We are pleased to inform you that 2004  was another remarkable year for Diodes Incorporated. 

While the semiconductor industry generally experienced a year of solid demand, we again yielded record results. Our 36 % growth in revenues for 2004  once again exceeded the discrete semiconductor sector by a factor of nearly two times. We continued to strengthen our balance sheet and generate positive cash from operations even as we built working capital in support of our growth and invested over $26  million in capital expenditures to expand our manufacturing capacity for next- generation devices. 

Our strong performance is based on a core operating strategy that has served us well in both strong and weak markets over the past several years. This strategy has three essential elements: 

First, to position Diodes as an innovation leader for discrete devices and provider of integrated solutions. We have stepped up the pace of develop- ment of core intellectual property that enables us to transcend the current limits of performance, size and power consumption. 

## DEAR SHAREHOLDERS 

Second, to continually pursue manufacturing excellence in order to establish an industry-leading cost structure, maintain the flexibility to rapidly respond to changing customer needs, and sustain our unmatched reputation for product quality. 

Third, to exercise rigorous fiscal discipline in order to ensure that our organization is lean, we optimize our working capital performance, and every dollar we invest in capital equipment and research and development earns multiple returns for our shareholders. 

These are the fundamental principles that have been behind Diodes’ success in recent years – and we believe they offer a compelling formula for sustained performance in the future. 

Our fiscal results are the tangible expression of this success. In the past year: 

Revenues increased 35.6 % to a record $185.7  million. This compares to the 2004  discrete semiconductor growth of 18.1 %. • 

Sales of new products reached a record level of 16 % of total sales. • 

We continued to diversify into higher-margin product lines, improving our gross profit margin 600  bps to 32.7 %. • 

