DIODES INCORPORATED

Notice of Annual Meeting of Stockholders

To Be Held May ~~29, 2008~~28, 2009

Notice is hereby given that the annual meeting (the “Meeting”) of the stockholders of Diodes Incorporated (the “Company”) will be held at the Dallas/Addison Marriott Quorum ~~Hotel,~~by the Galleria, located at 14901 Dallas Parkway, Dallas, Texas 75254, on Thursday, May ~~29, 2008~~28, 2009 at 10:00 a.m. (Central time) for the following purposes:

	1.		Election of Directors.To elect seven persons to the Board of Directors of the Company, each to serve until the next annual meeting of stockholders and until their respective successors have been elected and qualified. The Board of Directors’ nominees are: C.H. Chen, Michael R. Giordano, L.P. Hsu, Keh-Shew Lu, Shing Mao, Raymond Soong and John M. Stich.

	2.		Amendment of 2001 Omnibus Equity Incentive Plan.To approve various proposed amendments of the 2001 Omnibus Equity Incentive Plan, including the extension of the term of the plan until May 28, 2019 and the increase by 5,000,000 in the number of shares of Common Stock which may be subject to awards granted thereunder.

	3.		Ratification of Appointment of Independent Registered Public Accounting Firm.To ratify the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ended December 31, ~~2008.~~2009.

	3.4.		Other Business.To transact such other business as properly may come before the Meeting or any adjournment or postponement thereof.

Only persons who are stockholders of record ~~(the “Stockholders”)~~ at the close of business on ~~April 4, 2008~~March 30, 2009 are entitled to notice of and to vote, in person or by proxy, at the Meeting or any adjournment or postponement thereof.

The proxy statement, which accompanies this Notice, contains additional information regarding the proposals to be considered at the Meeting, and ~~Stockholders~~stockholders are encouraged to read it in its entirety. ~~Pursuant to~~

Under new rules ~~promulgated~~adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials ~~both by sending you the attached proxy statement and proxy card, and~~ by notifying you of the availability of our proxy statement and our fiscal ~~2007~~2008 Annual Report to Stockholders at our ~~Investor Relations~~ web site at ~~http://investor.diodes.com under the tab “Annual Reports”. Additionally, and in accordance with new SEC rules, web~~www.proxyvote.com. Web access ~~for~~to our proxy materials does not ~~enable “cookies” that~~ identify visitors to the web site. Stockholders may still obtain a printed copy of the proxy materials free of charge by following the instructions provided in the Notice of Internet Availability of Proxy Materials that will be mailed to stockholders on or about April 17, 2009.

As set forth in the enclosed proxy statement, proxies are being solicited by and on behalf of the Board of Directors of the Company. All proposals set forth above are proposals of the Board of Directors. ~~It is expected that these proxy materials will be mailed to Stockholders on or about April 22, 2008.~~

Whether or not you plan to attend the Meeting, YOUR VOTE IS IMPORTANT. Please ~~mark, date and sign~~follow the instructions enclosed ~~proxy and return it promptly in the enclosed, postage-paid envelope~~ to ~~be sure~~ensure that your shares are voted. If you attend the Meeting, you may revoke your proxy and vote your shares in person. You may revoke your proxy at any time prior to its exercise at the Meeting.

Dated at Dallas, Texas, this ~~22nd~~17th day of April, ~~2008.~~2009.



	By Order of the Board of Directors, ~~DIODES INCORPORATED~~

		DIODES INCORPORATED

		/s/ Carl C. Wertz

		Carl C. Wertz,
	Secretary

TABLE OF CONTENTS


	Page

General Information		1
Internet Access to Proxy Materials ~~Included~~		1
Matters to be Considered		12
~~Method~~Voting Recommendations of ~~Voting~~the Board		2
~~Proxy Revocation~~How to Vote		2
How to Revoke a Proxy		3
Voting Rights		24
Cost of Proxy Solicitation		35
Other Business		35
Security Ownership of Certain Beneficial Owners and Management		46
Proposal One —– Election of Directors		79
Corporate Governance		1012
Committees of the Board ~~of Directors~~		1012
Meetings of the Board and Committees		1113
Nominating Procedures and Criteria		1114
Communications with Directors		1214
Executive Officers of the Company		1215
Executive Compensation		1418
Compensation Discussion and Analysis		1418
Introduction		1418
Compensation Objectives and Philosophy		1418
How the Company’s Compensation Program Operates		1419
Elements of Named Executive Officer Compensation		1621
How and Why Executive Compensation Decisions Were Made		1722
Tax and Accounting Implications		2228
Conclusion		2328
Compensation Committee Report		2329
Summary Compensation Table		2430
Grants of Plan-Based Awards		2632
Narrative to Summary Compensation Table and Plan-Based Awards Table		2633
Outstanding Equity Awards at Fiscal Year-End		3135
Option Exercises and Stock Vested		3237
Equity Compensation Plan Information		3237
Pension Benefits		3338
Non-qualified Deferred Compensation		3338
Potential Payments upon Termination or Change in Control		3439
Compensation of Directors		3844
Compensation Committee Interlocks and Insider Participation		4047
Audit Committee Report		4047
Report of the Audit Committee		47
Code of Ethics		4148
Certain Relationships and Related Transactions		4148
Compliance with Section 16(a) of the Securities Exchange Act of 1934		4350
Proposal Two —– Amendment of 2001 Omnibus Equity Incentive Plan		51
General		51
Purpose and Effect of the Amendment		51
Option Grants and Exercises		51
Vote Required		52
Summary of the 2001 Incentive Plan		52
Federal Income Tax Consequences		54
Proposal Three – Ratification of the Appointment of Independent Registered Public Accounting Firm		4456
Audit Fees, Tax Fees and All Other Fees		56
Proposals of Stockholders and Stockholder Nominations for ~~2009~~2010 Annual Meeting		4658
Annual Report and Form 10-K		4759
~~Annex~~Appendix A —– Audit Committee Charter		4860
Appendix B – 2001 Omnibus Equity Incentive Plan		62

Diodes Incorporated

15660 North Dallas Parkway, Suite 850

Dallas, Texas 75248

(972) 385-2810

Proxy Statement

Annual Meeting: May ~~29, 2008~~28, 2009

GENERAL INFORMATION

This proxy statement (“Proxy Statement”) is furnished in connection with the solicitation of ~~proxy~~proxies by the Board of Directors (the “Board”) of Diodes Incorporated (the “Company”) for use at the annual meeting (the “Meeting”) of the stockholders of the Company to be held on Thursday, May ~~29, 2008,~~28, 2009, at the Dallas/Addison Marriott Quorum ~~Hotel,~~by the Galleria, located at 14901 Dallas Parkway, Dallas, Texas 75254, at 10:00 a.m. (Central time), and at any adjournment or postponement thereof. Only stockholders ~~of record (the “Stockholders”)~~ at the close of business on ~~April 4, 2008~~March 30, 2009 (the “Record Date”) are entitled to notice of and to vote, in person or by proxy, at the Meeting or any adjournment or postponement thereof. ~~The Notice of Annual Meeting of Stockholders, this~~

Internet Access to Proxy ~~Statement, the proxy card and our 2007 Annual Report to Stockholders first will be mailed to Stockholders on or about April 22, 2008.~~Materials

~~Pursuant to new~~Under rules ~~promulgated~~recently adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials ~~both by sending you this full set~~over the Internet at www.proxyvote.com. On or about April 17, 2009, a Notice of ~~proxy materials, including a proxy card, and by notifying you~~Internet Availability of the availability of our proxy materials on the Internet. This Proxy Statement and our fiscal 2007 Annual Report to Stockholders are available at our Investor Relations web site at http://investor.diodes.com under the tab “Annual Reports”. Additionally, and in accordance with new SEC rules, web access for our proxy materials does not enable “cookies” that identify visitors to the web site.

Proxy Materials ~~Included:~~(the “Notice”) was sent to our stockholders of record and beneficial owners.

The Notice provides you with instructions regarding how to:

	•		View our proxy materials for the Meeting on the Internet;

	•		Request a printed copy of the proxy materials; and

	•		Instruct us to send future proxy materials to you by mail or electronically by email on an ongoing basis.

Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

The proxy materials include:

	•		Notice of Annual Meeting of Stockholders;

	•		This Proxy Statement;

	•		~~The proxy card;~~ and

	•		The ~~2007~~2008 Annual Report to Stockholders, which includes our audited consolidated financial statements.

If you request printed copies of the proxy materials by mail, these materials also include a proxy card.

- 1 -

Matters to be ~~Considered:~~Considered at the Meeting:

The matters to be considered and voted upon at the Meeting will be:

			~~The matters to be considered and voted upon at the Meeting will be:~~

	1.		Election of Directors.To elect seven persons to the Board, each to serve until the next annual meeting of stockholders and until their respective successors have been elected and qualified. The Board’s nominees are: C.H. Chen, Michael R. Giordano, L.P. Hsu, Keh-Shew Lu, Shing Mao, Raymond Soong and John M. Stich.

	2.		Amendment of 2001 Omnibus Equity Incentive Plan.To approve various proposed amendments of the 2001 Omnibus Equity Incentive Plan, including the extension of the term of the plan until May 28, 2019 and the increase by 5,000,000 in the number of shares of Common Stock which may be subject to awards granted thereunder;

	3.		Ratification of Appointment of Independent Registered Public Accounting Firm.To ratify the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ended December 31, ~~2008.~~2009.

	3.4.		Other Business.To transact such other business as properly may come before the Meeting or any continuation, adjournment or postponement thereof.

1

How to Revoke a Proxy ~~Revocation~~

You may revoke a proxy at any time before ~~it is exercised~~the vote at the Meeting by voting again by proxy over the Internet or telephone on a later date (only your last Internet or telephone proxy will be counted), or by filing a written revocation, or a duly executed proxy card bearing a later date, with the Company’s Secretary at our offices located at 15660 North Dallas Parkway, Suite 850, Dallas, Texas 75248 prior to the ~~commencement of~~vote at the Meeting. You may also revoke a proxy by attending the Meeting and voting in person. ~~Stockholders whose shares are held~~Attending the Meeting in ~~“street name” should consult~~person will not automatically revoke your proxy unless you vote again at the Meeting or file a written revocation with ~~their broker~~the Company’s Secretary at or ~~nominee concerning~~before the ~~method for revoking their proxy.~~Meeting.

- 3 -

Voting Rights

The authorized capital of the Company consists of (i) 70,000,000 shares of common stock, par value $0.66-2/3 per share (“Common Stock”), of which ~~40,325,814~~41,395,815 shares were issued and outstanding on the Record Date and (ii) 1,000,000 shares of Preferred Stock, $1.00 par value (“Preferred Stock”), none of which were issued and outstanding on the Record Date. The Common Stock and the Preferred Stock are collectively referred to as the “Stock.”

A majority of the shares of Common Stock issued and outstanding and entitled to vote at the meeting, present either in person or by proxy, constitutes a quorum for the conduct of business at the Meeting. Votes withheld, abstentions and “broker non-votes” (as defined below) will be counted for the purpose of determining the presence of a quorum.

Each ~~Stockholder~~stockholder is entitled to one vote, in person or by proxy, for each share of Common Stock standing in his or her name on the books of the Company at the close of business on the Record Date on any matter submitted to the ~~Stockholders,~~stockholders, except that in connection with the election of directors, each ~~Stockholder~~stockholder has the right to cumulate votes, provided that the candidates’ names have been properly placed in nomination prior to commencement of voting and a ~~Stockholder~~stockholder has given notice prior to commencement of voting of his or her intention to cumulate votes. If a ~~Stockholder~~stockholder has given such notice, all ~~Stockholders~~stockholders may cumulate their votes for all nominated candidates. Cumulative voting entitles a ~~Stockholder~~stockholder to give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares of Common Stock owned by such ~~Stockholder,~~stockholder, or to distribute such ~~Stockholder’s~~stockholder’s votes on the same principle among as many candidates as the ~~Stockholder~~stockholder shall think fit. Discretionary authority to cumulate votes is hereby solicited by the Board, and the ~~return of~~vote by proxy through the ~~Proxy~~Internet or telephone or mail shall grant such authority.

In the election of directors, the candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected. Each proposal described in this Proxy Statement, other than the election of directors, requires ~~that~~the affirmative vote of the holders of a majority of the outstanding shares of Common Stock present, in person or by proxy, and entitled to vote on the proposal at the Meeting. Abstentions and broker non-votes will have no effect with respect to the election of directors. With respect to all other proposals submitted to the ~~Stockholders,~~stockholders, abstentions will be included in the number of votes present and entitled to vote on that proposal and, accordingly, will have the effect of a vote “AGAINST” the proposal. However, broker non-votes with respect to any proposal submitted to the ~~Stockholders~~stockholders will not be counted as shares present and entitled to vote on that proposal and, accordingly, will not have any effect with respect to the approval of that proposal (other than to reduce the number of affirmative votes required to approve the proposal).

2

Cost of Proxy ~~Soliciation~~Solicitation

This proxy solicitation is made by the Board of the Company, and the Company will bear the costs of this solicitation, including the expense of preparing, assembling, printing and mailing this Proxy Statement and any other material used in this proxy solicitation. If it should appear desirable to do so to ensure adequate representation at the Meeting, officers and regular employees may communicate with ~~Stockholders,~~stockholders of record, beneficial owners, banks, brokerage houses, custodians, nominees and others, by telephone, facsimile transmissions, telegraph, ~~e-mail~~email or in person to request that the ~~proxy~~proxies be furnished. No additional compensation will be paid for these services to officers or employees of the Company. The Company will reimburse banks, brokerage houses, and other custodians, nominees and fiduciaries, for their reasonable expenses in forwarding proxy materials to their principals. The estimated cost for the printing of the proxy materials and ~~solicitation of proxies~~proxy solicitations is approximately ~~$30,000.~~$25,000.

Other Business

As of the date of this Proxy Statement, the Board knows of no business to be presented for consideration at the Meeting other than as stated in the Notice of Annual Meeting of Stockholders. However, if any other matters properly come before the Meeting, including a motion to adjourn the Meeting to another time or place to solicit additional ~~Proxies~~proxies in favor of the recommendation of the Board, the ~~Proxyholders~~designated proxyholders will vote the shares represented by the ~~Proxies~~proxies on such matters in accordance with the recommendation of the Board, and authority to do so is included in the ~~Proxy.~~proxy. Such authorization includes authority to appoint a substitute nominee or nominees to the Board’s nominees identified herein where death, illness or other circumstances arise which prevent any such director nominee from serving in such position and to vote such Proxy for such substitute nominee. Dr. Keh-Shew Lu and Carl C. Wertz, the designated proxyholders (the “Proxyholders”), are members of the Company’s management.

3- 5 -

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the “beneficial ownership” of Common Stock as of the Record Date by each person known to the Company to be the beneficial owner of ~~more than~~ five percent (5%) or more of the outstanding shares of Common Stock (other than depositories).

Amount and Nature Percent of
Name and Address of Beneficial Owner of Beneficial Owner⁽¹⁾ Class⁽²⁾

Lite-On Semiconductor Corporation (“LSC”)
9F. No. 233-2, Pao-Chiao Road, Hsin-Tien,
Taipei-hsien 23115, Taiwan, R.O.C. 8,665,781 ⁽³⁾ 21.5 %
T. Rowe Price Associates, Inc.
100 E. Pratt Street, 10^th Floor, Baltimore,
Maryland 21202
2,612,212 ⁽⁴⁾ 6.5 %
FMR LLC
82 Devonshire Street, Boston, Massachusetts
02109 2,043,849 ⁽⁵⁾ 5.1 %
Munder Capital Management
480 Pierce Street, Birmingham, Michigan
48009 2,028,056 ⁽⁶⁾ 5.0 %



	Amount and Nature			Percent of
Name and Address of Beneficial Owner	of Beneficial Owner		⁽¹⁾	Class⁽²⁾
Lite-On Semiconductor Corporation (“LSC”)		8,365,781	⁽³⁾		20.2	%
9F. No. 233-2, Pao-Chiao Road, Hsin-Tien, Taipei-hsien
23115, Taiwan, R.O.C.

FMR LLC		4,414,609	⁽⁴⁾		10.7	%
82 Devonshire Street, Boston, Massachusetts 02109

T. Rowe Price Associates, Inc.		2,081,962	⁽⁵⁾		5.0	%
100 E. Pratt Street, 10^th Floor, Baltimore, Maryland 21202


	(1)		The named stockholder has sole voting power and investment power with respect to the shares listed, except as indicated below.

	(2)		The Percentage of Class is based on ~~40,325,814~~41,395,815 shares outstanding as of the Record Date.

	(3)		LSC is a public company listed on the Taiwan Stock Exchange Corporation and a member of ~~The~~the Lite-On Group of companies. See “Proposal One —– Election of Directors —– Certain Relationships and Related Transactions” for a discussion of the relationship among LSC, the Company and certain directors and executive officers of the Company.

	(4)		Based solely on information provided by FMR LLC in a Schedule 13G filed with the SEC on February 17, 2009 reporting beneficial ownership of our Common Stock. According to the Schedule 13G, FMR LLC has sole voting power with respect to 42,389 shares, has sole dispositive power with respect to 4,414,609 shares and has neither shared voting power nor shared dispositive power with respect to any shares.

	(5)		Based solely on information provided by T. Rowe Price Associates, Inc. in a Schedule 13G filed with the SEC on February ~~13, 2008~~10, 2009 reporting beneficial ownership of our Common Stock. According to the Schedule 13G, T. Rowe Price Associates, Inc. has sole voting power with respect to ~~248,850~~268,350 shares, has sole dispositive power with respect to ~~2,612,212 shares and has neither shared voting power nor shared dispositive power with respect to any shares.~~

~~(5)~~		Based solely on information provided by FMR LLC in a Schedule 13G filed with the SEC on February 14, 2008 reporting beneficial ownership of our Common Stock. According to the Schedule 13G, FMR LLC has sole voting power with respect to 725,900 shares, has sole dispositive power with respect to 2,043,849 shares and has neither shared voting power nor shared dispositive power with respect to any shares.

~~(6)~~		Based solely on information provided by Munder Capital Management in a Schedule 13G filed with the SEC on February 14, 2008 reporting beneficial ownership of our Common Stock. According to the Schedule 13G, Munder Capital Management has sole voting power with respect to 2,028,056 shares, has sole dispositive power with respect to 2,087,8342,081,962 shares and has neither shared voting power nor shared dispositive power with respect to any shares.

4- 6 -

The following table sets forth the “beneficial ownership” of Common Stock as of the Record Date by (i) each executive officer, director and nominee for director of the Company and (ii) all directors and executive officers as a group.

Amount and Nature
Name of Beneficial Owner of Beneficial Owner⁽¹⁾ Percent of Class^{(2) (3)}

Directors

Raymond Soong 747,938 ⁽⁴⁾ 1.8 %

C.H. Chen 551,625 ^{(4) (5)} 1.4 %

Michael R. Giordano 203,949 ^{(4) (7)} *

L.P. Hsu 1,313 ⁽⁴⁾ *

Keh-Shew Lu⁽⁶⁾
649,312 ^{(4) (5)} 1.6 %

Shing Mao 250,312 ⁽⁴⁾ *

John M. Stich 112,313 ⁽⁴⁾⁽⁸⁾ *

Executive Officers

Steven Ho 162,972 ⁽⁴⁾ *

Mark A. King 194,813 ⁽⁴⁾ *

Joseph Liu 385,844 ⁽⁴⁾ *

Edmund Tang 7,656 ⁽⁴⁾ *

Francis Tang 21,527 ⁽⁴⁾ *

Carl C. Wertz 81,100 ⁽⁴⁾ *

Richard D. White 9,225 ⁽⁴⁾ *

All directors and executive officers as a group (14 persons) 3,379,898 ⁽⁹⁾ 7.7 %



	Amount and Nature of			Percent of
Name of Beneficial Owner	Beneficial Owner⁽¹⁾			Class^{(2) (3)}

Directors

Raymond Soong		799,063	⁽⁴⁾		1.9	%

C.H. Chen		560,604	^{(4) (5)}		1.3	%

Michael R. Giordano		202,304	^{(4) (8)}		*

L.P. Hsu		2,387	⁽⁴⁾		*

Keh-Shew Lu⁽⁶⁾		1,234,501	^{(4) (5) (7)}		3.0	%

Shing Mao		263,575	⁽⁴⁾		*

John M. Stich		128,387	^{(4) (9)}		*

Executive Officers

Mark A. King		220,751	⁽⁴⁾		*

Joseph Liu		418,669	⁽⁴⁾		1.0	%

Carl C. Wertz		98,163	⁽⁴⁾		*

Richard D. White		22,800	⁽⁴⁾		*

All other executive officers (6 persons)		79,108	⁽⁴⁾		*

All directors and executive officers as a group (17 persons)		4,030,312	⁽¹⁰⁾		8.9	%


*		Less than 1%.

(1)		The named stockholder has sole voting power and investment power with respect to the shares listed, except as indicated and subject to community property laws where applicable.

(2)		Under Rule 13d-3 of the Securities Exchange Act of 1934 (the “Exchange Act”), certain shares may be deemed to be beneficially owned by more than one person (if, for example, a person shares the power to vote or the power to dispose of the shares). In addition, under Rule 13d-3(d)(1) of the Exchange Act, shares which the person (or group) has the right to acquire within sixty (60) days after the Record Date are deemed to be outstanding in calculating the beneficial ownership and the percentage ownership of the person (or group) but are not deemed to be outstanding as to any other person or group. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership of voting power with respect to the number of shares of Common Stock actually outstanding at the Record Date.

(3)		The Percentage of Class is based on ~~40,325,814~~41,395,815 shares outstanding as of the Record Date.

(Footnotes continued on following page)

5- 7 -

(Footnotes continued from previous page)


(4)		Includes the following shares of Common Stock that the named individual has the right to acquire within sixty (60) days after the Record Date by ~~the exercise of vested~~exercising stock options or the vesting of restricted stock ~~units:~~units/awards:



Named Individual	Shares

Raymond Soong		~~739,313~~775,063

C.H. Chen		~~476,500~~375,675

Michael R. Giordano		~~188,344~~138,231

L.P. Hsu		~~1,313~~1,075

Keh-Shew Lu⁽⁶⁾		~~451,312~~508,593

Shing Mao		~~217,875~~227,388

John M. Stich		~~105,938~~117,700
~~Steven Ho~~		~~154,500~~
Mark A. King		~~194,813~~220,751

Joseph Liu		~~311,814~~342,626
~~Edmund Tang~~		~~7,125~~
~~Francis Tang~~		~~21,000~~
Carl C. Wertz		~~80,480~~97,543

Richard D. White		~~8,437~~15,950

All other executive officers (6 persons)		52,125

TOTAL		2,872,720


(5)		Includes 202,250 and 45,000 shares of restricted stock granted on April 14, 2005 to Dr. Lu and Mr. Chen, respectively, fifty percent (50%) of which ~~will~~ first ~~become~~became saleable and transferable ~~(“vest”)~~ on April 14, 2008, the third anniversary of the date of grant, and fifty percent (50%) of which ~~will vest~~became saleable and transferable on April 15, 2009, the day following the fourth anniversary of the date of grant. ~~If the recipient voluntarily leaves the employment of the Company or is terminated for cause, any stock not yet vested will be forfeited.~~

(6)		~~Keh-Shew~~Dr. Lu is a ~~director~~member of the Board and the President and Chief Executive Officer of the Company.

(7)		Includes ~~5,063~~440,000 shares in Texastac Investments L.P. and the Lu Family Revocable Trust, and 10,500 shares in an UTMA (Custodial) Trust. Dr. Lu is the co-general partner of Texastac Investments L.P. and a co-trustee of the Lu Family Revocable Trust and UTMA (Custodial) Trust. He has voting and investment authority over these shares held by the limited partnership and these trusts.

(8)		Includes 5,062 shares of Common Stock held in the name of UBS Trust for the Individual Retirement Account of Mr. Giordano. Mr. Giordano has voting and investment authority over these shares.

~~(8)~~(9)		Includes ~~3,375~~10,687 shares of Common Stock held in the name of Stich Family Holdings, LLC. Mr. Stich is a co-member of the Stich Family Holdings, LLC and has voting and investment authority over these shares.

~~(9)~~(10)		Includes ~~479,999~~2,872,720 shares that the directors and executive officers have the right to acquire within sixty (60) days after the Record Date, by ~~the exercise of vested~~exercising stock options or the vesting of restricted stock units, but excludes an additional ~~819,006~~574,531 shares that the directors and executive officers will have the right to acquire upon the exercise of stock options or restricted stock units, which will become exercisable in installments more than sixty (60) days after the Record Date.

6- 8 -

PROPOSAL ONE

ELECTION OF DIRECTORS

The Company’s Bylaws provide that the number of directors shall be determined from time to time by the Board of the Company, but may not be less than five nor more than seventeen. Currently, the Board has fixed the number of directors at seven. The Bylaws further provide for the election of each director at each annual meeting of ~~Stockholders.~~stockholders.

The persons nominated have been nominated for election to the Board to serve until the next annual meeting of stockholders and until their respective successors have been elected and qualified. All director nominees are currently directors of the Company and have indicated their continued willingness to serve. Unless otherwise instructed, the proxy will be voted in such a way as to elect as many of these director nominees as possible under applicable voting rules. In the event that any of the director nominees should be unable or unwilling to serve as a director, the proxy will be voted for the election of such substitute director nominees, if any, as shall be designated by the Board. The Board has no reason to believe that any director nominee will be unable or unwilling to serve. The seven nominees who receive the highest number of affirmative votes will be elected.

None of the director nominees was selected pursuant to any arrangement or understanding, other than that with the directors of the Company acting within their capacity as such. There are no family relationships among directors of the Company as of the date hereof, and, except as set forth below, as of the date hereof, no directorships are held by any director in a company that has a class of securities registered pursuant to Section 12 of the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”),~~ or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.

The following table sets forth certain biographical information concerning the director nominees of the Company as of the Record Date:



			Director			Director
Director Nominees	Age	Position with the Company	Since	Age	Position with the Company	Since

Raymond Soong⁽¹⁾	66	Director — Chairman of the Board	1993	67	Director and Chairman of the Board		1993

C.H. Chen⁽²⁾	65	Director — Vice Chairman of the Board	2000	66	Director and Vice Chairman of the Board		2000

Michael R. Giordano⁽³⁾	61	Director	1990	62	Director		1990

L.P. Hsu⁽⁴⁾	68	Director	2007	69	Director		2007

Keh-Shew Lu⁽⁵⁾	61	President, Chief Executive Officer, and Director	2001	62	President, Chief Executive Officer, and Director		2001

Shing Mao⁽⁶⁾	73	Director	1990	74	Director		1990

John M. Stich⁽⁷⁾	66	Director	2000	67	Director		2000

(Footnotes continued from previous page)


(2)		C.H. Chen Director and Vice Chairman of the Board

		Mr. Chen was appointed the Vice Chairman of the Board of ~~Directors~~the Company in June 2005. Mr. Chen ~~previously~~is also the Chairman of the Board of Co-Tech Copper Foil Corporation, Vice Chairman of the Board of LSC and a board member of Lite-On Technology Corporation, Actron Technology Corporation and Dynacard Corp., each of which is a member or an affiliate of the Lite-On Group. Mr. Chen served as the Company’s President and Chief Executive Officer from 2000 until 2005. From 1969 to 1990, Mr. Chen held various positions at ~~TI,~~Texas Instruments Incorporated (“TI”), most recently as the Vice President of TI Taiwan. In 1990, he left TI to found Dyna Image Corporation, ~~a Lite-On Group company and the world’s leading supplier of contact image sensors (CISs),~~ which merged with LSC in December 2000. Mr. Chen ~~is currently the Vice Chairman and Chief Executive Officer~~received his Bachelor of LSC, the Vice Chairman of Dynacard Corporation, a board member of Lite-On Technology Corporation, the Chairman of Co-Tech Copper Foil Corporation and a board member of Actron Technology Corporation, each of which is a member of The Lite-On Group. He is also the Chairman of Anachip Corporation, a wholly owned subsidiary of the Company, and served as the Chairman of the Company’s Compensation Committee until February 2008.Science degree in Mechanical Engineering from National Taiwan University.

(3)		Michael R. Giordano Director

		Chair, Audit Committee (Financial Expert)

		Mr. Giordano, CIMA, joined the private-banking firm of UBS Financial Services, Inc. as a Senior Vice President-Investment Consulting when UBS AG acquired PaineWebber, Inc. in 2000. PaineWebber, Inc. had acquired his previous employer, Kidder Peabody and Co., Inc., with whom he was employed since 1979. Mr. Giordano advises corporations, foundations, trusts, and municipal governments in investments and finance. Mr. Giordano served as Chairman of the Board and the Chief Executive Officer of the Leo D. Fields Co. from 1980 to 1990, when GWC Holdings acquired it, and served as a board member of Professional Business Bank, a publicly traded corporation, from 2001 to 2003. Formerly a captain and pilot in the United States Air Force, ~~Mr. Giordano~~he received his ~~Bachelor of Science~~Bachelor’s degree in Aerospace Engineering from California State Polytechnic University and his ~~Masters~~Master’s degree in Business Administration (Management and Finance) from the University of Utah. Mr. Giordano also ~~did~~completed post-graduate work in International Investments at Babson ~~College. Mr. Giordano~~College and is certified by the Investment Management Consultants Association. ~~Mr. Giordano~~He is also certified by the John E. Anderson Graduate School of Management, University of California at Los Angeles as a Corporate Director, having demonstrated understanding of directorship and corporate governance. Mr. Giordano was the Chairman of the Board and the Chief Executive Officer of the Leo D. Fields Co. from 1980 to 1990, when GWC Holdings acquired it. Mr. Giordano served as a director of Professional Business Bank, a publicly traded corporation, from 2001 to 2003. Mr. Giordano is the Chairman of the Company’s Audit Committee.

(4)		Lu-Pao Hsu is Director

		Member, Audit Committee Member, Compensation Committee

		Mr. Hsu has been Chairman of Philips Taiwan Quality Foundation since 2002, a position he has held since 2002. Previously, he served as the Supervisor of the Board at Delta Electronics (2000-2003); the Vice Chairman (1998-2000) and the Chief Executive Officer (2001) of HannStar Display; a director of Taiwan Semiconductor Manufacturing Company Ltd. (1991-2000); and the Executive Vice President of Philips Taiwan (1989-1998). He also has served on the Board of Directorsboard member of Winbond Electronics Corporation ~~(“Winbond”)~~ since 1999, a board member of Vanguard International Semiconductor Corporation since 2003 and a board member of ZyXEL Communications Corporation since ~~2006, and Lite-On Technology Corporation from 2004 to 2006 and~~2006. He also currently serves as a consultant to Lite-On Technology Corporation. ~~Mr. Hsu has completed~~Previously, he served as a board member of Lite-On Technology Corporation from 2004 to 2006 and the ~~International~~Supervisor of the Board at Delta Electronics from 2000 to 2003 and the Vice Chairman from 1998 to 2000. He also served as the Chief Executive ~~Program at IMD,~~Officer of HannStar Display in 2001, a board member of Taiwan Semiconductor Manufacturing Company Ltd. from 1991 to 2000 and the ~~Advanced Management Program at Harvard Business School, and holds a Bachelor~~Executive Vice President of ~~Science degree in Physics~~Philips Taiwan Limited from ~~National Cheng Kung University in Taiwan. In addition, since~~1989 to 1998. Since 1998, Mr. Hsu has been an Esteemed Chair Lecturer at the College of Management at National Chiao Tung University in Taiwan, where he served as Associate Professor from 1971 to 1972. Mr. Hsu iscompleted the International Executive Program at IMD and the Advanced Management Program at Harvard Business School and holds a ~~member of the Company’s Audit Committee and Compensation Committee.~~Bachelor’s degree in Physics from National Cheng Kung University in Taiwan.

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(5)		Keh-Shew Lu Director, President and Chief Executive Officer

		Dr. ~~Keh-Shew~~ Lu was appointed the President and Chief Executive Officer of the Company in June 2005 after serving on the Board since 2001. Dr. Lu is also a board member of Lite-On Technology Corporation, a publicly held company in Taiwan, as well as LedEngin, Inc., Lorentz Solution, Inc. and Nuvoton Technology Corporation, three privately held companies. Dr. Lu is the founding Chairman of the Asia American Citizen’s Council, the Vice Chairman of the governing board of the Plano Chinese Alliance Church, a board member of the Texas Tech foundation and a board member of the Advisory Board to the Southern Methodist University’s Asian Studies Program. From 2001 to 2005, Dr. Lu was a partner of the WK Technology Venture Fund. From 1998 to 2001, Dr. Lu served as ~~the~~ Senior Vice President of TI and General Manager of Worldwide Mixed-Signal and Logic Products. His responsibilities included all aspects of the analog, mixed-signal and logic products for TI worldwide business, including design, process and product development, manufacturing and marketing. From 1996 to 1998, Dr. Lu was the manager of TI’s worldwide memory business. In addition, he served as the President of TI Asia from 1994 ~~until~~to 1997 where he supervised all of ~~TI’s~~TI activities in Asia, (excluding Japan). Since beginning his TI career in 1974, Dr. Lu has held a number of technical and managerial positions within TI’s Semiconductor Group, including Vice President and division manager of the Linear Products Division.excluding Japan. Dr. Lu holds a Bachelor’s degree in engineering from the National Cheng Kung University in Taiwan, and a Master’s degree and a Doctorate in ~~electrical engineering~~Electrical Engineering from Texas Tech University. Dr. Lu is also a director of two publicly held companies in Taiwan: Lite-On Technology Corporation and Winbond. Dr. Lu is the Founding Chairman of the Asia American Citizen’s Council, serves as the Vice Chairman of the Governing Board of the Plano Chinese Alliance Church, and is a member of the Advisory Board to Southern Methodist University’s Asian Studies Program.

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8

CORPORATE GOVERNANCE

Committees of the Board ~~of Directors~~

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Governance and Stockholder Relations ~~Committee.~~Committee (the “Committees”). Each committee consists of two or more directors who serve at the discretion of the Board. The Board usually makes committee and committee chair assignments annually at its meeting immediately following the Company’s annual meeting of stockholders. The current composition of each committee is as follows:

Governance and

Audit

Compensation

Stockholder Relations

Directors

Committee

Raymond Soong⁽²⁾

Chair

C. H. Chen

(1

)

Ex officiomember⁽⁴⁾

Michael R. Giordano⁽²⁾

Chair⁽³⁾

L.P. Hsu⁽²⁾

Member

Keh-Shew Lu

Shing Mao⁽²⁾

Member

John M. Stich⁽²⁾

Member


(1)		Until February 2008, Mr. Chen served as ~~chairman~~Chairman of the Compensation Committee, and anex officiocommittee member. As anex officiomember, Mr. Chen was not entitled to vote and attended meetings only at the invitation of the Compensation Committee.

(2)		Independent director (as determined by the Board under the rules of Nasdaq and in the case of members of the Audit Committee, the rules of the SEC).

(3)		Qualifies as “audit committee financial expert” as the term is defined in Item 407(d)(5) of Regulation S-K promulgated under the Exchange Act.

(4)		Mr. Chen is not entitled to vote and may attend meetings only at the invitation of the committee.

Compensation Committee. The Compensation Committee makes recommendations to the Board regarding compensation, benefits and incentive arrangements for the Chief Executive Officer and other officers and key employees of the Company. The Compensation Committee also administers the Company’s 1969 Incentive Bonus Plan, the 1993 Incentive Stock Option Plan (“1993 ISO

10

Nominating Procedures and Criteria

Among its functions, the Governance ~~and Stockholder Relations~~ Committee considers and approves nominees for election to the Board. In addition to the candidates proposed by the Board or identified by the ~~committee,~~Governance Committee, the ~~committee~~Governance Committee considers candidates for director suggested by ~~Stockholders~~stockholders provided such recommendations are made in accordance with the procedures set forth under “Proposals of Stockholders and Stockholder Nominations for ~~2009~~2010 Annual Meeting.” Stockholder nominations that comply with these procedures and meet the criteria outlined below will receive the same consideration that the ~~committee’s~~Governance Committee’s nominees receive.

Essential criteria for all candidates considered by the Governance ~~and Stockholder Relations~~ Committee include the following: integrity and ethical ~~behavior, maturity,~~behavior; maturity; management experience and ~~expertise,~~expertise; independence and diversity of ~~thought and~~thought; broad business or professional ~~experience, with~~experience; and an understanding of business and financial affairs and the complexities of business organizations.

11

Executive Officers of the Company

None of the executive officers was selected pursuant to any arrangement or understanding, other than that with the executive officers of the Company acting within their capacity as such, and executive officers serve at the discretion of the Board. The following table sets forth certain biographical information concerning the company’s executive officers as of the Record Date:



Name	Age		Position with the Company

Keh-Shew Lu*⁽¹⁾		61	62	President, Chief Executive Officer, and Director
~~Steven Ho~~⁽²⁾					52	~~Asia President and Vice President, Asia Sales and Marketing~~
Mark A. King*⁽³⁾⁽²⁾		49	50	Senior Vice President, Sales and Marketing

Joseph Liu*⁽⁴⁾⁽³⁾		66	67	Senior Vice President, Operations

~~Edmund Tang~~Hans Rohrer⁽⁵⁾⁽⁴⁾		60		Senior Vice President, ~~Corporate Administration~~Business Development
~~Francis Tang~~⁽⁶⁾					53	~~Vice President, Product Development~~
Carl C. Wertz*⁽⁷⁾⁽⁵⁾		53	54	Chief Financial Officer, Secretary and Treasurer

Richard D. White*⁽⁸⁾⁽⁶⁾		60	61	Senior Vice President, Finance

Colin Greene⁽⁷⁾	52		Europe President and Vice President, Europe Sales and Marketing

Julie Holland⁽⁸⁾	47		Vice President, Worldwide Analog Products

T.J. Lee⁽⁹⁾	60		Vice President, Packaging Operations

Edmund Tang⁽¹⁰⁾	61		Vice President, Corporate Administration

Francis Tang⁽¹¹⁾	54		Vice President, Product Development

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12


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(4)		Hans Rohrer Senior Vice President, Business Development

		Mr. Rohrer was appointed to his current position in June 2008. He previously served as the Chief Executive Officer of Zetex plc from 2006 until it was acquired by the Company in June 2008. He began his career in research and development at Diehl Data Systems before working at TI from 1976 to 1980, where he held a variety of engineering and marketing positions. From 1980 to 1998, he held several managerial positions at National Semiconductor Corporation (“NSM”), including vice president and general manager of Europe and vice president for VLSI and mixed signal products. After NSM, he served as President of ~~Diodes FabTech Inc.~~Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) – Europe until joining Zetex plc in 2006. Mr. Rohrer holds a Master’s degree in electronics from Aalen University and received further business and management education from Stanford University and INSEAD, Paris.

(5)		~~Edmund Tang~~ Carl C. Wertz Chief Financial Officer, Secretary and Treasurer

		Mr. Wertz was appointed to his current position in 1998. He previously served as the Company’s Controller from 1993 to 1998. Prior to joining the Company, he served in various financial management and accounting positions. Mr. Wertz, a licensed certified public accountant, has over 24 years of manufacturing and distribution experience and began his accounting career with Deloitte & Touche LLP.

(6)		Richard D. White Senior Vice President, ~~Administration~~Finance

		Mr. White was appointed to his current position with the Company in 2006. HeMr. White has 30thirty years of ~~managerial and engineering~~senior level finance experience, including 25 years at TI, where he served as Vice President of Finance and Production Planning for MOS memory, Controller for TI’s Asia Pacific Division in Singapore, and various other financial positions in the United States, France and Germany. From 1999 to 2005, he served as the Chief Financial Officer for Optisoft, Inc., and from 2005 to 2006, he served as a Partner for Tatum, LLC. Mr. White, a licensed certified public accountant, holds a Bachelor’s degree in electrical engineering from Oklahoma State University and an MBA from the University of Michigan.

(7)		Colin Greene Europe President and Vice President, Europe Sales and Marketing

		Mr. Greene was appointed to his current position in June 2008 upon the acquisition of Zetex plc. From 1997 to 2008, Mr. Greene held several positions with Zetex. He served on the Zetex’ Board as an executive director from March 2004 until joining the Company and served as Director of Marketing from March 2004 to December 2004 and thereafter as Chief Operating Officer. Prior to Zetex, he spent 10 years with NSM, most recently as European Marketing Manager for all analog products. Mr. Greene holds a Bachelor’s degree with honors in Electrical Engineering from Aston University.

(8)		Julie Holland Vice President, Worldwide Analog Products

		Ms. Holland joined the Company in January 2008. Prior to joining the Company, she served as Director and General Manager of the Connectivity Solutions business unit at TI where her responsibilities included leading business and technical teams in the US, Asia, and Japan in the development, production, and marketing of multiple interface product lines. During her tenure with TI, Ms. Holland held several key management roles within the Mixed Signal Products organization from 1997 to 2001, including Director of the Worldwide Bus Solutions business unit and Director of the Computer Peripheral and Control Products organization. She earned Bachelor‘s degrees in Physics and Mathematics at Northwestern University and a Master’s degree in Engineering Management at Southern Methodist University. She is an alumna of Leadership America and Leadership Texas, and was named a Fellow of the International Women’s Forum Leadership Foundation.

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(9)		T.J. Lee Vice President, Packaging Operations

		T.J. Lee was appointed to his current position in 2008. Prior to joining the Company, Mr. Lee was the President of TI Taiwan Limited since 1998. He served as site manager of TI’s assembly and testing facility in Chung Ho, Taiwan from 1997 to 1998 where he was responsible for the site’s manufacturing operation, sales and marketing. Mr. Lee held various engineering and quality management positions in the manufacturing facility throughout his 32 years career with TI, beginning as a Quality and Reliability Assurance supervisor in 1973. He graduated from Taipei Institute of Technology and earned an Executive MBA degree from Tulane University.

(10)		Edmund Tang Vice President, Corporate Administration

		Mr. Tang was appointed to his current position in 2006. From 1997 to 2001, he served as Vice President and global memory quality manager of the world-wide MOS memory operation and prior to that position, he served as Vice President and General Manager of Asia memory operations. From 2002 to 2006, Mr. Tang served as the Asia President of FSI International Inc., a global supplier of wafer cleaning and processing technology, responsible for FSI’s business in Taiwan, Singapore, South Korea, and China. Mr. Tang holds a ~~Bachelor of Science~~Bachelor’s degree in electrical engineering from the National Cheng Kung University in Taiwan and a Master’s degree in ~~electrical engineering~~Electrical Engineering from Southern Methodist University.

~~(6)~~(11)		Francis Tang Vice President, Product Development

		Mr. Tang was appointed ~~the Company’s Vice President, Product Development~~to his current position in May 2006. He previously served as the Company’s Global Product Manager ~~from 2005~~since 2005. From 2002 until ~~2006. Prior to~~ joining the Company, Mr. Tang served as general manager of T2 Microelectronics in Shanghai, China where he managed complex mixed-signal SOC product development. From 1996 to 2001, Mr. Tang was the senior strategic marketing director for Acer Labs, Inc. USA, and prior to that, he was employed by ~~National Semiconductor Corp.~~NSM for 17 years, where he held various management positions in analog and mixed-signal circuit design, applications and strategic marketing. Mr. Tang holds a Master’s degree in ~~electrical engineering~~Electrical Engineering from University of ~~Missouri—~~Missouri – Rolla.

~~(7)~~		Carl C. Wertz was appointed the Company’s Chief Financial Officer, Secretary and Treasurer in 1998. Mr. Wertz previously served as the Company’s Controller from 1993 to 1998. Prior to joining the Company, Mr. Wertz served in various financial management and accounting positions. Mr. Wertz, a licensed certified public accountant, has over 23 years of manufacturing and distribution experience, and began his accounting career with Deloitte & Touche LLP.

~~(8)~~		Richard D. White was appointed the Company’s Senior Vice President, Finance in 2006. Mr. White has 30 years of senior level finance experience, including 25 years at TI, where he served as Vice President of Finance and Production Planning for MOS memory, Controller for TI’s Asia Pacific Division in Singapore, and various other financial positions in the U.S., France and Germany. From 1999 to 2005, he served as the Chief Financial Officer for Optisoft, Inc., and from 2005 to 2006, he served as a Partner for Tatum, LLC. Mr. White, a certified public accountant, holds a Bachelor of Science degree in electrical engineering from Oklahoma State University and an MBA from the University of Michigan.

13- 17 -

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This section of the Proxy Statement is intended to provide to the Company’s stockholders information about the Company’s compensation objectives and policies for the Company’s ~~Named Executive Officers (“NEOs”)~~NEOs and other executive officers. The Company’s NEOs are the Chief Executive Officer, Chief Financial Officer and three most highly compensated executive officers in ~~2007.~~2008.

To achieve this purpose, this section will explain and analyze how the Company’s compensation program operates and how and why executive compensation decisions were made with respect to the NEOs’ compensation for ~~2007.~~2008.

Compensation Objectives and Philosophy

The objective of the Company’s compensation program is to promote the continued profitability and growth of the Company for the benefit of its stockholders.

The Company’s compensation philosophy is to attract, retain and motivate executives critical to the Company’s long-term growth and profitability. This compensation ~~includes~~consists primarily of base ~~salary,~~salaries, cash bonuses, equity awards and ~~other compensation.~~benefits.

The Compensation Committee ~~(“Committee”~~(the “Committee”) determines the Company’s compensation philosophy and forms of compensation and benefits for NEOs and all other executive officers. The Committee operates under a written charter approved by the Board. A copy of the charter is available atwww.diodes.com in the “Investors —– Corporate Governance” section. The Company currently has ~~eight~~eleven executive officers including the Chief Executive Officer. The Chief Executive Officer participates in the Committee’s executive compensation process. The Committee also periodically receives reports and recommendations from outside compensation consultants.

In support of the Company’s compensation philosophy, the Committee generally believes that:

	•		~~the~~ The total compensation package for NEOs should be competitive (i.e., in at least the 50^th percentile) compared with the total compensation paid by other companies of similar size to their executive officers with comparable duties in the semiconductor industry;

	•		~~base~~ Base salaries should only be a portion of the total compensation package and may generally be lower than the median (i.e., lower than the 50^th percentile) base salaries paid by other companies; and

	•		~~cash~~Cash bonuses and equity awards should be used to motivate NEOs to achieve specific strategic and performance objectives established by the Board and to align the NEOs’ interests with those of the Company’s stockholders.

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How the Company’s Compensation Program Operates

In fiscal ~~2007,~~2008, the Committee continued to apply the compensation objectives and philosophy described above in determining the compensation of the NEOs and the other executive officers.

Annual Evaluation Procedures

The Committee determines the compensation for all the executive officers, including the NEOs. The Committee meets in executive session at the beginning of each fiscal year to (i) evaluate the performance of the NEOs during the prior fiscal year; (ii) determine their annual bonuses, if any, for the prior fiscal year; (iii) establish overall performance goals and objectives for the current fiscal year; and (iv) establish the formula for determining the total executive officer bonus pool (the “Executive Bonus Pool”) for the current fiscal year. The Committee meets again in executive session ~~around~~ mid-year to (i) set the NEOs’ base salaries for the current fiscal year; and (ii) consider and approve any equity incentive compensation. For a discussion of the criteria used by the Committee to evaluate the performance of NEOs in ~~2007~~2008 see “How and Why Executive Compensation Decisions Were Made.”

14

At the time Radford conducted the Survey, the Company only had nine executive officers. The number of executive officers of the Company was expanded to eleven during the second half of 2008. Therefore, the Survey only covers the compensation paid to the following nine executive officers of the Company: the Chief Executive ~~Officer,~~Officer; Chief Financial ~~Officer,~~Officer; Senior Vice President, ~~Operations, and~~Finance; Senior Vice President, Operations; Senior Vice President, Sales and ~~Marketing for~~Marketing; Vice President, Corporate Administration; Vice President, Product Development, Asia President and Vice President, Asia Sales and Marketing; and Director, Worldwide Analog Business Unit Products, in comparison with those occupying similar positions in the 3925 companies in the Peer Group as ~~follows:~~listed below:


~~Actel Corp.~~Applied Micro Circuits Corporation	~~Ixys Corp.~~	~~Sigmatel Inc.~~
~~AMIS Holdings,~~Conexant Systems, Inc.	~~Lattice Semiconductor~~	~~Silicon Image, Inc.~~
~~Anadigics, Inc.~~	~~Micrel, Inc.~~	~~Silicon Laboratories, Inc.~~
~~Applied Micro Circuits CC.~~ ~~Atheros Communications~~	~~Microsemi Corp.~~ ~~Mindspeed Technologies~~	~~Silicon Storage Technologies~~ ~~Siliconix, Inc.~~
~~Cirrus Logic, Inc.~~	~~Omnivision Technologies~~	~~Sirf Techology Holding~~
Cree, Inc.	~~Pixelworks, Inc.~~	~~Standard Microsystems~~
DSP Group, Inc.	~~PMC-Sierra, Inc.~~	~~Three-Five Systems, Inc.~~
~~ESS~~Integrated Device Technology, Inc.	~~Portalplayer,~~Integrated Silicon Solution, Inc.
International Rectifier Corporation	~~Triquint Semiconductor~~
~~Genesis Microchip, Inc.~~Intersil Corporation	~~Power Integrations, Inc.~~IXYS Corporation
Lattice Semiconductor Corporation	~~Vitesse Semiconductor~~
~~Integrated Device Tech, Inc.~~Linear Technology Corporation	~~Rambus, Inc.~~Micrel, Incorporated
Microchip Technology Incorporated	~~White Electronic Design~~Microsemi Corporation	OmniVision Technologies, Inc.
~~Integrated Silicon Solution~~PMC-Sierra, Inc.	RF Micro Devices, Inc.	~~Zarlink Semiconductor~~Semtech Corporation
~~Intersil Corp — CL A~~Silicon Image, Inc.	~~Semtech Corp.~~Silicon Laboratories Inc.	Silicon Storage Technology, Inc.
Skyworks Solutions, Inc.	Standard Microsystems Corporation	TriQuint Semiconductor, Inc.
Zoran ~~Corp.~~Corporation

The Survey compares the base salary, ~~cash~~target bonus, target total cash, ~~compensation, restricted stock awards,~~long-term incentive value, and total direct compensation ~~and stock option awards~~of each of the Company’s nine executive officers to the amounts given for the similar ~~positions~~position in the

15

Elements of ~~NEO~~Named Executive Officer Compensation

The Company’s compensation for NEOs consists primarily of base salaries, cash bonuses and equity awards in the form of stock options and restricted stock units (“RSUs”). The following table shows ~~each~~all compensation ~~element~~elements as ~~a percentage~~percentages of total compensation for each NEO for fiscal ~~2007:~~2008:

Base Equity Additional
Salaries Bonuses Awards (1) Benefits Total
Name Title (%) (%) (%) (%) (%)
Keh-Shew Lu
President and Chief Executive Officer 9.7 28.2 60.9 1.3 100
Carl C. Wertz
Chief Financial Officer, Secretary and Treasurer 22.4 34.1 37.9 5.6 100
Joseph Liu
Senior Vice President,
Operations 20.7 37.6 38.3 3.4 100
Mark A. King
Senior Vice President, Sales and Marketing 20.7 35.6 39.2 4.4 100
Richard D. White
Senior Vice President,
Finance 23.8 49.2 20.8 6.1 100



		Base				Equity		Additional
		Salaries		Bonuses		Awards⁽¹⁾		Benefits		Total
Name	Title	(%)		(%)		(%)		(%)		(%)
Keh-Shew Lu	President and Chief Executive Officer		9.9		22.1		67.1		0.9		100
Carl C. Wertz	Chief Financial Officer, Secretary and Treasurer		27.1		27.1		41.3		4.5		100
Joseph Liu	Senior Vice President, Operations		24.4		30.5		42.7		2.4		100
Mark A. King	Senior Vice President, Sales and Marketing		23.4		30.6		42.7		3.4		100
Richard D. White	Senior Vice President, Finance		24.7		38.5		32.7		4.1		100


(1)		These percentages reflect portions of NEOs’ total compensation determined by the Company for accounting purposes for these equity awards and do not reflect whether each NEO has actually realized a financial benefit from these equity awards. The value of the equity awards is calculated in accordance with the amount recognized for financial statement reporting purposes for the fiscal year ended December 31, ~~2007~~2008 in accordance with the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). Pursuant to SEC rules, the percentages shown above as equity award portions of NEO’s total compensation exclude the impact of estimated forfeitures related to service-based vesting conditions. Amounts reported for ~~restricted stock units (“RSU”)~~RSUs and restricted stock awards (“~~RSA”~~RSAs”) are calculated by multiplying the number of shares subject to the award by the closing price of the Company’s Common Stock on the grant date and then dividing by the vesting period. ~~The~~Amounts reported for stock ~~option amounts~~options are determined using the ~~Black Scholes option valuation~~Black-Scholes option-pricing model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. See Note 1517 to the Company’s audited financial

16


		statements for the fiscal year ended December 31, ~~2007,~~2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~29, 2008,~~26, 2009, for a further discussion of the relevant valuation assumptions used in calculating grant date fair value pursuant to SFAS 123(R).

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How and Why Executive Compensation Decisions Were Made

For fiscal ~~2007,~~2008, the major factors that influenced the Committee’s executive compensation decisions for NEOs were:

	•		~~the~~The Company’s ~~2007~~2008 financial performance, including, but not limited to, the following items: serviceable area market (SAM) industry growth; fiscal ~~2007~~2008 revenue and net income versus fiscal ~~2006~~2007 revenue and net income; and profit fall-through; and

	•		Executive retention.

Both factors will also be major considerations in the Committee’s executive compensation decisions for NEOs for fiscal ~~2008.~~2009. Due to the ongoing economic downturn worldwide, it is difficult to determine the likelihood that the NEOs will meet the Committee’s performance expectations for fiscal 2009.

Base Salaries

In line with the Committee’s compensation philosophy, executive officers receive a relatively small portion of their total compensation in the form of base salaries. Generally, the executive officers’ base salaries are below the median (or the 50^th percentile) base salaries paid to officers with comparable duties by similar size companies in ~~same sectors of~~ the semiconductor industry.

The Committee may increase or decrease executive officers’ base salaries by considering each executive officer’s scope of responsibility, ~~year after year,~~ level of experience, ~~the Company’s performance,~~ individual performance, past and potential contribution to the Company’s business as well as the Company’s performance and the current year’s change in the cost of ~~living for each executive officer.~~living. To ensure that the base salaries are adequate, the Committee also periodically reviews independent surveys of executive compensation, such as ~~Lipis~~Radford Surveys and Consulting’s ~~2006 executive compensation survey,~~2008 Executive Compensation Competitive Assessment, and compares the executive officers’ base salaries to amounts paid by comparable companies to executives with similar duties in the ~~same sectors of the~~ semiconductor industry. ~~Finally,~~In addition, the Committee discusses and takes into consideration the recommendation of the Chief Executive Officer regarding each executive officer’s base salary other than the Chief Executive Officer’s own base salary.

For ~~2006~~2007 and ~~2007,~~2008, the changes in the NEOs’ base salaries are summarized as follows:



Name	Fiscal 2006 Salary			Fiscal 2007 Salary		Percent Change			Fiscal 2007 Salary		Fiscal 2008 Salary		Percent Change

Keh-Shew Lu	$	315,000		$	326,000		3.5	%	$	326,000	$	343,000		5.2	%
Carl C. Wertz	$	164,000		$	165,000		0.6	%	$	165,000	$	170,000		3.0	%
Joseph Liu	$	229,000		$	237,000		3.5	%	$	237,000	$	248,000		4.6	%
Mark A. King	$	197,000		$	204,000		3.6	%	$	204,000	$	215,000		5.3	%
Richard D. White	$	150,000	*	$	160,000		6.7	%	$	160,000	$	170,000		6.2	%

The following table shows each NEO’s share of the Executive Bonus Pool for 2007 and 2008 and the percentage change in such bonuses from 2007 to 2008:



Name	Fiscal 2007 Bonus		Fiscal 2008 Bonus		Percent Change

Keh-Shew Lu		$953,892		$763,114		-20	%
Carl C. Wertz		$251,024		$170,000		-32	%
Joseph Liu		$431,762		$310,000		-28	%
Mark A. King		$351,434		$281,147		-20	%
Richard D. White		$331,352		$265,082		-20	%

		$2,319,464		$1,789,343		-23	%

Dr. Lu received a 2008 bonus of $763,114, which is 20% lower than his previous year’s bonus. The Committee determined Dr. Lu’s 2008 bonus after considering the following factors: the Company’s 2008 performance and objectives; Dr. Lu’s individual performance; the allocation between the cash and non-cash components of his executive compensation; internal pay equity among executive officers; and the Survey. Under Dr. Lu’s leadership and management, the Company’s 2008 revenue grew nearly 8% to $433 million, compared to $401 million in year 2007. Notably, under Dr. Lu’s leadership, the Company completed the acquisition of Zetex plc, a semiconductor company based in Oldham, United Kingdom, just prior to the severe economic recession that has been affecting the economy worldwide. While the economic downturn occurred sharply and rapidly during the second half of 2008, Dr. Lu was able to take several decisive actions to reduce cost, maintain cash, and position the Company for future growth once the worldwide economic situation improves. Dr. Lu also quickly led the Company management to approve a practical workforce reduction plan in response to the economic downturn. Dr. Lu directed the Company to enter into a settlement with UBS AG and its affiliates to provide liquidity for the Company’s $320.7 million auction rate securities portfolio and subsequently completed a discounted repurchase of $56.1 million of the Company’s $230 million 2.25% Convertible Senior Notes. Despite these abovementioned accomplishments, Dr. Lu requested that the Committee substantially lower his and Company executive officers’ 2008 bonuses for the benefit of the Company and its stockholders. The Committee, therefore, determined that a 20% decrease in his 2008 bonus, compared to his 2007 bonus, would be an appropriate response to his request.

Mr. Wertz received a 2008 bonus of $170,000, which is 32% lower than his previous year’s bonus. The Committee’s decision to decrease Mr. Wertz’s 2008 bonus and the percentage of the decrease in Mr. Wertz’s 2008 bonus were mainly due to the request of Dr. Lu to substantially lower the Company executive officers’ 2008 bonuses for the benefit of the Company and its stockholders as a response to the recent severe economic downturn worldwide, and also the continued shift of a portion of Mr. Wertz’s day-to-day management and operational responsibilities from Mr. Wertz to Mr. White, the Company’s Senior Vice President, Finance.

Mr. White received a 2008 bonus of $265,082, which is 20% lower than his previous year’s bonus. The Committee’s decision to decrease Mr. White’s 2008 bonus and the percentage of the decrease in Mr. White’s 2008 bonus were mainly due to the request of Dr. Lu to substantially lower the Company executive officers’ 2008 bonuses in response to the recent severe economic downturn worldwide, offset in part by the Committee’s recognition that Mr. White had assumed a portion of Mr. Wertz’s day-to-day management and operational responsibilities.

Mr. King received a 2008 bonus of $281,147, which is 20% lower than his previous year’s bonus. The Committee’s decision to decrease Mr. King’s 2008 bonus and the percentage of the decrease in Mr. King’s 2008 bonus were mainly due to the request of Dr. Lu to substantially lower the Company executive officers’ 2008 bonuses in response to the recent severe economic downturn worldwide.

Mr. Liu received a 2008 bonus of $310,000, which is 28% lower than his previous year’s bonus. The Committee’s decision to decrease Mr. Liu’s 2008 bonus and the percentage of the decrease in Mr. Liu’s 2008 bonus were mainly due to the request of Dr. Lu to substantially lower the Company executive officers’ 2008 bonuses in response to the recent severe economic downturn worldwide and the continued shift of Mr. Liu’s responsibilities, in the area of semiconductor product assembly and product package manufacturing and testing, to other executive officers in the Company.

Fiscal 2009 Executive Bonus Pool

At the beginning of 2009, the Committee decided to use the same formula used in 2008 for determining the Executive Bonus Pool. At the end of 2009, the Committee will allocate the Executive Bonus Pool among the executive officers based on the workload and areas of responsibilities of each executive officer during 2009, and the Committee’s assessment of the contributions made by each executive officer to the achievement of the Company’s performance.

- 23 -

Equity Awards

Under the Company’s 2001 ~~Omnibus Equity~~ Incentive Plan, ~~(the “2001 Incentive Plan”),~~ the Company may grant any type of equity award whose value is derived from the value of the Common Stock of the Company, including shares of Common Stock, stock options, stock appreciation rights and ~~restricted stock units (“RSUs”).~~RSUs.

The exercise price of stock options granted to date has been no less than the 100% of fair market value of the Common Stock as of the date of grant. To encourage retention, the ability to exercise ~~the~~ stock ~~option~~options is subject to vesting restrictions. The Committee’s policy is to award stock options and RSUs annually, which generally vest in four equal annual installments on the first four anniversary dates of the date of grant, and are in recognition of ~~the~~each executive officer’s current and potential contributions to the Company. Decisions made by the Committee regarding the timing and size of subsequent awards take into consideration the Company’s and the individual’s performance, allocation between cash and non-cash components of the executive compensation, and the size and term of awards made in the prior ~~years.~~year.

19

number of stock options and ~~3,750~~approved a minor increase in the number of RSUs to Mr. White as compared to 2007 after assessing ~~the above-mentioned Company’s increased stock price factor in 2007,~~ the Company’s performance, Mr. White’s ~~first full-year~~ performance in fiscal 2008, his workload in his areas of responsibilities and the allocation between the cash and non-cash components of his compensation.

As discussed in the previous section on “Bonuses,” the Committee recognized that some of Mr. King’s management and operational responsibilities were shifted to other managers in the Company in ~~2007. Therefore,~~2007 and 2008; therefore, the Committee decreased Mr. King’s ~~2007~~2008 stock options by 2% while granting him the same number of RSUs in 2008, compared to his RSU grants in 2007, after assessing the Company’s performance, Mr. King’s performance in fiscal 2008, his workload in his areas of responsibilities and ~~RSUs by 5.6%~~the allocation between the cash and ~~14.3%, respectively.~~non-cash components of his compensation.

As discussed in the previous section on “Bonuses,” the Committee recognized ~~that some~~the continued shift of Mr. Liu’s management and operational responsibilities, ~~were shifted~~particularly in the area of semiconductor product assembly and product package manufacturing and testing, to other managers in the ~~Company in 2007. Therefore,~~Company; therefore, the Committee decreased Mr. Liu’s ~~2007~~2008 stock options and RSUs by ~~5.0%~~8.8% and ~~12.5%~~4.8%, ~~respectively.~~respectively, after assessing the Company’s performance, Mr. Liu’s performance in fiscal 2008, his workload in his areas of responsibilities and the allocation between the cash and non-cash components of his compensation.

20- 25 -

Additional Benefits and Perquisites

Pursuant to their employment agreements, NEOs and certain other executive officers are entitled to reimbursement for all reasonable and documented business expenses and paid vacation in accordance with the Company’s policies. NEOs are also provided additional executive benefits and perquisites. The Committee periodically reviews NEO benefits and perquisites to ensure these remain competitive and supportable to stockholders. For fiscal ~~2007,~~2008, we provided the following benefits and perquisites to the NEOs:



Executive Benefits	Description		Who Qualifies


Automobile Usage Expense	•	Automobile allowance of $1,300 per month for the President and Chief Executive ~~Officer~~Officer.	All NEOs

	•	Automobile allowance of $1,000 per month for all other ~~NEOs~~NEOs.

Health Insurance	•	Corporate group ~~insurance~~insurance.	All NEOs

	•	From January to April 2008, Mr. Joseph Liu also ~~participates~~participated in the Company’s Taiwan health insurance plan.

Dental Insurance	•	Corporate group ~~dental insurance~~insurance.	All NEOs

Vision Insurance	•	Corporate group ~~insurance~~insurance.	All NEOs

Employee Assistance Program	•	Corporate employee assistance ~~program~~program.	All NEOs

Retirement Plans	•	The 401(k) Plan matching contributions of $1 for every $2 contributed by the participant up to 6% (3% maximum matching) of the ~~total cash compensation~~participant’s eligible payroll (subject to ~~Internal Revenue Service~~IRS regulations)~~, the Company matches 50% of the employee’s contribution to his retirement account~~.	All NEOs

	•	Discretionary 401(k) contribution, the amount of which is to be determined each ~~year, provided employed through the last day of the year and a minimum of 500 hours of service in that year~~year. For 2008, no discretionary 401(k) contributions were made.

	•	From January to April 2008, Mr. Joseph Liu also ~~participates~~participated in the Company’s Taiwan pension plan.

Deferred Compensation Plan	•	Defer receipt of a portion of salary, cash bonus, equity or other specified ~~compensation by providing NEOs with greater flexibility in structuring the timing of their compensation payments~~compensation.	All NEOs

	•	Discretionary contribution made by the ~~Company~~Company. For 2008, no discretionary contributions were made.

Life Insurance	•	Corporate group life insurance in the amount of ~~$700,000~~$700,000.	All NEOs

Accidental Death and Dismemberment	•	Insured in the amount of ~~$700,000~~$700,000.	All NEOs

Business Travel Accident Insurance	•	Tiered benefit with executive officers receiving $1,000,000 accidental death and ~~dismemberment~~dismemberment.	All NEOs

	• ~~$500,000~~	$500,000 permanent total disability and $500 per week for accident total disability for covered injury resulting from a covered accident worldwide while on a business ~~trip~~trip.

Short-Term Disability Insurance	•	Corporate group short-term disability: after elimination period of 30 days, 60% of weekly earnings are paid to a maximum of $1,250 per week.	All NEOs

21

Our analysis of the NEOs’ additional benefits and perquisites for fiscal ~~2007~~2008 indicates that these account for a nominal amount of the NEOs’ total compensation package and are consistent with the Committee’s philosophy to provide a competitive compensation package.

Post-Termination and Change in Control Payments

Messrs. Lu, Wertz, Liu and King have current employment agreements entered into with the Company on August 29, 2005. In the event employment is terminated by the Company without “cause” (as defined), the executive either may (a) commence a one-year paid leave of absence, or (b) forego such leave of absence and the benefits associated therewith. If the executive chooses to commence the leave of absence, the executive will, during that one year, continue as a full-time employee, entitled to receive all the benefits provided under the employment agreement. At the end of the leave of absence, the executive will continue to receive his base salary for one year, and all share-based compensation previously granted will continue to vest. The executives are subject to non-competition and non-solicitation provisions during the leave of absence and for one year after the end of the leave of absence. Upon a change in control, all share-based compensation granted to the executive shall vest immediately and be exercisable for the full term thereof. If the executive chooses to forego such leave of absence, the vesting of any options or restricted stock awards awarded to the executive and his ability to exercise them, upon termination will be governed by the terms of the 2001 Incentive Plan and his stock option agreements. As no other officers have employment agreements with the Company, upon termination or a change in control, the vesting of their stock options and ability to exercise such options will be governed by the terms of the 2001 Incentive Plan and their stock option agreements. The 2001 Incentive Plan generally provides, that upon a change in control, all stock awards then outstanding shall vest immediately. For a further description of these arrangements, see “Potential Payments Upon Termination or Change in Control.”

The Committee has not provided for a lump sum payment upon termination of the executives, as the Committee believes that by providing the executives with an option to commence a one-year leave of absence upon termination, the Company has the ability to work with the executive to transition his duties and responsibilities in a productive manner. The Committee believes that these post-termination and change in control arrangements are an important part of overall compensation for our NEOs because they help to secure the continued employment and dedication of our NEOs, notwithstanding any concern that they might have regarding their own continued employment prior to or following a change in control.

- 27 -

Tax and Accounting Implications

Deductibility of Compensation

Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the ~~“Code”~~“IRCode”), a public company generally will not be entitled to a deduction for non-performance-based compensation paid to a certain executive officer to the extent such compensation exceeds $1.0 million. Special rules apply for “performance-based” compensation, including the approval of the performance goals by the stockholders of the Company. The stockholders of the Company have approved each of the Company’s incentive plans for the purpose of qualifying those plans under Section 162(m). To qualify for deductibility under Section 162(m), the performance goals must be established no later than 90 days from the beginning of the performance period.

Because the Committee retained discretion in the allocation of the ~~executive bonus pool~~Executive Bonus Pool in ~~2007,~~2008, a portion of the executive bonuses in ~~2007~~2008 was not “performance-based.” In order to maintain flexibility in compensating NEOs and other

22

COMPENSATION COMMITTEE REPORT

The Report of the Compensation Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

The Compensation Committee ~~(the “Committee”)~~ of the Company has reviewed and discussed the Compensation Discussion and Analysis with the Company’s management, and based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.



Dated: April ~~8, 2008~~ 1, 2009		THE COMPENSATION COMMITTEE

		Raymond Soong, Chairman
		L.P. Hsu
		Shing Mao ~~L.P. Hsu~~

23- 29 -

SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by each ~~of the~~ NEO for the fiscal year ended December 31, ~~2007.~~2008. The NEOs are the Company’s Chief Executive Officer, Chief Financial Officer, and three other most highly compensated executive officers ranked by their total compensation in the table below (reduced by the amount in column (h)). ~~Columns required by SEC rules are omitted where there is no amount to report.~~

Change in
Non-Equity Pension Value
Incentive Plan and Nonquali-
Stock Option Compen- fied Deferred All Other
Name and Principal Bonus Awards Awards sation Compensation Compensation Total
Position Year Salary ($) ($) (4) ($) (1) ($) (1) ($) (4) Earnings ($) ($) (5) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Keh-Shew Lu
2007 326,000 953,892 1,167,750 887,042 — — 43,230 3,377,913
President and 2006 315,000 — 1,167,750 495,678 827,000 — 44,832 2,850,260
Chief Executive Officer

Carl C. Wertz
2007 165,000 251,024 38,528 240,344 — — 40,975 735,871
Chief Financial 2006 164,000 — 15,652 204,692 283,000 — 39,799 707,143
Officer, Secretary and Treasurer

Joseph Liu
2007 237,000 431,762 52,270 387,107 — — 39,142 1,147,282
Senior Vice 2006 229,000 — 20,869 320,008 416,000 — 42,371 1,028,247
President, Operations (2)

Mark A. King
2007 204,000 351,434 45,399 341,479 — — 43,837 986,150
Senior Vice 2006 197,000 — 18,260 278,122 387,000 — 46,162 926,544
President, Sales and Marketing

Richard D. White
2007 160,000 331,352 44,716 95,725 — — 41,241 673,035
Senior Vice 2006 (3) 75,000 — 19,519 203,240 140,000 — 29,579 467,338
President, Finance



										Non- Equity		Change in
										Incentive		Pension Value
										Plan		and Non-quali-
						Stock		Option		Compen-		fied Deferred		All Other
Name and Principal				Bonus ($)		Awards ($)		Awards ($)		sation		Compensation		Compensation		Total
Position	Year	Salary ($)		(3)		(1)		(1)		($) (3)		Earnings ($)		($) (4)		($)
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)

Keh-Shew Lu	2008		343,000		763,114		1,167,750		1,154,787		-		-		30,285		3,458,936
President and Chief	2007		326,000		953,892		1,167,750		887,042		-		-		43,230		3,377,913
Financial Officer	2006		315,000		-		1,167,750		495,678		827,000		-		44,832		2,850,260

Carl C. Wertz	2008		170,000		170,000		60,389		198,976		-		-		28,011		627,376
Chief Financial	2007		165,000		251,024		38,528		217,866		-		-		40,975		713,394
Officer, Secretary and Treasurer	2006		164,000		-		15,652		204,692		283,000		-		39,799		707,143

Joseph Liu	2008		248,000		310,000		86,136		347,953		-		-		24,712		1,016,801
Senior Vice	2007		237,000		431,762		52,270		349,644		-		-		39,142		1,109,819
President, Operations (2)	2006		229,000		-		20,869		320,008		416,000		-		42,371		1,028,247

Mark A. King	2008		215,000		281,147		75,301		317,350		-		-		31,385		920,183
Senior Vice	2007		204,000		351,434		45,399		311,509		-		-		43,837		956,180
President, Sales and Marketing	2006		197,000		-		18,260		278,122		387,000		-		46,162		926,544

Richard D. White	2008		170,000		265,082		69,838		155,774		-		-		28,405		689,099
Senior Vice	2007		160,000		331,352		44,716		95,725		-		-		41,241		673,035
President, Finance	2006		75,000		-		15,615		31,406		140,000		-		29,579		291,600


(1)		These amounts reflect the value determined by the Company for accounting purposes for these awards and do not reflect whether each NEO has actually realized a financial benefit from the awards. The value of the equity awards in ~~column~~columns (e) and (f) is calculated in accordance with the amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2008, 2007 and ~~2006.~~2006 in accordance with SFAS 123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Amounts reported for ~~restricted stock units (“RSUs”)~~RSUs and ~~restricted stock awards (“RSAs”)~~RSAs are calculated by multiplying the number of shares subject to the award by the closing price of the Company’s Common Stock on the grant date and then dividing by the vesting period. ~~In accordance with the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). The~~Amounts reported for stock ~~option amounts~~options are determined using the ~~Black Scholes option valuation~~Black-Scholes option-pricing model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. See Note 1517 to the Company’s audited financial statements for the fiscal year ended December 31, ~~2007,~~2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~29, 2008,~~26, 2009, for a further discussion of the relevant valuation assumptions used in calculating grant date fair value pursuant to SFAS 123(R). ~~Grant date fair value of restricted stock awards is calculated by multiplying the number of stock units by the price of the Company’s Common Stock on the grant date.~~

(Footnotes continued on following page)

24- 30 -

(Footnotes continued from previous page)

The following table details the amounts in column (e) and (f) and represents the SFAS 123(R) expense in 2008 for each of the equity awards:



																			Total
									Total Stock		2008 Stock		2007 Stock		2006 Stock		2005 Stock		Option
	2008 RSUs		2007 RSUs		2006 RSUs		2005 RSAs		Awards		Options		Options		Options		Options		Awards
Name	($)		($)		($)		($)		($)(e)		($)		($)		($)		($)		($)(f)
Keh-Shew Lu		-		-		-		1,167,750		1,167,750		270,389		417,531		394,144		72,724		1,154,787
Carl C. Wertz		12,228		23,119		25,043		-		60,389		29,231		56,423		60,060		53,261		198,976
Joseph Liu		20,380		32,366		33,390		-		86,136		63,334		107,204		100,100		77,315		347,953
Mark A. King		18,342		27,743		29,216		-		75,301		60,898		95,919		90,090		70,442		317,350
Richard D. White		15,489		23,119		31,230		-		69,838		36,539		56,423		62,812		-		155,774


		All equity awards granted since May, 2006 vest in four equal annual installments. Prior awards vest in three equal annual installments.

(2)		Mr. Joseph Liu’s salary includes a payment of ~~$15,240~~$5,080 payable in New Taiwan Dollars (“NT$”) (approximately NT$~~495,000)~~166,726), which, for the purpose of this table, was converted into US Dollars (“US$”) based on the currency exchange rate of NT$~~32.44~~ 32.82 to US$1 on January ~~2, 2008.~~

~~The following table details the amounts in column (e) and (f) of the previous table and represents the SFAS 123(R) expense in 2007 for each of the equity awards:~~

Total 2007 2006 2005 2004 Total
2007 2006 2005 Stock Stock Stock Stock Stock Option
RSU RSU RSA Awards Option Option Option Option Awards
Name ($) ($) ($) ($)(e) ($) ($) ($) ($) ($)(f)

Keh-Shew Lu
— — 1,167,750 1,167,750 243,560 394,144 249,338 — 887,042

Carl C. Wertz
13,486 25,043 — 38,528 32,913 60,060 98,328 49,042 240,344

Joseph Liu
18,880 33,390 — 52,270 62,536 100,100 142,735 81,736 387,107

Mark A. King
16,183 29,216 — 45,399 55,953 90,090 130,047 65,389 341,479

Richard D. White
13,486 31,230 — 44,716 32,913 62,812 — — 95,725

~~Stock options granted in 2005 vest in three equal annual installments, and all equity awards granted in 2006 and 2007 vest in four equal annual installments.~~


~~(3)~~		~~Amount shown for Mr. White’s 2006 salary represents amounts earned from his July 2006 hire date at an annual salary of $150,000.~~1, 2009.

~~(4)~~(3)		Amounts earned based on the Company’s executive bonus plan. In 2007 and 2008, the Compensation Committee allocated the Executive Bonus Pool based on the Compensation Committee’s subjective assessment of the contribution made by each officer of the Company to the achievement of the Company’s performance. In 2006, the Executive Bonus Pool was based on such assessment as well as in accordance with the executive bonus plan.

~~(5)~~(4)		Certain of the Company’s executive officers receive personal benefits in addition to salary, ~~and~~ cash bonuses and share-based compensation, consisting of automobile allowance, life insurance payable at the direction of the employee, short-term and long-term disability insurance, business travel accident insurance, foreign labor insurance, foreign voluntary workers compensation, contributions under the Company’s retirement plans, group health insurance, dental insurance, vision insurance, employee assistance program, deferred compensation plan, and health club membership discount. The amount shown in column (i) for “All Other Compensation” includes benefits summarized in the following table for each NEO:

Auto Health Retirement Life
Year Allowance ($) Insurance ($) Plans ($) Insurance ($) Total ($)

Keh-Shew Lu
2007 15,600 4,261 20,250 3,118 43,230
2006 15,600 4,212 22,000 3,020 44,832

Carl C. Wertz
2007 12,000 6,034 20,250 2,691 40,975
2006 11,600 3,611 22,000 2,588 39,799

Joseph Liu
2007 10,130 5,105 21,171 2,737 39,142
2006 10,130 6,485 22,928 2,828 42,371

Mark A. King
2007 12,000 8,817 20,250 2,770 43,837
2006 11,600 9,890 22,000 2,672 46,162

Richard D. White
2007 12,000 6,285 20,250 2,706 41,241
2006 5,750 3,156 18,219 2,454 29,579



		Auto		Health		Retirement		Life & Disability
Name	Year	Allowance ($)		Insurance ($)		Plans ($)		Insurance ($)		Total ($)
Keh-Shew Lu	2008		15,600		4,666		6,900		3,118		30,285
	2007		15,600		4,261		20,250		3,118		43,230
	2006		15,600		4,212		22,000		3,020		44,832
Carl C. Wertz	2008		12,000		6,368		6,900		2,744		28,011
	2007		12,000		6,034		20,250		2,691		40,975
	2006		11,600		3,611		22,000		2,588		39,799
Joseph Liu	2008		10,130		5,278		6,900		2,404		24,712
	2007		10,130		5,105		21,171		2,737		39,142
	2006		10,130		6,485		22,928		2,828		42,371
Mark A. King	2008		12,000		9,490		6,900		2,995		31,385
	2007		12,000		8,817		20,250		2,770		43,837
	2006		11,600		9,890		22,000		2,672		46,162
Richard D. White	2008		12,000		6,762		6,900		2,744		28,405
	2007		12,000		6,285		20,250		2,706		41,241
	2006		5,750		3,156		18,219		2,454		29,579

25- 31 -

GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information with respect to grants of awards to the NEOs under our non-equity and equity incentive plans during ~~2007.~~2008.

Estimated Future
Payouts Under Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards Equity
Incentive Plan
Awards All Other All Other
Stock Option Grant Date
Awards: Awards: Exercise or Fair Value of
Number of Number of Base Price Stock and
Maxi- Shares of Securities of Option Option
Threshold Target mum Threshold Maximum Stock Underlying Awards Awards ($)
Name Grant Date ($) ($)(d) ($) (#) Target (#) Units (#) Options (#) ($/Sh) (l)
(a) (b) (c) (1) (e) (f) (#)(g) (h) (i) (j) (k) (2)
Keh-Shew Lu
5/31/2007 — 763,114 — — — — — 111,000 24.66 1,670,124

Carl C. Wertz
5/31/2007 — 200,819 — — — — 3,750 15,000 24.66 318,167

Joseph Liu
5/31/2007 — 345,410 — — — — 5,250 28,500 24.66 558,281

Mark A. King
5/31/2007 — 281,147 — — — — 4,500 25,500 24.66 494,647

Richard D. White
5/31/2007 — 265,082 — — — — 3,750 15,000 24.66 318,167



											All Other			All Other
											Stock			Option
			Estimated Future Payouts Under					Estimated Future Payouts			Awards:			Awards:				Grant Date
			Non-Equity Incentive					Under Equity Incentive Plan			Number of			Number of		Exercise or		Fair Value of
		Plan Awards					Awards				Shares of			Securities		Base Price of		Stock and
						Maxi-				Maxi-	Stock or			Underlying		Options		Options
			Threshold	Target		mum		Threshold	Target	mum	Units			Options		Awards		Awards
Name	Grant Date		($)	($) (1)		($)		(#)	(#)	(#)	(#) (3)			(#) (3)		($/Sh)		($) (2)
(a)	(b)		(c)	(d)		(e)		(f)	(g)	(h)	(i)		��	(j)		(k)		(l)

Keh-Shew Lu	-		-		610,491	-		-	-	-		-			-		-		-
	5/29/2008		-		-	-		-	-	-		-			111,000		27.95		1,854,093

Carl C. Wertz	-		-		136,000	-		-	-	-		-			-		-		-
	5/29/2008		-		-	-		-	-	-		-			12,000		27.95		200,443
	5/29/2008		-		-	-		-	-	-		3,000			-		-		83,850

Joseph Liu	-		-		248,000	-		-	-	-		-			-		-		-
	5/29/2008		-		-	-		-	-	-		-			26,000		27.95		434,292
	5/29/2008		-		-	-		-	-	-		5,000			-		-		139,750

Mark A. King	-		-		224,918	-		-	-	-		-			-		-		-
	5/29/2008		-		-	-		-	-	-		-			25,000		27.95		417,589
	5/29/2008		-		-	-		-	-	-		4,500			-		-		125,775

Richard D. White	-		-		212,066	-		-	-	-		-			-		-		-
	5/29/2008		-		-	-		-	-	-		-			15,000		27.95		250,553
	5/29/2008		-		-	-		-	-	-		3,800			-		-		106,210


(1)		Amounts ~~assume~~shown in column (d) were made under the executive bonus plan. Amounts shown are 80% of the ~~2007~~2008 bonus amount. Under the executive ~~cash~~ bonus plan, no bonus is paid if the Company does not achieve 80% of the bonus formula.

(2)		These amounts reflect the value determined by the Company for accounting purposes for these awards and do not reflect whether each NEO has actually realized a financial benefit from the awards. Grant date fair value of RSAs, RSUs and stock options is calculated in accordance with the amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008 in accordance with SFAS 123(R). ~~The~~Pursuant to SEC rules, the amounts ~~attributable~~shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Grant date fair value reported for RSUs and RSAs is calculated by multiplying the number of shares subject to the award by the closing price of the Company’s Common Stock on the grant date and then dividing by the vesting period. Amounts reported for stock options are determined using the ~~Black Scholes option valuation~~Black-Scholes option-pricing model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. Grant date fair value of RSAs and RSUs is calculated by multiplying the number of stock units by the price of the Company’s Common Stock on the grant date. RSUs and stock options granted in 2007 vest in four equal annual installments, commencing on the first anniversary of the date of grant. See Note 1517 to the Company’s audited financial statements for the fiscal year ended December 31, ~~2007,~~2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~29, 2008,~~26, 2009, for a further discussion of the relevant valuation assumptions used in calculating grant date fair value pursuant to SFAS 123(R).

(3)		Awards shown in columns (i) and (j) were made under the 2001 Incentive Plan.

- 32 -

Narrative to Summary Compensation Table and Plan-Based Awards Table

Employment Agreements

On August 29, 2005, the Company entered into employment agreements with Messrs. Lu, Liu, King and Wertz, pursuant to which they are entitled to (i) receive an annual base salary (subject to increase from time to time in the discretion of the Board) of ~~$300,000, $208,000, $177,000,~~$343,000, $248,000, $215,000, and ~~$146,000,~~$170,000, respectively, as adjusted for 2008, (ii) participate in any executive bonus plan, (iii) receive reimbursement for all reasonable and documented business expenses, (iv) paid vacation in accordance with the vacation policy for employees generally, (v) participate in all plans provided to employees in general, (vi) receive a life insurance policy in the amount in effect on the date of the agreement, and (vii) receive a disability policy in the maximum insurable amount. Employment is “at will” and may be terminated by either the Company or the employee at any time. The employee is prohibited from disclosing the Company’s trade secrets, engaging in any “competitive activity” (as defined) or

26

2001 Omnibus Equity Incentive Plan

For a description of the 2001 Incentive Plan, see “PROPOSAL TWO - AMENDMENT OF 2001 OMNIBUS EQUITY INCENTIVE PLAN.”

The 1993 ISO Plan, the 1993 NQO Plan and the 2001 Incentive Plan were clarified and amended on September 22, 2006 by the Board to provide that, in the event of a change in the capital stock of the Company (such as a stock dividend, stock split, re-capitalization, merger, consolidation, split-up, combination, exchange of stock or other form of reorganization), such proportionate adjustment will be made to each award under any such plan as may be necessary or appropriate, as determined by the Compensation Committee, to reflect that change in the capital stock.

1969 Incentive Bonus Plan

The Company’s 1969 Incentive Bonus Plan provides that the Board may fix a dollar value to an employee bonus and determine to pay such bonus in the form of shares of the Common Stock of the Company. The number of shares to be awarded to the employee is determined by dividing the dollar amount of the bonus by the fair market value of one share of Common Stock. The fair market value of one share of Common Stock shall be determined by the Board and shall be equal to the closing price of one share of Common Stock on the trading day the award is granted by the Board. The Board may also elect to grant a number of shares of Common Stock to the employee. As a condition to receive any bonus payment approved by the Board, the employee must remain in full time employment of the Company through the date of the bonus payment. As of the Record Date, 879,750 shares of Common Stock had been issued, and 132,750 shares of Common Stock were available for issuance, under the 1969 Incentive Bonus Plan.

401(k) Plan and other Retirement Plans

The Company maintains the 401(k) Plan for the benefit of qualified employees at our U.S. locations. Employees who participate in the 401(k) Plan may elect to make salary deferral contributions to the 401(k) Plan up to 100% of the employees’ eligible payroll subject to annual IRCode maximum limitations. We make a matching contribution of $1 for every $2 contributed by the participant up to 6% (3% maximum matching) of the participant’s eligible payroll. In addition, we may make a discretionary contribution to the entire qualified employee pool, in accordance with the 401(k) Plan.

As stipulated by the rules and regulations of the People’s Republic of China, we maintain a retirement plan with the local municipal government for the employees in China. We are required to make contributions to the retirement plan at a rate of 22.5% of the employee’s eligible payroll. Pursuant to the Taiwan Labor Standard Law and Factory Law, we maintain a retirement plan for the employees in Taiwan. We make contributions at a rate of 6% of the employee’s eligible payroll.

Defined Benefit Plan

In connection with the acquisition of Zetex plc, the Company has adopted a contributory defined benefit plan that covers certain employees in the United Kingdom and Germany. The defined benefit plan is closed to new entrants and frozen with respect to future benefit accruals. The retirement benefit is based on the final average compensation and service of each eligible employee.

The Company did not make contributions to the defined benefit plan during fiscal 2008. The Company adopted a payment plan that Zetex had in place with the trustees of the defined benefit plan in which the Company will pay approximately £1.0 million GBP (approximately $1.6 million based on a USD:GBP exchange rate of 1.6:1) in the month of March of every calendar year from 2009 through 2012.

Salary and Bonus in Proportion to Total Compensation

As discussed under “Compensation Discussion and Analysis,” executive officers receive a relatively smaller portion of their total compensation package as base salary, in line with the Compensation Committee’s philosophy to attract, retain and motivate executive officers critical to the Company’s long-term growth and profitability primarily through bonus programs and equity incentive plans. See “Compensation Discussion and Analysis” for the breakdown between fixed pay through the executive officers’ base salaries and variable performance-based pay for fiscal 2008.

- 34 -

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information regarding equity-based awards held by each of the NEOs as of December 31, 2008.



	Option Awards											��	Stock Awards
																				Equity
																		Equity		Incentive
																		Incentive		Plan
																		Plan		Awards:
																		Awards:		Market or
						Equity												Number		Payout
						Incentive												of		Value of
						Plan										Market		Unearned		Unearned
						Awards:										Value of		Shares,		Shares,
	Number of		Number of			Number of										Shares or		Units or		Units of
	Securities		Securities			Securities										Units of		Other		Other
	Underlying		Underlying			Underlying							Number of			Stock		Rights		Rights
	Unexercised		Unexercised			Unexercised		Option					Shares or Units			That Have		That Have		That Have
	Options		Options			Unearned		Exercise		Option			of Stock That			Not		Not		Not
	(#)		(#) (1)			Options		Price		Expiration			Have Not Vested			Vested		Vested		Vested
Name	Exercisable		Unexercisable			(#)		($)		Date			(#) (1)			($)		(#)		($)
(a)	(b)		(c)			(d)		(e)		(f)			(g)			(h)		(i)		(j)

Keh-Shew Lu		43,875		-			-		8.1422		07/14/2014			202,500	(5)		1,227,150		-		-
		118,125		-			-		11.5333		04/14/2015			-			-		-		-
		59,062		59,063	⁽²⁾		-		22.2600		05/22/2016			-			-		-		-
		27,750		83,250	⁽³⁾		-		24.6600		05/31/2017			-			-		-		-
		-		111,000	⁽⁴⁾		-		27.9500		05/29/2018			-			-		-		-

Carl C. Wertz		12,042		-			-		7.0864		06/12/2010			2,250	⁽²⁾		48,862		-		-
		30,376		-			-		8.1422		07/14/2014			2,813	⁽³⁾		-		-		-
		34,875		-			-		15.5422		07/12/2015			3,000	⁽⁴⁾		-		-		-
		9,000		9,000	⁽²⁾		-		22.2600		05/22/2016			-			-		-		-
		3,750		11,250	⁽³⁾		-		24.6600		05/31/2017			-			-		-		-
		-		12,000	⁽⁴⁾		-		27.9500		05/29/2018			-			-		-		-

Joseph Liu		60,750		-			-		7.0864		06/12/2010			3,000	⁽²⁾		72,344		-		-
		40,500		-			-		2.4652		07/30/2011			3,938	⁽³⁾		-		-		-
		50,625		-			-		2.5274		06/28/2012			5,000	⁽⁴⁾		-		-		-
		50,625		-			-		5.7955		08/01/2013			-			-		-		-
		50,625		-			-		8.1422		07/14/2014			-			-		-		-
		50,626		-			-		15.5422		07/12/2015			-			-		-		-
		15,000		15,000	⁽²⁾		-		22.2600		05/22/2016			-			-		-		-
		7,125		21,375	⁽³⁾		-		24.6600		05/31/2017			-			-		-		-
		-		26,000	⁽⁴⁾		-		27.9500		05/29/2018			-			-		-		-

Mark A. King		60,750		-			-		7.0864		06/12/2010			2,625	⁽²⁾		63,630		-		-
		40,500		-			-		5.7955		08/01/2013			3,375	⁽³⁾		-		-		-
		40,500		-			-		8.1422		07/14/2014			4,500	⁽⁴⁾		-		-		-
		46,125		-			-		15.5422		07/12/2015			-			-		-		-
		13,500		13,500	⁽²⁾		-		22.2600		05/22/2016			-			-		-		-
		6,375		19,125	⁽³⁾		-		24.6600		05/31/2017			-			-		-		-
		-		25,000	⁽⁴⁾		-		27.9500		05/29/2018			-			-		-		-

Richard D. White		7,500		7,500	⁽²⁾		-		27.7600		07/03/2016			2,250	⁽²⁾		30,682		-		-
		3,750		11,250	⁽³⁾		-		24.6600		05/31/2017			2,813	⁽³⁾		-		-		-
		-		15,000	⁽⁴⁾		-		27.9500		05/29/2018			3,800	⁽⁴⁾		-		-		-

(Footnotes continued on following page)

- 35 -


(Footnotes continued from previous page)

(1)		Equity awards granted prior to May 22, 2006 vest in three equal annual installments on the first three anniversary dates of the date of grant. Equity awards granted on or after May 22, 2006 vest in four equal annual installments on the first four anniversary dates of the date of grant.

(2)		Awards vest in four equal annual installments beginning May 22, 2007.

(3)		Awards vest in four equal annual installments beginning May 31, 2008.

(4)		Awards vest in four equal annual installments beginning May 29, 2009.

(5)		Awards vest in two equal installments on April 14, 2008 and April 15, 2009.

- 36 -

OPTION EXERCISES AND STOCK VESTED

The following table sets forth certain information regarding exercises of options and vesting of RSUs and RSAs held by NEOs during the year ended December 31, 2008.



	Option Awards		Stock Awards
	Number of Shares
	Acquired on		Number of Shares
	Exercise	Value Realized on	Acquired on Vesting		Value Realized on
Name	(#)	Exercise ($)	(#)		Vesting ($)
(a)	(b)	(c)	(d)		(e)
Carl C. Wertz	-	-		2,062		57,187
Joseph Liu	-	-		2,812		78,018
Mark A. King	-	-		2,438		67,630
Richard D. White	-	-		2,062		54,802

Value realized on exercise (or vesting) is calculated by (i) multiplying the number of shares acquired on exercise (or vesting) by (ii) the difference between the closing price on the exercise (or vesting) date and the exercise price, if any, and does not reflect an actual sales price. The actual value realized depends upon the number of shares actually sold by the NEO, if any.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information with respect to shares of Common Stock that may be issued under our equity compensation plans as of December 31, 2008.


			Number of Securities
			Remaining Available for
	Number of Securities to	Weighted-Average	Future Issuance Under Equity
	be Issued Upon Exercise	Exercise Price of	Compensation Plans
	of Outstanding Options,	Outstanding Options,	(Excluding Securities
	Warrants and Rights	Warrants and Rights	Reflected in Column (a))
Plan Category	(a)	(b)	(c)

Equity Compensation Plans Approved by Security Holders	4,677,848⁽¹⁾	$11.60⁽²⁾	1,929,303⁽³⁾

Equity Compensation Plans Not Approved by Security Holders	0	N/A	0


Total	4,677,848	$11.60	1,929,303


(1)		Shares issuable pursuant to outstanding options and awards under the 1993 NQO Plan, the 1993 ISO Plan, and the 2001 Incentive Plan as of December 31, 2008.

(2)		Weighted average exercise price based on 3,852,574 stock options outstanding.

(3)		Represents 1,796,553 and 132,750 shares of Common Stock that may be issued pursuant to future awards under the 2001 Incentive Plan and the 1969 Incentive Bonus Plan, respectively.

- 37 -

PENSION BENEFITS

The table disclosing the actuarial present value of each NEO’s accumulated benefit under defined benefit plans, the number of years of credited service under each such plan, and the amount of pension benefits paid to each NEO during the year is omitted because the Company does not have a defined benefit plan. The only retirement plans available to all NEOs in 2008 were the Company’s 401(k) Plan and the non-qualified Deferred Compensation Plan.

Mr. Joseph Liu received minimum pension benefits, until April of 2008, available through Taiwan government mandated universal pension plans (Taiwan labor pension plan and labor insurance pension plan) that are available to all employees in Taiwan. The present value of these benefits is less than $10,000. For a further discussion of other benefits of NEOs in 2008, see “Compensation Discussion and Analysis.”

NON-QUALIFIED DEFERRED COMPENSATION

The Company adopted a non-qualified deferred compensation plan effective January 1, 2007, which permits our Board and eligible employees, including our NEOs, to voluntarily elect to defer up to 75% of base salary, and up to 100% of cash bonuses and stock awards, provided that their total deferrals do not reduce their total compensation below the amount necessary to satisfy obligations such as employment taxes and benefit plan payments. Amounts deferred by an executive are credited with earnings or losses based on the executive’s investment allocation among investment options, which may include stocks, bonds and mutual fund shares. Withdrawals can be made pursuant to Internal Revenue Service regulations for retirement and distributions. Upon termination, a 100% distribution is made after six months has lapsed. The Company may, from time to time, make discretionary contributions to participants’ accounts. No discretionary contributions were made in 2007 or 2008. Distributions are paid in accordance with the participants’ elections with regard to the timing and form of distributions.

The following table sets forth certain information related to the non-qualified deferred compensation plan for the NEOs:



	Executive	Registrant				Aggregate
	Contributions in	Contributions in	Aggregate Earnings			Withdrawls/	Aggregate Balance
	Last FY	Last FY	in Last FY			Distributions	at Last FYE
Name	($) (1)	($)	($) (7)			($)	($)
(a)	(b)	(c)	(d)			(e)	(f)
Keh-Shew Lu	-	-		(39,253	)	-	178,281⁽⁴⁾
Carl C. Wertz	295,772⁽²⁾	-		(102,029	)	-	297,720⁽⁵⁾
Mark A. King	562,839⁽³⁾	-		(101,781	)	-	762,022⁽⁶⁾
Richard D. White	-	-	-			-	-


(1)		Contributions are reported as compensation in the last completed fiscal year in the Summary Compensation Table.
(2)		Includes $240,794 of deferred cash compensation and $54,978 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2008.
(3)		Includes $497,805 of deferred cash compensation and $65,034 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2008.
(4)		Includes 2007 deferred cash compensation of $203,946 reported in the Summary Compensation Table for 2007.
(5)		Includes 2007 deferred cash compensation of $71,792 and $27,105 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2007.
(6)		Includes 2007 deferred cash compensation of $259,112 and $31,623 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2007.
(7)		Amounts shown are as a result of decrease in the values of the NEO’s deferred compensation due to loss based on the NEO’s investment allocations, which may include stocks, bonds and mutual fund shares.

- 38 -

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following sets forth potential payments payable to the NEOs upon termination of their employment or a change in control of the Company.

Payment Upon Termination Without Cause

Payments upon termination without “cause” for Messrs. Lu, Wertz, Liu and King are governed by their current employment agreements entered into with the Company on August 29, 2005. The executive’s relationship with the Company is “at will” and may be terminated at the option of either party, with or without cause.

As used in the employment agreements, “cause” means:

	•		the willful and continued refusal of the executive to substantially perform his duties in accordance with his employment agreement, after the Board has provided the executive with written demand for substantial performance and the executive has had reasonable opportunity to remedy it;

	•		the conviction of, or a plea of nolo contendere by, the executive to a felony; or

	•		a charge or indictment of a felony, the defense of which renders the executive substantially unable to perform his duties under his employment agreement.

In the event employment is terminated by the Company without “cause,” the executive either may (a) commence a one-year paid leave of absence (“LOA”), or (b) forego such LOA and the benefits associated therewith. If the executive chooses to commence the LOA, the potential payments to the executive can be divided into (i) payments during the LOA, and (ii) payments after the LOA.

(i) Payments during the leave of absence

During the LOA, the executive will continue as a full-time employee of the Company, entitled to receive all the benefits provided under his employment agreement, namely: (1) his annual base salary; (2) participation in any executive bonus plan of the Company, pro-rated to the beginning of the LOA; (3) reimbursement for all reasonable and documented business expenses; (4) paid vacation in accordance with the Company’s vacation policy for employees generally; (5) participation in all plans provided to employees in general; (6) a life insurance policy in the amount in effect on the date of the employment agreement; and (7) a disability policy in the maximum insurable amount.

(ii) Payments after the leave of absence

At the end of the LOA, neither the Company nor the executive shall have any further duties under his employment agreement, except that (1) the Company shall continue to pay to the executive, or his estate, the annual base salary for one year, and (2) all share-based compensation previously granted shall continue to vest and shall remain exercisable for the full term thereof, determined without regard to the termination of employment.

If the executive chooses to forego the LOA and the benefits associated therewith, the vesting of any options, RSAs or RSUs awarded to the executive and his ability to exercise them, upon termination will be governed by the terms of the 2001 Incentive Plan and his stock award agreements. The 2001 Incentive Plan generally provides, that if the executive is terminated for any reason other than death or “permanent disability” (as defined), the award will be exercisable until the earlier of (1) the expiration date of the award (generally ten years from date of grant), or (2) for three months after the termination date of the executive.

Trade secrets, non-competition and non-solicitation provisions

During the LOA, the executive shall not (1) without the prior consent of the Board, disclose or use any confidential business or technical information or trade secret of the Company, (2) without the prior consent of the Company, engage in any competitive activity in any line of business in which the Company is engaged, (3) without the prior consent of the Board, remove any tangible items from the premises of the Company, or (4) solicit any employee of the Company. The executive shall continue to be bound by these provisions of his employment agreement for one year after the end of the LOA.

- 39 -

Payment Upon Termination With Cause

The employment agreements do not provide for a payment to the executives in the event of termination with cause.

Payment Upon Termination Due To Death or Disability

The 2001 Incentive Plan generally provides that if the executive dies or becomes “permanently disabled” (as defined), the award will be exercisable by the executive’s successor until the earlier of (1) the expiration date of the award (generally ten years from date of grant), or (2) for one year after such death or “permanent disability,” to the extent such award was exercisable on the date of death or permanent disability. The awards will generally continue to vest according to the vesting schedule. The NEOs are also entitled to receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate. The employment agreements do not provide for a payment to the executives in the event of termination due to death or disability.

Payment Upon a Change in Control

Upon a change in control, all share-based compensation granted to the executive shall vest immediately and be exercisable for the full term thereof. A change in control, as currently defined in both the 2001 Incentive Plan and the NEO’s current employment agreement, means the occurrence of any one (or more) of the following:

	•		any person, including a group as defined in Section 13(d)(3) of the Exchange Act, as amended, becoming the beneficial owner of stock of the Company which entitles such holder to cast 25% or more of the total number of votes for the election of the Board;

	•		a cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, in which the directors of the Company immediately prior to such event cease to be a majority of the Board;

	•		the stockholders of the Company approving an agreement providing for either the Company to cease being a public company or for the sale of substantially all the assets of the Company; or

	•		a tender offer or exchange offer (other than one made by the Company) in which the shares of the Company’s stock are acquired.

If a holding company is formed but the stockholding in the holding company is substantially the same as the Company’s, such an event is not a change in control.

See “PROPOSAL TWO – AMENDMENT OF 2001 OMNIBUS EQUITY INCENTIVE PLAN” for a proposed amendment to the above definition of “change in control.”

Payment Upon Retirement

The 2001 Incentive Plan and forms of option and stock award agreements generally provide that upon retirement, the option or stock award will continue to vest according to the vesting schedule. In addition, upon retirement, the option or stock award will be exercisable until the earlier of (1) the expiration date of the option (generally ten years from date of grant) or stock award, or (2) for three months after the termination date of the executive.

- 40 -

The following table shows the potential payments upon termination or a change in control of the Company for each of the NEOs assuming each of the NEO’s employment was terminated on December 31, 2008, and assuming that the change in control occurred at December 31, 2008. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the NEOs, which would only be known at the time they become eligible for such payments.



	VoluntaryTermination
	or Termination With		Termination
	Cause, or Death, or		Without Cause ($)		Change in Control
Name	Disability ($) (1)		(1) (2)		($) (1) (3)
Keh-Shew Lu		-		1,934,127		1,227,150
Carl C. Wertz		-		408,435		48,862
Joseph Liu		-		595,103		72,344
Mark A. King		-		522,654		63,630
Richard D. White		-		-		53,710


(1)		Does not include the following amounts that could be realized upon exercising vested stock options:



			Amount
	Name		($)
	Keh-Shew Lu		-
	Carl C. Wertz		-
	Joseph Liu		337,816
	Mark A. King		10,711
	Richard D. White		-

Amounts assume that all vested stock options as of December 31, 2008 are exercised as of December 31, 2008, and are calculated by multiplying the number of vested stock options by the difference between the exercise price and the closing price of our Common Stock on December 31, 2008. Does not include a $700,000 benefit for each NEO employed in the U.S. paid by the Company’s life insurance policy upon death.

Does not include the following one-year short- and long-term disability payments payable by disability insurance policies:



			Amount
	Name		($)
	Keh-Shew Lu		122,500
	Carl C. Wertz		89,161
	Joseph Liu		115,158
	Mark A. King		104,159
	Richard D. White		89,161

- 41 -


(2)		The following table reflects the estimate of the payments and benefits that each NEO would receive assuming the NEO’s employment was terminated without “cause” on December 31, 2008, and the NEO chose to commence the LOA beginning on January 1, 2009. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the NEOs, which would only be known at the time they become eligible for such payments.



							Medical		Life Insurance,
							Benefits		Disability and		Continued Vesting
	Base Salary ($)		Bonus ($)		Paid Vacation		($)		Death Benefits ($)		of Share-based
Name	(a)		(b)		($)		(c)		(d)		Compensation ($)		Total ($)
Keh-Shew Lu		686,000		-		13,192		4,666		3,118		1,227,150		1,934,127
Carl C. Wertz		340,000		-		10,462		6,368		2,744		48,862		408,435
Joseph Liu		496,000		-		19,077		5,278		2,404		72,344		595,103
Mark A. King		430,000		-		16,538		9,490		2,995		63,630		522,654
Richard D. White		-		-		-		-		-		-		-


(a)		For purposes of determining this amount, the executive would receive his current base salary during the LOA and the one-year following the LOA. For the LOA, the base salary will be paid over the year, in accordance with the Company’s payroll practices. Payment of the base salary for the one year following the LOA will be paid in a lump sum.

(b)		Any bonus amount would be prorated based on days employed in 2009 and calculated using actual 2009 results per the performance criteria in accordance with the Company’s executive bonus plan.

(c)		Reflects the estimated lump sum value of premiums to be paid on behalf of the executive under the medical benefit plans during the LOA.

(d)		Reflects the estimated lump sum value of cost of coverage for life insurance, disability, and death benefits to be paid on behalf of the executive during the LOA. Does not include a $700,000 benefit for each NEO employed in the U.S. paid by the Company’s life insurance policy upon death.

Does not include the following short- and long-term disability payments for two years paid by disability insurance policies:



			Amount
	Name		($)
	Keh-Shew Lu		167,500
	Carl C. Wertz		117,492
	Joseph Liu		156,488
	Mark A. King		139,989
	Richard D. White		-

- 42 -


(3)		Represents the value of the accelerated vesting of the following shares underlying options, RSAs and RSUs assuming a change in control occurs on December 31, 2008:



Name	Options		RSA/RSU		Total Shares
Keh-Shew Lu		253,313		202,500		455,813
Carl C. Wertz		32,250		8,063		40,313
Joseph Liu		62,375		11,938		74,313
Mark A. King		57,625		10,500		68,125
Richard D.White		33,750		8,863		42,613

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COMPENSATION OF DIRECTORS

The following table sets forth the compensation paid to each director who is not a NEO for service in 2008.



								Changes in Pension
								Value and
	Fees							Nonqualified
	Earned or						Non-Equity	Deferred
	Paid in		Stock		Option		Incentive Plan	Compensation	All Other
	Cash		Awards		Awards		Compensation	Earnings	Compensation	Total
Name	($)		($) (1)(2)		($) (1)(2)		($)	($)	($)	($)
(a)	(b)		(c)		(d)		(e)	(f)	(g)	(h)
Raymond Soong		80,000		446,082		314,017	-	-	-		840,099
C.H Chen		80,000		572,295		51,945	-	-	-		704,241
Michael R. Giordano		100,000		122,934		120,532	-	-	-		343,465
John M. Stich		90,000		116,673		101,500	-	-	-		308,174
Shing Mao		80,000		104,152		82,469	-	-	-		266,621
L.P. Hsu		90,000		49,893		-	-	-	-		139,893


(1)		These amounts reflect the value determined by the Company for accounting purposes for these awards and do not reflect whether each director has actually realized benefit from the awards. The value of the equity awards in column (c) and (d) is calculated in accordance with the amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008 in accordance with SFAS 123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Amounts reported for stock awards include RSUs and are calculated by multiplying the number of shares subject to the award by the closing price of the Company’s Common Stock on the grant date and then dividing by the vesting period. Amounts reported for stock options are determined using the Black-Scholes option-pricing model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. See Note 17 to the Company’s audited financial statements for the fiscal year ended December 31, 2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2009, for a further discussion of the relevant valuation assumptions used in calculating grant date fair value pursuant to SFAS 123(R).

(Footnotes continued on following page.)

- 44 -

(Footnotes continued from previous page.)

(2)

Under the Company’s 2008 director compensation plan, each non-employee director listed in the table above was granted an award of 4,300 RSUs on May 29, 2008, except Mr. Raymond Soong, Chairman of the Board, and Mr. C.H. Chen, Vice Chairman of the Board, who were granted an award of 21,500 and 14,700, respectively, on May 29, 2008. Each of these awards to the Company’s non-employee directors, except Mr. Soong and Mr. Chen, had a grant date fair value of $120,185. Awards to Mr. Soong and Mr. Chen had grant date fair values of $600,925 and $410,865, respectively. The following table details the amounts in column (c) and (d) of the previous table and represents the SFAS 123(R) expense in 2008 for each of the equity awards:



											2008	2007	2006	2005		Total
									Total Stock		Stock	Stock	Stock	Stock		Option
	2008 RSUs		2007 RSUs		2006 RSUs		2005 RSAs		Awards ($)		Options	Options	Options	Options		Awards ($)
Name	($)		($)		($)		($)		(c)		($)	($)	($)	($)		(d)
Raymond Soong		87,635		166,455		191,993	-			446,082	-	-	-		314,017		314,017
C.H Chen		59,918		110,970		141,908		259,500		572,295	-	-	-		51,945		51,945
Michael R. Giordano		17,527		32,366		73,041	-			122,934	-	-	-		120,532		120,532
John M. Stich		17,527		32,366		66,780	-			116,673	-	-	-		101,500		101,500
Shing Mao		17,527		32,366		54,259	-			104,152	-	-	-		82,469		82,469
L.P. Hsu		17,527		32,366	-		-			49,893	-	-	-	-			-

The table below shows the aggregate number of shares underlying outstanding restricted stock units/awards held by non-employee directors as of December 31, 2008:



	Restricted Stock
	Units/Awards
Name	(in shares)
Raymond Soong		59,000
C.H Chen		85,950
Michael R. Giordano		14,801
John M. Stich		14,238
Shing Mao		13,113
L.P. Hsu		8,238

The table below shows the aggregate number of shares underlying outstanding stock options held by non-employee directors as of December 31, 2008:



Name	Options (in shares)
Raymond Soong		761,063
C.H Chen		320,625
Michael R. Giordano		133,875
John M. Stich		113,625
Shing Mao		223,875
L.P. Hsu		-

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Beginning June 2007, each non-employee director of the Company receives a quarterly retainer of $20,000, the Chairman of the Audit Committee receives an additional $5,000 quarterly retainer and all other members of the Audit Committee receive an additional $2,500 quarterly retainer.

In addition, the following annual awards, which vest in four equal annual installments commencing on the first anniversary of the date of grant, of shares of Common Stock are granted to each non-employee director:

	•		Chairman of the Board: 21,500 shares

	•		Vice Chairman: 14,700 shares

	•		All other directors: 4,300 shares.

The Board may modify such compensation in the future.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2008, the Compensation Committee consisted of three directors, Raymond Soong (Chairman), L.P. Hsu, and Shing Mao. During 2008, no executive officer of the Company served on the compensation committee (or equivalent) of the Board of another entity whose executive officer(s) served on the Company’s Compensation Committee or Board.

Report of the Audit Committee of the Board to Stockholders

The Report of the Audit Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

AUDIT COMMITTEE REPORT

The Board maintains an Audit Committee comprised of three of the Company’s directors, Michael R. Giordano (Chairman), John M. Stich and L.P. Hsu. Each member of the Audit Committee meets the independence and experience requirements of the Nasdaq Stock Market and the independence requirements of the SEC. Mr. Giordano qualifies as an “audit committee financial expert” as defined under the rules of the SEC. The Audit Committee assists the Board in monitoring the accounting, auditing and financial reporting practices of the Company.

Management is responsible for the preparation of the Company’s financial statements and financial reporting process, including its system of internal controls. In fulfilling its oversight responsibilities, the Audit Committee:

•		Reviewed and discussed with management the audited financial statements contained in the Company’s Annual Report on Form 10-K for fiscal 2008; and

•		Obtained from management their representation that the Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

The independent registered public accounting firm is responsible for performing an audit of the Company’s financial statements in accordance with the auditing standards generally accepted in the United States and expressing an opinion on whether the Company’s financial statements present fairly, in all material respects, the Company’s financial position and results of operations for the periods presented and conform with accounting principles generally accepted in the United States. In fulfilling its oversight responsibilities, the Audit Committee:

•		Discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (“Communication with Audit Committees”); and

•		Received and discussed with the independent registered public accounting firm the written disclosures and the letter from the independent registered public accounting firm required by the Public Company Accounting Oversight Board as currently in effect (“Independence Discussions with Audit Committees”), and reviewed and discussed with the independent registered public accounting firm whether the rendering of the non-audit services provided by them to the Company during fiscal 2008 was compatible with their independence.

The Audit Committee operates under a written charter, which was adopted by the Board and is assessed annually for adequacy by the Audit Committee. In 2008, the charter was revised. The revised charter is attached to this Proxy Statement as Appendix A. The Audit Committee held six meetings during fiscal 2008, and took action by written consent on four occasions.

In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that the Company’s financial statements are complete and accurate, are presented in accordance with accounting principles generally accepted in the United States or present fairly the results of operations of the Company for the periods presented or that the Company maintains appropriate internal controls. Nor is it the duty of the Audit Committee to determine that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s auditors are independent.

- 47 -

Based upon the reviews and discussions described above, and the report of the independent registered public accounting firm, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for filing with the Securities and Exchange Commission. The Audit Committee also has recommended, and the Board also has approved, the selection of Moss Adams LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009.


Dated: April 1, 2009		THE AUDIT COMMITTEE

		Michael R. Giordano, Chairman
		L.P. Hsu
		John M. Stich

Code of Ethics

The Company has adopted a Code of Ethics applicable to the principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions of the Company. The Code of Ethics is available on the Company’s Investor Relations website at investor.diodes.com under the “Corporate Governance” section of the web site. The direct link to the Code of Ethics is media.corporateir.net/media_files/irol/62/62202/Codeofethics1a.pdf. We intend to disclose future amendments to, or waivers from, certain provisions of the Code of Ethics applicable to senior financial executives on our website within four business days following the date of such amendment or waiver.

Certain Relationships and Related Transactions

Policy Regarding Related Person Transactions

The Audit Committee has adopted a written policy (the “Policy”) to review any transaction (a “related person transaction”) in which the Company was, or is to be, a participant and in which any director, executive officer, nominee for director or beneficial owner of more than 5% of the outstanding shares of Common Stock of the Company, or any immediate family member of any such person, has a direct or indirect material interest. The Policy requires the following:

•		the Audit Committee shall review any proposed agreement or arrangement relating to a related person transaction or series of related person transactions, and any proposed amendment to any such agreement or arrangement;

•		the Audit Committee shall establish standards for determining whether the transactions covered by such proposed agreement or arrangement are on terms no less favorable to the Company than could be obtained from an unrelated third party (“fair to the Company”);

•		before the Company enters into any such proposed agreement or arrangement, and at least annually thereafter, the Company’s internal audit department shall report to the Audit Committee whether the transactions covered by such agreement or arrangement are fair to the Company under the standards established by the Audit Committee;

•		the Audit Committee shall make all reasonable efforts (taking into account the cost thereof to the Company) to cancel or to renegotiate any such agreement or arrangement which is not so determined to be fair to the Company; and

•		the Company will disclose any related person transactions required to be disclosed by the rules promulgated by the SEC, in the manner so required.

Relationships and Transactions

The Audit Committee of our Board reviews all related party transactions for potential conflict of interest situations on an ongoing basis, in accordance with such procedures as the Audit Committee may adopt from time to time. We believe that all related party transactions are on terms no less favorable to us than could be obtained from unaffiliated third parties.

We conduct business with one related party company: LSC. LSC is our largest stockholder and is a member of the Lite-On Group of companies. C.H. Chen, our former President and Chief Executive Officer and current Vice Chairman of our Board, is also Vice Chairman of LSC. Mr. Chen is the Vice Chairman of Dynacard Corporation, a board member of Lite-On Technology Corporation, the Chairman of Co-Tech Copper Foil Corporation, and a board member of Actron Technology

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Corporation, each of which is a member or an affiliate of the Lite-On Group. M.K. Lu, a member of our Board until May 2007, was President of LSC. In addition, Raymond Soong, the Chairman of our Board, is the Chairman of the Board of LSC, Liteon-IT Corp., and Lite-On Technology Corporation, a significant shareholder of LSC, and also serves on the Board of Actron Technology Corporation and Co-Tech Copper Foil Corporation, both of which are affiliates of the Lite-On Group.

We also conduct business with one significant company, Keylink International (B.V.I) Inc., and its subsidiaries and affiliates (“Keylink”). Keylink is our 5% joint venture partner in our Shanghai manufacturing facilities.

In connection with our 2005 follow-on public offering, LSC sold 1.7 million shares (split adjusted), reducing its holdings of our Common Stock to approximately 8.7 million shares. We did not receive any of the proceeds from LSC’s sale of our Common Stock, but LSC shared in the offering expenses. During 2008, LSC further sold 0.3 million shares, reducing its holdings of our Common Stock to 8.4 million shares (approximately 20.2% of our outstanding Common Stock as of December 31, 2008).

We sold products to LSC totaling 6.5%, 6.2% and 3.5% of total sales for the years ended December 31, 2006, 2007 and 2008, respectively, making LSC our largest customer. Also for the years ended December 31, 2006, 2007 and 2008, 13.0%, 11.3% and 9.6%, respectively, of our net sales were from discrete semiconductor products purchased from LSC for subsequent sale by us, making LSC our largest outside supplier. We also rent warehouse space in Hong Kong from a member of the Lite-On Group, which also provides us with warehousing services at that location. For 2006, 2007 and 2008, we reimbursed this entity in aggregate amounts of $0.5 million, $0.5 million and $0.7 million, respectively, for these services. We believe such transactions are on terms no less favorable to us than could be obtained from unaffiliated third parties. See Part I, Item 1A of the Company’s Annual Report on Form 10-K “Risk Factor –We receive a significant portion of our net sales from a single customer. In addition, this customer is also our largest external supplier and is a related party. The loss of this customer or supplier could harm our business and results of operations.”

We sell products to, and purchase inventory from, companies owned by Keylink. We sold products to companies owned by Keylink totaling 0.4%, 0.6% and 0.8% of total sales for the years ended December 31, 2006, 2007 and 2008, respectively. Also for the years ended December 31, 2006, 2007 and 2008, 2.3%, 1.5% and 1.3%, respectively, of our net sales were from discrete semiconductor products purchased from companies owned by Keylink. In addition, we lease our Shanghai manufacturing facilities from, and subcontract a portion of their manufacturing process (metal plating and environmental services) to, Keylink, and also pay a consulting fee to a Keylink affiliated company. The aggregate amounts for these services for the years ended December 31, 2006, 2007 and 2008 were $7.9 million, $9.4 million and $10.5 million, respectively. We believe such transactions are on terms no less favorable to us than could be obtained from unaffiliated third parties.

We acquired our wafer foundry, FabTech, Inc., from LSC in December 2000 for approximately $6.0 million cash plus $19.0 million in assumed debt (the debt was due primarily to LSC). In addition, in 2006, we acquired 99.81% of Anachip Corp., a Taiwanese fabless analog IC company located in the Hsinchu Science Park in Taiwan. The selling shareholders included LSC (which owned approximately 60% of Anachip’s outstanding capital stock), and two Taiwanese venture capital firms (together owning approximately 20% of Anachip’s stock), as well as current and former Anachip Corp. employees, among others.

When we acquired Anachip Corp., we entered into a wafer purchase agreement between Anachip Corp. and LSC, pursuant to which LSC would sell to Anachip Corp., according to Anachip Corp.’s requirements, during the three year period ending on December 31, 2008. Anachip Corp. purchased the wafers on terms (including purchase price, delivery schedule, and payment terms) no less favorable to Anachip Corp. than those terms on which Anachip Corp. purchased such wafers from LSC at the time of the acquisition; provided, however, that the purchase price was the lower of the current price or the most favorable customer pricing. If the price of raw wafers increased by more than 20% within any six-month period, Anachip Corp. and LSC would renegotiate in good faith the price of wafers to reflect the cost increase. Although this contract was not renewed, Anachip Corp. continues to purchase wafers from LSC.

Dr. Shing Mao, a director of the Company, retired in 2000 as Chairman of the Board of Lite-On USA, Inc., a wholly-owned subsidiary of Taiwan Lite-On, a Lite-On Group company, which merged with Lite-On Technology Corporation in 2002. Dr. Mao was also a director of LSC from 1989 to 2000.

Lu-Pao Hsu, elected to our Board in May 2007, was an independent director for Lite-On Technology Corporation from 2004 to 2006, and now serves as a consultant to Lite-On Technology Corporation.

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Michael Giordano, a director of the Company, is a Senior Vice President-Investments with UBS Financial Services, Inc. From time to time, Mr. Giordano and his son, James Giordano, provide brokerage services to directors, executive officers and employees of the Company at customary rates and terms. In 2008, Michael Giordano and James Giordano together received less than $15,000 in commissions as a result of these services.

Notwithstanding such relationships and transactions, the Board has determined that each of Messrs. Soong, Stich, Mao, Hsu and Giordano is independent under the rules of the Nasdaq Stock Market and the SEC.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Under Section 16(a) of the Exchange Act, the Company’s directors, executive officers and any persons holding ten percent or more of the Common Stock are required to report their ownership of Common Stock and any changes in that ownership to the SEC and to furnish the Company with copies of such reports.

Specific due dates for these reports have been established and the Company is required to report any failure to file on a timely basis. Based solely upon review of copies of reports filed with the SEC during the most recent fiscal year ended December 31, 2008 and during the prior fiscal year ended December 31, 2007, a number of reports and transactions failed to file on a timely basis. Based solely upon a review of the Forms 3, 4 and 5 filed by the Company’s directors and executive officers, the Company identified the following reporting persons and the number of untimely reported transactions (stated in parentheses): Mr. Edmund Tang (1) during fiscal 2007; and Mr. C.H. Chen (2), Mr. Edmund Tang (3), Ms. Julie Holland (2), Mr. T.J. Lee (2) and Mr. Colin Greene (1) during fiscal 2008.

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PROPOSAL TWO

AMENDMENT OF 2001 OMNIBUS EQUITY INCENTIVE PLAN

General

At the Meeting the stockholders will be asked to approve an amendment to the Company’s 2001 Incentive Plan. The proposed amendment was approved by the Board on April 1, 2009, subject to the stockholders’ approval.

Under the 2001 Incentive Plan, employees, non-employee directors and consultants of the Company and its subsidiaries are eligible to receive shares of Common Stock of the Company or other securities or benefits with a value derived from the value of the Common Stock of the Company. The purpose of the 2001 Incentive Plan is to enable the Company to attract, retain and motivate employees, non-employee directors and consultants by providing for or increasing their proprietary interests in the Company and, thereby, further align their interests with those of the Company’s stockholders.

Purpose and Effect of the Amendment

The stockholders will be asked at the Meeting to consider and vote upon a proposal to amend the 2001 Incentive Plan to:

	•		Increase the number of shares of Common Stock that may be issued pursuant to awards granted thereunder by 5,000,000 shares.

	•		Extend the term of the 2001 Incentive Plan until May 28, 2019.

	•		Provide that the “gross” number of shares of Common Stock subject to awards shall be used for purposes of (i) computing the total number of shares of Common Stock available for awards under the 2001 Incentive Plan, (ii) computing the total number of shares of Common Stock to be made available for awards under the 2001 Incentive Plan after any such awards are forfeited, terminated, expire unexercised, settled or paid in cash in lieu of stock or exchanged for other awards, (iii) computing the number of shares used to settle a stock appreciation right upon exercise, and (iv) computing the number of shares issued in a cashless exercise of a stock option.

	•		Provide that a Change in Control shall have occurred in the event the Company ceases to be an independent publicly owned corporation or a sale or other disposition is completed for all or substantially all the assets of the Company. Currently, a Change in Control shall have occurred if the stockholders of the Company approved an agreement providing such a transaction.

	•		Provide that a stock appreciation right shall accrue in value from the date of grant over a maximum of a ten year time period.

	•		Provide that the maximum amount payable for any calendar year pursuant to a performance unit grant under the 2001 Incentive Plan shall be $5,000,000. Currently, such limit is $4,000,000.

The foregoing summary of the proposed amendment to the 2001 Incentive Plan is qualified in its entirety by a copy of the amended plan attached to this Proxy Statement as Appendix B.

THE BOARD RECOMMENDS A VOTE “FOR” THE PROPOSED AMENDMENT OF THE 2001 OMNIBUS
EQUITY INCENTIVE PLAN

Option Grants and Exercises

As of the Record Date, 2,052,303 shares have been issued pursuant to awards granted under the 2001 Incentive Plan, 3,844,275 shares were subject to awards outstanding under the 2001 Incentive Plan, and 6,792,753 shares were available for issuance under awards that may be granted under the 2001 Incentive Plan. For information concerning the grant of awards during fiscal 2008 to the Named Executive Officers, the exercise of stock options, RSUs or RSAs during fiscal 2008 by the Name Executive Officers, and unexercised stock options, RSUs and RSAs held by the Named Executive Officers as of

- 51 -

December 31, 2008, see “EXECUTIVE COMPENSATION – Grants of Plan-Based Awards,” “EXECUTIVE COMPENSATION – Option Exercises and Stock Vested” and “EXECUTIVE COMPENSATION — Outstanding Equity Awards at Fiscal Year-End.”

Vote Required

The affirmative vote of a majority of the outstanding shares of Common Stock present, in person or by proxy, and entitled to vote on the amendment at the Meeting is required to approve the amendment. Abstentions will be included in the number of votes cast on the amendment and, accordingly, will have the effect of a vote “AGAINST” the amendment. However, broker non-votes will not be included in the number of shares counted as being present for the purposes of voting on the amendment and, accordingly, will have the effect of reducing the number of affirmative votes required to approve the amendment).

Summary of the 2001 Incentive Plan

The following summary of the 2001 Incentive Plan does not purport to be a complete description of the Plan and is qualified in its entirety by reference to its full text, a copy of which is attached to this Proxy Statement as Appendix B.

General.The purpose of the 2001 ~~Omnibus Equity~~ Incentive Plan ~~(“2001 Incentive Plan”)~~ is to encourage ownership in the Company by key personnel whose long-term employment is considered essential to the Company’s continued progress and, thereby, align participants’ and stockholders’ interests. Stock options and stock awards, including stock units and cash awards, may be granted under the 2001 Incentive Plan. Options granted under the 2001 Incentive Plan may be either ~~incentive~~“incentive stock options,” as defined in Section 422 of the IRCode, or ~~are not intended to be incentive options (“~~non-qualified stock options”). As of the Record Date, 1,493,252 shares have been issued on the exercise of options granted, 90,775 shares have been issued on the vesting of RSUs and 521,542 shares were subject to RSUs outstanding, 3,452,448 shares were subject to options outstanding under the 2001 Incentive Plan, and 2,310,739 shares were available for issuance under awards that may be granted in the future. At the 2006 annual meeting of stockholders, the 2001 Incentive Plan was amended to:

	•		~~increase the number of shares of Common Stock that may be issued pursuant to awards granted thereunder by 3,300,000 (split adjusted) shares;~~

	•		~~delete the provision thereof that automatically increases, by 1% of the outstanding shares on each January 1, the maximum number of shares of Common Stock that may be issued thereunder;~~

27

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information regarding equity-based awards held by each of the NEOs as of December 31, 2008.

Option Awards �� Stock Awards
Equity
Equity Incentive
Incentive Plan
Plan Awards:
Awards: Market or
Equity Number Payout
Incentive of Value of
Plan Market Unearned Unearned
Awards: Value of Shares, Shares,
Number of Number of Number of Shares or Units or Units of
Securities Securities Securities Units of Other Other
Underlying Underlying Underlying Number of Stock Rights Rights
Unexercised Unexercised Unexercised Option Shares or Units That Have That Have That Have
Options Options Unearned Exercise Option of Stock That Not Not Not
(#) (#) (1) Options Price Expiration Have Not Vested Vested Vested Vested
Name Exercisable Unexercisable (#) ($) Date (#) (1) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Keh-Shew Lu
43,875 - - 8.1422 07/14/2014 202,500 (5) 1,227,150 - -
118,125 - - 11.5333 04/14/2015 - - - -
59,062 59,063 ⁽²⁾ - 22.2600 05/22/2016 - - - -
27,750 83,250 ⁽³⁾ - 24.6600 05/31/2017 - - - -
- 111,000 ⁽⁴⁾ - 27.9500 05/29/2018 - - - -

Carl C. Wertz
12,042 - - 7.0864 06/12/2010 2,250 ⁽²⁾ 48,862 - -
30,376 - - 8.1422 07/14/2014 2,813 ⁽³⁾ - - -
34,875 - - 15.5422 07/12/2015 3,000 ⁽⁴⁾ - - -
9,000 9,000 ⁽²⁾ - 22.2600 05/22/2016 - - - -
3,750 11,250 ⁽³⁾ - 24.6600 05/31/2017 - - - -
- 12,000 ⁽⁴⁾ - 27.9500 05/29/2018 - - - -

Joseph Liu
60,750 - - 7.0864 06/12/2010 3,000 ⁽²⁾ 72,344 - -
40,500 - - 2.4652 07/30/2011 3,938 ⁽³⁾ - - -
50,625 - - 2.5274 06/28/2012 5,000 ⁽⁴⁾ - - -
50,625 - - 5.7955 08/01/2013 - - - -
50,625 - - 8.1422 07/14/2014 - - - -
50,626 - - 15.5422 07/12/2015 - - - -
15,000 15,000 ⁽²⁾ - 22.2600 05/22/2016 - - - -
7,125 21,375 ⁽³⁾ - 24.6600 05/31/2017 - - - -
- 26,000 ⁽⁴⁾ - 27.9500 05/29/2018 - - - -

Mark A. King
60,750 - - 7.0864 06/12/2010 2,625 ⁽²⁾ 63,630 - -
40,500 - - 5.7955 08/01/2013 3,375 ⁽³⁾ - - -
40,500 - - 8.1422 07/14/2014 4,500 ⁽⁴⁾ - - -
46,125 - - 15.5422 07/12/2015 - - - -
13,500 13,500 ⁽²⁾ - 22.2600 05/22/2016 - - - -
6,375 19,125 ⁽³⁾ - 24.6600 05/31/2017 - - - -
- 25,000 ⁽⁴⁾ - 27.9500 05/29/2018 - - - -

Richard D. White
7,500 7,500 ⁽²⁾ - 27.7600 07/03/2016 2,250 ⁽²⁾ 30,682 - -
3,750 11,250 ⁽³⁾ - 24.6600 05/31/2017 2,813 ⁽³⁾ - - -
- 15,000 ⁽⁴⁾ - 27.9500 05/29/2018 3,800 ⁽⁴⁾ - - -

(Footnotes continued on following page)

- 35 -


(Footnotes continued from previous page)

(1)		Equity awards granted prior to May 22, 2006 vest in three equal annual installments on the first three anniversary dates of the date of grant. Equity awards granted on or after May 22, 2006 vest in four equal annual installments on the first four anniversary dates of the date of grant.

(2)		Awards vest in four equal annual installments beginning May 22, 2007.

(3)		Awards vest in four equal annual installments beginning May 31, 2008.

(4)		Awards vest in four equal annual installments beginning May 29, 2009.

(5)		Awards vest in two equal installments on April 14, 2008 and April 15, 2009.

- 36 -

OPTION EXERCISES AND STOCK VESTED.

The following table sets forth certain information regarding exercises of options and vesting of RSUs and RSAs held by NEOs during the year ended December 31, 2008.

Option Awards Stock Awards
Number of Shares
Acquired on Number of Shares
Exercise Value Realized on Acquired on Vesting Value Realized on
Name (#) Exercise ($) (#) Vesting ($)
(a) (b) (c) (d) (e)

Carl C. Wertz
- - 2,062 57,187

Joseph Liu
- - 2,812 78,018

Mark A. King
- - 2,438 67,630

Richard D. White
- - 2,062 54,802

Value realized on exercise (or vesting) is calculated by (i) multiplying the number of shares acquired on exercise (or vesting) by (ii) the difference between the closing price on the exercise (or vesting) date and the exercise price, if any, and does not reflect an actual sales price. The actual value realized depends upon the number of shares actually sold by the NEO, if any.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information with respect to shares of Common Stock that may be issued under our equity compensation plans as of December 31, 2008.

Number of Securities
Remaining Available for
Number of Securities to Weighted-Average Future Issuance Under Equity
be Issued Upon Exercise Exercise Price of Compensation Plans
of Outstanding Options, Outstanding Options, (Excluding Securities
Warrants and Rights Warrants and Rights Reflected in Column (a))
Plan Category (a) (b) (c)

Equity Compensation Plans Approved by Security Holders 4,677,848⁽¹⁾ $11.60⁽²⁾ 1,929,303⁽³⁾

Equity Compensation Plans Not Approved by Security Holders 0 N/A 0

Total
4,677,848 $11.60 1,929,303


(1)		Shares issuable pursuant to outstanding options and awards under the 1993 NQO Plan, the 1993 ISO Plan, and the 2001 Incentive Plan as of December 31, 2008.

(2)		Weighted average exercise price based on 3,852,574 stock options outstanding.

(3)		Represents 1,796,553 and 132,750 shares of Common Stock that may be issued pursuant to future awards under the 2001 Incentive Plan and the 1969 Incentive Bonus Plan, respectively.

- 37 -

PENSION BENEFITS

The table disclosing the actuarial present value of each NEO’s accumulated benefit under defined benefit plans, the number of years of credited service under each such plan, and the amount of pension benefits paid to each NEO during the year is omitted because the Company does not have a defined benefit plan. The only retirement plans available to all NEOs in 2008 were the Company’s 401(k) Plan and the non-qualified Deferred Compensation Plan.

Mr. Joseph Liu received minimum pension benefits, until April of 2008, available through Taiwan government mandated universal pension plans (Taiwan labor pension plan and labor insurance pension plan) that are available to all employees in Taiwan. The present value of these benefits is less than $10,000. For a further discussion of other benefits of NEOs in 2008, see “Compensation Discussion and Analysis.”

NON-QUALIFIED DEFERRED COMPENSATION

The Company adopted a non-qualified deferred compensation plan effective January 1, 2007, which permits our Board and eligible employees, including our NEOs, to voluntarily elect to defer up to 75% of base salary, and up to 100% of cash bonuses and stock awards, provided that their total deferrals do not reduce their total compensation below the amount necessary to satisfy obligations such as employment taxes and benefit plan payments. Amounts deferred by an executive are credited with earnings or losses based on the executive’s investment allocation among investment options, which may include stocks, bonds and mutual fund shares. Withdrawals can be made pursuant to Internal Revenue Service regulations for retirement and distributions. Upon termination, a 100% distribution is made after six months has lapsed. The Company may, from time to time, make discretionary contributions to participants’ accounts. No discretionary contributions were made in 2007 or 2008. Distributions are paid in accordance with the participants’ elections with regard to the timing and form of distributions.

The following table sets forth certain information related to the non-qualified deferred compensation plan for the NEOs:

Executive Registrant Aggregate
Contributions in Contributions in Aggregate Earnings Withdrawls/ Aggregate Balance
Last FY Last FY in Last FY Distributions at Last FYE
Name ($) (1) ($) ($) (7) ($) ($)
(a) (b) (c) (d) (e) (f)

Keh-Shew Lu
- - (39,253 ) - 178,281⁽⁴⁾

Carl C. Wertz
295,772⁽²⁾ - (102,029 ) - 297,720⁽⁵⁾

Mark A. King
562,839⁽³⁾ - (101,781 ) - 762,022⁽⁶⁾

Richard D. White
- - - - -


(1)		Contributions are reported as compensation in the last completed fiscal year in the Summary Compensation Table.
(2)		Includes $240,794 of deferred cash compensation and $54,978 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2008.
(3)		Includes $497,805 of deferred cash compensation and $65,034 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2008.
(4)		Includes 2007 deferred cash compensation of $203,946 reported in the Summary Compensation Table for 2007.
(5)		Includes 2007 deferred cash compensation of $71,792 and $27,105 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2007.
(6)		Includes 2007 deferred cash compensation of $259,112 and $31,623 of deferred equity compensation from stock awards that are reported in the Summary Compensation Table for 2007.
(7)		Amounts shown are as a result of decrease in the values of the NEO’s deferred compensation due to loss based on the NEO’s investment allocations, which may include stocks, bonds and mutual fund shares.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following sets forth potential payments payable to the NEOs upon termination of their employment or a change in control of the Company.

Payment Upon Termination Without Cause

Payments upon termination without “cause” for Messrs. Lu, Wertz, Liu and King are governed by their current employment agreements entered into with the Company on August 29, 2005. The executive’s relationship with the Company is “at will” and may be terminated at the option of either party, with or without cause.

As used in the employment agreements, “cause” means:

	•		the willful and continued refusal of the executive to substantially perform his duties in accordance with his employment agreement, after the Board has provided the executive with written demand for substantial performance and the executive has had reasonable opportunity to remedy it;

	•		the conviction of, or a plea of nolo contendere by, the executive to a felony; or

	•		a charge or indictment of a felony, the defense of which renders the executive substantially unable to perform his duties under his employment agreement.

In the event employment is terminated by the Company without “cause,” the executive either may (a) commence a one-year paid leave of absence (“LOA”), or (b) forego such LOA and the benefits associated therewith. If the executive chooses to commence the LOA, the potential payments to the executive can be divided into (i) payments during the LOA, and (ii) payments after the LOA.

(i) Payments during the leave of absence

During the LOA, the executive will continue as a full-time employee of the Company, entitled to receive all the benefits provided under his employment agreement, namely: (1) his annual base salary; (2) participation in any executive bonus plan of the Company, pro-rated to the beginning of the LOA; (3) reimbursement for all reasonable and documented business expenses; (4) paid vacation in accordance with the Company’s vacation policy for employees generally; (5) participation in all plans provided to employees in general; (6) a life insurance policy in the amount in effect on the date of the employment agreement; and (7) a disability policy in the maximum insurable amount.

(ii) Payments after the leave of absence

At the end of the LOA, neither the Company nor the executive shall have any further duties under his employment agreement, except that (1) the Company shall continue to pay to the executive, or his estate, the annual base salary for one year, and (2) all share-based compensation previously granted shall continue to vest and shall remain exercisable for the full term thereof, determined without regard to the termination of employment.

If the executive chooses to forego the LOA and the benefits associated therewith, the vesting of any options, RSAs or RSUs awarded to the executive and his ability to exercise them, upon termination will be governed by the terms of the 2001 Incentive Plan and his stock award agreements. The 2001 Incentive Plan ~~authorizes~~generally provides, that if the executive is terminated for any reason other than death or “permanent disability” (as defined), the award will be exercisable until the earlier of (1) the expiration date of the award (generally ten years from date of grant), or (2) for three months after the termination date of the executive.

Trade secrets, non-competition and non-solicitation provisions

During the LOA, the executive shall not (1) without the prior consent of the Board, disclose or use any confidential business or technical information or trade secret of the Company, (2) without the prior consent of the Company, engage in any competitive activity in any line of business in which the Company is engaged, (3) without the prior consent of the Board, remove any tangible items from the premises of the Company, or (4) solicit any employee of the Company. The executive shall continue to be bound by these provisions of his employment agreement for one year after the end of the LOA.

- 39 -

Payment Upon Termination With Cause

The employment agreements do not provide for a payment to the executives in the event of termination with cause.

Payment Upon Termination Due To Death or Disability

The 2001 Incentive Plan generally provides that if the executive dies or becomes “permanently disabled” (as defined), the award will be exercisable by the executive’s successor until the earlier of (1) the expiration date of the award (generally ten years from date of grant), or (2) for one year after such death or “permanent disability,” to the extent such award was exercisable on the date of death or permanent disability. The awards will generally continue to vest according to the vesting schedule. The NEOs are also entitled to receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate. The employment agreements do not provide for a payment to the executives in the event of termination due to death or disability.

Payment Upon a Change in Control

Upon a change in control, all share-based compensation granted to the executive shall vest immediately and be exercisable for the full term thereof. A change in control, as currently defined in both the 2001 Incentive Plan and the NEO’s current employment agreement, means the occurrence of any one (or more) of the following:

	•		any person, including a group as defined in Section 13(d)(3) of the Exchange Act, as amended, becoming the beneficial owner of stock of the Company which entitles such holder to cast 25% or more of the total number of votes for the election of the Board;

	•		a cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, in which the directors of the Company immediately prior to such event cease to be a majority of the Board;

	•		the stockholders of the Company approving an agreement providing for either the Company to cease being a public company or for the sale of substantially all the assets of the Company; or

	•		a tender offer or exchange offer (other than one made by the Company) in which the shares of the Company’s stock are acquired.

If a holding company is formed but the stockholding in the holding company is substantially the same as the Company’s, such an event is not a change in control.

See “PROPOSAL TWO – AMENDMENT OF 2001 OMNIBUS EQUITY INCENTIVE PLAN” for a proposed amendment to the above definition of “change in control.”

Payment Upon Retirement

The 2001 Incentive Plan and forms of option and stock award agreements generally provide that upon retirement, the option or stock award will continue to vest according to the vesting schedule. In addition, upon retirement, the option or stock award will be exercisable until the earlier of (1) the expiration date of the option (generally ten years from date of grant) or stock award, or (2) for three months after the termination date of the executive.

- 40 -

The following table shows the potential payments upon termination or a change in control of the Company for each of the NEOs assuming each of the NEO’s employment was terminated on December 31, 2008, and assuming that the change in control occurred at December 31, 2008. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the NEOs, which would only be known at the time they become eligible for such payments.

VoluntaryTermination
or Termination With Termination
Cause, or Death, or Without Cause ($) Change in Control
Name Disability ($) (1) (1) (2) ($) (1) (3)

Keh-Shew Lu
- 1,934,127 1,227,150

Carl C. Wertz
- 408,435 48,862

Joseph Liu
- 595,103 72,344

Mark A. King
- 522,654 63,630

Richard D. White
- - 53,710


(1)		Does not include the following amounts that could be realized upon exercising vested stock options:



			Amount
	Name		($)
	Keh-Shew Lu		-
	Carl C. Wertz		-
	Joseph Liu		337,816
	Mark A. King		10,711
	Richard D. White		-

Amounts assume that all vested stock options as of December 31, 2008 are exercised as of December 31, 2008, and are calculated by multiplying the number of vested stock options by the difference between the exercise price and the closing price of our Common Stock on December 31, 2008. Does not include a $700,000 benefit for each NEO employed in the U.S. paid by the Company’s life insurance policy upon death.

Does not include the following one-year short- and long-term disability payments payable by disability insurance policies:



			Amount
	Name		($)
	Keh-Shew Lu		122,500
	Carl C. Wertz		89,161
	Joseph Liu		115,158
	Mark A. King		104,159
	Richard D. White		89,161

- 41 -


(2)		The following table reflects the estimate of the payments and benefits that each NEO would receive assuming the NEO’s employment was terminated without “cause” on December 31, 2008, and the NEO chose to commence the LOA beginning on January 1, 2009. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the NEOs, which would only be known at the time they become eligible for such payments.

Medical Life Insurance,
Benefits Disability and Continued Vesting
Base Salary ($) Bonus ($) Paid Vacation ($) Death Benefits ($) of Share-based
Name (a) (b) ($) (c) (d) Compensation ($) Total ($)

Keh-Shew Lu
686,000 - 13,192 4,666 3,118 1,227,150 1,934,127

Carl C. Wertz
340,000 - 10,462 6,368 2,744 48,862 408,435

Joseph Liu
496,000 - 19,077 5,278 2,404 72,344 595,103

Mark A. King
430,000 - 16,538 9,490 2,995 63,630 522,654

Richard D. White
- - - - - - -


(a)		For purposes of determining this amount, the executive would receive his current base salary during the LOA and the one-year following the LOA. For the LOA, the base salary will be paid over the year, in accordance with the Company’s payroll practices. Payment of the base salary for the one year following the LOA will be paid in a lump sum.

(b)		Any bonus amount would be prorated based on days employed in 2009 and calculated using actual 2009 results per the performance criteria in accordance with the Company’s executive bonus plan.

(c)		Reflects the estimated lump sum value of premiums to be paid on behalf of the executive under the medical benefit plans during the LOA.

(d)		Reflects the estimated lump sum value of cost of coverage for life insurance, disability, and death benefits to be paid on behalf of the executive during the LOA. Does not include a $700,000 benefit for each NEO employed in the U.S. paid by the Company’s life insurance policy upon death.

Does not include the following short- and long-term disability payments for two years paid by disability insurance policies:



			Amount
	Name		($)
	Keh-Shew Lu		167,500
	Carl C. Wertz		117,492
	Joseph Liu		156,488
	Mark A. King		139,989
	Richard D. White		-

- 42 -


(3)		Represents the value of the accelerated vesting of the following shares underlying options, RSAs and RSUs assuming a change in control occurs on December 31, 2008:

Name Options RSA/RSU Total Shares

Keh-Shew Lu
253,313 202,500 455,813

Carl C. Wertz
32,250 8,063 40,313

Joseph Liu
62,375 11,938 74,313

Mark A. King
57,625 10,500 68,125

Richard D.White
33,750 8,863 42,613

- 43 -

COMPENSATION OF DIRECTORS

The following table sets forth the compensation paid to each director who is not a NEO for service in 2008.

Changes in Pension
Value and
Fees Nonqualified
Earned or Non-Equity Deferred
Paid in Stock Option Incentive Plan Compensation All Other
Cash Awards Awards Compensation Earnings Compensation Total
Name ($) ($) (1)(2) ($) (1)(2) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h)

Raymond Soong
80,000 446,082 314,017 - - - 840,099

C.H Chen
80,000 572,295 51,945 - - - 704,241

Michael R. Giordano
100,000 122,934 120,532 - - - 343,465

John M. Stich
90,000 116,673 101,500 - - - 308,174

Shing Mao
80,000 104,152 82,469 - - - 266,621

L.P. Hsu
90,000 49,893 - - - - 139,893


(1)		These amounts reflect the value determined by the Company for accounting purposes for these awards and do not reflect whether each director has actually realized benefit from the awards. The value of the equity awards in column (c) and (d) is calculated in accordance with the amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008 in accordance with SFAS 123(R). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Amounts reported for stock awards include RSUs and are calculated by multiplying the number of shares subject to the award by the closing price of the Company’s Common Stock on the grant date and then dividing by the vesting period. Amounts reported for stock options are determined using the Black-Scholes option-pricing model. This model was developed to estimate the fair value of traded options, which have different characteristics than employee stock options, and changes to the subjective assumptions used in the model can result in materially different fair value estimates. See Note 17 to the Company’s audited financial statements for the fiscal year ended December 31, 2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2009, for a further discussion of the relevant valuation assumptions used in calculating grant date fair value pursuant to SFAS 123(R).

(Footnotes continued on following page.)

- 44 -

(Footnotes continued from previous page.)

(2)

Under the Company’s 2008 director compensation plan, each non-employee director listed in the table above was granted an award of 4,300 RSUs on May 29, 2008, except Mr. Raymond Soong, Chairman of the Board, and Mr. C.H. Chen, Vice Chairman of the Board, who were granted an award of 21,500 and 14,700, respectively, on May 29, 2008. Each of these awards to the Company’s non-employee directors, except Mr. Soong and Mr. Chen, had a grant date fair value of $120,185. Awards to Mr. Soong and Mr. Chen had grant date fair values of $600,925 and $410,865, respectively. The following table details the amounts in column (c) and (d) of the previous table and represents the SFAS 123(R) expense in 2008 for each of the equity awards:

2008 2007 2006 2005 Total
Total Stock Stock Stock Stock Stock Option
2008 RSUs 2007 RSUs 2006 RSUs 2005 RSAs Awards ($) Options Options Options Options Awards ($)
Name ($) ($) ($) ($) (c) ($) ($) ($) ($) (d)

Raymond Soong
87,635 166,455 191,993 - 446,082 - - - 314,017 314,017

C.H Chen
59,918 110,970 141,908 259,500 572,295 - - - 51,945 51,945

Michael R. Giordano
17,527 32,366 73,041 - 122,934 - - - 120,532 120,532

John M. Stich
17,527 32,366 66,780 - 116,673 - - - 101,500 101,500

Shing Mao
17,527 32,366 54,259 - 104,152 - - - 82,469 82,469

L.P. Hsu
17,527 32,366 - - 49,893 - - - - -

The table below shows the aggregate number of shares underlying outstanding restricted stock units/awards held by non-employee directors as of December 31, 2008:



	Restricted Stock
	Units/Awards
Name	(in shares)
Raymond Soong		59,000
C.H Chen		85,950
Michael R. Giordano		14,801
John M. Stich		14,238
Shing Mao		13,113
L.P. Hsu		8,238

The table below shows the aggregate number of shares underlying outstanding stock options held by non-employee directors as of December 31, 2008:



Name	Options (in shares)
Raymond Soong		761,063
C.H Chen		320,625
Michael R. Giordano		133,875
John M. Stich		113,625
Shing Mao		223,875
L.P. Hsu		-

- 45 -

Beginning June 2007, each non-employee director of the Company receives a quarterly retainer of $20,000, the Chairman of the Audit Committee ~~to enter into any type~~receives an additional $5,000 quarterly retainer and all other members of ~~arrangement with~~the Audit Committee receive an ~~eligible recipient that, by its terms, involves or might involve~~additional $2,500 quarterly retainer.

In addition, the ~~issuance~~following annual awards, which vest in four equal annual installments commencing on the first anniversary of the date of grant, of shares of Common Stock are granted to each non-employee director:

	•		Chairman of the Board: 21,500 shares

	•		Vice Chairman: 14,700 shares

	•		All other directors: 4,300 shares.

The Board may modify such compensation in the future.

- 46 -

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2008, the Compensation Committee consisted of three directors, Raymond Soong (Chairman), L.P. Hsu, and Shing Mao. During 2008, no executive officer of the Company served on the compensation committee (or equivalent) of the Board of another entity whose executive officer(s) served on the Company’s Compensation Committee or Board.

Report of the Audit Committee of the Board to Stockholders

The Report of the Audit Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

AUDIT COMMITTEE REPORT

The Board maintains an Audit Committee comprised of three of the Company’s directors, Michael R. Giordano (Chairman), John M. Stich and L.P. Hsu. Each member of the Audit Committee meets the independence and experience requirements of the Nasdaq Stock Market and the independence requirements of the SEC. Mr. Giordano qualifies as an “audit committee financial expert” as defined under the rules of the SEC. The Audit Committee assists the Board in monitoring the accounting, auditing and financial reporting practices of the Company.

Management is responsible for the preparation of the Company’s financial statements and financial reporting process, including its system of internal controls. In fulfilling its oversight responsibilities, the Audit Committee:

•		Reviewed and discussed with management the audited financial statements contained in the Company’s Annual Report on Form 10-K for fiscal 2008; and

•		Obtained from management their representation that the Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

The independent registered public accounting firm is responsible for performing an audit of the Company’s financial statements in accordance with the auditing standards generally accepted in the United States and expressing an opinion on whether the Company’s financial statements present fairly, in all material respects, the Company’s financial position and results of operations for the periods presented and conform with accounting principles generally accepted in the United States. In fulfilling its oversight responsibilities, the Audit Committee:

•		Discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (“Communication with Audit Committees”); and

•		Received and discussed with the independent registered public accounting firm the written disclosures and the letter from the independent registered public accounting firm required by the Public Company Accounting Oversight Board as currently in effect (“Independence Discussions with Audit Committees”), and reviewed and discussed with the independent registered public accounting firm whether the rendering of the non-audit services provided by them to the Company during fiscal 2008 was compatible with their independence.

The Audit Committee operates under a written charter, which was adopted by the Board and is assessed annually for adequacy by the Audit Committee. In 2008, the charter was revised. The revised charter is attached to this Proxy Statement as Appendix A. The Audit Committee held six meetings during fiscal 2008, and took action by written consent on four occasions.

In performing its functions, the Audit Committee acts only in an oversight capacity. It is not the responsibility of the Audit Committee to determine that the Company’s financial statements are complete and accurate, are presented in accordance with accounting principles generally accepted in the United States or present fairly the results of operations of the Company for the periods presented or that the Company maintains appropriate internal controls. Nor is it the duty of the Audit Committee to determine that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s auditors are independent.

- 47 -

Based upon the reviews and discussions described above, and the report of the independent registered public accounting firm, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 for filing with the Securities and Exchange Commission. The Audit Committee also has recommended, and the Board also has approved, the selection of Moss Adams LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009.


Dated: April 1, 2009		THE AUDIT COMMITTEE

		Michael R. Giordano, Chairman
		L.P. Hsu
		John M. Stich

Code of Ethics

The Company has adopted a Code of Ethics applicable to the principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions of the Company. The Code of Ethics is available on the Company’s Investor Relations website at investor.diodes.com under the “Corporate Governance” section of the web site. The direct link to the Code of Ethics is media.corporateir.net/media_files/irol/62/62202/Codeofethics1a.pdf. We intend to disclose future amendments to, or waivers from, certain provisions of the Code of Ethics applicable to senior financial executives on our website within four business days following the date of such amendment or waiver.

Certain Relationships and Related Transactions

Policy Regarding Related Person Transactions

The Audit Committee has adopted a written policy (the “Policy”) to review any transaction (a “related person transaction”) in which the Company was, or is to be, a participant and in which any director, executive officer, nominee for director or beneficial owner of more than 5% of the outstanding shares of Common Stock of the Company, or any immediate family member of any such person, has a direct or indirect material interest. The Policy requires the following:

•		the Audit Committee shall review any proposed agreement or arrangement relating to a related person transaction or series of related person transactions, and any proposed amendment to any such agreement or arrangement;

•		the Audit Committee shall establish standards for determining whether the transactions covered by such proposed agreement or arrangement are on terms no less favorable to the Company than could be obtained from an unrelated third party (“fair to the Company”);

•		before the Company enters into any such proposed agreement or arrangement, and at least annually thereafter, the Company’s internal audit department shall report to the Audit Committee whether the transactions covered by such agreement or arrangement are fair to the Company under the standards established by the Audit Committee;

•		the Audit Committee shall make all reasonable efforts (taking into account the cost thereof to the Company) to cancel or to renegotiate any such agreement or arrangement which is not so determined to be fair to the Company; and

•		the Company will disclose any related person transactions required to be disclosed by the rules promulgated by the SEC, in the manner so required.

Relationships and Transactions

The Audit Committee of our Board reviews all related party transactions for potential conflict of interest situations on an ongoing basis, in accordance with such procedures as the Audit Committee may adopt from time to time. We believe that all related party transactions are on terms no less favorable to us than could be obtained from unaffiliated third parties.

We conduct business with one related party company: LSC. LSC is our largest stockholder and is a member of the Lite-On Group of companies. C.H. Chen, our former President and Chief Executive Officer and current Vice Chairman of our Board, is also Vice Chairman of LSC. Mr. Chen is the Vice Chairman of Dynacard Corporation, a board member of Lite-On Technology Corporation, the Chairman of Co-Tech Copper Foil Corporation, and a board member of Actron Technology

- 48 -