
			2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q
Property, facility and plants and to purchase machinery equipment	June 2007	85	0.1	0.5	2.1	1.8	5.6	12.4	18.2	14.1	5.1	4	3.8	4.4	6.5	3	2.4	0.3	0.7

Year	Projected expected benefit		Actual sales value and gross profit
Year	Sales value	Gross Profit	Sales value	Gross Profit
2001	5,754,000	497,000	12,005,406	(7,630,676)
2002	7,416,000	634,000	49,924,060	7,895,344
2003	37,421,050	2,439,970	72,026,902	17,474,853
2004	96,679,640	13,216,120	139,020,245	33,948,508
2005	169,392,480	22,070,614	191,711,909	22,698,573

	2004	2005	Difference
	2004	2005	Amount	Description
Fixed Assets	149,087,522	208,203,235	59,115,713	Plant construction and machinery and equipment purchase for operational expansion
Operating Income	164,603,464	217,295,128	52,691,664	Overall operating income increased compared to the same period last year due to growth in sales

				volume
Operating Cost	125,809,250	189,750,849	63,941,599	Operating cost increased due to growth in sales volume
Operating Profit	28,610,152	15,993,104	(12,617,048)	In 2005 AUO saw significant growth in sales volume and sales amount of panels due to capacity expansion. However, growth in supply and industry competition led to continuous price drops and thus decrease in operating profit

Company name	Quanta Display Incorporated
Company address	189 Hwa Ya 2nd Road Kuei Shan Hsiang Taoyuan County
Chairman of the Board, General Manager	Baili Lin
Paid-in capital	NT$ 51,640,232,740
Major lines of business	1. Electric equipment manufacturing 2. Data storage and processing equipment manufacturing 3. Electronic component manufacturing 4. Optic instrument manufacturing 5. Information software wholesale 6. International trade Description of business scope: the company is allowed to engage in other lines of business not restricted or prohibited by law in addition to its permitted lines of business.
Major products	TFT-LCD

Major raw material	Supplier
Glass	Corning Japan Corning Display Technologies Taiwan Branch Taiwan NH Techno Glass Corporation Asahi Glass Co., Ltd. Asahi Glass Fine Techno Taiwan
Color Filter	Toppan Printing Co., Ltd. Dai Nippon Printing Co., Ltd. Advanced Colortech Inc. Allied Material Technology Corporation
Backlight Units	SECT (Sharp), Coretronic, Taiwan Nano Electro-Optical Technology Co., Radiant Opto-electronics Corporation, Forhouse Corporation
Driver IC	SECT (Sharp), DenMos Technology, Novatek Microeletronics Corporation, Sunplus Technology Co.,

Polarizers	NITTO DENKO Optimax Technology Corporation
PWB UNIT	SECT (Sharp) Fuchi Electronics Co., Ltd. JAE Taiwan

Name (note)	line(s) of business	cost of investment	Book value	shares held		net equity value	market value	accounting practices	2005 gain (loss)		number of shares held by the invested company
				number	percentage of stake				Gain/loss	Distributed dividends
QDI International Ltd.	Investment company	USD 80,010 (2,639,074)	2,054,700	80,010,000	100%	1,986,432	-	Equity Method	57,194	-	-

QDI Development Ltd.	Investment company and commission subsidiaries to engage in panel design	USD 10,327 (342,464)	43,403	10,327,127	100%	43,403	-	Equity Method	(99,658)	-	-
QDI-T Investment Inc.	Investment company	490,000	445,772	49,000,000	100%	445,772	-	Equity Method	(21,971)	-	-
Topsun Optronics Inc.	Research in TFT-LCD and flat panel display technology	63,879	47,023	5,735,000	7.17%	47,023	-	Equity Method	(16,994)	-	-
Asia Pacific Genesis Venture Capital Fund L.P.	Invest in joint ventures	USD 6,250	188,317	-	11.25%	188,317	-	Equity Method	(8,055)	-	-

Type of contract	the party	commencement and termination date of the contract	Major content	restrictive provision
Syndicate agreement	ICBC et al. (29banks)	2000/10~2007/10	Loan amount NT$ 15,000,000 thousand	Financial ratio
Syndicate loan	Chinatrust et al. (16 banks)	2002/05~2007/05	Loan amount NT$3,000,000 thousand	Financial ratio
Syndicate loan	Chinatrust et al. (25 banks)	2002/09~2009/09	Loan amount NT$ 13,000,000 thousand and US$ 58,400 thousand	Financial ratio
Syndicate loan	ICBC et al. (27 banks)	2005/01~2012/01	Loan amount NT$23,300,000 thousand and US$ 200,000thousand	Financial ratio
Purchase contract	Corning	Five years starting April 2005	Supply glass substrate	-
Patent licensing agreement	American technology company	2005/11~2018/04	Patent licensing	-
Patent licensing agreement	Japanese energy research center	2004/12~2009/11	Patent licensing	-
Patent licensing agreement	Japanese technology company	2006/01~2010/06	Patent licensing	-
Patent licensing agreement	Japanese technology company	2006/03~2011/12	Patent licensing	-
Merger agreement	AUO	2006/4/7	Please refer to merger agreement	-

	(1)	Those activities materially affected the company in finance, or business aspects, pursuant to Article 185, Section 1 of the Company Law.
	(2)	To engage any agreements which materially affect the rights and benefits of the company, or to pledge any substantial undertakings, so as to materially and adversely impact the company.
	(3)	To repurchase treasury stocks, provided however, to repurchase in accordance with Article 11 of this Agreement is not prohibited.
	(4)	To amend the Certificate of Incorporation, or to adjust the job title of corporate employees, or to alter the position of directors, supervisors, managers or the compensation, salaries or benefits of any employee, but for the necessity of running the daily operation of the company, and there is no impact to the Conversion Ratio of this Agreement are not prohibited herein.
	(5)	Except for the conversion into common stocks form a corporate bonds holder of company, and the exercise of stock option to purchase common stocks by employees, as well as Party A resolved in its annual general meeting of shareholders in year 2006 for distribution of the stock dividends and employees’ stock dividends, to issue new shares for cash or any securities that with share natures, Or
	(6)	To proceed with decrease of capital, liquidation, dissolution or restructuring.

	(1)	Both parties should obtain the approving resolution of this Merger from the respective shareholders’ meetings on June 16, 2006.
	(2)	Both parties should proceed with the Merger by following the prescribed schedule under this Agreement, in the event that either party is not able to convene its annual shareholders’ meeting on June 15, 2006 and to have this Merger approved, thus making this Merger is not completed on the tentative Merger Closing Date date, the Boards of Directors of both parties should negotiate the alternation of Merger Schedule, in order to continue the process, and not to affect the validity of this Agreement.

Basis	AUO	QDI
The average market price of first quarter 2006	NT $47.97	NT $11.98

Exchange Ratio	1	4.00