these proceedings, and we cannot assure you that if a judgment is rendered against us in any or all of these proceedings, our financial  condition and results of operations would not be materially and adversely affected.  We are subject to the reporting requirements of the SEC. The SEC, as directed by Section 404 of the U.S. Sarbanes-Oxley  Act of 2002, adopted rules requiring U.S. public companies to include a report of management on our internal control over financial  reporting in their annual reports that contain an assessment by management of the effectiveness of our internal control over financial  reporting. The effectiveness of internal control over financial reporting has been audited by Deloitte & Touche, an independent  registered public accounting firm, who has also audited our consolidated financial statements for the year ended December 31, 2011.  Deloitte & Touche has issued an attestation report on the effectiveness of our internal control over financial reporting in accordance  with the standards of the Public Company Accounting Oversight Board (United States). See “Item 15. Controls and Procedures—  Attestation Report of the Registered Public Accounting Firm.”  While the management report included in this annual report concluded that our internal control over financial reporting was  effective, we cannot assure you that our management will be able to conclude that our internal control over financial reporting is  effective in future years. If in future years we fail to maintain effective internal control over financial reporting in accordance with the  Sarbanes-Oxley Act, we could suffer a loss of investor confidence in the reliability of our consolidated financial statements, which in  turn could negatively impact the trading price of our ADSs, result in lawsuits being filed against us by our stockholders or otherwise  harm our reputation.  We conduct most of our operations and generate most of our revenues in Taiwan. As a result, any decline in the Taiwan  economy or a decline in the growth of the population in Taiwan may materially and adversely affect our financial condition, results  of operations and prospects. The current European debt crisis and related financial restructuring efforts, including in Greece, Italy,  Spain, Portugal and Ireland, are contributing to instability in global financial markets, which adversely affects consumer confidence,  the cost of borrowing and economic activity. The global slowdown in technology expenditures has also from time to time adversely  affected the Taiwan economy, which is highly dependent on the technology industry. As our business is significantly dependent  on economic growth, any uncertainty or further deterioration in economic conditions could have a material adverse effect on our  financial condition and results of operations. We cannot assure you that economic conditions in Taiwan will continue to improve in  the future or that our business and operations will not be materially and adversely affected by deterioration in the Taiwan economy.  Our principal executive offices and substantially all of our assets are located in Taiwan, and substantially all of our revenues  are derived from our operations in Taiwan. Accordingly, our business, financial condition and results of operations and the market  price of our common shares and the ADSs may be affected by changes in Republic of China governmental policies, taxation, inflation  or interest rates and by social instability and diplomatic and social developments in or affecting Taiwan which are outside of our  control. Taiwan has a unique international political status. Since 1949, Taiwan and the Chinese mainland have been separately  governed. The People’s Republic of China, or PRC, claims that it is the sole government in China and that Taiwan is part of China.  Although significant economic and cultural relations have been established between the Republic of China and the PRC, such as  the engagement of Economic Cooperation Framework Agreement (ECFA) in 2010, relations may become strained again. The PRC  government has refused to renounce the use of military force to gain control over Taiwan. Past developments in relations between the  Republic of China and the PRC have on occasion depressed the market prices of the securities of companies in the Republic of China.  We face substantial political risks associated with doing business in Taiwan, particularly due to domestic political events and the  tense relationship between the Republic of China and the People’s Republic of China, which could adversely affect our financial  condition and results of operations.  Any further economic downturn or decline in the growth of the population in Taiwan may materially and adversely affect our  financial condition, results of operations and prospects.  Investor confidence in us may be adversely impacted if we or our independent registered public accountants are unable to attest to  or express an unqualified opinion on the effectiveness of our internal control over financial reporting.  13 P AR T I