Dear HTC Shareholders,

Your support and confidence in the HTC Corporation this past year have been invaluable to our growth and success. For this, please accept our warm and sincere gratitude. 2008 marked another banner year for our sales and our business, and I am pleased to share with you some of the highlights in this letter.

HTC sales of converged devices remain robust despite the ongoing global financial crisis that has crippled most major financial markets and tightened credit worldwide since the latter half of 2008. HTC sales growth continues to be driven by our sleeker, thinner product designs; readily navigated, user-friendly interfaces and continuing price advantage. HTC is further benefiting from the general consumer shift away from older generation mobile phones to new 'smart phones' able to take full advantage of telecom service providers' expanding suite of mobile digital services. Product innovation leadership and expanding market demand have combined yet again to deliver a banner year for HTC.

Continued buoyant growth prospects for converged device sales have encouraged major mobile phone makers as well as others to target investments on this sector. While Symbian, Windows Mobile, Blackberry and iPhone have long provided system standards for mobile service applications, it is the recent launch of the Android operating system that is now blazing the trail forward into the age of the truly mobile Internet. In-house R&D capabilities nurtured over more than a decade give HTC a leading edge in both Windows Mobile and Android system applications. HTC, the first in the industry to launch a mobile phone based on the Android platform, consistently demonstrates R&D and innovation leadership as well as an unsurpassed ability to package products that appeal to increasingly discerning and demanding consumers.

HTC brand value and image are earning increasing recognition in consumer markets around the world. Following on the success of our first self branded product, HTC Touch, we launched the flagship Diamond product line in 2008. Blazing new ground in fashion consciousness, telecommunications technology and user satisfaction, Diamond sold 2 million units worldwide in a short six-month period and set a new, all-time HTC sales record. The stellar success of Diamond builds on consumer acceptance and support already won by the HTC brand.

Financial Performance

Consolidated revenue in 2008 of NT$152.35 billion represent an NT$34.14 billion (28.9%) increase over 2007 revenue. The 12.03 million product units shipped this past year represent a 21.3% increase over 2007. 3G wireless device units accounted for at least 70% of this total. Growth in non-ODM revenues topped 40%.

Revenue from less profitable ODM sales fell last year below 10% of total corporate revenues. Such helped raise the HTC consolidated gross profit ratio to 33.5% in 2008 - a 1.1 percentage point growth over the 32.4% (adjusted) achieved in 2007. Investments in building the value and image of the HTC brand as well as continued R&D and innovation work gave HTC a consolidated operating expense ratio for the year of 13.6%. The consolidated operating margin achieved 19.9% in 2008. Net profits for the year before and after taxes totaled NT$31.59 billion and NT$28.64 billion, respectively. The after tax profit margin in 2008 was 18.8%, and EPS after tax totaled NT$37.97. Before employee bonus distributions, HTC's total after tax profit totaled NT$34.25 billion; NT$5.31 billion (18.4%) more than earned in 2007, resulting in an after tax EPS of NT$45.41.

Note 1: 2008 financial forecast numbers were not disclosed and thus cannot be compared to actual achievements.

Note 2: For purposes of comparison, the adjusted consolidated gross profit ratio used here for 2007 was 32.4%, which includes product warranty expenses (NT$5.02 billion), provision for loss on inventory (NT$0.68 billion) and employee bonus expense (NT$0.76 billion). It, therefore, differs from the consolidated gross profit ratio published in HTC financial reports for 2007.

Significant Achievements

HTC made impressive progress along other fronts as well during 2008:

> 6 May 2008 ( Watch Video )

HTC launches its flagship HTC Touch Diamond line of smart phones in London. The sleek profile and smart look of each distinctive model are just the beginning. These revolutionary smart phones incorporate HTC's pioneering TouchFLO 3D - a touch interface that brings a new level of ease and accuracy to mobile phone operations, supporting fast broadband Internet data throughput speeds and featuring a fully redesigned, exceptionally user-friendly browser. HTC Touch Diamond truly delivers full Internet functionality 'anytime, anywhere'. The outstanding craftsmanship in the Touch Diamond line creates a new standard for mobile telecommunications and encourages consumers to desire and expect more from their mobile phone devices.

> 23 September 2008 ( Watch Video )

HTC joins hands with Google, the world's largest online search provider, and US telecommunications service provider T-Mobile to launch the T-Mobile G1 smart phone in New York City. Designed and built by HTC, the G1 is the first mobile phone built on the Android platform - confirming HTC as the innovative leader in the global smart phone industry. The G1 gives users instant access to Google's multifaceted online services as well as to a full suite of developer-provided applications and content - making going online on the go easier, more effective and eminently more fun. The G1 is more than just a milestone in mobile phone and Internet development - it is a revolutionary mobile telecommunications experience.

> 2008

Investments in R&D and production further enhance competitiveness and set the stage for sustained growth.

HTC's board of directors approves in February an allocation of NT$3.335 billion to purchase land in Xindian City, a suburb of Taipei. This will be the future home of the company's Taipei R&D Center, slated for completion within 3 years.

HTC purchases the renowned San Francisco-based design house One & Company Design, Inc. through its subsidiary H.T.C. (B.V.I.) Corp. The strategic acquisition is expected to further sharpen HTC's edge in mobile phone innovation and design work.

To meet growing demand for products as well as raise precision and efficiencies at each stage of the production process, the board of directors passes a decision to expand manufacturing facilities located in the Kangqiao Industrial Zone near Shanghai in China. The new facilities came online in October.

Corporate Social Responsibility

The board of directors approves regular annual donations to the HTC Social Welfare and Charity Foundation or Education Foundation. This foundation funds leadership and character training for elementary, junior high and senior high students; co-sponsors local community development and urban cultural revitalization efforts; targets the special needs of disadvantaged groups; and provides disadvantaged children opportunities to further their academic careers.

HTC Foundation efforts have carefully targeted the needs of the community. The Foundation signed a white paper on character development with the Taoyuan County Government in March 2008, agreeing to joint execution of a three-year plan to implement character development education programs in 100 schools. A total of 454 schools are now signatories to HTC's Memorandum of Understanding on Foundation Education. Adding to Yuli Township (Hualien County) and Longtan Township (Taoyuan County), townships joining the HTC-sponsored 'Township of character' plan during 2008 include Shihzi Township (Pingtung County), Sinyi Township (Nantou County), and Yuanlin Township (Changhua County). The program works with and energizes local public agencies to proactively foster good character in youth and promote an atmosphere receptive to and supportive of strong character and culture.

The HTC Foundation established the nation's first institute dedicated to character-building and English training in Hualien's Meilun District. The institute provides character-building and English enhancement curricula free of charge to fourth grade elementary school students from around Hualien County. In addition, the Foundation offers scholarships for children with special financial needs and financial aid to low-income families and sponsors after school tutoring programs. Each year, Foundation disbursements benefit over 2,000 youths from disadvantaged families both in Taiwan and overseas.

Outlook

Despite a worldwide downturn in economic conditions and the negative impact of such on overall industrial growth, continued growth is forecast for the smart phone sector. HTC's long-term focus on smart phone technologies and products, coupled with stable and healthy corporate operations, give us confidence that growth prospects for HTC business remain strong.