20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Commission File Number: 000-30540

GIGAMEDIA LIMITED

(Exact name of registrant as specified in its charter)

REPUBLIC OF SINGAPORE

(Jurisdiction of incorporation or organization)

8 _TH FLOOR, NO. 22, LANE 407, SECTION 2 TIDING BOULEVARD, TAIPEI, TAIWAN, R.O.C.

(Address of principal executive offices)

COLLIN HWANG, Chief Executive Officer

8 _TH FLOOR, NO. 22, LANE 407, SECTION 2 TIDING BOULEVARD, TAIPEI, TAIWAN, R.O.C.

Tel: 886-2-2656-8000; Fax: 886-2-2656-8003

Securities registered or to be registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class	Name of Each Exchange on Which Registered
Ordinary Shares	The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Exchange Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

50,722,976 ordinary shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
    Yes  ¨    No  x

If this annual report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S–T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  x International Financial Reporting Standards as issued by the International Accounting Standards Board  ¨ Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    ¨   Item 17    ¨   Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨     No  x

TABLE OF CONTENTS

	Page
PART I		3
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		3
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE		3
ITEM 3. KEY INFORMATION		3
ITEM 4. INFORMATION ON THE COMPANY		19
ITEM 4A. UNRESOLVED STAFF COMMENTS		32
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS		32
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		52
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS		58
ITEM 8. FINANCIAL INFORMATION		59
ITEM 9. THE OFFER AND LISTING		59
ITEM 10. ADDITIONAL INFORMATION		60
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		67
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		68
PART II		68
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		68
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		68
ITEM 15. CONTROLS AND PROCEDURES		68
ITEM 16. RESERVED		69
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT		69
ITEM 16B. CODE OF ETHICS		69
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES		70
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		71
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		71
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANTS		71
ITEM 16G. CORPORATE GOVERNANCE		72
ITEM 16H. MINE SAFETY DISCLOSURE		72
PART III		72
ITEM 17. FINANCIAL STATEMENTS		72
ITEM 18. FINANCIAL STATEMENTS		72
ITEM 19. EXHIBITS		73

i

CERTAIN TERMS AND CONVENTIONS

In this annual report, all references to

(i) “we,” “us,” “our,” “our Company” or “GigaMedia” are to GigaMedia Limited and, unless the context requires otherwise, its subsidiaries, or where the context refers to any time prior to the incorporation of any of its subsidiaries, the businesses which predecessors of the present subsidiaries were engaged in and which were subsequently assumed by such subsidiaries;

(ii) “Shares” are to ordinary shares of our Company;

(iii) “Hoshin GigaMedia” are to Hoshin GigaMedia Center Inc., a company incorporated under the laws of Taiwan, Republic of China, (“Taiwan” or “R.O.C.”);

(iv) “FunTown” are to our Asian online game and service business operated through our two operating subsidiaries, Hoshin GigaMedia and FunTown World Limited, a company incorporated under the laws of the British Virgin Islands;

(v) “GigaMedia Cloud” are to GigaMedia Cloud Services Co. Ltd., a company incorporated under the laws of Taiwan;

(vi) “GigaCloud” are to the cloud computing services operated through our subsidiary GigaMedia Cloud;

(vii) “FingerRockz” are to FingerRockz Co., Ltd., a company incorporated under the laws of Taiwan that develops and publishes mobile games and apps;

(viii) “IAH” or “IAHGames” are to Infocomm Asia Holdings Pte. Ltd., an online game operator, publisher and distributor in Southeast Asia and incorporated under the laws of the Republic of Singapore;

(ix) “Monsoon” are to Monsoon Online Pte. Ltd., a company incorporated under the laws of the Republic of Singapore and wholly owned by IAHGames;

(x) “T2CN” are to T2CN Holding Limited, a company incorporated under the laws of the British Virgin Islands, and the T2CN Operating Entities;

(xi) “T2CN Operating Entities” are to T2CN Holding Limited’s two wholly owned subsidiaries, T2CN Information Technology (Shanghai) Co., Ltd. (“T2 Technology”) and J-Town Information (Shanghai) Co., Ltd. (“J-Town”), and three variable interest entities, Shanghai T2 Entertainment Co., Ltd. (“T2 Entertainment”), Shanghai T2 Advertisement Co., Ltd. (“T2 Advertisement”) and Shanghai Jinyou Network & Technology Co., Ltd. (“Jinyou”));

(xii) “Internet access and service business” are to an Internet access and service business that we historically operated through Koos Broadband Telecom Co., Ltd. (“KBT”) and completely disposed of in September 2008;

(xiii) “UIM” are to Ultra Internet Media S.A., a company incorporated under the laws of Nevis;

(xiv) “Everest Gaming” are to Mangas Everest S.A.S, a société par actions simplifiée registered with the Trade and Companies Registry of Paris and organized under the laws of France;

(xv) “BetClic” are to BetClic Everest Group, formerly named as Mangas Gaming S.A.S, a company organized under the laws of France;

(xvi) “JIDI” are to JIDI Network Technology (Shanghai) Co., Ltd., our wholly owned subsidiary incorporated under the laws of the PRC; and

(xvii) “Shanghai JIDI” are to Shanghai JIDI Network Technology Co., Ltd., a company incorporated under the laws of the PRC.

For the purpose of this annual report only, geographical references to “China” and the “PRC” are to the People’s Republic of China and do not include Taiwan, the Hong Kong Special Administrative Region (“Hong Kong”) and the Macau Special Administrative Region (“Macau”). Except if the context otherwise requires, and for the purpose of this annual report only, references to “Greater China” include the PRC, Taiwan, Hong Kong and Macau. References to “South Korea” are to the Republic of Korea.

All references in this annual report to “U.S. dollar,” “$” and “US$” are to the legal currency of the United States; all references to “NT dollar” or “NT$” are to the legal currency of Taiwan; all references to “RMB,” “Rmb” or “Renminbi” are to the legal currency of the PRC; all references to “Hong Kong dollar” are to the legal currency of Hong Kong and all references to “Singapore dollar” and “S$” are to the legal currency of the Republic of Singapore.

We have approximated certain numbers in this annual report to their closest round numbers or a given number of decimal places. Due to rounding, figures shown as totals in tables may not be arithmetic aggregations of the figures preceding them.

1

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This annual report includes “forward-looking statements” within the meaning of, and intended to qualify for the safe harbor from liability established by, the United States Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact, may consist of or contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Some of the risks are listed under Item 3, “Key Information — D. Risk Factors” and elsewhere in this annual report. In some cases, you can identify these forward-looking statements by words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “plan,” “potential,” “project,” “seek,” “may,” “might,” “can,” “could,” “will,” “would,” “should,” “shall,” “is likely to” or similar expressions, including their negatives. These forward-looking statements include, without limitation, statements relating to:

• our business plan and strategies;

• our future business development and potential financial condition, results of operations and other projected financial information;

• our ability to manage current and potential future growth;

• expected continued acceptance of our revenue model;

• our plans for strategic partnerships, licenses and alliances;

• our acquisition and strategic investment strategy, and our ability to successfully integrate any past, current, or future acquisitions into our operations;

• our ability to protect our intellectual property rights and the security of our customers’ information;

• the launch of new online games according to our timetable;

• expected continued acceptance of our online games, including expected growth of the online games industry, and consumer preferences for our products and services;

• the in-house development of new online games;

• our plans to license additional games from third parties, and the launch of these new games, including the timing of any such development, licenses or launches, in various geographic markets;

• our ability to maintain and strengthen our position as one of the largest online MahJong operators in Taiwan;

• the potential entry of new competitors in any of our business lines;

• changes in the global regulatory environment relating to the online gaming business;

• changes or stability in certain regulatory environments relating to GigaCloud’s operations;

• changes in PRC laws and regulations, and future enforcement of those laws and regulations, including laws and regulations relating to Internet usage, advertising over the Internet, Internet content providers, foreign investment and ownership in online business, distribution of dividends and foreign exchange controls;

• the outcome of ongoing, or any future, litigation or arbitration; and

• our corporate classification by various governmental entities.

These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of risk factors and other factors noted throughout this annual report, including those described under Item 3, “Key Information — D. Risk Factors” and those detailed from time to time in other filings with the United States Securities and Exchange Commission (the “SEC”). We do not guarantee that the transactions and events described in this annual report will happen as described or that they will happen at all. We undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events. Whether actual results will conform to our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, and reflect future business decisions that are subject to change. Given this level of uncertainty, you are advised not to place undue reliance on such forward-looking statements.

2

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable, but see Item 6, “Directors, Senior Management and Employees — A. Directors and Senior Management” in this annual report.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Exchange Rates

Assets and liabilities on our balance sheet denominated in currencies other than U.S. dollars are translated into U.S. dollars using year-end exchange rates. Income and expense items in our statement of income (loss) denominated in currencies other than U.S. dollars are translated into U.S. dollars using weighted-average exchange rates. Certain other operating financial information denominated in currencies other than U.S. dollars, not included in our consolidated financial statements and provided in this annual report, are translated using weighted-average exchange rates. We make no representation that any currencies, other than U.S. dollars, could be converted to U.S. dollars at such rate or any particular rates.

A. Selected Financial Data

The following selected consolidated balance sheet data as of December 31, 2012 and 2013 and the selected consolidated statement of operations data for the years ended December 31, 2011, 2012 and 2013 have been derived from our audited consolidated financial statements included in Item 18 in this annual report. The selected consolidated balance sheet data as of December 31, 2009, 2010 and 2011, and the selected consolidated statement of operations data for the years ended December 31, 2009 and 2010 have been derived from our audited consolidated financial statements for the years ended December 31, 2009, 2010 and 2011, which are not included in this annual report. The consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. You should read the following selected consolidated financial data in conjunction with Item 5, “Operating and Financial Review and Prospects,” and the consolidated financial statements and the accompanying notes to those statements included in this annual report. The statement of operations for the year ended December 31, 2011 has been restated to reflect the results of JIDI, which our board of directors resolved in June 2012 to liquidate and which we subsequently disposed of in 2013, as discontinued operations. Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no effect on net income (loss) or shareholders’ equity as previously reported.

3

For the Years Ended December 31,

(in thousands except for per share data)

	2009			2010			2011			2012			2013
	US$			US$			US$			US$			US$
STATEMENT OF OPERATIONS DATA:
OPERATING REVENUES
Gaming software and service revenues		112,694			25,820			0			0			0
Asian online game and service revenues		46,887			38,862			34,367			27,470			14,106
Other revenues		0			0			0			0			926
Total operating revenues		159,581			64,682			34,367			27,470			15,032
COSTS OF REVENUES
Cost of gaming software and service revenues		(20,102	)		(4,010	)		0			0			0
Cost of Asian online game and service revenues		(16,785	)		(17,103	)		(14,413	)		(11,388	)		(6,425	)
Cost of other revenues		0			0			0			0			(1,159	)
Total costs of revenues		(36,887	)		(21,113	)		(14,413	)		(11,388	)		(7,584	)
GROSS PROFIT		122,694			43,569			19,954			16,082			7,448
OPERATING EXPENSES
Product development and engineering expenses		(14,195	)		(7,301	)		(1,956	)		(1,471	)		(1,698	)
Selling and marketing expenses		(79,421	)		(21,589	)		(10,079	)		(8,377	)		(4,815	)
General and administrative expenses		(29,692	)		(31,780	)		(18,101	)		(13,384	)		(6,324	)
Bad debt expenses		(1,092	)		(1,639	)		(1,820	)		(169	)		(37	)
Impairment loss on property, plant, and equipment		(1,250	)		(278	)		0			0			0
Impairment loss on goodwill		(14,103	)		(2,255	)		(5,097	)		(12,489	)		(17,054	)
Impairment loss on intangible assets		(4,701	)		(1,330	)		(2,583	)		(15	)		(13,251	)
Impairment loss on prepaid licensing and royalty fees		(18,301	)		(870	)		(247	)		(702	)		(2,752	)
Impairment loss on deconsolidation of T2CN		0			(22,234	)		0			0			0
Other		0			(1,989	)		0			(49	)		(4	)
Total operating expenses		(162,755	)		(91,265	)		(39,883	)		(36,656	)		(45,935	)
Loss from operations		(40,061	)		(47,696	)		(19,929	)		(20,574	)		(38,487	)
Income (loss) from continuing operations		(56,102	)		1,408			(67,390	)		(13,596	)		(34,743	)
Income (loss) from discontinued operations		222			(128	)		(4,188	)		(2,521	)		(318	)
Net income (loss)		(55,880	)		1,280			(71,578	)		(16,117	)		(35,061	)
Less: Net (income) loss attributable to the noncontrolling interest and subsidiary preferred shares		6,795			1,370			366			827			281
Net income (loss) attributable to shareholders of GigaMedia		(49,085	)		2,650			(71,212	)		(15,290	)		(34,780	)
Earnings (loss) per share (in dollars):
Basic:
Income (loss) from continuing operations		(0.90	)		0.05			(1.23	)		(0.25	)		(0.68	)
Income (loss) from discontinued operations		0.00			0.00			(0.08	)		(0.05	)		(0.01	)
Net income (loss)		(0.90	)		0.05			(1.31	)		(0.30	)		(0.69	)
Diluted:
Income (loss) from continuing operations		(0.90	)		0.04			(1.23	)		(0.25	)		(0.68	)
Income (loss) from discontinued operations		0.00			0.00			(0.08	)		(0.05	)		(0.01	)
Net income (loss)		(0.90	)		0.04			(1.31	)		(0.30	)		(0.69	)
Dividends declared per share (in dollars)		0			0			0			0			0

4

As of December 31,

(US dollars in thousands except for number of issued shares)

	2009		2010		2011		2012		2013
	US$		US$		US$		US$		US$
BALANCE SHEET DATA:
Total current assets		104,839		93,088		118,920		85,135		83,331
Property, plant and equipment-net		5,989		5,301		4,288		1,949		1,677
Goodwill		44,417		39,493		28,437		16,934		—
Intangible assets-net		18,924		19,769		15,534		15,675		1,461
Total assets		260,181		267,589		191,706		140,394		103,321
Total current liabilities		72,329		43,293		35,658		21,647		14,839
Total GigaMedia’s shareholders’ equity		184,745		217,521		156,072		118,231		88,448
Common shares, no par value, and additional paid-in capital		304,379		309,332		304,672		304,851		305,072
Number of issued shares (in thousands)		54,995		56,263		50,720		50,720		50,723

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Related to Our Business and Industries

We may not be successful in operating and improving our existing online games to satisfy the changing demands and preferences of players.

The level of demand and market acceptance of our existing online games is subject to a high degree of uncertainty. Our future operating results will depend on numerous factors, many of which are beyond our control. These factors include:

• the popularity of existing and new online games operated by us;

• the introduction of new online games by us or third parties, competing with or replacing our existing online games;

• general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending;

• changes in our customer demands and preferences;

• regulatory and other risks associated with our operations in Taiwan and Hong Kong;

• the availability of other forms of entertainment; and

• critical reviews and public tastes and preferences, all of which change rapidly and cannot be predicted.

Our ability to plan for product development and distribution and promotional activities will be significantly affected by how well we anticipate and adapt to relatively rapid changes in consumer tastes and preferences. Currently, a substantial portion of our online games revenue is derived from revenues from PC-based online games including MahJong games and other casual games offered in Taiwan and Hong Kong by FunTown and the licensed massively multi-player online (“MMO”) game Tales Runner. However, revenues from our PC-based games have been in decline, reflecting the overall shift in player preferences away from PC-based games to browser-based games and mobile games. This decline in the popularity of PC-based online games, and declines in the popularity of online games in general, is likely to adversely affect our business, financial condition and results of operations. To maintain competitiveness of our games, we must regularly invest in enhancing, improving, expanding or upgrading our games. If we fail to do so, revenues generated from our existing games will likely decline.

5

Our games are currently accessed primarily through personal computers. As devices other than personal computers are increasingly used to access the Internet, successful development of games for such devices will be imperative if we are to maintain or increase our revenues, and our inability to do so may result in lower growth of or a decline in revenues.

Devices other than personal computers, such as mobile phones and tablets, are used increasingly to access the Internet. We believe that, for our business to be successful, we will need to develop versions of our existing games, our pipeline games and any future games that work well with such devices. The games that we develop for such devices may not function as smoothly as our existing games, and may not be attractive to game players in other ways. In addition, manufacturers of such devices may establish restrictive conditions for developers of applications to be used on such devices, and as a result our games may not work well, or at all, on such devices. As new devices are released or updated, we may encounter problems in developing versions of our games for use on such devices and we may need to devote significant resources to the creation, support, and maintenance of games for such devices. If we are unable to successfully expand the types of devices on which our existing and future games are available, or if the versions of our games that we create for such devices do not function well or are not attractive to game players, our revenues may fail to grow and may decline.

The online games market is characterized by rapid technological change, and failure to respond quickly and effectively to new Internet technologies or standards may have a material adverse effect on our business.

The online games industry is evolving rapidly. Any new technologies and new standards may require increases in expenditures for online game development and operations. In addition, we use internally developed software systems that support nearly all aspects of our billing and payment transactions in our Asian online game and service business. All of our businesses may be adversely affected if we are unable to upgrade our systems effectively to accommodate future traffic levels, to avoid obsolescence or to successfully integrate any newly developed or acquired technology with our existing systems. Capacity constraints could cause unanticipated system disruptions and slower responses, which could adversely affect data transmission and game play. These factors could, among other things, cause us to lose existing or potential users and existing or potential game development partners.

In operating our Asian online game and service business, we may fail to launch new games according to our timetable, and our new games may not be commercially successful.

In order for our Asian online game and service business strategy to succeed over time, we will need to license, acquire or develop new online games that can generate additional revenue and further diversify our revenue sources. A number of factors, including technical difficulties, government approvals and game licenses required for launching new games, lack of sufficient game development personnel and other resources, and adverse developments in our relationship with the licensors of our new licensed games could result in delay in launching our new games. Therefore, we cannot assure you that we will be able to meet our timetable for new game launches.

There are many factors that may adversely affect the popularity of our new games. For example, we may fail to anticipate and adapt to future technical trends and new business models, fail to satisfy game player preferences and requirements, fail to effectively plan and organize marketing and promotion activities, fail to effectively detect and prevent programming errors or defects in the games, and fail to operate our new games at acceptable costs. We cannot assure you that our new games will gain market acceptance and become commercially successful. If we are not able to license, develop or acquire additional online games that are commercially successful, our future revenues and profitability may decline.

Due to increased competition among online games operators in Greater China, license fees for online games have increased and most licensors are demanding upfront license fees and guaranteed minimum royalty payments. If any of the new games we license from third parties fails to appeal to players, we may not be able to fully recover upfront and/or minimum royalty licensing costs, which can be significant. As a result, our results of operations and financial condition may be materially and adversely affected.

Our Asian online game and service business faces intense competition, which may adversely affect our revenues, profitability and planned business expansion.

The online games market is highly competitive. Online casual game operators in Greater China are currently our primary competitors. We also compete with massively multi-player online role-playing game (“MMORPG”) operators throughout Greater China. Our major competitors in Taiwan include Gamania Digital Entertainment Co., Ltd. (“Gamania”), Soft-World International Corporation (“Soft-World”), International Games System, Co., Ltd. (“IGS”), UserJoy Technology Co., Ltd. (“UserJoy”) and GodGame Inc. (“GodGame”). Our major competitors in the PRC include Shanda Interactive Entertainment Ltd. (“Shanda”), Giant Interactive Group, Inc. (“Giant”), Changyou.com Limited (“Changyou”), Shanghai Everstar Online Entertainment Co., Ltd. (“Nineyou”), Tencent Holdings Limited (“Tencent”), Perfect World Co., Ltd. (“Perfect World”), Kingsoft Corporation Limited (“Kingsoft”) and Beijing Globalink Computer Technology Co., Ltd. (“Ourgames.com”). In addition, we compete for users against various offline games, such as console games, arcade games and handheld games, as well as various other forms of traditional or online entertainment.

6

We expect more online games operating companies to enter the markets where we operate in Greater China, and a wider range of online games to be introduced to these markets, given the relatively low entry barriers to the online games industry and the increasing popularity of Internet-based businesses. Our competitors vary in size and include private and public companies, many of which have greater financial, marketing and technical resources as well as name brand recognition. We intend to continue to enhance our market position through providing competitive products and quality services that meet market trends and users’ preferences, as well as strengthening sales effectiveness. As a result of the above, significant competition may reduce the number of our users or the growth rate of our user base, reduce the average number of hours played by our users, or cause us to reduce usage fees. All of these competitive factors could have a material adverse effect on our business, financial condition and results of operations.

Our results of operations are subject to significant fluctuations. We have recorded net and operating losses in past years, and we may experience losses in the future.

Our revenues, expenses and results of operations have varied in the past and may fluctuate significantly in the future due to a variety of factors, many of which are beyond our control. In 2011, 2012 and 2013, we recorded operating losses of US$19.9 million, US$20.6 million, and US$38.5 million as well as net losses of US$71.2 million, US$15.3 million and US$34.8 million, respectively. Our future profitability will depend to a great extent upon the performance of our Asian online game and service business and the GigaCloud cloud computing business. The key factors affecting our businesses include:

• Asian online game and service business: our ability to retain existing users; attract new users and maintain user satisfaction; the pace of rolling out new games or updating existing games by us or our competitors; the amount and timing of operating costs and capital expenditures relating to our business operations and expansion; seasonal trends in Internet use; price competition in the industry; regulatory and other risks associated from our operations in Taiwan and Hong Kong.

• Cloud computing business: global economic conditions and general economic conditions of the markets that GigaCloud targets; the availability of the Internet infrastructure; and the technological and other competition from existing and new competitors, our ability to attract new users and maintain user satisfaction; the pace of rolling out new products and services or updating existing offerings by us or our competitors; the amount and timing of operating costs and capital expenditures relating to our business operations and expansion; and regulatory risks associated with our operations in Greater China.

In addition, our operating expenses are based on our expectations of the future demand for our services and are relatively fixed in the short term. We may be unable to adjust spending quickly enough to offset any unexpected demand shortfall. A decrease in revenues in relation to our expenses could have a material and adverse effect on our business, results of operations and financial condition. You should not place undue reliance on our financial guidance, nor should you rely on year-to-year or quarter-to-quarter comparisons of our results of operations as indicators of our future performance and we cannot assure you that we will not experience operating or net losses in future periods.

Our business strategy, which contemplates growth through acquisitions and strategic investments, exposes us to significant risks.

We have pursued and may continue to pursue growth through acquisitions and strategic investments. Any acquisition or investment is subject to a number of risks. Such risks include the diversion of management time and resources, disruption of our ongoing business, lack of familiarity with new markets, difficulties in supporting the acquired business, and dilution to existing stockholders if our common stock is issued in consideration for an acquisition or investment, incurring or assuming indebtedness or other liabilities in connection with an acquisition.

We entered into multiple strategic alliances in the past and later recorded related impairment losses on investments and goodwill. We may incur debts in the future upon an acquisition or suffer losses related to impairment of these investments. Any impairment on goodwill and marketable securities and investments in the future may have a negative impact on our financial results. We will continue to examine the merits, risks and feasibility of potential transactions, and expect to explore additional acquisition opportunities in the future. Such examination and exploration efforts, and any related discussions with third parties, may or may not lead to future acquisitions and investments. We may not be able to complete acquiring or investing transactions that we initiate. Our ability to grow through such acquisitions and investments will depend on many factors, including the availability of suitable acquisition candidates at an acceptable cost, our ability to reach agreement with acquisition candidates or investee companies on commercially reasonable terms, the availability of financing to complete transactions and our ability to obtain any required governmental approvals.

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We also face challenges in integrating any acquired business. These challenges include eliminating redundant operations, facilities and systems, coordinating management and personnel, retaining key employees, managing different corporate cultures, maintaining the relationship with the suppliers, vendors and/or distributors of acquired businesses, and achieving cost reductions and cross-selling opportunities. There can be no assurance that we will be able to successfully integrate all aspects of acquired businesses. The process of integrating the acquired business may disrupt our business and divert our resources. In addition, the benefits of an acquisition or investment transaction may take considerable time to be fully realized and we cannot assure you that any particular acquisition or investment and the subsequent integration will produce the intended benefits.

Our business could suffer if we do not successfully manage current growth and potential future growth.

We are pursuing a number of growth strategies. Some of these strategies relate to services, products or markets in which we lack experience and expertise. Anticipated expansion of our operations will place a significant strain on our management, operation systems and resources. In addition to training and managing our workforce, we will need to continue to develop and improve our financial and management controls and our reporting systems and procedures, including those of acquired businesses. We cannot assure you that we will be able to effectively manage the growth of our operations, and any failure to do so may limit our future growth and materially and adversely affect our business, financial condition and results of operations.

Dependence on network suppliers may adversely affect our operating results.

Our success depends in part upon the capacity, reliability, and performance of our network infrastructure, including the capacity leased from our Internet bandwidth suppliers. We depend on these companies to provide uninterrupted and error-free service through their telecommunications networks. Some of these providers are also our competitors. We exercise little control over these providers, which increases our vulnerability to problems with the services they provide. We have experienced and expect to continue to experience interruptions or delays in network service. Any failure on our part or the part of our third-party suppliers to achieve or maintain high data transmission capacity, reliability or performance could significantly reduce customer demand for our services and damage our business. As our customer base grows and their usage of telecommunications capacity increases, we will be required to make additional investments in our capacity to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be on terms unacceptable to us. If adequate capacity is not available to us as our customers’ usage increases, our network may be unable to achieve or maintain sufficiently high data transmission capacity, reliability or performance. In addition, our business would suffer if our network suppliers increased the prices for their services and we were unable to pass along the increased costs to our customers.

Our Asian online game and service business depends on the reliability of the network infrastructure and related services provided by ourselves and third parties, which is subject to physical, technological, security and other risks.

The development and operation of our online networks are subject to physical, technological, security and other risks which may result in interruption in service or reduced capacity. These risks include physical damage, power loss, telecommunications failure, capacity limitation, hardware or software failures or defects and breaches of physical and cybersecurity by computer viruses, system break-ins or otherwise. An increase in the volume of usage of online services could strain the capacity of the software and hardware employed, which could result in slower response time or system failures. We have a variety of backup servers at our primary site to deal with possible system failures. However, we do not have redundant facilities in the event of an emergency. The occurrence of any of these events could result in interruptions, delays or cessation in service to users of our online services, which could have a material adverse effect on our business and results of operations.

While we have implemented industry-standard physical and cybersecurity measures, our network may still be vulnerable to unauthorized access, computer viruses, denial of service and other disruptive problems. Our Internet-based services may be interrupted as a result of the accidental or intentional actions of Internet users, our current and former employees or others. A party that is able to circumvent security measures could misappropriate proprietary information, attack our security and network system, and, perhaps, most importantly, cause interruptions in our operations. We have experienced in the past, and may experience in the future, security breaches and attacks. We may be required to expend significant capital or other resources to protect against the threat of security breaches and attacks or to alleviate problems caused by such actions. There can be no assurance that any measures implemented will not be circumvented in the future. Furthermore, a successful security breach or attack may lead us to incur substantial costs to repair damage or restore data, implement substantial organizational changes and training to prevent future similar attacks and lost revenues and litigation costs due to misused sensitive information, and cause substantial reputational damage.

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Our business is also vulnerable to delays or interruptions due to our reliance on infrastructure and related services provided by third parties. End-users of our offerings depend on ISPs and our system infrastructure for access to the Internet games and services we offer. Some of these services have experienced service outages in the past and could experience service outages, delays and other difficulties due to system failures, stability or interruption. For example, in February 2007, an earthquake off the coast of Taiwan, and in March 2011 an earthquake off the north-east coast of Japan, damaged several undersea fiber optic cables linking countries such as Malaysia, Singapore, Australia, Japan, South Korea, China, the United States and Europe, causing disruptions in Internet traffic worldwide. We may lose customers as a result of delays or interruption in service, including delays or interruptions relating to high volumes of traffic or technological problems, which may prevent communication over the Internet and could materially adversely affect our business, revenues, results of operations and financial condition.

Any failure to maintain a stable and efficient distribution and payment network could have a material and adverse impact on our Asian online game and service business, financial condition and results of operations.

Our Asian online game and service business operation relies heavily on a multi-layer distribution and payment network composed of third-party distributors for our sales to, and collection of payment from, our users. As we do not enter into long-term agreements with any of our distributors, we cannot assure you that we will continue to maintain favorable relationships with them. If we fail to maintain a stable and efficient distribution and payment network, our business, financial condition and results of operations could be materially and adversely affected.

In addition, our ability to process electronic commerce transactions depends on bank processing and credit card systems. In order to prepare for certain types of system problems, we have a formal disaster recovery plan. Nevertheless, any system failure, including network, software or hardware failure, which causes a delay or interruption in our e-commerce services could have a material adverse effect on our business, revenues, results of operations and financial condition.

Undetected programming errors or defects in our software, services and games and the proliferation of cheating programs could materially and adversely affect our Asian online game and service business and the cloud computing business, financial condition and results of operations.

Our online games and cloud computing software and services may contain undetected programming errors or other defects. These errors or other defects could damage our reputation and subject us to liability. As to online games, parties unrelated to us may develop cheating programs that enable users to acquire superior features for their game characters that they would not have otherwise. Furthermore, certain cheating programs could cause the loss of a character’s superior features acquired by a user. The occurrence of undetected errors or defects in our games, and our failure to discover and disable cheating programs affecting the fairness of our game environment, could disrupt our operations, damage our reputation and detract from the game experience of our users. As a result, such errors, defects and cheating programs could materially and adversely affect our business, financial condition and results of operations. If such errors, defects and cheating programs occur in software, services and games we operate, our business operations and, in turn, our business and financial condition, could be materially and adversely affected.

Operation of pirate game servers and the expenses incurred in protecting our Asian online game and service business operation against unlawful operations through pirate servers may adversely affect our business.

We face challenges from pirate game servers, which are game servers that operate unauthorized copies of our online games and permit users to play those games without purchasing pre-paid game cards from us. The existence of unauthorized servers may attract game players away from our games and may result in decreases in our revenues. Although we have made efforts to detect and shutdown pirate servers in Greater China, we cannot assure you that such efforts will be successful in eliminating these unauthorized servers. In addition, detailed comparisons of software codes and litigation proceedings are often necessary to enforce the intellectual property rights, whether owned by or licensed by us, which sometimes result in substantial costs. The continued illegal operation of any of our existing games by pirate game servers, or the illegal operation of any of our new games by pirate servers, may materially and adversely affect our business, financial condition and results of operations.

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We may be subject to claims of intellectual property right infringement by third parties, which could subject us to significant liabilities and other costs.

Our success depends largely on our ability to use and develop our technology and know-how without infringing upon the intellectual property rights of third parties. There has been substantial litigation in the communications, VoIP services, semiconductor, electronics, and related industries regarding intellectual property rights and, from time to time, third parties may claim infringement by us of their intellectual property rights. Our broad range of current technology, including IP telephone systems, digital and analog circuits, software, and semiconductors, increases the likelihood that third parties may claim infringement by us of their intellectual property rights. The validity and scope of claims relating to the intellectual property may involve complex scientific, legal and factual questions and analysis, and tend to be uncertain. If third parties assert copyright or patent infringement or violation of other intellectual property rights against us, we have to defend ourselves in legal or administrative proceedings, which can be costly and time consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such proceedings to which we may become a party could subject us to significant liability to third parties, require us to seek licenses from third parties, and prevent us from selling our products and services. The imposition of liabilities that are not covered by insurance, in excess of insurance coverage or for which we are not indemnified by a content provider, could have a material adverse effect on our business, results of operations and financial condition.

Certain technologies necessary for us to provide our services may, in fact, be patented by other parties either now or in the future. If such technology were held under patent by another person, we would have to negotiate a license for the use of that certain technology. We may not be able to negotiate such a license at a price that is acceptable. The existence of such patents, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using such technology and offering products and services incorporating such technology. If we were found to be infringing on the intellectual property rights of any third party in lawsuits or other claims and proceedings that may be asserted against us in the future, we could be subject to liabilities for such infringement, which could be material. We could also be required to refrain from using, manufacturing or selling certain products or using certain processes, either of which could have a material adverse effect on our business and operating results. From time to time, we may receive in the future, notices of claims of infringement, misappropriation or misuse of other parties’ proprietary rights. We cannot assure you that we will always prevail in these discussions and actions or that other actions alleging infringement by us of third-party patents will not be asserted or prosecuted against us. Furthermore, lawsuits like these may require significant time and expense to defend, may divert management’s attention away from other aspects of our operations and, upon resolution, may have an adverse effect on our business, results of operations, financial condition and cash flows.

We may need to incur significant expenses to protect our intellectual property rights, and if we are unable to adequately protect our intellectual property rights, our competitive position could be harmed.

We regard our copyrights, service marks, trademarks, trade secrets, patents and other intellectual property as critical to our success. We rely on a combination of copyright and trademark laws, trade secret protection, confidentiality and non-disclosure agreements, and other contractual provisions to protect our proprietary software, trade secrets and similar intellectual property. We have patents, copyrights and trademarks in certain jurisdictions and may apply for further trademark and copyright registrations and additional patents, which may provide such protection in relevant jurisdictions. However, we cannot assure you that our efforts will prove to be sufficient or that third parties will not infringe upon or misappropriate our proprietary rights. Unauthorized use of the intellectual property, whether owned by or licensed to us, could adversely affect our business and reputation.

The validity, enforceability and scope of protection of intellectual property in Internet-related industries are evolving, and therefore, uncertain. In particular, the laws and enforcement procedures of the PRC, Taiwan, and Hong Kong are uncertain or do not protect intellectual property rights to the same extent as the laws and enforcement procedures of the United States do. We may have to engage in litigation or other legal proceedings to enforce and protect our intellectual property rights, which could result in substantial costs and diversion of our resources, and have a material adverse effect on our business, financial condition and results of operations.

Our future results of operations or the growth of our business may suffer if we are unable to maintain satisfactory relationships with the licensors of our online games.

While we are focused on strengthening our abilities to self-develop casual games, we have historically and may in the future source casual games, advanced casual games and MMOs through licensing from developers in various regions where online game development is relatively established. As of the date of this annual report, we have one licensed MMO in our online game portfolio, including the games we currently offer and the games in the pipeline. We need to maintain stable and satisfactory working relationships with our licensors in order to ensure the continued operation of our licensed online games and our continued access to new online game licenses. We depend on our licensors to provide the necessary technical support for the operation of the licensed games as well as expansion packs and upgrades that sustain continuing interest in the games. Our ability to maintain satisfactory working relationships with our licensors may also influence our ability to license new online games developed by the same or other licensors. If we are unable to maintain satisfactory relationships with our licensors, our financial condition, results of operations, future profitability and growth prospects may be materially and adversely affected.

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We have a limited operating history in providing cloud computing services, which makes it difficult to predict our future operating results.

We introduced our first cloud computing services in early April 2013. As a result of our limited operating history, our ability to forecast our future operating results is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. We face risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described herein. If our assumptions regarding these risks and uncertainties (which we use to plan our business) are incorrect or change due to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

The success of our cloud computing business is dependent on the growth and public acceptance of our services.

Our future success in cloud computing depends on our ability to significantly increase revenues generated from our services. In turn, the success of our cloud computing solutions and services depends, among other things, upon future demand for cloud-based communications systems and services. Because the use of our service requires that the user be a subscriber of an existing broadband Internet service, usually provided through a cable or digital subscriber line, or DSL, connection, slow or limited adoption of broadband Internet service could adversely affect the growth of our subscriber base and revenues. Although the number of broadband subscribers in Greater China has grown significantly over the last five years, cloud-based communications services have not yet been adopted by a majority of prospective business customers. To increase the deployment of broadband Internet services from broadband Internet service providers, telephone companies and cable companies must continue to invest in the deployment of high speed broadband networks to residential and business customers, over which we have no control. In addition, networks must improve quality of service for real-time communications, managing effects such as packet jitter, packet loss, and unreliable bandwidth, so that toll-quality service can be consistently provided. Cloud-based communications equipment and services must achieve a similar level of reliability that users of the public switched telephone network, or PSTN, have come to expect from their telephone service, and the cost and feature benefits of cloud-based communications must be sufficient to cause customers to switch away from traditional telephone service providers. We must devote substantial resources to educate customers and end users about the benefits of cloud-based communications solutions, in general, and our services in particular. Substantial, ongoing interaction with our customers in order to train and assist them with the deployment and use of our services over these networks is sometimes required. If any or all of these factors fail to occur, our business may be adversely affected.

Our cloud computing business depends on continued and unimpeded access to the Internet by us and our users. Internet access providers and Internet backbone providers may be able to block, degrade or charge for access to or bandwidth use of certain of our products and services, which could lead to additional expenses and the loss of users.

Our cloud computing solutions and services depend on the ability of our users to access the Internet, and certain of our products require significant bandwidth to work effectively. Currently, this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies and mobile communications companies. Some of these providers offer products and services that directly compete with our own offerings, which give them a significant competitive advantage. Some of these providers have stated that they may take measures that could degrade, disrupt or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our users to provide our offerings. While others, including some of the largest providers of broadband Internet access services, have committed to not engaging in such behavior, we cannot assure you that they will follow through on their commitments.

Intense competition in the markets in which we compete in cloud computing could prevent us from increasing or sustaining our revenue and increasing or maintaining profitability.

The cloud computing and telecommunications industries are highly competitive. We face intense competition from new cloud service providers, traditional telephone companies, wireless companies, cable companies, competitive local exchange carriers, alternative voice communication providers and independent VoIP providers.

Most of our current and potential competitors, particularly incumbent telephone and cable companies, have longer operating histories, significantly greater resources and name recognition, and a larger base of customers than we have. As a result, these competitors may have greater credibility with our existing and potential customers. They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion and sale of their products than we can to ours. Our competitors may also offer bundled service arrangements offering a more complete product despite the technical merits or advantages of our products. Competition could decrease our prices, reduce our sales, lower our gross profits or decrease our market share.

We also compete against established alternative voice communication providers and face competition from other large, well-capitalized Internet companies that have recently launched or plan to launch cloud-based services. In addition, we compete with independent cloud service providers. Some of these service providers may choose to sacrifice revenue in order to gain market share by offering their services at lower prices or for free. In order to compete with such service providers, we may have to significantly reduce our prices, which would affect our profitability.

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We also are subject to the risk that new technologies may be developed that are able to deliver competing voice services at lower prices, better or more conveniently. Future competition from new technologies could have a material adverse effect on our growth and operating results.

Given the significant price competition in the markets for our products, we are at a significant disadvantage compared to many of our competitors, especially those with substantially greater resources, and therefore may be better able to withstand an extended period of downward pricing pressure. The adverse impact of a shortfall in our revenues may be magnified by our inability to adjust spending to compensate for such shortfall. Announcements of new products and technologies by our competitors or us could cause customers to defer purchases of our existing products, which also could have a material adverse effect on our business, financial condition or operating results.

The cloud computing market is subject to rapid technological change, and we depend on new product and service introductions in order to maintain and grow our business.

Cloud computing solutions and services is an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products, and continuing and rapid technological advancement. To compete successfully in this emerging market, we must continue to design, develop, manufacture, and sell new and enhanced cloud software products and services that provide increasingly higher levels of performance and reliability at lower cost.

Decreasing telecommunications rates and increasing regulatory charges may diminish or eliminate our competitive pricing advantage of our communications offerings, which yield significant savings over traditional phone systems.

Decreasing telecommunications rates may diminish or eliminate the competitive pricing advantage of our services, while increased regulation and the imposition of regulatory obligations could require us to either increase the retail price for our services, thus making us less competitive, or absorb such costs, thus decreasing our profit margins. International and domestic telecommunications rates have decreased significantly over the last few years in Greater China, and we anticipate these rates will continue to decline in all of the markets in which we do business or expect to do business. Users who select our services to take advantage of the current pricing differential between traditional telecommunications rates and our rates may switch to traditional telecommunications carriers if such pricing differentials diminish or disappear, however, and we will be unable to use such pricing differentials to attract new customers in the future. Continued rate decreases would require us to lower our rates to remain competitive and would reduce or possibly eliminate any gross profit from our services. In addition, we may lose subscribers for our services.

We rely on third-party network service providers to originate and terminate substantially all of our public switched telephone network calls.

We leverage the infrastructure of third-party network service providers to provide telephone numbers, PSTN call termination and origination services, and local number portability for our customers rather than deploying our own network throughout Taiwan. This decision has resulted in lower capital and operating costs for our business in the short term but has reduced our operating flexibility and ability to make timely service changes. If any of these network service providers cease operations or otherwise terminate the services that we depend on, the delay in switching our technology to another network service provider, if available, and qualifying this new service could have a material adverse effect on our business, financial condition or operating results.

While we believe that relations with our current service providers are good, and we have contracts in place, there can be no assurance that these service providers will be able or willing to supply cost-effective services to us in the future or that we will be successful in signing up alternative or additional providers. New rules in Taiwan may impact charges that regulated telecommunications carriers assess each other for originating and terminating traffic and it is possible that we will be subject to increased charges. This may reduce our profitability and may also increase the retail price of our service, making our service less competitive with other providers of similar calling services. Although we could replace our current providers, if necessary, our ability to provide service to our subscribers could be impacted during this timeframe, and this could have an adverse effect on our business, financial condition or results of operations. The loss of access to, or requirement to change, the telephone numbers we provide to our customers also could have a material adverse effect on our business, financial condition or operating results.

Due to our reliance on these service providers, when problems occur in a network, it may be difficult to identify the source of the problem. The occurrence of hardware and software errors, whether caused by our service or another vendor’s products, may result in the delay or loss of market acceptance of our products and any necessary revisions may force us to incur significant expenses. The occurrence of some of these types of problems may seriously harm our business, financial condition or operating results.

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Our physical infrastructure is concentrated in a few facilities and any failure in our physical infrastructure or our inability to handle a growing number of simultaneous calls and other services could lead to significant costs and disruptions and could reduce our revenue, harm our business reputation and have a material adverse effect on our financial results.

Our leased network and data centers are subject to various points of failure. Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, whether or not within our control, could result in service interruptions for our customers as well as equipment damage. Because our services do not require geographic proximity of our data centers to our customers, our infrastructure is consolidated into a few large facilities. Any failure or downtime in one of our data center facilities could affect a significant percentage of our customers. The total destruction or severe impairment of any of our data center facilities could result in significant downtime of our services and the loss of customer data. Because our ability to attract and retain customers depends on our ability to provide customers with highly reliable service, even minor interruptions in our service could harm our reputation. Additionally, in connection with the expansion or consolidation of our existing data center facilities from time to time, there is an increased risk that service interruptions may occur as a result of server relocation or other unforeseen construction-related issues.

We expect the volume of simultaneous calls to increase significantly as our subscriber base grows. Our systems may not be able to accommodate this additional volume. If we fail to maintain an appropriate level of operating performance, or if our service is disrupted, our reputation could be hurt and we could lose customers, all of which could have a material adverse effect on our business, financial condition or operating results.

• Any future service interruptions could:

• Cause our customers to seek damages for losses incurred;

• Require us to replace existing equipment or add redundant facilities;

• Affect our reputation as a reliable provider of hosting services;

• Cause existing customers to cancel or elect to not renew their contracts; or

• Make it more difficult for us to attract new customers.

Any of these events could materially increase our expenses or reduce our revenue, which would have a material adverse effect on our operating results.

Increased energy costs, power outages, and limited availability of electrical resources may adversely affect our operating results.

Our data centers are susceptible to increased costs of power and to electrical power outages. Our customer contracts do not contain provisions that would allow us to pass on any increased costs of energy to our customers, which could affect our operating margins. Any increases in the price of our services to recoup these costs could not be implemented until the end of a customer contract term. Further, power requirements at our data centers are increasing as a result of the increasing power demands of today’s servers. Increases in our power costs could impact our operating results and financial condition. Since we rely on third parties to provide our data centers with power sufficient to meet our needs, our data centers could have a limited or inadequate amount of electrical resources necessary to meet our customer requirements. We attempt to limit exposure to system downtime due to power outages by using backup generators and power supplies. However, these protections may not limit our exposure to power shortages or outages entirely. Any system downtime resulting from insufficient power resources or power outages could damage our reputation and lead us to lose current and potential customers, which would harm our operating results and financial condition.

We depend on third-party vendors for mobile phones, IP phones, and video cameras, and any delay or interruption in manufacturing by these vendors would result in delayed or reduced shipments to our customers and may harm our business.

We rely on third-party vendors for mobile phones, IP phones, and video cameras to utilize our services. We currently do not have long-term supply contracts with any of these vendors. As a result, most of these third-party vendors are not obligated to provide products or perform services to us for any specific period, in any specific quantities or at any specific price, except as may be provided in a particular purchase order. The inability of these third-party vendors to deliver IP phones of acceptable quality and in a timely manner, particularly the sole source vendors, could adversely affect our operating results or cause them to fluctuate more than anticipated. Additionally, some of our products may require specialized or high-performance component parts that may not be available in quantities or in time frames that meet our requirements.

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We could be liable for breaches of security on our web site, fraudulent activities of our users, or the failure of third-party vendors to deliver credit card transaction processing services.

A fundamental requirement for operating an Internet-based, international communications service and electronically billing our customers is the secure transmission of confidential information and media (such as customers’ credit card numbers and expiration dates, personal information and billing addresses) over public networks. Although we have developed systems and processes that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches and are not aware of any breaches of security on our websites having occurred, failure to mitigate such fraud or breaches may expose us to litigation and possible liability for failing to secure confidential customer information and could harm our reputation and ability to attract and retain customers, consequently adversely affect our operating results. The law relating to the liability of providers of online payment services is currently unsettled and certain jurisdictions may enact their own rules with which we may not comply. We rely on third-party providers to process and guarantee payments made by our subscribers up to certain limits, and we may be unable to prevent our customers from fraudulently receiving goods and services. Our liability risk will increase if a larger fraction of our transactions involve fraudulent or disputed credit card transactions. Any costs we incur as a result of fraudulent or disputed transactions could harm our business. In addition, the functionality of our current billing system relies on certain third-party vendors delivering services. If these vendors are unable or unwilling to provide services, we will not be able to charge for our services in a timely or scalable fashion, which could significantly decrease our revenue and have a material adverse effect on our business, financial condition and operating results.

We may experience losses due to subscriber fraud and theft of service.

Subscribers may in the future obtain access to our service without paying for monthly service and international toll calls by unlawfully using our authorization codes or by submitting fraudulent credit card information. To date, such losses from unauthorized credit card transactions and theft of service have not occurred. We have implemented anti-fraud procedures in order to control losses relating to these practices, but these procedures may not be adequate to effectively limit all of our exposure in the future from fraud. If our procedures are not effective, consumer fraud and theft of service could significantly decrease our revenue and have a material adverse effect on our business, financial condition and operating results.

A high rate of customer terminations would negatively affect our business by reducing our revenue or requiring us to spend more money to grow our customer base.

We could experience a high customer termination or churn rate in the future if customers are not satisfied with our service. Other factors, including increased competition from VoIP providers, alternative technologies, and adverse business conditions may also influence our churn rate.

Because of churn, we have to acquire new customers on an ongoing basis just to maintain our existing level of customers and revenues. As a result, marketing expenditures are an ongoing requirement of our business. If our churn rate is high and increases, we will have to acquire even more new customers in order to maintain our existing revenues. We incur significant costs to acquire new customers, and those costs are an important factor in determining our net profitability. Therefore, if we are unsuccessful in retaining customers or are required to spend significant amounts to acquire new customers beyond those budgeted, our revenue could decrease and our net income could decrease.

We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services or are unable to attract new key employees.

The success of our business is heavily dependent upon the services of our management team and other key personnel who have critical industry experience and relationships that we rely on to implement our business plan. The development, marketing and growth of our services will continue to place a significant strain on our limited personnel, management and other resources. We have experienced substantial turnover among members of our board of directors and senior management team in recent years. Further turnover of directors, senior management or key personnel could harm our business and our growth prospects. In addition, we must successfully integrate all new management and other key personnel into our organization to achieve our operating objectives; failure to do so could adversely affect our business. None of our officers or key employees are bound by employment agreements for any specific term, and we also currently do not maintain key person life insurance policies on any of our employees. The loss of the services of any of our officers or key employees could delay the development and introduction of, and negatively impact our ability to sell our services which could adversely affect our financial results and impair our growth.

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Our ability to offer services outside Taiwan is subject to different local regulatory environments, which may be unknown, complicated and uncertain.

Regulatory treatment of cloud computing solutions and services outside Taiwan varies from country to country and often the applicable laws are unclear. We plan to distribute our products and services directly to consumers and through resellers that may be subject to telecommunications regulations in their home countries. Any failure by us or our customers and resellers to comply with these laws and regulations could reduce our revenue and profitability. Some countries may require us to register as a telecommunications provider based on our relationship with local resellers and may subject us to fines or penalties should we fail to do so. In addition, some countries are considering subjecting cloud-based communications services to the regulations applied to traditional telephone companies. Regulatory developments such as these could have a material adverse effect on the use of our services in international locations.

Our transactions with related parties may not benefit us and may harm our Company.

We have entered into several transactions with certain related parties in the past. We believe that we have conducted our related-party transactions on an arm’s-length basis and on terms comparable to, or more favorable to us than, similar transactions we would enter into with independent third parties. However, we cannot assure you that all our future transactions with related parties will be beneficial to us. See Item 7, “Major Shareholders and Related-Party Transactions” in this annual report.

We may need additional capital in the future, and it may not be available on acceptable terms.

• The development of our business may require significant additional capital in the future to:

• fund our operations;

• enhance and expand the range of products and services we offer; and

• respond to competitive pressures and perceived opportunities, such as investment, acquisition and international expansion activities.

We cannot assure you that additional financing will be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be forced to curtail or cease our operations. Moreover, even if we are able to continue our operations, any failure to obtain additional financing could have a material and adverse effect on our business, financial condition and results of operations, and we may need to delay the deployment of our services. See Item 5, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources.”

Our results of operations and financial condition are affected by political stability, as well as the occurrence of natural disasters and epidemics.

We operate our Asian online game and service business in Greater China. Political unrest, war, acts of terrorism and other instability, as well as natural disasters such as earthquakes and typhoons which are common in Greater China, can result in disruption to our business or the businesses of our customers. Our business could be adversely affected by natural disasters and the effects of influenza A virus subtypes, such as H1N1 and H5N1, SARS or other epidemics. Any prolonged recurrence of such adverse public health developments in the regions where we operate may have material adverse effects on our business operations. These could include illness and loss of our management and key employees. Natural disasters or outbreak of epidemics may result in a decrease in economic activities or temporary closure of many businesses and disruption in our operations. In addition, other major natural disasters may also adversely affect our business by, for example, causing disruptions of the Internet network or otherwise affecting access to our games.

Risks Related to Doing Business in Greater China

There are currently no clear laws or regulations governing virtual asset property rights, in particular, in Greater China, and therefore, it is not clear what liabilities, if any, online game operators may have in respect of virtual assets.

In the course of playing online games, some virtual assets, such as special equipment, player experience grades and other features of our users’ game characters, are acquired and accumulated. Such virtual assets can be important to online game players. In practice, virtual assets can be lost for various reasons, often through unauthorized use of user identifications by other users and occasionally through data loss caused by delay of network service or by a network crash. Currently there are no clear laws or regulations governing virtual asset property rights, in particular, in Greater China where we operate our Asian online game and service business. As a result, it is unclear under PRC law whether an operator of online games such as us would have any liability (whether in contract, tort or otherwise) for loss of such virtual assets by game players. Based on several judgments regarding the liabilities of online game operators for loss of virtual assets by game players, the PRC courts have generally required online game operators to provide well-developed security systems to protect such virtual assets owned by game players. In the case of a loss of virtual assets, we may be sued by online game players and could be held liable for damages, which may negatively affect our business, financial condition and results of operations.

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There are economic risks associated with doing business in Taiwan, particularly due to the tense relationship between Taiwan and the PRC.

Our principal executive offices and a significant portion of our assets are located in Taiwan and a major portion of our revenues of Asian online game and service business are derived from our operations in Taiwan. Taiwan, as part of the Republic of China, has a unique international political status. The PRC asserts sovereignty over mainland China and Taiwan and does not recognize the legitimacy of the Taiwan government. Relations between Taiwan and the PRC and other factors affecting the political or economic conditions of Taiwan could also affect our Asian online game and service and GigaCloud businesses.

Fluctuations in the exchange rates between the U.S. dollar and other currencies in which we conduct our business could adversely affect our profitability.

The operations of our Asian online game and service business are conducted in NT dollars and Hong Kong dollars and our cloud computing services are conducted in NT dollars. Accordingly, fluctuations in the exchange rates could have a positive or negative effect on our reported results. Generally, an appreciation of NT dollars or Hong Kong dollars against U.S. dollars results in a foreign exchange loss for monetary assets denominated in U.S. dollars, and a foreign exchange gain for monetary liabilities denominated in U.S. dollars. On the contrary, a devaluation of NT dollars, Hong Kong dollars, or Singapore dollars against U.S. dollars results in a foreign exchange gain for monetary assets denominated in U.S. dollars, and a foreign exchange loss for monetary liabilities denominated in U.S. dollars. Given the constantly changing currency exposures and the substantial volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations upon future operating results. There can be no assurance that we will not experience currency losses in the future, which could have a material adverse effect on our business, revenues, results of operations and financial condition.

Risks Related to Ownership of our Shares

The price of our Shares has been volatile historically and may continue to be volatile, which may make it difficult for holders to resell our Shares when desired or at attractive prices.

The trading price of our Shares has been and may continue to be subject to wide fluctuations. In 2013, the closing prices of our Shares on the NASDAQ Stock Market have ranged from US$0.93 to US$1.20 per share, and the closing price on March 31, 2014 was US$1.40. Our Share price may fluctuate in response to a number of events and factors. In addition, the financial markets in general, and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our Shares, regardless of our operating performance.

Our Shares are listed on the NASDAQ Global Market and if we fail to meet the standards for continued listing of our Shares on NASDAQ, the Shares could be delisted from the NASDAQ Stock Market.

Our Shares are listed on the NASDAQ Global Market. The NASDAQ Global Market has several quantitative and qualitative requirements companies must comply with to maintain listing, including a US$1.00 minimum bid price per share. The trading prices for our Shares in the year 2013 were around the US$1.00 range and traded below US$1.00 several times. As of March 31, 2014, the closing price for our Shares was US$1.40.

There can be no assurance that we will continue to meet all of the requirements for continued NASDAQ listing. If we fail to comply with the minimum bid price requirement, our Shares could be delisted from NASDAQ, which could have a material adverse effect on our stock prices and our standing with current and future investors.

We are controlled by the Koo family, which has significant influence in determining the outcome of any corporate transaction or other matters submitted to our shareholders for approval, and their interests may conflict with your interests.

As of March 31, 2014, a member of the Koo family beneficially owned approximately 20.76 percent of our outstanding Shares. Accordingly, a member of the Koo family has significant influence in determining the outcome of any corporate transaction or other matters submitted to our shareholders for approval, including mergers, consolidations, the sale of all or substantially all of our assets and the power to prevent or cause a change in control. The interests of such member of the Koo family may differ from or conflict with your interests.

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The ability of our subsidiaries in Taiwan to distribute dividends to us may be subject to restrictions under the laws of Taiwan.

We are a holding company, and some of our assets constitute our ownership interests in our subsidiaries in Taiwan, including Hoshin GigaMedia, which owns the Taiwan-based operations of our Asian online game and service business. Accordingly, part of our primary internal source of funds to meet our cash needs is our share of the dividends, if any, paid by our subsidiaries, including those in Taiwan. The distribution of dividends to us from these subsidiaries in Taiwan is subject to restrictions imposed by the applicable corporate and tax regulations in these countries, which are more fully described in Item 5, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Dividends from Our Subsidiaries” in this annual report. In addition, although there are currently no foreign exchange control regulations which restrict the ability of our subsidiaries in Taiwan to distribute dividends to us, the relevant regulations may be changed and the ability of these subsidiaries to distribute dividends to us may be restricted in the future.

We are a Singapore company, and because the rights of shareholders under Singapore law differ from those under U.S. law, you may have difficulty in protecting your shareholder rights or enforcing any judgment obtained in the U.S. against us or our affiliates.

Our corporate affairs are governed by our memorandum and articles of association and by the applicable laws governing corporations incorporated in Singapore. The rights of our shareholders and the responsibilities of members of our board of directors under Singapore law are different from those applicable to a corporation incorporated in the United States and, therefore, our shareholders may have more difficulty protecting their interests in connection with actions by the management, members of our board of directors or our controlling shareholders than they would as shareholders of a corporation incorporated in the United States.

Our Company is incorporated under the laws of the Republic of Singapore. Many of our directors and senior management reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or any of these persons or to enforce in the United States any judgment obtained in the U.S. courts against us or any of these persons, including judgments based upon the civil liability provisions of the U.S. federal securities laws or any state or territory of the United States. Judgments of the U.S. courts based upon the civil liability provisions of the U.S. federal securities laws may not be enforceable in Singapore courts, and it is unclear whether Singapore courts will enter judgments in original actions brought in Singapore courts based solely upon the civil liability provisions of the U.S. federal securities laws.

Anti-takeover provisions under the Singapore Securities and Futures Act (Chapter 289) and the Singapore Code on Take-overs and Mergers may delay, deter or prevent a future takeover or change of control of our Company, which could adversely affect the price of our Shares.

The Singapore Code on Take-overs and Mergers (the “Code”), issued pursuant to Section 321 of the Singapore Securities and Futures Act (Chapter 289) regulates the acquisition of ordinary shares of, inter alia, listed public companies and contains certain provisions that may delay, deter or prevent a future takeover or change of control of our Company. Any person acquiring an interest, either on his own or together with parties acting in concert with him, in 30 percent or more of the voting shares in our Company must, except with the prior consent of the Singapore Securities Industry Council (the “SIC”), extend a takeover offer for the remaining voting shares in our Company in accordance with the provisions of the Code. Likewise, any person holding between 30 percent and 50 percent of the voting shares in our Company, either on his own or together with parties acting in concert with him, must, except with the prior consent of the SIC, make a takeover offer in accordance with the provisions of the Code if that person together with parties acting in concert with him acquires additional voting shares in excess of one percent of the total number of voting shares in any six-month period.

Under the Code, an offeror must treat all shareholders of the same class in an offeree company equally. A fundamental requirement is that shareholders in the company subject to the takeover offer must be given sufficient information, advice and time to consider and decide on the offer.

These provisions contained in the Code may discourage or prevent transactions that involve an actual or threatened change of control of our Company. This may harm you because an acquisition bid may allow you to sell your Shares at a price above the prevailing market price.

Our shareholders may be subject to Singapore taxes.

Singapore tax law may differ from the tax laws of other jurisdictions, including the United States. Gains from the sale of our Shares by a person not tax resident in Singapore may be taxable in Singapore if such gains are part of the profits of any business carried on in Singapore. For additional information, see Item 10, “Additional Information — E. Taxation — Singapore Tax Consideration” in this annual report. You should consult your tax advisors concerning the overall tax consequences of acquiring, owning or selling the Shares.

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We may be deemed to be an investment company under the United States Investment Company Act of 1940, which could have a significant negative impact on our results of operations.

We may be deemed to be an investment company under the United States Investment Company Act of 1940 (the “1940 Act”), and may suffer adverse consequences as a result. Generally, the 1940 Act provides that a company is an investment company if the company (i) is, holds itself out as or proposes to be engaged primarily in the business of investing, reinvesting or trading in securities or (ii) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities or cash items) on an unconsolidated basis. Under the 1940 Act, investment securities include, among other things, securities of non-majority owned businesses. However, a company that is primarily engaged, directly or through wholly-owned subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding or trading in securities is not an investment company.

In the past, we disposed of our online gambling business and made several significant investments in online game developers and operators. As a result of these transactions, we have a significant amount of cash and securities. See Item 4, “Information on the Company — B. Business Overview — Gaming Software and Service Business” for additional information. Consequently, there is a risk that we could be deemed to be an investment company because our investment securities may be deemed to comprise more than 40% of our total assets (exclusive of U.S. government securities or cash items) on an unconsolidated basis pending investment of disposal proceeds into our businesses.

However, based on our historical and current business activities, our intentions, the manner in which we hold ourselves out to the public, the primary activities of our officers and directors and an analysis of our non-cash assets and income during 2013, the first quarter of 2014 and in prior periods, we believe that the better view is that we are not an investment company. Nevertheless, a part of the determination of whether we are an investment company is based upon the composition and value of our non-cash assets, a significant portion of which are presently comprised of our Strategic Investments. As a result, we could be deemed to be an investment company.

We intend to continue to conduct our businesses and operations so as to avoid being required to register as an investment company. We have sought opportunities to deploy our capital in a manner which would result in the Company acquiring majority interests in entities or businesses that complement or enhance our remaining businesses or would otherwise assist the Company in achieving our current corporate objectives. We have also limited, and intend to continue to limit, new Strategic Investments to those opportunities which would present excellent opportunities to complement or enhance our remaining businesses or would otherwise assist the Company in achieving our current corporate objectives. If, nevertheless, we were to be required to register as an investment company, because we are a foreign company, the 1940 Act would prohibit us and any person deemed to be an underwriter of our securities from offering for sale, selling or delivering after sale, in connection with a public offering, any security issued by the Company in the United States. Additionally, we may be unable to continue operating as we currently do and might need to acquire or sell assets that we would not otherwise acquire or sell in order to avoid being treated as an “investment company” as defined under the 1940 Act. We may incur significant costs and management time in this regard, which could have a significant negative impact on our results of operations.

We may be classified as a passive foreign investment company for U.S. federal income tax purposes. As a result, you may be subject to materially adverse tax consequences with respect to Shares.

In light of our significant cash balances and portfolio of investment securities, we believe that it is likely that we were classified as a passive foreign investment company, or PFIC, for the taxable year ended December 31, 2013, and we will likely be a PFIC for our current taxable year ending December 31, 2014, unless our share value increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of non-passive income. In addition, it is possible that one or more of our subsidiaries may be or become classified as a PFIC for U.S. federal income tax purposes. A non-United States corporation, such as us, will be classified as a PFIC for any taxable year in which 75 percent or more if its gross income consists of certain types of “passive” income or 50 percent or more of the average quarterly value of its assets (as generally determined on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash and other assets readily convertible into cash are generally classified as passive and goodwill and other unbooked intangibles associated with active business activities may generally be classified as non-passive.

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If we were to be classified as a PFIC in any taxable year during which a U.S. person (as defined in “E. Taxation — U.S. Tax Considerations — Passive Foreign Investment Company”) holds our Shares, such U.S. person may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the Shares and on the receipt of distributions on the Shares to the extent such gain or distribution is treated as an “excess distribution” under the U.S. federal income tax rules. Furthermore, a U.S. person will generally be treated as holding an equity interest in a PFIC in the first taxable year of the U.S. Person’s holding period in which we become a PFIC and subsequent taxable years (“PFIC-Tainted Shares”) even if, we, in fact, cease to be a PFIC in subsequent taxable years. Accordingly, a U.S. person, who acquires our Shares during the current taxable year ending 2014 or subsequent taxable years, should, to the extent an election is available, consider making a “mark-to-market” election in the first taxable year of such holder’s holding period to avoid owning PFIC-Tainted Shares. For more information, see the section entitled “E. Taxation — U.S. Tax Considerations — Passive Foreign Investment Company”.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of Our Company

Our business was founded as Hoshin GigaMedia in Taiwan in October 1998. For the purpose of a public equity offering, GigaMedia Limited was incorporated in Singapore in September 1999 as a company limited by shares. We acquired 99.99 percent of equity interest in Hoshin GigaMedia in November 1999 and the remaining 0.01 percent in October 2002. In more recent years, we have established additional subsidiaries inside and outside Taiwan to conduct parts of our operations.

In February 2000, we completed the initial public offering of our Shares. Our Shares are traded on the NASDAQ Stock Market under the symbol GIGM.

In January 2006, we acquired FunTown, an Asian online game and service business operated in Taiwan and Hong Kong. In 2012, we began internal development of GigaCloud, a cloud computing software business focused on serving SMEs in Greater China. GigaCloud completed development of its first bundle of software and services in March 2013 and began commercial operations in April 2013. In 2013, we acquired a majority interest in FingerRockz, a mobile game/app developer and publisher based in Taiwan.

As part of plans to turn around the Company’s financial performance, in 2012 we began implementation of a disposal and asset optimization program targeting non-strategic investments and underperforming assets. During 2012, we completed the sale of a remaining 33.66 percent interest we held in an underperforming legacy online gambling business, Everest Gaming. In 2014, we expect to continue to dispose of non-strategic game studio holdings.

Descriptions of our principal capital expenditures and divestitures and descriptions of acquisitions of material assets are found in our discussion and analysis of financial condition and results of operation and in the notes to our consolidated financial statements included elsewhere in this annual report. See Item 5, “Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013”.

There have been no public takeover offers by third parties in respect of our shares or by us in respect of other companies’ shares which have occurred during the last and current financial year.

Our Singapore company registration number is 199905474H. Our principal executive offices are located at 8F, No. 22, Lane 407, Section 2, Tiding Boulevard, Taipei, Taiwan, and our telephone number is 886-2-2656-8000. Our website address is: http://www.gigamedia.com. Our agent in the U.S. is Computershare Limited and its office address is located at 480 Washington Blvd. Jersey City, the United States.

B. Business Overview

We are a diversified growth company with online game operations in Taiwan, Hong Kong and Macau and a cloud computing software and services business based in Taipei. We do not utilize variable-interest entities (“VIEs”) in our operations.

In online games, we own 100 percent of and operate FunTown, a leading online game portal in Taiwan and Hong Kong. FunTown is focused on the high-growth mobile and browser-based casual games market in Asia. We also own a majority interest in FingerRockz, a Taiwan-based developer and publisher of mobile games and apps.

In cloud computing, we own 100 percent of and operate GigaCloud, a provider of cloud computing solutions and related services focused on the emerging cloud services market for SMEs in Greater China.

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Online Games Business

Overview

FunTown is focused on the high-growth mobile and browser-based casual games and social casino games markets in Asia. FunTown has a strong track record of developing and monetizing PC-based casual games and social casino games, including by revenues one of the largest MahJong offerings in Taiwan, and we plan to leverage that as we restructure the business and extend our offerings to mobile and browser-based games and social casino games in select areas and geographies going forward.

FingerRockz is focused on the mobile game market in Asia. The company was founded in 2012; the first game it developed in 2012 has over 1 million downloads to date. We plan to leverage the development capability of FingerRockz to strengthen our mobile game offerings.

Most of our games are operated or expected to be operated under the item-billing revenue model (“Item-Billing”). Under the Item-Billing model, users are able to access the basic functions of a casual online game for free. Players may choose to purchase in-game value-added services as well as in-game virtual items and premium features to enhance the game experience. These services and items allow players to utilize more functions, improve performance and skills, and personalize the appearance of a game character. Game points are consumed as users purchase value-added services and in-game items.

We have experienced seasonality in the form of slower sales of FunTown’s online game and service business in the second and third quarters, during which people tend to spend less time indoors and online as daylight hours increase and the weather conditions improve. Typically, our first and fourth quarters have been our strongest revenue periods.

To complement our offerings and strengthen their appeal, we focus on building community-based online platforms that cater to different social networking needs of our users and provide various channels to facilitate communications among them.

We intend to continue to seek growth and enhance our market position in the online games industry by increasing focus on mobile and browser-based games and social casino games and expect to drive growth both organically and via mergers and acquisitions.

Our Games

Our portfolio of online games includes predominantly PC-based, non-cash gambling or casino casual games, including MahJong and various card and table games. FunTown’s offers over 40 PC-based non-cash gambling or casino casual games and one MMO. We have also launched one self-developed MahJong game application which uses a web or browser-based technology with no download required and one licensed mobile strategy card game.

MahJong

MahJong is a traditional and highly popular Chinese title game, which is widely played in Taiwan, Hong Kong, the PRC, Japan, South Korea and many other Asian regions. Similar to poker, MahJong involves skill, strategy, calculation, as well as a certain degree of chance.

Through our FunTown-branded platform, we develop and offer various local versions of MahJong for players in Asia, particularly for those from Taiwan and Hong Kong. To play our online MahJong games, players install the client-end software which can be downloaded free of charge from our game websites. Players can compete with anyone throughout the FunTown network. Our MahJong games are designed for players of all levels of skill and experience. To accommodate various needs of players, we offer different online MahJong rooms based on skill levels or stakes. We believe our online MahJong game site is one of the largest online MahJong networks in Taiwan.

Players may play our online MahJong free of charge. To continue to play on a regular basis and establish a track record inside our online MahJong community, players may choose to purchase game points or game-playing time through various distribution channels, such as convenience stores and computer-based payment processing terminals. By purchasing our game points, players may exchange for virtual currency and deposit into their virtual bank accounts. The virtual currency may be used to play MahJong and other games in the FunTown game site or to purchase in-game virtual items, but may not be redeemed for cash.

Our PC-based MahJong offering faced strong competition in 2013 from the growth of mobile and browser-based online games, driven by the popularity of social networks and high mobile device usage in our markets. We responded by launching in February 2013 our MahJong game application which uses a web or browser-based technology with no download required. This simplified user sign-in procedures and enabled tighter integration with social networking platforms by allowing users to log into our game directly via their accounts at the social networking platform.

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We organize offline events from time to time with a view to attract more players and enhance our leading position in the online MahJong market.

Non-cash Gambling or Casino Casual Games

Through our FunTown-branded platform, we offer various non-cash gambling or casino casual games. These online games are Internet-based and developed through computer simulation and adaptation of non-computer games, which are traditionally played offline. The FunTown platform targets players from different regions, particularly Taiwan and Hong Kong.

We provide many different online card games, which are popular in various regions in Asia. Players can select their desired table based on the level of skill or stakes. These games are designed with online multiplayer features that allow players to compete against one another. We also offer chance-based games, including bingo, lotto, horse racing, Sic-Bo, slots and various simple casual games.

Like online MahJong, players may play our FunTown games for free. They may choose to purchase playing time or virtual currency to play on a continuous and regular basis. Virtual currencies may be used to play all the games in the FunTown game site or to purchase virtual items, but may not be redeemed for cash.

MMOs

In Taiwan and Hong Kong, we offer one MMO through FunTown. In June 2006, we launched the MMO Tales Runner. Tales Runner is a multi-player obstacle running game in which players compete by running, jumping, dashing and using items. Since the launch, Tales Runner has become one of the most popular online sports games in Hong Kong.

Players download and install client software from our websites, except for browser-based games, where players can play directly from a web browser. Our MMO is offered free-of-charge to all players. In order to enhance their online game playing experience, players may purchase virtual items that enhance their characters’ performance and game playing experience, or personalize their characters.

In October 2010, we acquired a non-controlling interest in XLGames, an online game developer in Korea, through an investment in XLGames. As a result of the transaction, we received certain strategic rights, including exclusive rights to operate the MMO game ArcheAge in Taiwan, Hong Kong, and Macau. XLGames launched the game in Korea in January 2013. As of March 31, 2014, GigaMedia has not scheduled the launch of ArcheAge in its markets.

Game Sources

In-house development of Non-cash Gambling or Casino Casual Games

We develop the gambling or casino games offered on FunTown’s game platform, including online MahJong, card games, and other simple casual games. Our in-house development enables us to have better control of the game features and allow for seamless integration into our FunTown platform. In order to support product development capabilities and develop our proprietary online games, we intend to expand our browser/mobile-based games and social casino games development capabilities. As of March 31, 2014, we have an in-house development team comprised of approximately 60 software and design engineers.

Sources of MMOs

Our focus is on casual games. However, historically we have sourced MMOs through licensing from developers in various regions where online game development is well established. We monitor each of the United States, South Korean, the PRC, Japanese, Southeast Asia and European markets and maintain communications with a number of leading game development studios to identify and source new online games.

In selecting games, we evaluate the key factors that indicate the market trend and player demand and interest in the regions where we operate. We believe that our market analysis enables us to better assess the quality, risks, costs and potential returns of the games.

Prior to negotiating a license agreement with a game developer, our game testing team evaluates the game and prepares detailed evaluation reports covering the theme, storyline, in-game culture and environment, character progression, system architecture, game art, design, virtual articles and items.

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Based on the results of our evaluation, we may at times enter into a license agreement to operate select games. The cost of licensing games from developers generally consists of an upfront licensing fee, which we normally pay in several installments, and ongoing licensing fees, or royalties, which are equal to a percentage of revenues generated from operation of the game. We may also have to provide certain minimum guarantees in royalties to developers.

In preparing for the commercial launch of each new game, we cooperate with the game developer to localize the game to make it suitable for the target markets where we plan to launch. Once the developer completes the localization and provides the first-built version, we conduct closed beta testing of the game with a select group of users. During the test period, we identify and eliminate any technical problems, assess how likely users will be to play the game regularly over a period of time (referred to as user “stickiness”), and modify and add certain game features in order to increase user stickiness. The closed beta testing is followed by open beta testing, during which we operate our games under open market conditions and monitor the performance, consistency and stability of operational systems for the game.

Following the commercial launch of a game, we regularly implement improvements and upgrades to our games.

Fun Town Platform and Services

Our FunTown platform provides many online game services for the users to enhance their playing and entertainment experiences, facilitate information communication among them and support the development of a strong player community. These services include:

• Player Clubs. FunTown offers online club services in its game community. FunTown players can form their own clubs, invite other players with similar interests or skill levels to join, and organize online and offline events for club members. Player clubs complement the strong social features of online games by helping to maintain an online game community.

• Tournaments. FunTown provides various tournaments for its online MahJong players. After players join a club, they can participate in biweekly online inter-club tournaments. On an annual basis, FunTown organizes large-scale tournaments, in which a large number of players are invited to the tournament premises and compete online via computers.

• Avatars. To enhance players’ overall entertainment experience, FunTown offers many in-game virtual items which may be purchased by players to customize their online personal graphic profiles, or avatars. Players use avatars to create their own unique look while participating in the online community. The virtual items for avatars include facial expressions, clothes and different accessories. These items are particularly popular with younger players, who customize their avatars to establish unique identities and pursue distinct fashions in the online community.

• Friends and Family Messenger. The FunTown platform has a unique function designed for players’ personal contacts, which is similar to the contact list of instant message programs. This enables players to see when their friends and family members are online and invite people in their personal network to play games together.

• Social Networking. The FunTown platform provides an online social networking community called FunTown Village, in which players meet each other through their online avatars. In FunTown Village, players can interact and communicate, purchase virtual items, and even get married virtually. FunTown plans to introduce more virtual items within FunTown Village to address the strong social interests of its players and to help increase FunTown’s overall appeal as a distinct online game community.

• Customer Services. FunTown provides support and services to its customers primarily through walk-in customer service centers in Taipei and Hong Kong and e-mails and in-game report system where players can inquire and receive responses from FunTown.

• Other Platforms. FunTown expects to launch its current online games onto other platforms, including Android platform and Apple’s iOS platform and to allow data synchronization between each of these platforms. FunTown launched a licensed mobile strategy card game for Android devices in March 2014 and plans to launch the game for iOS devices by May 2014.

Our Marketing

Our marketing strategy is to capitalize on our established brand names and utilize our diverse distribution networks to retain our existing users and attract new users. We use various qualitative and quantitative market research methods to analyze our target market and to differentiate our product offerings from those of our competitors. We are engaged in a variety of traditional and online marketing programs and promotional activities, including the following:

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In-Game Events and Marketing

We organize in-game events for our users, which we believe encourages the development of online communication and teamwork among our users and increases user interest in our games. Examples of in-game events include scheduled challenges or competitions for prizes. In addition, we use in-game events to introduce new features of our games.

Open Beta Testing

Our open beta testing is conducted under open market conditions. During open beta testing, we do not charge users to play the new game. Open beta testing serves important marketing functions, including instilling initial interests, establishing an initial user base, and generating word-of-mouth publicity to support the following commercial launch of the game.

Advertisements and Offline Promotions

We advertise our brand names and our games across a variety of media, including the Internet, television and outdoor advertisements. From time to time we distribute game-related posters, promotional prepaid cards for new users and souvenirs at trade shows, selected Internet cafés and other locations. We have contracted with various Internet café unions directly or via agents to promote our games in Internet cafés. We also conduct events at popular venues to stage exhibitions, distribute software and game content-related merchandise, and interact directly with our users.

Magazines

In addition to advertising certain games in various magazines, we also collaborate with certain entertainment magazines for various promotions, including giving away copies of certain games free of charge with each magazine sold.

New Media Promotion

In addition to advertising certain games in conventional channels described above, we also collaborate with certain new media channels, for example, with micro-blogging services provided with websites and search engine services.

Direct Marketing

We use telemarketing and e-mail correspondence to inform our users of new games, promotions and other game-related services.

Our Distribution and Payment Channels

We sell game points for our online games through various channels. Our distribution and payment channels include:

Offline Physical Distribution Channels

Physical distribution channels include convenience chain stores, gaming and related retail stores, supermarkets and Internet cafés. At these locations, users may purchase pre-paid game cards with varying amounts of game points. Alternatively, users may purchase game packs to play specific games on FunTown.

Internet-Based Distribution Channels

Internet-based distribution channels consist of various websites, including the official website of FunTown. Users may purchase game points through these websites with their credit cards or computer-based payment processing terminals.

Telecommunication Network Operators

We also distribute game points through cooperation with telecommunication network operators and their service providers. Our cooperating operators and service providers charge the fees to the purchasers’ phone bills, which are prepared and collected by the network operators.

Payment Aggregators

We also work with established payment aggregators. These payment aggregators allow users to pay for a variety of products and services, such as mobile phone calls and game points of different game operators, using their pre-paid scratch cards, vouchers or codes printed on receipts.

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We sell our game points to distributors at prices lower than the face value of the game points. The costs of distributing game points through Internet-based channels are generally lower than the costs involved in offline distribution of physical game cards. To encourage use of the Internet-based channels and provide more convenience for users, in certain markets we give our users the computer-based payment processing terminals for free so that they can purchase game points online.

Our Operation Architecture

We have a scalable and modular operation architecture that enables us to support and expand our game offerings and services. The architecture consists of several key subsystems, including game services, central user database, billing and payment, online customer service, game telemetry and monitoring. FunTown, has its own unified user account system, which allows players to use a single account to access all FunTown games. Our billing and game management system supports various billing models and deposit options, and is sufficiently flexible to accommodate in-house developed games and licensed games. Our customer service system enables us to assist our players inside and outside the games. Our game telemetry and monitoring system allows us to track our concurrent online users in real time and effectively identify and fix technical problems in our server network.

Technology Infrastructure

Due to the real-time interaction among thousands of users, the stable operation of our online games requires a significant number of servers and a significant amount of connectivity bandwidth. We have developed an extensive technology infrastructure that supports the operation of our online games.

We seek to adapt our infrastructure promptly in response to changing circumstances. This includes operating our games on servers in Macau, Hong Kong, and in the future the PRC.

Our Players

In Taiwan and Hong Kong, as of March 31, 2014, we had an aggregate of about 12.5 million unique registered players of our online games, more than 97 percent of which were located in Taiwan. In the fourth quarter of 2013, we recorded approximately 30,000 active paying players and approximately 17,000 peak concurrent users.

Competition

Our primary competitors in the Asian online game and service business are online game operators based in Taiwan and the PRC. Our major competitors in Taiwan include Gamania, Soft-World, IGS, UserJoy and GodGame. Our major competitors in the PRC include Shanda, Giant, Changyou, Nineyou, Tencent, Perfect World, Kingsoft and Ourgames.com.

In addition, we compete for users against various offline games, such as console games, arcade games and handheld games, as well as various other forms of traditional or other online entertainment.

We expect more online games operating companies to enter into the markets where we operate, and a wider range of online games to be introduced to the these market given the relatively low entry barriers to entry in the online games industry. Our competitors vary in size and include private and public companies, many of which have greater financial, marketing and technical resources as well as name recognition. We intend to continue to enhance our market position through providing competitive products and quality services that meet market trends and users’ preferences, as well as strengthening sales effectiveness.

Cloud Computing Business

Overview

GigaCloud is a provider of cloud computing solutions and related services, which we launched in 2013. The business was founded on the concept of delivering via the Internet, or “cloud,” integrated tools and services designed to help small-to-medium enterprises (“SMEs”) in Greater China effectively manage complex and dynamic operating environments. We provide our customers highly adaptable, accessible and reliable services and tools to manage critical business functions that enable them to optimize their financial and human capital resources.

GigaCloud’s mission is to simplify and improve the way SMEs acquire, deploy and manage their hardware, software, security and data management technology needs. GigaCloud’s offerings enable firms to either avoid deployment of a full-scale onsite IT infrastructure or replace an existing company’s internal IT infrastructure with an externally managed and hosted IT function. This “virtualization” of SMEs can eliminate excess costs and enhance return on investment, promoting the development of boutique businesses that might otherwise find it challenging to compete and grow.

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Our initial offerings may be organized into two main product groups:

a. Communication-oriented services, including hosted private branch exchange (PBX) telephone systems that create private telephone networks within an enterprise, and hosted Internet fax service enabling faxes to be sent via smart devices, as well as similar bundles of privately managed solutions for enterprises that prefer to manage their IT and data inhouse; and

b. Value-added services, including hosted video camera surveillance systems that enable users to view video via smart devices, hosted cloud storage, and other related services.

Our products are intuitive and easy to use, can be deployed rapidly, customized easily and integrated with other platforms and enterprise applications. We deliver our solutions as a service via all the major Internet browsers and on most major mobile device operating systems.

Industry Information

The Market is Large

According to a survey completed in 2011 by Taiwan’s Ministry of Economic Affairs, Taiwan’s SME market size was estimated at approximately 1.24 million enterprises.

Changes in the Business Environment, User Expectations, and Technology are Driving Change

We believe that the convergence of cloud, social, and mobile technologies is transforming how companies connect with their customers, employees, partners and products; as businesses look to operate their IT systems in a more cloud-like manner, they will seek to spend less time and effort on developing underlying infrastructure and focus more on re-imagining, re-platforming, and virtualizing their businesses. Our strategy of cloud infrastructure, application platform capabilities for new and renewed applications, and client management capabilities for the post-PC era will provide customers an extended suite of software to address the integration, automation, management, and development capabilities they need.

Strategic Partnerships

To address the market opportunity, we have formed strategic partnerships with a broad group of hardware, software and cloud computing service vendors to cooperatively advance virtualization technology for SMEs through joint marketing, product interoperability, collaboration and co-development. These partners include Taiwan’s telecom leader Far EasTone, global computer hardware and electronics leader Asus, leading PDF document solutions provider Foxit Corporation, a leader in virtualization and cloud infrastructure solutions. We create opportunity for partners by enabling them to build products that utilize our SME virtualization technology and create differentiated value through joint solutions. The endorsement and support of our partners further enhances the awareness, reputation and adoption of our virtualization solutions.

We have also developed a multi-channel distribution model to expand our presence and reach various segments of the market. Our distribution partners include Atos SE and Chailease Holding Co Ltd. Based in France, Atos is an international IT services and consulting company. Atos provides consulting and technology services, as well as managed services and systems, to a global client base. Taiwan-based Chailease Holding Co Ltd. is Taiwan’s number one leasing company with approximately 42 percent market share in the business leasing market. The firm has a wide product offering, including financial services, leasing, and installment sales and serves approximately 15,000 SMEs in Greater China. Management believes GigaCloud will benefit from the distribution capabilities and large customer bases of these partners.

Intellectual Property

We rely on a combination of patent, trademark, copyright and trade secret laws in the U.S. and Taiwan as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We have applied for trademark registration in certain jurisdictions and may apply for further trademark and copyright registrations and additional patents, which may provide such protection in relevant jurisdictions. However, there is no assurance that this will be sufficient to fully protect our proprietary technology. In addition, our technologies may not be able to withstand any third-party claims or rights against their use.

We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to proprietary technology.

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Regulation

Our business is subject to various laws and regulations in the jurisdictions we operate relating to the telecommunications industry, the internet and the online game industry, and is regulated by various government authorities.

Regulations Relating to Online Games

Taiwan

At present, there is no specific law in Taiwan governing online game services, nor are there any specific licensing requirements imposed on Internet content providers in connection with offering online game services. The National Communications Commission (the “NCC”) was established in March 2006. In December 2006, the NCC proposed the overhaul of the regulatory framework in the communications and broadcasting sectors by amending the Telecommunications Act, the Radio and Television Act, the Cable Radio and Television Act and the Satellite Radio and Television Act. Pursuant to the original proposal, the legislation at issue would be consolidated into a new legislative Act to be known as the Communications and Broadcasting Act. In December 2008, the NCC announced a change to its policy, stating that it had decided to delay enacting the Communication and Broadcasting Act for two to four years. According to the digital convergence plan adopted by the Executive Yuan in December 2010, digital convergence framework is expected to be approved in 2014 and digital convergence law is expected to be finalized in 2015.

Rating of Internet Content

The Regulations for the Rating of Internet Content was abolished by the NCC in 2012. At present, the rating of internet content is governed by Article 46 of the Protection of Children and Youths Welfare and Rights Act (last amended on January 22, 2014), which requires that all internet platform providers adopt their own rules implementing “clear and practicable” protection measures in accordance with the internet content supervisory institutions engaged by the NCC and other relevant authorities to prevent youth and children from having access to harmful internet contents. An internet platform provider is required to restrict children and youths from having access to internet content upon the relevant authority’s notification that such internet contents may be harmful or that such internet platform provider failed to implement “clear and practicable” protection measures.

Computer Software Ratings

The Ministry of Economic Affairs announced in July 2006 the Regulations Governing Computer Software Rating pursuant to the Protection of Children and Youths Welfare and Rights Act, which took effect in January 2007. These regulations were last amended in May 29, 2012 and renamed the Regulations Governing Game Software Ratings. The definition of “game software” and the rating system have been significantly modified in the 2012 amendment. Game software means software that integrates digitalized text, sound, visual effects, music, pictures, images or animation which allows users to operate on electronic devices to achieve certain goals of the game, but excluding software installed upon the “electronic game arcade” as defined in the Electronic Game Arcade Business Regulation Act. Manufacturers, distributors, agents, sellers, rental service operators, disseminators, exhibitors and download providers are responsible for the administration of ratings. There are five ratings: (i) Restricted (allowed for ages 18 and above); (ii) Parental Guidance 15 (allowed for ages 15 and above); (iii) Parental Guidance 12 (allowed for ages 12 and above); (i) Parent Protection (allowed for ages 6 and above); and (v) General Audience (suitable for all ages). According to the 2012 amendment, game software that uses virtual currency to play simulated MahJong, poker, dice, steel ball, horse racing, roulette, slot machine and other games of similar nature, and the outcome of the games may result in increase or decrease of the virtual currency, must be rated as Parental Protection. If the contents of such game software meet the requirements under the rating criteria for Restricted, Parental Guidance 15 or Parental Guidance 12, such games must be rated accordingly.

Online Game Contract Template

The Ministry of Economic Affairs and the Consumer Protection Commission have published a model contract template which sets out permitted terms and limitations with respect to online game services offered in Taiwan, pursuant to the Consumer Protection Act. The contract template was last amended on December 7, 2010. Generally, consumers should be given at least three days to review such contract. Amendments or changes to fees payable for services offered must be publicly announced at least thirty days prior to such amendment, and notification provided to consumers. Consumer game records must be maintained by each online game operator for a minimum period of thirty days and shall be open to inspection by such consumers. Suspension periods for consumers who have breached the terms of their online game contracts may not exceed a period of seven days. Apart from gifts, the on-line game operator cannot limit the use period of the game points in the on-line game contract. Furthermore, the on-line game operator cannot specify in the on-line game contract that it has the right to interpret the contract terms and conditions.

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Personal Data Protection Act

On April 27, 2010, the Legislative Yuan passed a bill to amend the Computer-processed Personal Data Protection Act, which was renamed as the Personal Data Protection Act. Whenever an entity collects personal data from any individual, it shall inform such individual about (i) the name and identity of the collecting entity; (ii) the purpose of collection; (iii) how the collected personal data will be used; (iv) his/her rights; and (v) the consequences of his/her failure to provide the required personal data. If personal data is not provided by individuals, in addition to the information required to be disclosed as described above, the collecting entity shall inform such individual of the source of the data before processing or using the data. In principle, prior consent from the individual is required for use of his/her personal data. These requirements shall be exempted if relevant personal data of the individual (i) is used for public interests; or (ii) is available from the public domain and the interest to be protected is more important than the privacy of such individual. Depending on the gravity of a violation, damages of NT$500 to NT$20,000 may be claimed against a person for each violation of the Personal Data Protection Act even if the actual damage cannot be proved. If there is more than one victim in a single violation, the maximum damages would be up to NT$200,000,000. However, if the interests involved therein exceed NT$200,000,000, restrictions on maximum amount for damages to be claimed and on minimum amount for damages to be claimed (NT$500 per person for each violation) shall not apply. This new Personal Data Protection Act will take effect pursuant to the announcement of the Executive Yuan. Given that there may be some delay in the enactment of the enforcement rules, the new Personal Data Protection Act was enacted on October 1, 2012.

Singapore

Presently, there are no laws in Singapore which specifically govern the provision of online gaming. However, depending on the type of games offered and services rendered as part of our online gaming operations, the operations may be subject to regulation under various Singapore legislation. Relevant legislation includes:

• the Broadcasting Act (Chapter 28) of Singapore (the “Broadcasting Act”) and its subsidiary legislation, which regulates, inter alia, the operation of Internet websites;

• the Telecommunications Act (Chapter 323) of Singapore (the “Telecommunications Act”) and its subsidiary legislation, which regulates the operation of telecommunications systems and the provision of telecommunications services; and

• the Common Gaming Houses Act (Chapter 49) of Singapore (the “CGH Act”) and the Betting Act (Chapter 21) of Singapore (the “Betting Act”) and subsidiary legislation, which regulate, inter alia, gaming and lotteries.

Broadcasting Act

The Broadcasting Act provides for the general legal framework to regulate media and Internet content and empowers the Media Development Authority (“MDA”) of Singapore with the authority to grant licenses and to regulate and monitor licensees in relation to such media and Internet content. In particular, section 8 of the Broadcasting Act provides that “no person shall provide any licensable broadcasting service in or from Singapore without a broadcasting license granted by the Authority (MDA)”. A “licensable broadcasting service” is defined in the Broadcasting Act to include “computer on-line services”.

The MDA also regulates online services through the Broadcasting (Class License) Notification (the “BCLN”). Under the BCLN, VAN computer on-line services (as defined in the BCLN) and computer on-line services that are provided by Internet Content Providers and Internet Service Providers (as such terms are defined in the BCLN) are deemed automatically licensed, and the licensees under the class license must comply with the conditions of the class license under the BCLN. The definition of “Internet Content Provider” under the BCLN includes any corporation or group of individuals, whether registrable or incorporated under the laws of Singapore, who provides any programme on the World Wide Web through the Internet. A programme is defined under the Broadcasting Act to mean, broadly, any matter the primary purpose of which is to entertain, educate or inform all or part of the public, or any advertising whether commercial or not, excluding any matter that is wholly related to or connected with any private communication.

Pursuant to the BCLN, a licensee must use its best efforts to ensure that its service complies with the codes of practice which may be issued by the MDA from time to time (including the Internet Code of Practice), and is not used for any purpose and does not contain any programme that is against the public interest, public order, national harmony or offends against good taste or decency. Further, licensees must also ensure that its services are not used for, or in furtherance of, certain prohibited activities such as games and lotteries the conduct of which is an offence under the CGH Act, the advertisement or promotion of astrology, geomancy, palmistry or any other type of fortune telling device or the solicitation of prostitution or any other immoral activity.

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Under the Internet Code of Practice issued by the MDA, an Internet Content Provider is required to ensure that it does not broadcast via the Internet to users in Singapore, programs which include material that is objectionable on the grounds of public interest, public morality, public order, public security, national harmony or is otherwise prohibited by applicable Singapore laws (“prohibited materials”). The Internet Content Provider is also required to deny access to such prohibited materials that he discovers in the normal course of exercising editorial duties, or is informed about.

Telecommunications Act

The provision and operation of telecommunication services and systems in Singapore is regulated by the Telecommunications Act, which provides the general legal framework for the provision and operation of telecommunication systems and services in Singapore.

Under the Telecommunications Act, all persons who, inter alia, establish, install, maintain, develop or hire a telecommunication system or service within Singapore must be licensed by the Info-communications Development Authority (“IDA”) of Singapore. A telecommunication system is defined as any system used or intended to be used for telecommunications, and telecommunication service is defined as any service for telecommunications but excludes any broadcasting service. Telecommunications is defined as a transmission, emission or reception of signs, signals, writing, images, sounds or intelligence of any nature by wire, radio, optical or other electro-magnetic systems whether or not such signs, signals, writing, images, sounds or intelligence have been subject to rearrangement, computation or other processes by any means in the course of their transmission, emission or reception.

The existing telecommunications licensing framework provides for two broad categories of licenses — facilities based operator (“FBO”) licenses and services based operator (“SBO”) licenses. SBO licenses are, in turn, granted either on an individual or class license basis.

Pursuant to IDA’s published guidelines, the telecommunications services which are provided as licensable under an SBO license include store-and-retrieve value-added network services, examples of which include any online information and database retrieval services, online games or electronic chatting services, provided by telecommunication systems, built over and above the telecommunication systems operated by an FBO and accessed through public telecommunication systems or leased circuits, which allow telecommunication traffic between a user and the value-added network or between users.

CGH Act and Betting Act

Depending on the type of games and services being offered, the online gaming operations may also be regulated by the CGH Act and the Betting Act. Generally, the CGH Act and the Betting Act prohibit the operation and patronization of unlicensed common gaming and betting houses as well as ancillary acts. In addition, the CGH Act prohibits the operation of and participation in a public lottery. The offences are wide-ranging in nature and encompass acts by the owner of the website, the player and assisting parties.

The CGH Act generally prohibits the engaging in gaming activities and arguably applies to gaming activities carried out online. In particular, the CGH Act prohibits, among other things, the following: (i) gaming in a “common gaming house” (as such term is defined in the CGH Act) or a public place; (ii) participation or assistance in any public lottery; (iii) advancing or furnishing money for the purpose of establishing or conducting the business of a common gaming house; and (iv) assisting in any manner in the management of a place kept or used as a common gaming house. Under the CGH Act, “gaming” is defined as the playing of any game of chance or of mixed chance and skill for money or money’s worth. “Lottery” includes any game, method, device, scheme or competition whereby money or money’s worth is distributed or allotted in any manner depending upon or to be determined by chance or lot, whether the same is held, drawn, exercised or managed within or without Singapore. A “public lottery” is defined as a lottery to which the public or any class of the public has or may have access, and every lottery shall, until the contrary is proved, be deemed to be a public lottery.

The Betting Act generally prohibits betting or wagering on any event or contingency of or relating to any horse-race or any other race, fight, game, sport or exercise, and would arguably also apply where such betting or wagering is conducted online. In particular, the Betting Act prohibits, inter alia, the following: (i) betting or wagering in a “common betting-house” or with a “bookmaker” (as such terms are defined in the Betting Act) in any place or by any means; (ii) the receipt (directly or indirectly) of any money or valuable thing for or in respect of any bet or wager on any such event or contingency in a common betting-house or “betting information centre” (as defined in the Betting Act); (iii) the advancing or furnishing of money for the purpose of establishing or conducting the business of a common betting-house; and (iv) assisting in any manner in the management or in the business of a place kept or used as a common betting-house or betting information centre.

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Regulations Relating to Cloud Computing

Telecommunications Act

Taiwan’s Telecommunications Act and the regulations under the Telecommunications Act establish the framework and govern the various aspects of the Taiwan telecommunications industry, including:

• licensing of telecommunications services;

• telecommunication numbers;

• restrictions on dominant telecommunications service providers;

• tariff control and price cap regulation;

• accounting separation system;

• interconnection arrangements;

• bottleneck facilities;

• spectrum allocation;

• provision of universal services;

• equal access;

• number portability;

• local loop unbundling;

• co-location; and

• ownership limitations.

The Telecommunications Act also establishes a non-auction pricing system for assignment of radio frequencies.

Type I and Type II Service Providers

Under the Telecommunications Act, telecommunications service providers are classified into two categories:

Type I. Type I service providers are providers that install network infrastructure, such as network transmission, switching and auxiliary equipment for the provision of telecommunications services. Type I services include fixed-line services such as local, domestic long distance and international long distance services, as well as interconnection, leased line, ADSL and satellite services and wireless services such as mobile, including 3G mobile, paging, mobile data and trunked radio services.

Type II. Type II service providers are defined as all telecommunications service providers other than Type I service providers. Type II services are divided into special services and general services. Special services include simple resale, VoIP international leased circuit and other services specified by the Ministry of Transportation and Communications before March 1, 2006 or by the NCC from March 1, 2006. General services include any Type II service other than special services.

Granting of Licenses: Type II

The Telecommunications Act was amended in 1996 to open the market for all Type II services. Under the Type II Services Regulations, Type II services are divided into special services and general services. Special services include simple resale, VoIP, network telephone service of E.164 and non-E.164 user numbers (IP Phone Numbers), international leased circuit and other services specified by governing authority. General services include any Type II service other than special services. The policy for granting a Type II service license is as follows:

• there is no limit on the number of licenses to be issued;

• licenses were granted by the Directorate General of Telecommunications before March 1, 2006 and are not granted by the NCC; and

• no bidding procedure is required.

We hold a license to operate general Type II services. Type II service licenses issued before November 15, 2005 are valid for ten years and may be renewed by application made two months prior to the expiration date. Type II service licenses issued or renewed on or after November 15, 2005 are valid for three years and may be renewed during the period commencing two months prior to the expiration date. There is no minimum paid-in capital requirement for Type II service providers. Our license to operate Type II services is valid from March 2013 to March 2016.

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Dividends from Our Subsidiaries

Under Singapore tax regulations, foreign-sourced dividend income used for capital expenditures, including investments, and repayment of borrowings, is not deemed as remitted to Singapore and is therefore not taxable.

Listing and Offering

Under NASDAQ Rule 5210(c), as amended (“Rule 5210(c)”), all securities listed on NASDAQ must be eligible for a direct registration program, or DRS, operated by a registered clearing agency, unless the foreign private issuer is prohibited from complying by a law or regulation in its home country. In order to fulfill the direct registration program eligibility requirements, we are required to, among other provisions, amend our constitutional documents to allow for the issue of non-certificated securities.

Our Company is incorporated under the laws of the Republic of Singapore and is subject to the provisions of the Companies Act (Cap.50) of Singapore (the “Companies Act”). Under the Companies Act, Singapore-incorporated companies are required to issue physical share certificates to registered shareholders as prima facie evidence of a registered shareholder’s title to the Shares and there are no exceptions to or exemptions from this requirement that would enable us to amend our constitutional documents to allow for the issue of non-certificated shares. Therefore, we are not able to comply with the DRS eligibility provisions of Rule 5210(c).

Under the DRS eligibility provisions, as a foreign private issuer, we are allowed to follow our home country practice in lieu of the requirements set out in Rule 5210(c), subject to certain exceptions. We will be relying on this for an exemption from the DRS eligibility requirements under Rule 5210(c). We have informed the NASDAQ Stock Market about our election to comply with the laws of Singapore in lieu of the DRS eligibility provisions of Rule 5210(c).

C. Organizational Structure

We were incorporated in Singapore as a company limited by shares on September 13, 1999. As of the date of this annual report, our principal operating subsidiaries include Hoshin GigaMedia, FunTown World Limited, and GigaMedia Cloud. Hoshin GigaMedia, our wholly-owned subsidiary incorporated in Taiwan, operates our Asian online game and service business in Taiwan. FunTown World Limited, our wholly-owned subsidiary incorporated in the British Virgin Islands, operates our Asian online game and service business in Hong Kong and Macau. GigaMedia Cloud, our wholly-owned subsidiary incorporated in Taiwan, operates our GigaCloud services in Taiwan.

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The following organization chart and table set forth our business structure and selected information for each of our principal subsidiaries as of the date of this annual report:

* Includes our operating subsidiaries or companies holding material investments or contracts only. All subsidiaries are 100% owned unless otherwise indicated.

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Entity	Place of Incorporation	Relationship
Held by our Company
GigaMedia International Holdings Limited	British Virgin Islands	Wholly-owned subsidiary
Held by GigaMedia International Holdings Limited
GigaMedia Online Entertainment Corp.	Cayman Islands	Wholly-owned subsidiary
Cambridge Entertainment Software Limited	British Virgin Islands	Wholly-owned subsidiary
GigaMedia (HK) Limited	Hong Kong	Wholly-owned subsidiary
Held by GigaMedia Online Entertainment Corp.
FunTown World Limited	British Virgin Islands	Wholly-owned subsidiary
GigaMedia Capital Limited	British Virgin Islands	Wholly-owned subsidiary
GigaMedia Freestyle Holdings Limited	British Virgin Islands	Wholly-owned subsidiary
GigaMedia (Labuan) Limited	Labuan	Wholly-owned subsidiary
Held by FunTown World Limited
FunTown Hong Kong Limited	Hong Kong	Wholly-owned subsidiary (Dormant)
Held by GigaMedia (Labuan) Limited
Leisure Alliance Sdn. Bhd.	Malaysia	Wholly-owned subsidiary
Held by Leisure Alliance Sdn. Bhd.
Hoshin GigaMedia Center Inc.	Taiwan	Wholly-owned subsidiary
GigaMedia Cloud Services Co., Ltd.	Taiwan	Wholly-owned subsidiary
GigaMedia Development Corporation	Taiwan	Wholly-owned subsidiary (Dormant)
Held by Hoshin GigaMedia Center Inc.
FingerRockz Co. Ltd.	Taiwan	Majority-owned subsidiary
Gaminfinity Publishing Co. Ltd.	Taiwan	Wholly-owned subsidiary
Play2gether Digital Technology Co. Ltd.	Taiwan	Wholly-owned subsidiary
PerfectPairs Gaming Co. Ltd.	Taiwan	Wholly-owned subsidiary
Held by Cambridge Entertainment Software Limited
Cambridge Interactive Development Corporation	U.S.A.	Wholly-owned subsidiary
Internet Media Licensing Limited	British Virgin Islands	Wholly-owned subsidiary

D. Property, Plant and Equipment

As of March 31, 2014, we leased approximately 47,137 square feet as office premises as our corporate head office in Taipei, Taiwan and approximately 4,831 square feet as office premises for FunTown’s office in Hong Kong. In addition, we leased approximately 1,265 square feet of warehouse space in Hong Kong.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Unless stated otherwise, the discussion and analysis of our financial condition and results of operations in this section apply to our consolidated financial statements as prepared in accordance with U.S. GAAP. You should read the following discussion of our financial condition and results of operations together with the consolidated financial statements and the notes to these statements included elsewhere in this annual report.

A. Operating Results

Overview

We are a diversified provider of online games and cloud computing services. Our principal businesses are as follows:

• Our Asian online game and service business operates a portfolio of online games, primarily targeting online game players across Asia, including Greater China and Southeast Asia.

• Our cloud product and service business aims at providing an integrated platform of services and tools for small-to-medium enterprises in Greater China to increase flexibility, efficiency and competitiveness. The business launched in early April 2013.

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In the past we operated a gaming software and service business, of which we held a controlling equity interest through July 2012. The gaming software and service business, developed and licensed online poker, casino, and sports betting gaming software solutions and application services, primarily targeting continental European markets.

In 2013, we had total operating revenues of approximately US$15.0 million, a decrease of approximately US$12.4 million year-over-year, mainly resulting from a decline of US$9.2 million in FunTown revenues, as well as the deconsolidation of IAHGames in August 2012 following our sale of a 60 percent interest in the company. Our total costs and expenses increased by approximately US$5.5 million year-over-year to US$53.5 million, primarily due to impairment losses recognized during the year, which increased by US$19.9 million. We incurred an operating loss of approximately US$38.5 million, an increase of approximately US$17.9 million year-over-year. We recognized a net loss attributable to us of approximately US$34.8 million, an increase of approximately US$19.5 million year-over-over, primarily resulting from the aforementioned increase in impairment losses.

Asian Online Game and Service Business. We operate our Asian online game and service business in Taiwan, Hong Kong and Macau through FunTown. We acquired FunTown in January 2006 and consolidated the financial results of FunTown into our consolidated financial statements starting from January 1, 2006. Previously, we operated in the PRC through a variable interest entity, JIDI, until our board of directors approved a plan to liquidate and dissolve JIDI in June 2012. The process of liquidation and dissolution was completed by the end of 2013. In Southeast Asia, we operated through IAHGames. We increased our ownership percentage in IAHGames from 32.26 percent in 2006 to 80 percent in 2010 through the acquisition of certain preferred shares and the subscription for new preferred shares and consolidated IAHGames’ financial results into our consolidated financial statements starting from July 1, 2010. In July 2012, we entered an agreement to sell a 60 percent ownership in IAHGames, and, upon the closing of the agreement, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method. We completed our divestiture of IAHGames in May 2013.

In addition to our majority-controlled subsidiaries, we also entered into strategic alliances with XL Games, Access China, JoyCity Corporation (previously named JC Entertainment Corporation), and East Gate in December 2007, January 2008, September 2009, and August 2010, respectively. XL Games was founded by the creator of a world-renowned online game franchise, focuses on MMORPGs and has studios in Seoul, South Korea and Austin, Texas. Access China is an online game software developer in the PRC. JoyCity is a publicly-listed company which develops online games in Korea. East Gate is a Korean fund which invests in online game businesses and films.

Online casual game operators in Greater China and Southeast Asia are currently our primary competitors. We also compete with MMORPG operators throughout Greater China and Southeast Asia. Given the low barriers to entry in the online game industry and the increasing popularity of Internet-based businesses, there are a large number of potential competitors scattered throughout many different segments of the software and Internet industries. In addition to the aforementioned competitors, traditional entertainment service providers and other entities, many of which have significant financial resources and name brand recognition, may provide online game services in the future, and thus become our competitors.

Faced with our known competitors, and most likely several new competitors which may be established in the near future, we will continue to improve the principal competitive factors that we believe can differentiate our product offerings from those offered by our competitors, including: brand, technology, financial stability and resources, proven track record, independent oversight and transparency of business practices in our industry.

In 2013, our Asian online game and service business generated revenue of approximately US$14.1 million, gross profit of approximately US$7.7 million, operating loss of approximately US$33.7 million, non-operating income of approximately US$3.7 million, and net loss attributable to us of approximately US$27.0 million.

Cloud Product and Service Business. We launched a cloud product and service business in April 2013. Our cloud product and service business made its first revenue contributions in the fourth quarter of 2013; overall, financial results of our cloud product and service business did not have a material impact on our financial results in 2013.

Other Business. Until April 8, 2010, we operated a gaming software and service business through our subsidiary, Cambridge Entertainment Software Limited (“CESL”), and through its wholly-owned subsidiaries, Cambridge Interactive Development Corporation and Internet Media Licensing Limited. Under the terms of the licenses granted by us to Ultra Internet Media S.A. (“UIM”), we were entitled to a share of the revenues of such licensee, and as such, we had certain economic risks with respect to, and derived certain economic benefits from, their operations. Therefore, through March 31, 2010, the financial results of UIM were incorporated into our consolidated financial statements as UIM met the criteria of a VIE as defined by the FASB Accounting Standards Codification.

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On April 8, 2010, we sold a 60 percent interest in our gaming software and service business to Mangas Gaming S.A.S., a French Corporation, now renamed as BetClic Everest Group (“BetClic”), and deconsolidated the gaming software and service business as we ceased to have a controlling financial interest from that date. Our remaining ownership interest in the gaming software and service business was accounted for under the equity method starting from April 2010 to August 2012 when we entered in to an agreement with BetClic to sell our remaining ownership interest.

The holding and disposal of our remaining non-controlling interest in the gaming software and service business generated net gain of approximately US$2.5 million for the year ended December 31, 2012, which was directly related to the sale of our remaining ownership interest in such business in July 2012.

Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013

Divestiture of Gaming Software and Service Business

On December 15, 2009, we entered into an agreement with BetClic to sell 60 percent of substantially all of the assets and liabilities of our gaming software and service business for approximately US$100 million in cash, subject to certain adjustments. The closing of the sale occurred on April 8, 2010. The sale resulted in the recognition of a gain of US$79.1 million, net of transaction costs. The sale of the remaining 40 percent was subject to a put and call mechanism in place between us and BetClic, as defined in the agreement. We had the option to put all or part of our remaining 40 percent ownership interest to BetClic in each of 2013, 2014, and 2015 at a value considering all relevant facts and circumstances after the end of each year. If the put option owned was not fully exercised, BetClic would have the option to call the remaining interest held by us in each of 2015 and 2016.

We deconsolidated the gaming software and service business and recognized a gain when we completed the sale of 60 percent of substantially all of the assets and liabilities to BetClic on April 8, 2010, which was the date that we ceased to have a controlling financial interest. The remaining ownership interest we retained in the gaming software and service business, a 40 percent interest later diluted to 33.66 percent, was accounted for under the equity method starting from April 2010 to July 2012, when we entered into another agreement with BetClic to sell our remaining ownership interest in the gaming software and service business for a consideration of US$1.7 million. Of this consideration, US$985,000 was paid to us in cash, while the remainder related to the extinguishment of a 2009 tax liability. The closing of the sale occurred in August 2012. The sale resulted in the recognition of a gain of US$2.5 million, net of transaction costs. In 2011 and 2012, we recognized equity investment losses relating to our remaining non-controlling interest of US$49.7 million and US$0, respectively.

Acquisition and Divestiture of IAHGames

In July 2010, we began consolidating IAHGames, an online game operator, publisher and distributor in Southeast Asia. We acquired IAHGames in order to enhance our position in the online game market in Southeast Asia and strengthen our online entertainment product portfolio. This primary factor among others, contributed to a purchase price in excess of the fair market value of the net tangible assets and intangible assets acquired.

As of December 31, 2010 and 2011, we owned 5,982,230 Class A preferred shares and 1,208,881 Class B preferred shares of IAHGames, which represents a controlling financial interest of 80 percent of the total outstanding voting rights of IAHGames. The preferred shares (Class A) were convertible into ordinary shares of IAHGames at a conversion rate of 10 Class A shares for 1 ordinary share. The preferred shares (Class B) were convertible into ordinary shares of IAHGames at a conversion rate of 1 Class B share for 1 ordinary share.

In July 2012, we entered into agreements to sell 100 percent of the shares of Spring Asia, an investment holding company which owns 30 percent of the shares of Game First International Corporation (“GFI”), to IAHGames, as well as a 60 percent ownership in IAHGames (with a 20 percent ownership of IAHGames retained by us) to IAHGames’ management and Management Capital International Limited, a British Virgin Islands company owned by IAHGames’ management.

In consideration for sale of IAHGames and Spring Asia, we are to receive US$3 million in cash consideration in four equal installments, with the first due upon closing, the second due on October 2, 2012, the third due on January 2, 2013 and the fourth due on April 2, 2013. The first installment of US$750,000 was received upon the closing on August 15, 2012. However, the second, third, and fourth installments were deferred. The payments were collateralized by the shares of Spring Asia. In April 2013, we entered into the IAH Settlement Agreement to settle the deferred Spring Asia purchase price of US$2.25 million. Under the IAH Settlement Agreement, we also sold all of our remaining shares in IAHGames to MCIL (approximately 20% of IAHGames’ total issued and outstanding shares) at a purchase price of US$1 million. The settlement was completed in May 2013 when the deferred payment for the sale of Spring Asia and the amount for the sale of the remaining shares in IAHGames were received in full.

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Consolidation of Monsoon

We, through IAHGames, made an equity investment in Monsoon, an operator and distributor of online games in Southeast Asia, in connection with our acquisition of a controlling financial interest in IAHGames with effect from July 1, 2010. In connection with a strategic alliance, Monsoon entered into various agreements with Blizzard Entertainment International, a division of Coöperatie Activision Blizzard International U.A. (“Blizzard”) to distribute selected Blizzard Entertainment ^® games in Southeast Asia (collectively referred to as the “Distribution Partnership”). Although IAHGames owns 100 percent of the common stock of Monsoon, Monsoon was not consolidated at the time of the acquisition as Blizzard had substantive participating rights in Monsoon’s business operations pursuant to Monsoon’s management agreement. In September 2011, IAHGames, Monsoon and Blizzard entered into an agreement whereby they agreed to the early termination of the Monsoon management agreement and other related agreements which granted Blizzard the abovementioned substantive participating rights. The termination agreement was effective from August 31, 2011. Starting from September 1, 2011, IAHGames had effective control over Monsoon and therefore we consolidated Monsoon from that date through the date we deconsolidated IAHGames.

The agreement was effective from the third quarter of 2011. In January 2012, IAHGames’ and Monsoon’s commitments under the Distribution Partnership with Blizzard were fully terminated. The following were the main impacts in our consolidated financial statements in 2011 resulting from the execution and closing of this agreement:

	(in US$ thousands)
Gain on cancellation of warrant liabilities	$	665
Gain on reversal of impairment of prepaid expenses		1,347
Recovery of loss on termination of third-party contract	$	2,012

Divestitures of JIDI and Shanghai JIDI

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI, a wholly-owned subsidiary, and Shanghai JIDI. Results for JIDI and Shanghai JIDI operations are reported as discontinued operations for all periods presented. The carrying amounts of the remaining assets and liabilities of JIDI and Shanghai JIDI were not significant to our consolidated financial statements as of December 31, 2012, and we recognized a loss of approximately US$588,000 in connection with the disposal of property, plant and equipment, which is included within discontinued operations in 2012. The process of liquidation and dissolution was completed by the end of 2013. Summarized selected financial information for discontinued operations of JIDI and Shanghai JIDI are as follows:

(in US$ thousands)	2011			2012			2013
Revenue	$	29		$	100		$	0
Loss from discontinued operations before tax	$	(4,240	)	$	(2,521	)	$	(318	)
Income tax expense		—			—			—
Loss from discontinued operations	$	(4,240	)	$	(2,521	)	$	(318	)

Deconsolidation of T2CN

On December 14, 2011, we completed the sale of our equity method investee T2CN. Pursuant to the agreement, we sold all of our ownership interest in T2CN to Hornfull Limited in exchange for a cash payment of US$4.7 million, resulting in a gain of US$4.7 million being recognized in 2011. Hornfull Limited also reimbursed us US$0.8 million in cash for legal fees incurred by us in connection with the T2CN dispute.

Share Repurchase Program

On May 20, 2011, our board of directors approved an US$11 million share repurchase program of GigaMedia’s common stock. Under the terms of the share repurchase program, GigaMedia could repurchase up to US$11 million worth of its issued and outstanding shares during the period starting from June 1, 2011 to November 30, 2011. The repurchases could be made from time to time on the open market at prevailing market prices pursuant to a Rule 10b5-1 plan, subject to restrictions relating to volume, pricing and timing. The timing and extent of any repurchases depended upon market conditions, the trading price of GigaMedia’s shares and other factors. This share repurchase program was implemented in a manner consistent with market conditions, in the interests of our shareholders, and in compliance with GigaMedia’s securities trading policy and relevant Singapore and U.S. laws and regulations. During 2011, repurchases under this program amounted to approximately 5.6 million shares at a cost of US$6.0 million. All of the treasury shares under this program were cancelled by the end of 2011.

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Impairment Loss Related to Underperforming Game Projects in Our Asian Online Game and Service Business

2011 Impairment Loss

Due to certain underperforming game projects within our Asian online game and service business, we recorded an impairment loss of approximately US$8.3 million in our consolidated financial statements for the year ended December 31, 2011 as follows:

1) US$5.1 million impairment loss on goodwill from the acquisition of IAHGames. The goodwill had a carrying amount of US$12.2 million which was written down to its estimated fair value of US$9.9 million as of December 31, 2010, and fully written down to US$0 as of December 31, 2011, after the reversal of a contingent liability recorded in connection with the acquisition of IAHGames for US$5.9 million, resulting in an impairment charge of US$4.0 million in 2011, which is included in operating expenses in our consolidated statements of operations. Goodwill from the acquisition of OneNet Co., Ltd., an investee of IAHGames, with a carrying amount of US$1.0 million was fully written down to US$0 as of December 31, 2011, resulting in an impairment charge of US$1.0 million in 2011.

2) US$619,000 impairment loss on prepaid licensing and royalty fees (of which US$372,000 related to Shanghai JIDI is reclassified to loss from discontinued operations), which was related to certain licensed games that we stopped operating or for which the carrying amounts were determined not to be recoverable due to lower than expected performances. Prepaid licensing and royalty fees are valued using a discounted cash flow model to determine fair value, incorporating available market discount information, our estimate for liquidity risk and other cash flow model related assumptions based on unobservable inputs; and

3) US$2.6 million impairment loss on intangible assets for capitalized software costs and favorable lease rights, reflecting a full provision relating to certain projects that we have ceased to further develop.

2012 Impairment Loss

Due to decreased forecasts within our Asian online game and service business, we recognized an impairment loss of approximately US$13.2 million in our consolidated financial statements for the year ended December 31, 2012 as follows:

1) US$12.5 million impairment loss on goodwill from the acquisition of FunTown. Goodwill from the acquisition of FunTown, which constitutes our Asian online game and service business, was written down to its estimated fair value of US$16.9 million as of December 31, 2012, resulting in an impairment charge of US$12.5 million in 2012, which is included within operating expenses in our consolidated statements of operations. As a result of the slowdown in the PC-based online game market on which we depend and an unfinished transition of FunTown to new browser/mobile games and social casino games markets, we estimated that the fair value of our Asian online game and service business had decreased and, as a result, impaired the goodwill related to FunTown as of December 31, 2012. The impairment charge was determined by our estimates of future cash flows from the FunTown business which have been reduced due to our change in strategic focus, indicating that the original carrying amount of the goodwill from the acquisition of FunTown could not be fully recovered as of December 31, 2012.

2) US$702,000 impairment loss on prepaid licensing and royalty fees, which was related to certain licensed games that we stopped operating or for which the carrying amounts were determined not to be recoverable due to lower than expected performances. Prepaid licensing and royalty fees are valued using a discounted cash flow model to determine fair value, incorporating available market discount information, our estimate for liquidity risk and other cash flow model related assumptions based on unobservable inputs; and

3) US$15,000 impairment loss on intangible assets for capitalized software costs, reflecting a full provision relating to certain projects that we have ceased to further develop.

2013 Impairment Loss

Due to certain underperforming game projects and decreased forecasts within our Asian online game and service business, we recognized an impairment loss of approximately US$33.1 million in our consolidated financial statements for the year ended December 31, 2013 as follows:

1) US$17.1 million impairment loss on goodwill and US$12.0 million impairment loss on intangible assets – specifically, trade names and trademarks, originally arising from the acquisition of FunTown. Goodwill and trade names and trademarks from the acquisition of FunTown, which constitutes our Asian online game and service business, were written down to nil as of December 31, 2013, resulting in an impairment charge of US$29.1 million in 2013, which is included within operating expenses in our consolidated statements of operations. As a result of the further slowdown in the PC-based online game market on which we depend and an unfinished transition of FunTown to new browser/mobile games and social casino games markets, we estimated that the fair value of our Asian online game and service business had decreased and, as a result, impaired the goodwill related to FunTown as of December 31, 2013. The impairment charge was determined by our estimates of future cash flows from the FunTown business which have been reduced due to market conditions and our incomplete transition to new markets, indicating that the original carrying amount of the goodwill from the acquisition of FunTown could not be fully recovered as of December 31, 2013.

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2) US$2.8 million impairment loss on prepaid licensing and royalty fees, which was related to certain licensed games for which the carrying amounts were determined not to be recoverable due to deferred development progress and remote possibility of commercial launch. Prepaid licensing and royalty fees are valued using a discounted cash flow model, when reasonable grounds exist for projections, to determine fair value, incorporating available market discount information, our estimate for liquidity risk and other cash flow model related assumptions based on unobservable inputs.

3) US$1.3 million impairment loss on intangible assets for capitalized software costs to reflect a full provision relating to certain projects that we have ceased to further develop.

Impairment Loss on Marketable Securities and Investments

As a result of unsuccessful investments made by previous management in game studios and companies, we recognized impairment losses on marketable securities and investments of US$13.3 million, US$1.2 million and US$0 in 2011, 2012 and 2013, respectively. The major impairments are listed below:

2011 Impairment Loss on Marketable Securities and Investments

1) In 2009 we made an investment in common shares of Numen Soft Co., Ltd. (“Numen Soft”) of US$679,000. As a result of deteriorating earnings and inability to meet its projections and forecasts, we fully wrote down our investment in Numen Soft in 2011 to zero.

2) In 2010, we acquired from IAHGames 100 percent of common shares of Spring Asia Limited which owns 30 percent interest in Game First International Corporation (“GFI”) in connection with our acquisition of a controlling financial interest in IAHGames. The carrying amount of this investment was US$15.1 million as of December 31, 2011. The investment was written down to its estimated fair value of US$2.5 million, resulting in an impairment charge of US$12.6 million in 2011.

2012 Impairment Loss on Marketable Securities and Investments

1) In 2009 we made an investment in common shares of Gorilla Banana Entertainment Corp. (“GBE”) of US$700,000. As a result of accumulated loss, inability to meet its projections and forecasts, and cash shortage, we fully wrote down our investment in GBE in 2012 to zero.

2) In 2007, we made an investment in common shares of Soft Star Entertainment Inc. (“SoftStar”) of approximately US$1.9 million through a private placement. As a result of deteriorating earnings and considering the resulting lack of liquidity, we wrote down this investment to its estimated fair value of US$1.6 million, resulting in an impairment charge of US$493,000 in 2012.

Subsequent Events

On April 10, 2014 (with supplemental modification on April 15, 2014), we entered into a short-term loan agreement on an arm’s-length basis with Wen He Investment Ltd. (“Wen He”) to finance its purchase from a third-party of 15 million common shares of a company in Taiwan. The amount of the loan is approximately US$18.8 million, maturing on May 10, 2014, and carries an interest rate of 5% per annum. The term of the loan also requires that all of the shares so purchased by Wen He be pledged to us as collateral together with the personal guarantee of another major shareholder of the Taiwan company. We entered into this loan agreement because we believe it will support the growth of our online games business.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are derived from our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S., or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our significant accounting policies are closed in note 1(c) to our consolidated financial statements. We believe that the following discussion addresses the most critical accounting policies applicable to our Company, which are those that are most important to the portrayal of the financial condition and results of operations of our Company, and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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Revenue Recognition

Revenues are recognized revenue when persuasive evidence of an arrangement exists, delivery occurs and the customer takes ownership and assumes risks or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured. Sales taxes assessed by governmental authorities on our revenue transactions are presented on a net basis and therefore are excluded from revenues in our consolidated financial statements.

Our Company has in the past entered into and may in the future enter into multiple-element revenue arrangements, which may include any combination of services, software, and/or products. To the extent that a deliverable in a multiple-element arrangement is subject to specific accounting guidance, whether and/or how to separate multiple deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation) for that deliverable is accounted for in accordance with such specific guidance.

In addition to the aforementioned general policies, the following are the specific revenue recognition policies for each major category of revenue.

Asian Online Game and Service Revenues

Asian online game and service revenues are related to our Asian online game and service business that operates play-for-fun games online to players across Asia.

Asian online game revenues are earned through the sale of online game points, prepaid cards, game packs, through the sublicensing of certain games to distributors and through licensing fee revenues. Virtual online game points are sold to distributors or end-users who can make the payments through credit cards, Internet ATMs or telecommunication service operators. Physical prepaid cards and game packs are sold through distributors and convenience stores. Proceeds from sales of physical cards and game packs, net of sales discounts, and online game points are deferred when received and revenue is recognized upon the actual usage of the playing time or in-game virtual items by the end-users; over the estimated useful life of virtual items; or when the sold game points expire and can no longer be used to access the online games or products in accordance with our published game points expiration policy. Sublicensing revenues from the distributors are recognized based on end-users’ activation to the game system and when the performance obligations have been completed. Licensing fee revenues are recognized when the delivery of licensed products has occurred and the fee is fixed or determinable.

Sales of virtual online game points and licensing fee revenues are reported on a gross basis. In the sales of virtual online game points and game licenses, we act as principal and we have latitude in establishing price. Fixed percentage fees retained by service providers for payment processing related to our online game services are recognized as cost of online game revenues. We report sublicensing revenues on a net basis. In the sublicense agreements, we act as agent and the distributors are responsible for the operating and the marketing.

Asian online game and service revenues also include revenues derived from online advertising arrangements, sponsorship arrangements, or a combination of both. These service arrangements allow advertisers to place advertisements on particular areas of our Company’s websites and online game platforms over a stated period of time. Service revenues from online advertising arrangements are recognized ratably over the period of the contract when the collectability is reasonably assured.

Other Revenues

Other revenues include cloud service revenues, which are related to cloud computing services provided by our Company. Revenues are recorded net of discounts. Cloud service revenues are recognized for the period of time for which we provide services to the customers. Customers have a choice of paying either monthly or in advance for a certain period of time, for which they receive corresponding discounts. Our Company records any such advanced payment receipts as other current liabilities and amortizes such revenues over the subscription period.

Revenues from the sales of equipment and other related products are recognized upon acceptance.

Deferred Revenues

Deferred revenues consist mainly of the prepaid income related to our Asian online game and service business. Deferred revenue represents proceeds received relating to the sale of game points and in-game items which are activated or charged to the respective player game account by players, but which have not been consumed by the players or expired. Deferred revenue is credited to profit or loss when the game points and in-game items are consumed or expired. Deferred revenue was US$3.2 million and US$2.4 million at December 31, 2012 and 2013, respectively.

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Prepaid Licensing and Royalty Fees

Our Company, through our subsidiaries, routinely enters into agreements with licensors to acquire licenses for using, marketing, distributing, selling and publishing multi-player online games.

Prepaid licensing fees paid to licensors are capitalized when technological feasibility is achieved, and amortized on a straight-line basis over the shorter of the estimated useful economic life of the relevant online game or license period, which is usually within two to five years. The annual amortization is modified if the amount computed on the ratio of current gross revenues for a game license over the total of current and anticipated future gross revenues for that game license is greater than the amount computed using the straight-line method.

Prepaid royalty fees and related costs are initially deferred when paid to licensors and amortized as operating costs based on certain percentages of revenues generated by the licensee from operating the related online game in the specific country or region over the contract period.

Whenever events or changes in circumstances indicate that the carrying amount of our prepaid licensing and royalty fees may not be recoverable, we test its recoverability by comparing the carrying value of the item in question to its undiscounted cash flows. If the carrying amounts of the related prepayments were determined to be greater than their expected future undiscounted cash flows, the estimated fair values of prepaid licensing and royalty fees are determined based on their discounted cash flows.

Based on the analysis, we estimated the fair values of certain prepaid licensing and royalty fee assets to be nil, and recognized impairment charges of US$619,000, US$702,000 and US$2.8 million on prepaid licensing and royalty fees in 2011, 2012 and 2013, respectively.

The impairment losses recognized in 2011, 2012 and 2013 were mainly due to lower than expected performances of products and services or resulted from the uncertain commercial viability of products and services, or from game development that did not successfully pass the testing phase and for which we fully wrote off the contractual value of related fees paid. In 2013 we recognized a US$2.8 million impairment loss on prepaid licensing fees for certain outsourced game development, which was primarily due to a novation agreement entered into with an outsourced game developer and licenser in 2013. The agreement relieved us from obligations in the remaining contractual period of the original game development contract. We therefore had rights to receive running royalties from the outsourced game developer or sell these rights to the outsourced game developer. We believed the possibility of a successful commercial launch of the game to be remote, thus we concluded that the prepaid licensing fees were impaired and recognized an impairment loss of US$2.8 million.

Impairment of Intangible Assets with Indefinite Useful Life

If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Our indefinite useful life intangible asset is our trade name, which resulted from the acquisition of FunTown in 2006. We perform an impairment test on our trade name annually on December 31, or more frequently when a triggering event occurs between annual impairment tests.

Late in 2013, due to a slowdown in the PC-based online game market and our new strategy to focus on social online casino games and mobile games in Greater China, we determined that triggering events had occurred requiring us to review our trade name associated with the Asian online game reporting unit, before testing this reporting unit for goodwill impairment. Based on our assessment, the profit margin generated from the Asian online games business was very low compared to our peer companies. The Asian online game business was projected to generate losses in the coming years as it was projected to be negatively impacted by the end of its game life cycles. Our trade name associated with our current gaming platform was considered to have no economic value because it could not contribute profit to us in consideration of our updated strategic plan to reposition our business. The strategic plan would result in a significant transfer of our resources. Meanwhile we have decided to retire the existing trade name at the end of the game life cycles and rebrand many developed games under new platforms unassociated with the existing trade mark. We therefore determined that the fair value of the trade name was zero and recognized an impairment loss of US$12.0 million in 2013.

Impairment of Long-lived Assets and Intangible Assets with Definite Useful Life

         We review our long-lived assets that are held and used for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The estimate of cash flows is based upon certain assumptions about expected future operating performance. If the sum of the expected undiscounted future cash flows is less than the carrying value, an impairment charge is recognized for the amount that the carrying value of the asset exceeds its fair value, based on the best information available, including discounted cash flow analysis. Prior to evaluating goodwill for impairment, we evaluated our long-lived assets for impairment. We determined that we have two asset groups for impairment testing purposes, one of which is associated with our online game operations, and the other is associated with our cloud services. For each asset group, we determined that the undiscounted cash flows expected to result from the use of the asset group exceeded their respective carrying amounts. Consequently, we have not recognized any impairment charges on long-lived assets during the period from year 2011 to 2013.

Impairment of Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. For 2013, we concluded that we had two reporting units, which are the same as our operating segments. Goodwill was assigned to our Asian Online Game reporting unit. In determining whether goodwill is impaired and measuring any loss resulting from the impairment, we first determine whether the fair value of the reporting unit is less than its carrying amount (including goodwill). The fair value of the reporting unit is determined using a discounted cash flows analysis. Second, if the fair value of the reporting unit does not exceed the carrying amount, we recognize an impairment loss for the excess of the carrying amount of the reporting unit goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. We perform an impairment test on goodwill annually on December 31, or more frequently when a triggering event occurs between annual impairment tests.

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We estimated the fair value of the Asian Online Game reporting unit by using the discounted cash flow approach, which uses Level 3 inputs of the fair value hierarchy. Unobservable inputs include, but are not limited to, (1) discount rates; (2) terminal year growth rates; (3) recent operating performance and forecasts; (4) growth anticipated in cash flow; (5) the state of the online game business in the respective geographic area; and (6) trends in average monthly users, paying users, pay rates and average revenue per user.

In 2012, the significant assumptions used to determine the estimated fair value of this reporting unit included five-year undiscounted cash inflow projections ranging from US$2.9 million to US$8.6 million (assuming an average revenue decline of 7 percent over the five-year period), with a terminal value (using a zero terminal growth rate) of approximately US$20.3 million at the end of the fifth year, and a discount rate of 17.1 percent. In 2012, the carrying value of the Asian Online Game reporting unit exceeded its estimated fair value. Thus we performed the second step and determined that the implied fair value of the goodwill was US$16.9 million compared to its carrying value of US$29.4 million. Consequently, we recognized a goodwill impairment charge of US$12.5 million in 2012.

In 2013, our Asian Online Game reporting unit experienced a slowdown in the PC-based online game market. We also decided to reposition FunTown to focus on market growth in social casino games and browser/mobile games, as we have seen a significant shift in customer demand for these products and expected a corresponding effect to be reflected on the fair value of the Asian Online Game reporting unit. The decrease of total revenue in 2013 reflected an unfinished transition to social casino and mobile games and lower contributions from our currently PC-based online casual games as a result of the continuing shift in player preference for browser/mobile games. Our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the current fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, our projection for recurring revenue and costs has reflected the uncertain preference in the consumers’ perspective. The assumptions used for our 2013 estimated fair value included six-year undiscounted cash flows projections ranging from (US$4.0) million to US$2.8 million and a discount rate of 13.0 percent. The decrease in the discount rate used for the goodwill impairment testing purpose from 2012 to 2013 resulted from changes of the Beta and small size risk premium. The carrying value of our Asian Online Game reporting exceeded its estimated fair value. Thus we performed the second step and determined that the implied fair value of the goodwill was US$0 compared to its carrying value of US$17.1 million. Consequently, we recognized a further goodwill impairment charge of US$17.1 million in 2013.

Income Taxes

As part of the process of preparing our consolidated financial statements, our management is required to estimate income taxes and tax bases of assets and liabilities for our Company. This process involves estimating current tax exposure together with assessing temporary differences resulting from differing treatments of items for tax and accounting purposes and the amount of tax credits and tax loss carry-forward. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheets. Management must then assess the likelihood that the deferred tax assets will be realized and, to the extent it believes that realization is not more likely than not, a valuation allowance is provided.

The ultimate realization of deferred tax assets and therefore the determination of the valuation allowance are dependent upon the generation of future taxable income by the taxable entity during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of different liabilities, projected future taxable income and tax planning strategies in determining the valuation allowance.

We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. We have to recognize income tax expenses when the possibility of tax adjustments made by the tax authority is greater than 50% in the future period. Changes in income tax recognition or measurement of previous periods are reflected in the period in which the change in judgment occurs.

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As of December 31, 2012 and 2013, we recognized valuation allowances of US$18.3 million and US$5.2 million, respectively, on our deferred tax assets to reflect uncertainties related to our ability to utilize these deferred tax assets, which consist primarily of certain net operating loss carryforwards and loss on equity method investment. We considered both positive and negative evidence, including forecasts of future taxable income and our cumulative loss position, and continued to report a valuation allowance against our deferred tax assets as of both December 31, 2012 and 2013. We continue to review all available positive and negative evidence in each jurisdiction and our valuation allowance may need to be adjusted in the future as a result of this ongoing review. Given the magnitude of our valuation allowance, future adjustments to this allowance based on actual results could result in a significant adjustment to our results of operations.

In 2011, the valuation allowance on the deferred tax assets increased by US$17.9 million to US$25.3 million primarily due to the evaluation of the loss related to our investment in Mangas Everest. We provided a valuation allowance against the deferred tax asset related to our investment loss in Mangas Everest as we believed that the subsequent disposal of this investment would not likely offset the related deferred tax asset based on our estimation of any future disposal gain, as Mangas Everest has had successive losses, and therefore we did not believe that sufficient objective, positive evidence existed to conclude that the realization of the deferred tax asset related to our investment losses in Mangas Everest was more likely than not. In 2013, due to the liquidation of GigaMedia Europe Limited S.à.r.l., which held investments in Mangas Everest, the related deferred tax asset and the valuation allowance were reversed accordingly.

In 2012 the valuation allowance on the deferred tax assets decreased by US$6.9 million to US$18.3 million primarily due to the deconsolidation of our controlling interests in IAHGames in which a full valuation allowance was provided. In 2013 the valuation allowance on the deferred tax assets decreased by US$13.2 million to US$5.2 million mainly due to the completion of liquidation processes for subsidiaries in Luxembourg and China, resulting in a reversal of US$16.7 million on deferred tax assets (consisting primarily of operating loss carryforward) and related valuation allowance partially offset by an addition of US$3.5 million of the valuation allowance to loss carryforward generated from our Hong Kong and Taiwan businesses.

The effect of the changes of the valuation allowance increased our income tax expense for the years ended December 31, 2011, 2012 and 2013 by US$15.6 million, US$0.5 million and US$3.5 million, respectively.

Recent Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. The update does not change the requirements for reporting net income or other comprehensive income in financial statements. The updated guidance is effective for our fiscal year beginning January 1, 2014. The adoption of this guidance is not expected to have any impact on our consolidated financial position, results of operations or cash flows.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The update is effective for our fiscal year beginning January 1, 2015, and is to be applied prospectively, with retrospective application permitted. The adoption of this guidance will not have any impact on our consolidated financial position, results of operations or cash flows.

Taxation

Our major tax jurisdictions are located in Taiwan, the PRC and Singapore.

The corporate income tax rate in Taiwan is 17 percent effective from 2010. In addition to the corporate income tax rate, all retained earnings generated beginning January 1, 1998 by our subsidiaries under Taiwan law and not distributed to us as dividends in the following year are assessed a 10 percent retained earnings tax. This rule applies primarily to our FunTown online games portal, whose principal operating entities are incorporated under Taiwan law.

         On January 1, 2006, the Taiwanese government enacted the Alternative Minimum Tax (“AMT”) Act. Taxes imposed under the AMT Act are supplemental tax payable if the income tax payable pursuant to the R.O.C. Income Tax Act is below the minimum amount prescribed under the AMT Act. The AMT rate for business entities is 10 percent. The taxable income for calculating the AMT includes most income that is exempted from income tax under various legislation such as tax holidays and investment tax credits. For example, gains on disposal of marketable securities from our Taiwan-based entities were exempt from income tax based on Taiwan tax laws prior to the AMT Act. However, such gains will need to be included for the purpose of calculating the AMT.

The statutory enterprise income tax rate in the PRC is 25 percent unless the entities qualify under certain limited exceptions. Our Asian online games in the PRC applied this income tax rate before we ceased our operations in the PRC.

The corporate income tax rate in Singapore is 17 percent, which applied primarily to IAHGames acquired in July 2010 and up to August 2012 when we deconsolidated it.

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Discussion of Results of Operations

Factors Affecting Our Performance

We believe that the following are the principal factors affecting our results of operations:

Acquisitions and disposals. We have made several significant acquisitions and dispositions of businesses during the past several years, and may enter into additional acquisition and disposition transactions in the future. Past acquisitions and dispositions have had a significant impact on our results of operations over the past several years, and if we engage in such transactions in the future, the nature, amounts and timing of our revenues, expenses and cash flows and the nature and amounts our assets and liabilities are likely to be materially affected.

Development of cloud computing and online games industries. We began developing a new cloud computing business in the second half of 2012. The business launched in early April 2013. The cloud computing and online games industries are in relatively early stages of development. We believe that our results of operations are likely to be affected by developments in these industries, including:

• the development and regulation of these industries;

• our adaptation to technological change, such as the shift towards greater use of mobile phones and tablets for Internet access;

• changing consumer preferences, including for mobile games;

• legal development affecting these industries; and

• general economic conditions in the markets where we or our licensees operate.

Competition. Our online games business operates in an extremely competitive industry and our cloud computing business may face strong future industry competition as the cloud computing industry grows in Asia. Our Asian online games business is characterized by rapid technological change and we face significant and intense competition from online game software design houses, application service providers and casual games operators. Our nascent cloud computing business also faces rapid technological change and potential intense future competition from major telecommunication service operators and Internet application providers.

Divestiture of Gaming Software and Service Business. When we sold a 60 percent ownership interest in our gaming software and service business on April 8, 2010, we ceased to consolidate its financial results and no longer have revenue from the gaming software and service business from April 2010 onwards. Our remaining ownership interest in the gaming software and service business was accounted for under the equity method until we sold such interest in July 2012.

For each of our businesses, we cannot assure you that we will be successful in adapting to technological developments and achieving widespread acceptance of our services before our competitors offer services similar to our current or prospective offerings. As a consequence, we may lose our existing customers and not expand our client base, which would have a material adverse effect on our revenues and financial condition.

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The table below presents, for the periods indicated, information regarding our revenues, costs and expenses for our consolidated operations.

	For the Year Ended December 31,
	2011						2012						2013
	Amount in US$ thousands			% of total revenues			Amount in US$ thousands			% of total revenues			Amount in US$ thousands			% of total revenues
OPERATING REVENUES
Asian online game and service revenues		34,367			100.0			27,470			100.0			14,106			93.8
Other revenues		—			—			—			—			926			6.2
Total operating revenues		34,367			100.0			27,470			100.0			15,032			100.0
COSTS OF REVENUES
Cost of Asian online game and service revenues		14,413			41.9			11,388			41.5			6,425			42.7
Cost of other revenues		—			—			—			—			1,159			7.7
Total costs of revenues		14,413			41.9			11,388			41.4			7,584			50.4
Gross profit		19,954			58.1			16,082			58.6			7,448			49.6
OPERATING EXPENSES
Product development and engineering expenses		1,956			5.7			1,471			5.4			1,698			11.3
Selling and marketing expenses		10,079			29.3			8,377			30.5			4,815			32.0
General and administrative expenses		18,101			52.7			13,384			48.7			6,324			42.1
Bad debt expense		1,820			5.3			169			0.6			37			0.2
Impairment loss on goodwill		5,097			14.9			12,489			45.5			17,054			113.5
Impairment loss on intangible assets		2,583			7.5			15			—			13,251			88.2
Impairment loss on prepaid licensing and royalty fees		247			0.7			702			2.6			2,752			18.3
Other		—			—			49			0.2			4			—
Total operating expenses		39,883			116.1			36,656			133.5			45,935			305.6
Loss from operations		(19,929	)		(58.0	)		(20,574	)		(74.9	)		(38,487	)		(256.0	)
NON-OPERATING INCOME (EXPENSES), NET		(47,706	)		(138.8	)		7,649			27.8			3,805			25.3
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(67,635	)		(196.8	)		(12,925	)		(47.1	)		(34,682	)		(230.7	)
INCOME TAX BENEFIT (EXPENSE)		245			0.7			(671	)		(2.4	)		(61	)		(0.4	)
LOSS FROM CONTINUING OPERATIONS		(67,390	)		(196.1	)		(13,596	)		(49.5	)		(34,743	)		(231.1	)
LOSS FROM DISCONTINUED OPERATIONS -NET OF TAX		(4,188	)		(12.2	)		(2,521	)		(9.2	)		(318	)		(2.1	)
NET LOSS		(71,578	)		(208.3	)		(16,117	)		(58.7	)		(35,061	)		(233.2	)
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		366			1.1			827			3.0			281			1.8
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA		(71,212	)		(207.2	)		(15,290	)		(55.7	)		(34,780	)		(231.4	)

The key items included in our income statement are:

OPERATING REVENUES. Our operating revenues consist of revenues from our current Asian online game and service business and our nascent cloud product and service business. Asian online game and service revenues are related to our online games business in Asia and are collected through the sale of online game points, pre-paid cards and game packs, and through licensing fee revenues. Cloud service revenues are related to cloud computing services provided by our Company. Revenues are collect through monthly payment or in advance payments with discounts. Revenues from the sales of equipment and other related products are recognized upon acceptance.

COSTS OF REVENUES. Costs of revenues consist primarily of online game and cloud service processing costs, online game royalties, bandwidth costs, production costs for prepaid game cards and game packs, amortization of intangible assets, cost of products, customer service department costs, operational department costs, depreciation, maintenance and other overhead expenses directly attributable to the provision of our Asian online game and services and cloud products and services.

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OPERATING EXPENSES. Operating expenses include product development and engineering expenses, selling and marketing expenses, general and administrative expenses, bad debt expenses and impairment losses.

NON-OPERATING INCOME (EXPENSES), NET. Non-operating income and expenses consist of interest income and expenses, gain or loss on sales of marketable securities, foreign exchange gain or loss, loss on equity method investments, gain or loss on deconsolidation of business units, and impairment loss on marketable securities and investments.

INCOME TAX EXPENSES (BENEFIT). Taxes include current income tax in various jurisdictions in which our subsidiaries operate and deferred tax expenses related to temporary tax assets or liabilities that arise due to the timing differences between book profits and taxable profits that originate in one period and are capable of reversal in one or more subsequent periods. Taxes are measured using the tax rates and laws that have been enacted or subsequently enacted as of the date of the financial statements.

NON-CONTROLLING INTEREST. Noncontrolling interest represents the portion of net income allocated to the non-controlling voting shares of our majority-owned subsidiaries (T2CN through December 13, 2011, IAHGames through August 15, 2012, Dragongate Enterprises Limited and FingerRockz). In May 2005, IAHGames issued redeemable preferred shares, which are redeemable at the option of the investors, and as such these preferred shares are classified as mezzanine equity on our balance sheet, through August 15, 2012.

The financial information in relation to our business segments is provided net of inter-segment transactions.

For the Years Ended December 31, 2013 and 2012

Consolidated Results of Operations

OPERATING REVENUES. Operating revenues for 2013 declined by approximately 45.5 percent to approximately US$15.0 million from approximately US$27.5 million in 2012. The decrease was primarily due to a decrease of approximately US$9.2 million in revenue from FunTown. The period comparison was also impacted by revenue contributions from former subsidiary IAHGames. We deconsolidated the results of IAHGames from August 2012 onwards and do not expect to generate revenue from IAHGames going forward. Therefore, revenue from IAHGames declined to nil in 2013 from approximately US$4.2 million in 2012.

COSTS OF REVENUES. Costs of revenues in 2013 decreased by approximately US$3.8 million, or 33.4 percent, to approximately US$7.6 million in 2013 from approximately US$11.4 million in 2012. The decrease in costs of revenues mainly reflected the deconsolidation of IAHGames from August 2012.

GROSS PROFIT. Gross profit decreased by approximately 53.7 percent to approximately US$7.4 million in 2013 from approximately US$16.1 million in 2012. The decrease in consolidated gross profit mainly resulted from decreased gross profit from FunTown.

OPERATING EXPENSES. Total operating expenses increased by approximately 25.3 percent to approximately US$45.9 million in 2012 from approximately US$36.7 million in 2012. The increase in total operating expenses was mainly due to an increase in impairment loss of approximately US$19.9 million, offset by a decrease of US$7.1 million, or 52.7 percent, in general and administrative operating expenses.

Consolidated product development and engineering expenses increased by approximately 15.4 percent in 2013 to approximately US$1.7 million from US$1.5 million in 2012. This increase was mainly due to development of certain online game projects in our Asian online game and service business.

Consolidated selling and marketing expenses decreased by approximately 42.5 percent to approximately US$4.8 million in 2013 from US$8.4 million in 2012, primarily due to cost cutting and cost controls in FunTown. The period comparison was also impacted by expenses from former subsidiary IAHGames, which we deconsolidated from August 2012.

Consolidated general and administrative expenses decreased by approximately US$7.1 million, or 52.7 percent, to approximately US$6.3 million in 2013 from US$13.4 million in 2012, primarily as a result of stringent control in expenditures. Results also reflected the deconsolidation of IAHGames from August 2012.

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Consolidated impairment loss, all in our Asian online games and service business, increased by approximately US$19.9 million to approximately US$33.1 million in 2013 from US$13.2 million in 2012. Total consolidated impairment loss in 2013 was composed of a US$17.1 million impairment loss on goodwill mainly related to the acquisition of FunTown, a US$12.0 million impairment loss on intangible assets for trade names and trademarks related to FunTown, a US$1.3 million impairment loss on intangible assets for capitalized software costs, and a US$2.8 million impairment loss on prepaid licensing and royalty fees. Total consolidated impairment loss in 2012 was composed of a US$15,000 impairment loss on intangible assets for capitalized software costs, a US$702,000 impairment loss on prepaid licensing and royalty fees, and a US$12.5 million impairment loss on goodwill related to FunTown.

OPERATING LOSS. Operating loss for 2013 was US$38.5 million as compared to a loss of US$20.6 million in 2012. The US$17.9 million increase in loss was primarily a result of increased impairment loss in 2013.

NON-OPERATING INCOME (EXPENSES), NET. Non-operating income, net was approximately US$3.8 million in 2013 compared to income of approximately US$7.6 million in 2012. The non-operating income, net in 2013 primarily included (1) US$0.5 million income on equity method investments, (2) US$1.2 million gain on sales of equity method investments, and (3) US$1.7 million gain on sales of marketable securities. The non-operating income, net in 2012 primarily included (1) US$2.5 million gain on the sale of remaining non-controlling ownership interest in our gaming software and service business, (2) US$5.7 million gain on the sales of marketable securities, and (3) US$1.2 million impairment loss on marketable securities and investments.

LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations decreased by approximately US$2.2 million to approximately US$0.3 million in 2013 compared to a loss of approximately US$2.5 million in 2012, primarily due to completion of our discontinuance of operations of JIDI.

NET LOSS ATTRIBUTABLE TO GIGAMEDIA. Net loss attributable to us for 2013 was approximately US$34.8 million compared to a loss of approximately US$15.3 million in 2012. The increase reflected the aforementioned factors affecting loss from operations and consolidated non-operating expenses/income.

Business Segment Results

Asian Online Game and Service Business

In July 2012, we entered into agreements to sell a 60 percent ownership interest in IAHGames. Upon the closing of the agreement in August 2012, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method until the closing of the disposal transaction in July 2012 when we sold our remaining ownership. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013 — Acquisition and Divestitures of IAHGames”.

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI, a wholly-owned subsidiary, and Shanghai JIDI, a VIE controlled through a series of contractual arrangements. Results for JIDI and Shanghai JIDI operations are reported as discontinued operations for all periods presented. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013 — Divestitures of JIDI and Shanghai JIDI”.

In addition to these divestitures, financial results of our Asian online game and service business in 2013 were affected by several factors, including but not limited to strong competition from an increase of online games offered on social network platforms.

SEGMENT OPERATING REVENUES. Total operating revenues decreased by approximately US$13.3 million or 48.6 percent to approximately US$14.1 million in 2013 from approximately US$27.5 million in 2012. Such decrease reflected (1) an approximately US$4.2 million decrease in contributions from IAHGames as a result of the deconsolidation of IAHGames from August 2012, and (2) an approximately US$9.2 million decrease related to FunTown operations in Taiwan and Hong Kong, mainly due to declining demand for certain online games.

As of December 31, 2013, FunTown’s number of registered users was approximately 18.0 million, representing a decrease of 17 percent compared with the fourth quarter of 2012. However, in the fourth quarter of 2013 there was a decrease of 42 percent in the number of peak concurrent users compared to the fourth quarter of 2012, to approximately 17,000, and the number of average monthly active paying accounts was about 30,000 in the fourth quarter of 2013, representing a decrease of 39 percent compared to the fourth quarter of 2012. The average revenue per paying user (“ARPU”) in the fourth quarter of 2013 was approximately US$28, representing a year-over-year decrease of 9 percent. The decreases in active paying accounts and in ARPU resulted in a year-over-year decrease in fourth-quarter revenue of 45 percent.

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SEGMENT COSTS OF REVENUES. Costs of our Asian online game and service revenue decreased by 43.6 percent to approximately US$6.4 million in 2013 from US$11.4 million in 2012. The decrease reflected a decline of approximately US$3.4 million in operating costs related to IAHGames, which was deconsolidated from August 2012, as well as a decreased of approximately US$1.5 million related to FunTown, mainly from variable costs, in line with the decreased revenues.

SEGMENT GROSS PROFIT. Gross profit decreased by 52.2 percent to approximately US$7.7 million in 2013 from US$16.1 million in 2012. Gross profit margin was approximately 54.5 percent in 2013 compared with 58.5 percent in 2012.

SEGMENT OPERATING EXPENSES. Total operating expenses increased by approximately US$13.0 million to approximately US$41.4 million in 2013 from approximately US$28.4 million in 2012. The increase was primarily due to an increase in impairment loss of approximately US$17.1 million related to FunTown, offset by decreases of approximately US$3.8 million in selling and marketing expenses and US$3.0 million in general and administrative expenses in 2013.

Selling and marketing expenses. Selling and marketing expenses decreased by approximately US$3.8 million to US$4.5 million in 2013 from US$8.3 million in 2012. The decrease reflected cost cutting and cost controls in FunTown and the deconsolidation of IAHGames from August 2012.

General and administrative expenses. General and administrative expenses incurred in 2013 decreased by approximately US$3.0 million to US$2.3 million from US$5.3 million in 2012. The decrease reflected the deconsolidation of IAHGames from August 2012, and expenditure reduction in FunTown.

Impairment loss. Impairment loss increased by approximately US$19.9 million to approximately US$33.1 million in 2013 from US$13.2 million in 2012. The impairment loss in 2013 was comprised of a US$17.1 million impairment loss on goodwill mainly related to the acquisition of FunTown, a US$12.0 million impairment loss on intangible assets for trade names and trademarks related to FunTown, a US$1.3 million impairment loss on intangible assets for capitalized software costs, and a US$2.8 million impairment loss on prepaid licensing and royalty fees. The impairment loss in 2012 was comprised of a US$15,000 impairment loss on intangible assets for capitalized software costs, a US$702,000 impairment loss on prepaid licensing and royalty fees, and a US$12.5 million impairment loss on goodwill related to FunTown.

SEGMENT OPERATING LOSS. Operating loss in 2013 was US$33.7 million, compared to US$12.3 million in 2012. The increase was due to the aforementioned factors. Segment results do not reflect certain corporate headquarter expenses.

SEGMENT NON-OPERATING INCOME (EXPENSES), NET. Non-operating income, net in 2013 was US$3.7 million compared to income of US$4.9 million in 2012. Non-operating income in 2013 mainly included a gain on sales of marketable securities of US$1.7 million, a gain of US$1.2 million on the sale of equity method investments, and income of US$0.5 million on equity method investments. Non-operating income, net in 2012 mainly included a gain on sales of marketable securities of US$5.7 million, and an impairment loss of US$1.2 million on marketable securities and investments.

Cloud Product and Service Business

We began developing a new cloud computing business in the second half of 2012. The business launched in April 2013. Financial results of the cloud computing business did not have a material impact on GigaMedia’s financial results in 2013.

For the Years Ended December 31, 2012 and 2011

Consolidated Results of Operations

OPERATING REVENUES. Operating revenues for 2012, all from our Asian online game and service business, declined by approximately 20.0 percent to approximately US$27.5 million from approximately US$34.4 million in 2011. The decrease was primarily due to a decrease of approximately US$2.7 million in revenue from FunTown and the sale of our 60 percent ownership interest in IAHGames in August 2012. As a result, we deconsolidated the results of IAHGames from August 2012 onwards and do not expect to generate revenue from IAHGames going forward. Therefore, revenue from IAHGames declined to US$4.2 million in 2012 from approximately US$8.4 million in 2011, which accounted for 15.3 percent of our total revenues in 2012.

COSTS OF REVENUES. Costs of revenues in 2012 and 2011, all from our Asian online game and service business, decreased by approximately US$3.0 million, or 21.0 percent, to approximately US$11.4 million in 2012 from approximately US$14.4 million in 2011. The decrease in costs of revenues was mainly due to a US$3.1 million or 47.7 percent, decrease in operating costs in IAHGames as a result of its deconsolidation from August 2012.

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GROSS PROFIT. Gross profit decreased by approximately 19.4 percent to approximately US$16.1 million in 2012 from approximately US$20.0 million in 2011. The decrease in consolidated gross profit mainly resulted from decrease in gross profit from IAHGames as a result of its deconsolidation from August 2012.

OPERATING EXPENSES. Total operating expenses decreased by approximately 8.1 percent to approximately US$36.7 million in 2012 from approximately US$39.9 million in 2011. The decrease in total operating expenses was mainly due to a US$13.7 million, or 81.7 percent, decrease in operating expenses from IAHGames as a result of its deconsolidation from August 2012, offset by a US$11.1 million, or 77.1 percent, increase in operating expenses from FunTown (which primarily resulted from a US$12.5 million impairment to goodwill).

Consolidated product development and engineering expenses decreased by approximately 24.8 percent in 2012 to approximately US$1.5 million from US$2.0 million in 2011. This decrease was mainly due to reduced expenditures in certain online game projects in our Asian online game and service business.

Consolidated selling and marketing expenses decreased by approximately 16.9 percent to approximately US$8.4 million in 2012 from US$10.1 million in 2011, primarily due to an decrease of US$1.1 million, or 50.9 percent, in selling and marketing expenses as a result of the deconsolidation of IAHGames from August 2012.

Consolidated general and administrative expenses decreased by approximately US$4.7 million, or 26.1 percent, to approximately US$13.4 million in 2012 from US$18.1 million in 2011, primarily due to a US$3.3 million decrease in general and administrative expenses as a result of the deconsolidation of IAHGames from August 2012, and a US$1.3 million expenditure reduction in general and administrative expenses in FunTown.

Consolidated impairment loss, all in our Asian online games and service business, increased by approximately US$5.3 million to approximately US$13.2 million in 2012 from US$7.9 million in 2011. Total consolidated impairment loss in 2012 was composed of a US$15,000 impairment loss on intangible assets for capitalized software costs, a US$702,000 impairment loss on prepaid licensing and royalty fees, and a US$12.5 million impairment loss on goodwill related to FunTown. The total consolidated impairment loss in 2011 was composed of a US$2.6 million impairment loss on intangible assets for capitalized software costs and favorable lease right, a US$247,000 impairment loss on prepaid licensing and royalty fees, and a US$5.1 million impairment loss on goodwill related to IAHGames.

OPERATING LOSS. Operating loss for 2012 was US$20.6 million as compared to a loss of US$19.9 million in 2011. The US$12.7 million decrease in loss was primarily a result of the deconsolidation of IAHGames from August 2012.

NON-OPERATING INCOME (EXPENSES), NET. Non-operating income, net was approximately US$7.6 million in 2012 compared to non-operating expense, net of approximately US$47.7 million in 2011. The non-operating income, net in 2012 primarily included (1) US$2.5 million gain on the sale of remaining non-controlling ownership interest in our gaming software and service business, (2) US$5.7 million gain on the sales of marketable securities, and (3) US$1.2 million impairment loss on marketable securities and investments. The non-operating expense, net in 2011 primarily included (1) US$47.9 million loss on equity method investments, (2) US$13.3 million impairment loss on marketable securities and investments, (3) US$6.3 million gain on the sales of marketable securities, (4) US$4.7 million gain on the sale of ownership interest in T2CN, and (5) US$2.0 million gain on recovery of loss on termination of IAHGames’ initiatives with Blizzard.

LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations decreased by approximately US$1.7 million to approximately US$2.5 million in 2012 compared to a loss of approximately US$4.2 million in 2011, primarily due to our discontinuing the operations of JIDI.

NET LOSS ATTRIBUTABLE TO GIGAMEDIA. Net loss attributable to us for 2012 was approximately US$15.3 million compared to a loss of approximately US$71.2 million in 2011 for the reasons mentioned above.

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Business Segment Results

Asian Online Game and Service Business

In July 2012, we entered into agreements to sell a 60 percent ownership interest in IAHGames. Upon the closing of the agreement in August 2012, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013 — Acquisition and Divestitures of IAHGames”.

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI, a wholly-owned subsidiary, and Shanghai JIDI, a VIE controlled through a series of contractual arrangements. Results for JIDI and Shanghai JIDI operations are reported as discontinued operations for all periods presented. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012 and 2013 — Divestitures of JIDI and Shanghai JIDI”.

In addition to these divestitures, financial results of our Asian online game and service business in 2012 were affected by several factors, including but not limited to strong competition from an increase of online games offered on social network platforms.

SEGMENT OPERATING REVENUES. Total operating revenues decreased by approximately US$6.9 million or 20.0 percent to approximately US$27.5 million in 2012 from approximately US$34.4 million in 2011. Such decrease was due to (1) approximately US$4.2 million or 49.9 percent decrease as a result of the deconsolidation of IAHGames from August 2012, and (2) approximately US$2.7 million or 10.4 percent decrease related to FunTown operations in Taiwan and Hong Kong, mainly due to declining demand for certain online games.

As of December 31, 2012, FunTown’s number of registered users was approximately 21.7 million, representing a decrease of 12.4 percent compared with the fourth quarter of 2011. There was a decrease of 18 percent in the number of peak concurrent users in the fourth quarter of 2012 compared to the fourth quarter of 2011, to approximately 36,325, and the number of average monthly active paying accounts was about 59,607 in the fourth quarter of 2012, representing a decrease of 26 percent compared to the fourth quarter of 2011. The average revenue per paying user (“ARPU”) in the fourth quarter of 2012 was approximately US$30.39, representing a year-over-year increase of 13 percent. The decrease in active paying accounts and increase in ARPU resulted in a year-over-year decrease in fourth-quarter revenue of 23 percent. See “— D. Trend Information” for a more detailed description of our revenue drivers.

SEGMENT COSTS OF REVENUES. Costs of our Asian online game and service revenue decreased by 21.0 percent to approximately US$11.4 million in 2012 from US$14.4 million in 2011. The decrease was primarily due to a decrease of approximately US$3.1 million related to IAHGames, which was deconsolidated from August 2012.

SEGMENT GROSS PROFIT. Gross profit decreased by 19.4 percent to approximately US$16.1 million in 2012 from US$20.0 million in 2011. Gross profit margin was approximately 58.5 percent in 2012 compared with 58.1 percent in 2011.

SEGMENT OPERATING EXPENSES. Total operating expenses decreased by approximately US$2.5 million to approximately US$28.4 million in 2012 from approximately US$30.9 million in 2011. The decrease was primarily due to impairment losses of US$7.7 million related to IAHGames being recorded in 2011, as well as the deconsolidation of IAHGames from August 2012, offset by impairment losses of US$13.2 million related to FunTown recorded in 2012.

Selling and marketing expenses. Selling and marketing expenses decreased by approximately US$1.7 million to US$8.3 million in 2012 from US$10.0 million in 2011. The decrease was mainly due to the deconsolidation of IAHGames from August 2012 and expenditure reduction in FunTown.

General and administrative expenses. General and administrative expenses incurred in 2012 decreased by approximately US$4.8 million to US$5.3 million from US$10.1 million in 2011. The decrease was mainly due to the deconsolidation of IAHGames from August 2012, and expenditure reduction in FunTown.

Impairment loss. Impairment loss increased by approximately US$5.3 million to approximately US$13.2 million in 2012 from US$7.9 million in 2011. The impairment loss in 2012 was comprised of a US$15,000 impairment loss on intangible assets for capitalized software costs, a US$702,000 impairment loss on prepaid licensing and royalty fees, and a US$12.5 million impairment loss on goodwill related to FunTown. The impairment loss in 2011 was comprised of a US$2.6 million impairment loss on intangible assets for capitalized software costs and favorable lease right, a US$247,000 impairment loss on prepaid licensing and royalty fees, and a US$5.1 million impairment loss on goodwill related to IAHGames.

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SEGMENT OPERATING LOSS. Operating loss in 2012 was US$12.3 million as compared to US$10.9 million in 2011. The decrease of loss was due to the aforementioned factors. Segment results do not reflect certain corporate headquarter expenses.

NON-OPERATING INCOME (EXPENSES), NET. Non-operating income, net in 2012 was US$4.9 million compared to income of US$1.9 million in 2011. Non-operating income, net in 2012 mainly included a gain on sales of marketable securities of US$5.7 million, and an impairment loss of US$1.2 million on marketable securities and investments. The non-operating income, net in 2011 mainly included a gain on sales of marketable securities of US$5.8 million, a gain of US$4.7 million on disposal of our ownership interest of T2CN, a gain of US$1.8 million on equity method investments in relation to IAHGames, an impairment loss of US$13.3 million on marketable securities and investments and a gain of US$2.0 million on recovery of loss on termination of IAHGames’ initiatives with Blizzard.

B. Liquidity and Capital Resources

Our principal sources of liquidity consist of cash generated from our operations, proceeds generated from the disposal of our businesses as well as marketable security investments and other assets, bank borrowings, and interest derived from our investments. Our cash and cash equivalents are held primarily in U.S. dollars, RMB and NT dollars. Our policy with respect to liquidity management is to maintain sufficient cash and cash equivalents to fund operations and strategic transactions, while placing remaining funds in higher yield investment instruments.

Our future cash requirements will depend on a number of factors including:

• the rate at which we enter into strategic transactions;

• the rate at which we expand our operations and employee base;

• the timing of entry into new markets and new services offered;

• changes in revenues and cost splits with our business partners;

• the rate at which we invest in developing and licensing our products and upgrading and maintaining our network and future technologies; and

• the rate at which we grow and monetize our customer bases.

As a result of our operating, investing and financing activities during 2013, the amount of our cash and cash equivalents decreased from approximately US$62.7 million as of December 31, 2012 to US$58.8 million as of December 31, 2013. Such decrease was primarily attributable to cash used in operating activities and for repayment of short-term borrowings, which was partially offset by investing cash inflows, which mainly consisted of proceeds from the disposal of businesses and part of our holdings in marketable securities.

The following table set forth the summary of our cash flows for the periods indicated:

	For the Year Ended December, 31
(in US$ thousands)	2011			2012			2013
Net cash used in operating activities	$	(12,448	)	$	(7,323	)	$	(4,305	)
Net cash provided by investing activities		11,551			11,117			2,954
Net cash used in financing activities		(6,225	)		(4,348	)		(3,144	)
Exchange difference		130			(712	)		565
Net decrease in cash and cash equivalents		(6,992	)		(1,266	)		(3,930	)
Cash and cash equivalents at beginning of year		70,989			63,997			62,731
Cash and cash equivalents at end of year	$	63,997		$	62,731		$	58,801

OPERATING ACTIVITIES. In 2013, our net cash used in operating activities amounted to approximately US$4.3 million; we collected cash of approximately US$15.0 million from our customers, paid approximately US$4.1 million for license fees, royalties and channel costs, and paid approximately US$15.1 million to employees, suppliers and vendors. In 2012, our net cash used in operating activities amounted to approximately US$7.3 million; we collected cash of approximately US$26.3 million from our customers, received approximately US$1.2 million from a licensee, paid approximately US$11.1 million for license fees, royalties and channel costs, and paid approximately US$22.9 million to employees, suppliers and vendors. In 2011, our net cash used in operating activities amounted to approximately US$12.4 million; we collected cash of approximately US$33.3 million from our customers, recouped approximately US$1.3 million from an escrow account due to settlement of an agreement, paid approximately US$14.3 million for license fees, royalties and channel costs, and paid approximately US$33.4 million to employees, suppliers and vendors.

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INVESTING ACTIVITIES. Our net cash provided by investing activities in 2013 was approximately US$3.0 million. This reflected the proceeds from the disposal of investments and the disposal of part of our holdings in marketable securities, which totaled approximately US$6.7 million, net of transaction costs, partially offset by the purchase of marketable securities of approximately US$2.5 million and capital expenditures of approximately US$1.5 million. Our net cash provided by investing activities in 2012 was approximately US$11.1 million. This primarily reflected proceeds from the disposal of businesses and disposal of part of our holdings in marketable securities, which totaled approximately US$10.3 million, net of transaction costs, as well as the release of approximately US$3.7 million from restricted cash, partially offset by capital expenditures of approximately US$2.1 million. Our net cash provided by investing activities amounted to approximately US$11.6 million in 2011. This primarily reflected proceeds from the disposal of T2CN and disposal of part of our holdings in marketable securities, which totaled approximately US$14.6 million, net of transaction costs, as well as the release of US$2.0 million from restricted cash, and cash dividends of US$1.9 million received from equity method investees, partially offset by capital expenditures of approximately US$1.9 million and investments of approximately US$5.2 million in our loan to Everest Gaming.

FINANCING ACTIVITIES. Our net cash used in financing activities in 2013 was US$3.1 million, which was mainly due to repayment of short-term borrowings of approximately US$3.1 million. Our net cash used in financing activities in 2012 was US$4.3 million, which was mainly due to repayment of short-term borrowings of approximately US$4.3 million. Our net cash used in financing activities in 2011 was approximately US$6.2 million, in which cash outflows of US$5.8 million were used in our share repurchase program.

We believe that our existing cash, cash equivalents, marketable securities and expected cash flow from operations will be sufficient to meet our capital expenditure, working capital, and cash obligations under our existing lease arrangements and license and other present requirements through 2014. It is our opinion our working capital is sufficient our present requirements. We continue to seek and review potential merger and acquisition opportunities on an ongoing basis, which may be funded through cash on our balance sheet, proceeds from sales of investments, bank borrowings or equity offerings. We do not believe that any potential merger or acquisition that we may be engaged in would alter our goal of preserving sufficient cash and cash equivalents to fund future operations. We continue to seek and review potential merger and acquisition opportunities on an ongoing basis, which may be funded through cash on our balance sheet, proceeds from sales of investments, bank borrowings or equity offerings. We do not believe that any potential merger or acquisition that we may be engaged in would alter our goal of preserving sufficient cash and cash equivalents to fund future operations.

Capital Expenditures

We typically finance our capital expenditures through cash holdings. Our gross capital expenditures in continuing operations for equipment, furniture and fixtures, software, intangible assets and other deferred assets were US$1.9 million, US$2.1 million and US$1.5 million for 2011, 2012, and 2013, respectively. Capital expenditures during 2013 were primarily for capitalized software development and computer hardware equipment for our Asian online game and service business. Our capital expenditure plans for 2014, primarily in software development and computer hardware equipment, will aim to support our lean growth initiatives in our Asian online game and service business and our cloud products and service business. We may adjust the amount of our capital expenditures upward or downward based on cash flow from operations, the progress of our expansion plans, and market conditions.

Dividends From Our Subsidiaries

Under Singapore tax regulations, foreign-sourced dividend income used for capital expenditures, including investments, and repayment of borrowings, is not deemed as remitted to Singapore and is therefore not taxable.

In accordance with R.O.C. law, an appropriation for legal reserve amounting to 10 percent of a company’s net profit is required until the reserve equals the aggregate par value of such Taiwan company’s issued capital stock. As of December 31, 2012 and 2013, the legal reserves of Hoshin GigaMedia were US$3.0 million for each period. The reserve can only be used to offset a deficit or be distributed as a stock dividend of up to 50 percent of the reserve balance when the reserve balance has reached 50 percent of the aggregate paid-in capital of Hoshin GigaMedia.

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C. Research, Development, Patents and Licenses, etc.

We make investments in research and development to keep pace and remain competitive with technology advancements and product development relating to our Asian online game business and our new cloud computing business. For the years 2011, 2012 and 2013, we incurred US$2.0 million, US$1.5 million and US$1.7 million, respectively, in research and development activities.

D. Trend Information

In online games, the entire global business landscape is changing. Driven by the popularity of mobile phones and tablets and social networks, games are rapidly moving from PC-based formats to browser and mobile platforms. This in turn is causing changes in game content, as casual browser and mobile games require “light” content. In our market, Taiwan, the strongest demand is for casual browser/mobile games. Revenues clearly show this trend. Revenues for publishers of licensed PC-based games in Taiwan were basically flat in 2012 and profits declined. In contrast, revenues for companies focused on browser games grew at healthy double-digit rates and strong growth continued in 2013.

We are now in the process of extending GigaMedia’s PC-based online games platform to browser/mobile “light” games. This will help us capitalize on the strong growth trends of browser/mobile games, particularly in Asia, and our expertise in casual or “light” games. We have a strong offering of casual games including Asian card-based games and MahJong and a good track record of developing and monetizing them, especially in the types of games that are most popular – casino games, such as poker, slots and MahJong. We are now leveraging that expertise to transition our game portfolio from client-based games designed for PC usage to browser/mobile games and social casino games for social networks and mobile play.

In cloud computing, the convergence of cloud, social and mobile technologies is transforming how IT services are delivered to consumers and revolutionizing how companies connect internally and externally. Cloud solutions enable firms to either avoid deployment of a full-scale onsite IT infrastructure or replace an existing company’s internal IT infrastructure with an externally managed and hosted IT function. This is what is sometimes called ‘virtualization” of businesses. It is particularly helpful for SMEs as it brings many business benefits, including going to market faster and easier with lower capex costs.

In North America and Europe, a growing number of companies like RingCentral and 8x8 Inc have built successful businesses providing cloud computing services for SMEs. They have demonstrated that services such as hosted VoIP and cloud faxing reduce costs, increase flexibility, and drive SME productivity. However, in Taiwan and Asia, cloud services for SMEs is a largely untapped opportunity and lag the US in adoption. There are over one million SMEs in Taiwan and strong growth of cloud services regionally is forecast, driven by SMEs. The market for one segment of cloud services — business VoIP — in Asia is expected to grow at a 17% CAGR over the next five years, according to research by Global Industry Analysts, Inc. in 2013.

In Greater China, SMEs often have no dedicated IT staff, cannot afford investment in IT systems, still rely on legacy phone and paper-based fax systems, and work outside the office. They need affordable, efficient and mobile services to conduct business in and out of the office. These customer needs point to opportunities for integrated cloud services such as those provided by GigaCloud.

Our GigaCloud team has deep and wide knowledge in the SME market in Taiwan. We have developed an initial suite of cloud services to address the most critical needs of SMEs, including telephone, fax and storage services, which are all accessible anywhere, anytime on any smart device. We launched service in early April 2013 with tiered service offerings and special rates.

GigaCloud is an integrated platform of cloud services. Our software powers the front end and we integrate the backend solutions of our strategic technology partners.

Please see Item 3, “Key Information — D. Risk Factors” and Item 5, “Operating and Financial Review and Prospects — A. Operating Results — Certain Significant Events Affecting Our Results of Operations for 2011, 2012, and 2013” for a discussion of the most recent trends in our operating costs and revenues since the end of 2013. In addition, please refer to discussions included in this Item for a discussion of known trends, uncertainties, demands, commitments or events that we believe are reasonable likely to have a material effect on our net operating revenues, income from continuing operations, profitability or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

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E. Off-Balance Sheet Arrangements

Other than as disclosed in note 28 to our consolidated financial statements, we currently do not have (a) any obligation under a guarantee contract that has any of the characteristics identified by the FASB Accounting Standards Codification; (b) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets; (c) any obligation under a derivative instrument that is both indexed to our Company’s own stock and classified in equity, or not reflected, in our Company’s statement of financial position; or (d) any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, our Company, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, our Company.

F. Tabular Disclosure of Contractual Obligations

	As of December 31, 2013
	Payment Due by Period (in US$ thousands)
	Within 1 year		1-3 years		3-5 years		>5 years		Total
1. Operating leases		941		892		—		—		1,833
2. License fees*		100		—		—		—		100
3. Minimum guarantees against royalties		100		1,500		—		—		1,600
Total contractual cash obligations		1,141		2,392		—		—		3,533

* According to our license contracts, the total license fee payable, assuming all milestones or conditions under such license contracts were met, is approximately US$5.3 million. Considering game performance, industry environment and business situation, management determined that certain license fees will unlikely become payable and such amount have not been included in the above table.

The initial minimum guarantees against future royalties and license fees are not required to be paid until the licensed games are commercially released or until certain milestones are achieved, as stipulated in the individual license agreements. The remaining minimum guarantees are generally required to be paid within three years subsequent to the commercial release dates of the licensed games.

G. Safe Harbor

See “Disclosure Regarding Forward-Looking Statements” on page 4 of this annual report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth information with respect to our directors and executive officers as of the date of this annual report:

Name	Age	Position	Year Appointed to Current Position
CHIEN, Mo Na	70	Chairman of the Board and Executive Director	20121/2012
HUANG, John Ping Chang	62	Chairman of the Compensation Committee of the Board and Independent Non-Executive Director	20122/2011
LIU, Nick Chia-En	52	Independent Non-Executive Director	20113
WONG, King Wai Alfred	45	Independent Non-Executive Director	20134
Hong, Chin Fock (Damian)	65	Independent Non-Executive Director	20135
TUNG, Casey K.	63	Chairman of the Audit Committee of the Board and Independent Non-Executive Director	20126/2011
HWANG, Collin	40	Chief Executive Officer and Director	20127
CHEN, Dirk Chi-Ching	56	Chief Financial Officer and Director	20128/2011
HUANG, Billy Bing-Yuan	56	Independent Non-Executive Director	20139
LEE, Cherng-Shiun (Simon)	40	Chief Executive Officer of GigaCloud	201310

1 Mr. Mo Na CHIEN was appointed as an Independent Non-Executive Director on August 2, 2010 and as an Executive Director on December 1, 2012. He was also appointed as Chairman of the Compensation Committee on March 15, 2011. Mr. Chien resigned as Chairman of the Compensation Committee on November 26, 2012 and was appointed as Chairman of the Board on December 1, 2012.

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2 Mr. John Ping Chang HUANG was appointed as an Independent Non-Executive Director of the Board on January 31, 2011. He was also appointed as Chairman of the Compensation Committee on November 26, 2012.

3 Mr. Nick Chia-En LIU was appointed as an Independent Non-Executive Director of the Board on March 15, 2011. He was also appointed as a member of the Audit Committee on March 15, 2011.

4 Mr. Alfred Wong was appointed as an Independent Non-Executive Director of the Board on October 28, 2013.

5 Mr. Damian Hong was appointed as an Independent Non-Executive Director of the Board on October 31, 2013.

6 Mr. Casey K. TUNG was appointed as an Independent Non-Executive Director of the Board on November 24, 2011, and Chairman of the Audit Committee on November 5, 2012. He was also appointed as a member of the Compensation Committee on March 18, 2013.

7 Mr. Collin HWANG was appointed as Chief Executive Officer of our Company on November 26, 2012. Mr. Hwang was appointed as a Director of the Board on November 9, 2012.

8 Mr. Dirk Chi-Ching CHEN was appointed as Chief Financial Officer of our company on February 1, 2012. He was appointed as a Director of the Board on November 24, 2011.

9 Mr. Billy Bing-Yuan HUANG was appointed as an Independent Non-Executive Director of the Board and a member of the Audit Committee on April 18, 2013.

10 Mr. Cherng-Shiun LEE was appointed as Chief Executive Officer of GigaCloud on November 1, 2013.

Biographical information with respect to each of our directors and executive officers is set forth below.

Directors

MO NA CHIEN is the Executive Chairman of the board of directors of our Company. He is currently the chairman of the board of S.K. Machinery Co., Ltd., as well as supervisor of the board of the Taiwan Stock Exchange-listed microelectronics firm Maxtek Technology Co., Ltd, and director of the board of Chailease Holding Company Limited and Lian Hua Foods Corporation. Mr. Chien completed the senior executive program of MIT Sloan School of Management and holds a Bachelor of Arts degree from National Taiwan University.

JOHN PING CHANG HUANG is an independent non-executive director of our Company. He is also currently the chairman of Taiwan-based Grand Pacific Investment & Development Co., Ltd., as well as the firms Chailease Resources Tech. Co., Ltd., Global Hospitality Group Inc., and Beijing He Qiao Property Management Co., Ltd. Mr. Huang holds a Bachelor of Arts degree from Soochow University in Taiwan. Mr. Huang is the elder brother of Mr. Billy Bing-Yuan Huang.

NICK CHIA-EN LIU is an independent non-executive director of our Company. He was the managing director in Taiwan for a U.S. based game development company. Mr. Liu holds an MBA degree from the Stern School of Business at NYU and a bachelor’s degree from the University of Southern California.

KING WAI ALFRED WONG is an independent non-executive director of our Company. He currently serves as the managing director of CLJ Capital Management Co. Limited, a Shanghai-based private equity firm. He is also non-executive director of Philippine Grains International Corporation, owner and operator of the largest grain terminal in the Philippines. Previously, he was an advisor to Chailease Holding Co Ltd. From 2006 to 2011 Mr. Wong was the director of development for one of the largest agricultural product providers in the Philippines, La Filipina Uy Gongco Corporation, where, among other transactions, he advised the company and a consortium of strategic investors and private equity firms on a bid for the largest food company in the Philippines. Prior to that, he served as an advisor to MatlinPatterson Global Advisers, a global private equity firm focused on distressed investments with $8.9 billion of assets under management, and was a partner at Pareto Partners, a joint venture with Hong Kong-listed Golden Resources Group (677.HK) to develop Vietnamese infrastructure. Mr. Wong was interim chief financial officer at Petrocom Energy Limited in Hong Kong in 2005; prior to that he held multiple senior management positions at AIF Capital Limited, Hong Kong, an Asia-based private equity firm with over $1.3 billion in assets under management where he handled transactions involving a wide range of industries. He began his career at Emerging Markets Partnership, Hong Kong, the predecessor to EMP Global, principal advisor to the AIG Asian Infrastructure Funds, two funds totaling $2.7 billion, where he helped grow and list in Hong Kong one of the largest toll road companies in China. Mr. Wong earned a master’s degree from the Leonard N. Stern School of Business at New York University and a bachelor’s degree in management/economics from Ateneo De Manila University in the Philippines.

CHIN FOCK (DAMIAN) HONG is an independent non-executive director of our Company. He has more than 37 years experience in taxation and tax law. Damian began his career with the Inland Revenue Authority of Singapore before joining KPMG and working with the firm in various capacities, including post-retirement, for more than two decades. He was also a tax consultant to the law firm Allen & Gledhill in Singapore for 12 years. Damian currently serves as an independent director of Chailease Holding Co Ltd. and Riverstone Holdings Ltd. He also serves as a director of the charities Shared Services for Charities Limited and Binjaitree, as well as a non-executive director of Prima Limited. Mr. Hong lectured on a part-time basis at the Singapore Management University. He earned a bachelor’s degree in social science at the University of Singapore and attended an international tax program at Harvard Law School.

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CASEY K. TUNG is an independent non-executive director of our Company. Mr. Tung is the principal owner of the accounting offices of Casey Tung in California. Mr. Tung founded the business in 1991, which serves a number of publicly listed companies in Taiwan and in China and practices in the areas of assurance, taxation, and advisory on matters such as mergers and acquisitions, financing, and reorganizations. Mr. Tung is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. He holds a Master of Science in Business Administration from California State University, Long Beach and a Bachelor of Commerce degree from Soochow University in Taiwan.

COLLIN HWANG is the CEO and a director of our Company. He currently serves as chairman of Datadot Technology Asia & Taiwan, a joint venture in Shanghai and Taipei with Australian-listed Datadot Technology Limited, a world-leading provider of identification technologies. He is also chairman of Taipei-based Cita Investment and Technology Development Co. Ltd., which invests in real estate, equities and business ventures across Asia, and chairman of Cita Aircargo Service Co. Ltd. in Taipei, one of the largest perishables logistics providers in SE Asia, where he began his career in 2000. Mr. Hwang holds a Master of Transport Management degree from the University of Sydney and a Bachelor of Construction Management degree from the University of New South Wales, Australia.

DIRK CHI-CHING CHEN is the CFO and a director of our Company. He has extensive financial leadership experience in international business and an excellent record of delivering corporate growth and strong financial performance. During a 30-year career with Chailease Finance Co., Ltd., a leading financial firm based in Taiwan with business operation in the Greater China, South East Asia, and North America, Dirk served the company in different key roles, including senior advisor, president and chief financial officer, and successfully led several important initiatives. He spearheaded growth in China, tripling the firm’s revenues in that market from 2005 to 2008. Following the 2008 financial crisis, he directed a turnaround team at the firm’s New York operations in 2009, developing solutions that contributed to significant improvements in financial performance. Dirk previously served as a non-executive director for Chailease Holdings Co., Ltd. and Chailease Finance Co. Ltd.

BILLY BING-YUAN HUANG is an independent non-executive director of our Company. He has over 20 years of experience as an executive in the technology/media industry and a proven track record of driving growth. At The Walt Disney Company, where he serves as vice president responsible for the China, Hong Kong and Taiwan markets, he launched Disney Channel and Disney Junior Channel and expanded services to new online media. At Taiwan’s Videoland Communications, where he served as vice president from 1996-1998, Mr. Huang implemented a restructuring plan that transformed the business from an old production house into a modern cable television consortium distributing content for global television brands including CNN, Cartoon Network, and Discovery Channel. Prior to that, Mr. Huang was vice president of Fantasmic International, a public relations and advertising firm in Taipei, and held numerous positions with prominent advertising firms in Taipei. Mr. Huang earned a master’s degree in mass communication from Texas Tech University and has a bachelor’s degree in journalism from Chinese Culture University in Taipei. Mr. Huang is the younger brother of Mr. John Ping Chang Huang.

CHERNG-SHIUN (SIMON) LEE is the CEO of GigaCloud. Mr. Lee helped develop and grow the Taiwan branch of global technology services leader Atos from 2006 to 2013. During this time, Mr. Lee served in different key roles, including managing director, vice president of sales, and sales director. At Atos Taiwan, he spearheaded penetration of the telecom, warehouse, and government sectors, surpassing double-digit sales goals every year. Prior to working at Atos, Mr. Lee served as a sales manager at AdvancedTEK International Corporation, a consulting firm and major reseller and implementation partner of Oracle as well as other software, services and hardware, in Taiwan and China. Mr. Lee has a master’s degree in industrial engineering and management from National Chiao-Tung University and a bachelor’s degree from National Tsing-Hua University, both in Taiwan.

B. Compensation

Compensation of Directors and Executive Officers

For the year ended December 31, 2013, the aggregate cash compensation paid by us to our directors and executive officers was approximately US$1 million. For information on total amounts set aside by our Company to provide pension and retirement benefits, see note 19 to our consolidated financial statements.

As of December 31, 2013, the total outstanding number of share options granted to our directors and officers was 1,400,000, of which 47,000 shares were vested and 1,353,000 shares were unvested. As of the same date, the total number of restricted stock units granted to our directors and officers was zero.

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The following table summarizes, as of March 31, 2014, the outstanding options granted under our employee share option plans and equity incentive plans to our directors and executive officers as a group.

Date of Grant	Ordinary Shares Underlying Outstanding Options		Exercise Price ($/Share)		Date of Expiration
May 20, 2011		60,000		1.25	May 20, 2021
January 5, 2012		20,000		0.8101	January 5, 2022
November 26, 2012		1,000,000		0.955	November 26, 2022
October 28, 2013		20,000		1.01	October 28, 2023
November 1, 2013		300,000		1.04	November 1, 2023
March 28, 2014		40,000		1.43	March 28, 2024
Total		1,440,000

All options granted to our directors and executive officers were granted pursuant to the option plans and the equity incentive plans as described under “— Employee Share Option Plans and Equity Incentive Plans” below.

Employee Share Option Plans and Equity Incentive Plans

2002 Employee Share Option Plan

At the June 2002 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2002 Employee Share Option Plan (the “2002 Plan”) under which up to 3,000,000 common shares of our Company were reserved for issuance. All employees, officers, directors, advisors and consultants of our Company are eligible to participate in the 2002 Plan. The 2002 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, to determine which eligible individuals are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and vesting schedule. The maximum contractual term under the 2002 Plan is approximately 10 years. Termination of employment will not affect rights of exercise under vested options.

2004 Employee Share Option Plan

At the June 2004 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2004 Employee Share Option Plan (the “2004 Plan”) under which up to 7,000,000 common shares of our Company were reserved for issuance. All employees, officers, directors, advisors and consultants of our Company are eligible to participate in the 2004 Plan. The 2004 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, to determine which eligible individuals are to receive option grants, the time or times when options grants are to be made and the number of shares subject to grant vesting schedule. The maximum contractual term under the 2004 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options.

2006 Equity Incentive Plan

At the June 2006 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2006 Equity Incentive Plan (the “2006 Plan”) under which up to 1,000,000 common shares of our Company have been reserved for issuance. The 2006 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2006 Plan. The maximum contractual term under the 2006 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options. In the event that the employee’s employment with or service to our Company is terminated prior to the lapsing of restrictions with respect to any portion of the RSUs, such portion of the RSUs shall become forfeited.

2007 Equity Incentive Plan

At the June 2007 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2007 Equity Incentive Plan (the “2007 Plan”) under which up to 2,000,000 common shares of our Company have been reserved for issuance. The 2007 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2007 Plan. The maximum contractual term under the 2007 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options.

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2008 Equity Incentive Plan

At the June 2008 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2008 Equity Incentive Plan (the “2008 Plan”) under which up to 1,000,000 common shares of our Company have been reserved for issuance. The 2008 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2008 Plan. The maximum contractual term under the 2008 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options. All options, RSUs and other share-based awards are expected to be settled by issuing new shares.

2009 Equity Incentive Plan

At the June 2009 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2009 Equity Incentive Plan (the “2009 Plan”) under which up to 1,500,000 common shares of our Company have been reserved for issuance. The 2009 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2009 Plan. The maximum contractual term under the 2009 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options. All options, RSUs and other share-based awards are expected to be settled by issuing new shares.

2010 Equity Incentive Plan

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Equity Incentive Plan (the “2010 Plan”) under which up to 1,000,000 common shares of our Company have been reserved for issuance. The 2010 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2010 Plan. The maximum contractual term for the options under the 2010 Plan is 10 years. Options will be forfeited upon termination of employment, unless the relevant award agreement extends the exercisability of the outstanding options. All options, RSUs and other share-based awards are expected to be settled by issuing new shares.

Employee Share Purchase Plans

At the June 2008 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2008 Employee Share Purchase Plan (the “2008 ESPP”) under which up to 200,000 common shares of our Company were reserved for issuance. Any person who is regularly employed by our Company or our designated subsidiaries shall be eligible to participate in the 2008 ESPP. Pursuant to the 2008 ESPP, our Company would offer the Shares to qualified employees on favorable terms. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2008 ESPP. According to the 2008 ESPP, the plan will be administered by a committee designated by the board of directors.

At the June 2009 Annual General Meeting, the shareholders of our Company approved the GigaMedia Limited 2009 Employee Share Purchase Plan (the “2009 ESPP”) under which up to 200,000 common shares of our Company were reserved for issuance. Any person who is regularly employed by our Company or our designated subsidiaries shall be eligible to participate in the 2009 ESPP. Pursuant to the 2009 ESPP, our Company would offer the Shares to qualified employees on favorable terms. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2009 ESPP. According to the 2009 ESPP, the plan will be administered by a committee designated by the board of directors.

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Employee Share Purchase Plan (the “2010 ESPP”) under which up to 200,000 common shares of our Company have been reserved for issuance. To be eligible, employees must be regularly employed by us or our designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2010 ESPP. According to the 2010 ESPP, the plan will be administered by a committee designated by the board of directors.

As of March 31, 2014, none of the 2008 ESPP, the 2009 ESPP or the 2010 ESPP has been administered by our Company.

Employment of Executive Officers

Officers are selected by and serve at the discretion of our board of directors. No executive officer is entitled to any severance benefits upon termination of his or her employment with our Company.

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C. Board Practices

Our board of directors is currently comprised of nine directors, including six independent non-executive members. Each of our directors is elected by our Company’s shareholders and hold office until such director’s successor is elected and duly qualified, or until such director’s earlier death, bankruptcy, insanity, resignation or removal. No director is entitled to any severance benefits on termination of his or her service. We have established two committees of the board of directors, including the audit committee and the compensation committee.

Our audit committee currently consists of Casey K. TUNG, Nick Chia-En LIU and Billy Bing-Yuan HUANG. Our audit committee will select and evaluate, on our behalf, the independent public accountants who audit our annual financial statements, and will review and approve the planned scope of our annual audit, subject to the appointment, replacement or removal from office of our independent public accountants as has been approved by our shareholders at our Annual General Meeting. In accordance with our Articles of Association and our audit committee charter, all of the members of our audit committee must be persons who qualify as independent directors under the standards set forth in NASDAQ Rules 5605(c)(2)(A)(i) and (ii) and each of them is able to read and understand fundamental financial statements.

Our compensation committee currently consists of Casey K. TUNG and John Ping Chang HUANG. Our compensation committee reviews and evaluates the compensation and performance of executive officers, our Company’s general compensation plans and other employee benefit plans, and performs other duties and responsibilities pursuant to the compensation committee charter. In accordance with our compensation committee charter, all of the members of the compensation committee are qualified independent directors under the standards set forth in NASDAQ Rules 5605(c)(2)(A)(i) and (ii).

D. Employees

In the years ended December 31, 2011, 2012 and 2013, our total employees were 562, 287, and 257, respectively.

As of March 31, 2014, we had a total of 257 employees, excluding part-time and temporary personnel and consultants. Of the total 257 employees as of March 31, 2014, 19 were located at our corporate headquarters, 20 were employed for our cloud services business, and 218 were employed for our online games business. All 257 employees were in Asia.

E. Share Ownership

Share Ownership of Directors and Executive Officers

The table below sets forth information as to our directors’ and executive officers’ share ownership in our Company as of March 31, 2014:

Person	Number of Common Shares		Number of Shares Issuable upon exercise of options
HWANG, Collin		961,200		1,000,000
CHIEN, Mo Na		0		*
HUANG, John Ping Chang		0		*
LIU, Nick Chia-En		0		*
CHEN, Dirk Chi-Ching		0		0
TUNG, Casey K.		0		*
HUANG, Bing-Yuan		0		*
WONG, King Wai Alfred		0		*
HONG, Chin Fock		0		*
LEE, Cherng-Shiun		0		*
Directors and Officers as a group		961,200		1,440,000

* Less than 1 percent

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth information known to us with respect to the ownership of our shares as of March 31, 2014 by each shareholder known by us to own more than 5 percent of our shares:

Name of Owner	Shares Owned		Percentage of Shares Owned
Best Method Limited (1)		10,799,999		20.76	%

(1) Through Best Method Limited, a British Virgin Islands company, Andre Koo has a beneficial ownership of 10,799,999 common shares of our Company.

As of March 31, 2014, we had 52,035,350 Shares outstanding, of which 41,235,351 Shares representing approximately 79.24 percent of our total outstanding Shares were not held by our major shareholders as disclosed above. As of March 31, 2014, one shareholder of record with a registered address in the United States, Cede & Co., nominee of The Depository Trust Company, held 40,693,537 Shares.

The amounts and percentages of common shares beneficially owned are reported on the basis of regulations of the SEC, governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of securities as to which such person has no economic interest. None of our major shareholders have voting rights different from those of our other shareholders.

B. Related Party Transactions

We have engaged from time to time in various transactions with related parties.

Except for the following transactions, we were not a party to any transaction with any related party that did not arise in the ordinary course of business or that was material to us.

Borrowings

In 2010 and 2011, to support our current operations we had short-term indebtedness from Waterland Financial Holdings (“Waterland”), a key manager of which was one of our directors. The largest amounts of outstanding short-term indebtedness to Waterland during the years ended December 31, 2010 and 2011 were $1.5 million and $1.7 million, respectively. As of December 31, 2011 and 2012, we did not have any indebtedness owed to Waterland.

Loan Receivables

We, through IAHGames, made an equity investment in Monsoon in connection with our acquisition of IAHGames with effect from July 1, 2010. In 2010, prior to our acquisition, IAHGames loaned $5.0 million to Monsoon to support Monsoon’s current operations at an interest rate of 7 percent per annum. In addition, from September to December 2010, IAHGames, then one of our subsidiaries, loaned an additional $5.1 million to Monsoon to support its operation at an interest rate of 7 percent per annum. The largest amount outstanding to Monsoon from July 1, 2010 through August 31, 2011, after which we began to consolidate Monsoon, was $10.3 million. As of August 31, 2011, the net book value of the loans receivable was $3.2 million, after being reduced in connection with absorbing additional losses of Monsoon. See note 15 to our consolidated financial statements for additional information. Upon the deconsolidation of IAHGames’ operations of in August 2012, the loans receivable were deconsolidated as well. See note 5 to our consolidated financial statements for additional information.

During 2011, our Company entered into loan agreements in an aggregate of $5.2 million with Everest Gaming, bearing interest at 3 percent per annum. As of December 31, 2011, the net book value of this loan receivable was nil after being reduced in connection with absorbing additional losses of Everest Gaming (as discussed in more detail in note 15 to our consolidated financial statements) and considering the financial status of Everest Gaming, from which we do not expect to collect all principal and interest. We also reversed the interest recognized previously on these loans and ceased to recognize interest income going forward. Upon the closing of the sale of our remaining ownership in the gaming software and service business in August 2012, the rights and interest in and to the loan agreements were also assigned to BEG. See note 5 to our consolidated financial statements for additional information.

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Stock Option Grants and Employee Share Purchase

See Item 6, “Directors, Senior Management and Employees — E. Share Ownership.”

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

Financial Statements

See pages beginning on page F-1 in this annual report.

Dividend Policy

We have neither declared nor paid any dividends on our Shares. We anticipate that we will continue to retain any earnings for use in the operation of our business, and we do not intend to pay dividends in the foreseeable future. See Item 10, “Additional Information — B. Memorandum and Articles of Association — Dividends” in this annual report.

B. Significant Changes

Except as disclosed in this annual report, no significant change has occurred since the date of our consolidated financial statements.

ITEM  9. THE OFFER AND LISTING

Not applicable, except for “— A. Offer and Listing Details — 4. Information Regarding the Price History of the Stock” and “— C. Markets” as disclosed below.

Our Shares have been listed and traded on the NASDAQ Stock Market since February 18, 2000.

The following table shows, for the periods indicated, the high and low closing prices for our Shares as quoted on the NASDAQ Stock Market.

	Common Shares
	High		Low
Year Ending December 31	(in US$)
2009	$	7.47	$	3.04
2010	$	3.32	$	1.40
2011	$	1.60	$	0.80
2012	$	1.49	$	0.81
2013	$	1.20	$	0.93

	Common Shares
	High		Low
Year Ending December 31, 2012	(in US$)
First quarter	$	1.49	$	0.81
Second quarter	$	1.32	$	1.08
Third quarter	$	1.16	$	1.01
Fourth quarter	$	1.08	$	0.89

	Common Shares
	High		Low
Year Ending December 31, 2013	(in US$)
First quarter	$	1.20	$	0.97
Second quarter	$	1.06	$	0.93
Third quarter	$	1.16	$	0.93
Fourth quarter	$	1.10	$	0.94

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	Common Shares
	High		Low
	(in US$)
Quarter Ending March 31, 2014	$	1.72	$	0.98

	Common Shares
	High		Low
Monthly Highs and Lows	(in US$)
October 2013	$	1.10	$	0.94
November 2013	$	1.04	$	0.97
December 2013	$	1.02	$	0.96
January 2014	$	1.18	$	0.98
February 2014	$	1.38	$	1.05
March 2014	$	1.72	$	1.35
April 2014 (only through April 15, 2014)	$	1.40	$	1.16

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Our current memorandum and articles of association, filed with this annual report, were first adopted on our date of incorporation and have been amended since that date.

As of March 31, 2014, an aggregate of 52,035,350 shares have been issued and are outstanding.

There are no limitations imposed by Singapore law or by our Articles of Association on the right of a non-resident or foreign owner to hold or vote the Shares.

C. Material Contracts

The following are summaries of our material contracts, other than contracts entered into in the ordinary course of business, for the two years immediately preceding the date of this annual report. However, these summaries may not contain all the information important to you. For more complete information, you should read the entire agreements, which have been included as exhibits to this annual report.

Sale of T2CN

Sale and Purchase Agreement among GigaMedia China Limited, Hornfull Limited, and Hangzhou NewMargin Ventures Co. Ltd., dated December 2, 2011

On December 2, 2011, GigaMedia China Limited, Hornfull Limited, and Hangzhou NewMargin Ventures Co. Ltd. (“Hangzhou NewMargin”) entered into an agreement whereby GigaMedia agreed to sell all of its ownership interest in T2CN to Hornfull Limited and Hangzhou NewMargin agreed to guarantee the payment and performance of Hornfull Limited under the agreement. Pursuant to the agreement, GigaMedia China Limited sold all of its 43,633,681 shares of T2CN, representing a 67.087% interest in the company, to Hornfull Limited for a cash payment of US$4,738,588. Hornfull Limited also compensated GigaMedia China Limited US$789,765 in cash for legal fees incurred by GigaMedia in connection with the T2CN disputes. Hornfull Limited and Hangzhou NewMargin are private companies incorporated in the British Virgin Islands and the PRC, respectively.

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Sale of IAH

Share Purchase Agreement among Infocomm Asia Holdings Pte. Ltd., GigaMedia Asia Pacific Limited, Management Capital International Limited, and Roland Ong Toon Wah dated July 2, 2012, and

Share Purchase Agreement among Infocomm Asia Holdings Pte. Ltd., GigaMedia Asia Pacific Limited, Spring Asia Limited and Roland Ong Toon Wah dated July 2, 2012

On July 2, 2012 GigaMedia Asia, IAH, MCIL, and ROTW entered into a series of agreements whereby GigaMedia Asia agreed to sell to MCIL 1,463,930 Class A shares of IAH (representing 6.48% of the issued and outstanding shares of IAH), 1,208,881 Class B shares of IAH (representing 53.52% issued and outstanding shares), and to IAH 100% of the shares in Spring Asia Limited (“Spring Asia”) held by GigaMedia through IAH. The total purchase price was US$3 million for the Spring Asia shares, and US$1.00 for the IAH shares, excluding taxes. All consideration for the Spring Asia shares was to be paid in four equal installments of US$750,000 through a nine month period. The parties also executed other ancillary agreements on the same date, including the IAH Shareholders Agreement (among MCIL, GigaMedia Asia, ROTW and IAH), Share Charge Agreement (between IAH and GigaMedia Asia), and an Escrow Agreement (among IAH, GigaMedia Asia, and Trident Trust Company (Singapore) Pte. Limited).

Settlement Agreement among Infocomm Asia Holdings Pte. Ltd., Management Capital International Ltd., GigaMedia Asia Pacific Limited, Spring Asia Limited, and Roland Ong Toon Wah dated April 17, 2013

IAH, MCIL, GigaMedia Asia, Spring Asia, and ROTW entered into a Settlement Agreement, dated April 17, 2013, whereby IAH and/or ROTW agreed to pay GigaMedia Asia on or before May 2, 2013 all of the outstanding Spring Asia purchase price of US$2.25 million plus interest of US$8,390. In additional, MCIL will purchase all of the 451,830 IAH ordinary shares held by GigaMedia at a purchase price of US$1 million on May 2, 2013. All outstanding amounts (including interests) were paid in full on May 7, 2013.

Sale of XL Games

Share Purchase Agreement between GigaMedia Capital Limited (“GigaMedia Capital”) and Neowiz Corporation (“Neowiz”) dated August 8, 2012

On August 8, 2012, GigaMedia Capital entered into a Share Purchase Agreement with Neowiz, whereby GigaMedia Capital sold to Neowiz 400,000 preferred shares of XL Games representing approximately 7.2727% of the total number of issued and outstanding shares of XL Games, at a purchase price of US$6,889,900. GigaMedia Capital and Neowiz also executed two license agreements, one for GigaMedia Capital to license to Neowiz certain game software for a fee of US$1.5million, and the other for Neowiz to grant GigaMedia a non-exclusive license in Taiwan, Hong Kong, Macau and Southeast Asia on certain game software free of any license fee for three years.

Novation Agreement among Megabiz Limited, Blueark Global Co., Ltd, and Nickelodeon Asia Holdings Pte. Ltd. dated September 24, 2013

On March 18, 2010, Megabiz Limited (“Megabiz”) and Nickelodeon Asia Holdings Pte. Ltd. (“Nickelodeon”) entered into a Game Development, Publishing and Distribution Agreement (the “Game Development Agreement”) whereby Megabiz would acquire the rights from Nickelodeon to develop, publish and distribute in certain territories an online game based upon and branded with “SpongeBob SquarePants” (the “Game”), and Megabiz was to develop the Game with Blueark Global Co., Ltd. (“Blueark”). Pursuant to the Game Development Agreement, we paid an initial development fee of US$2.5 million and a set-up cost of US$200,000. To that end, Megabiz also entered into a Developer Agreement on May 10, 2010, with Blueark under which Megabiz would pay Blueark a one-time recoupable (against future royalties) service fee of US$2 million for joint development of the Game by Blueark and Megabiz.

In light of internal evaluations of the Game and estimated cash flows the Game would generate, our Company decided to impair our prepayments in relation to the Game and to assign the Game Development Agreement to Blueark by way of a Novation Agreement entered into among the three companies on September 24, 2013. A total of US$2.8 million have been impaired as a result.

Share Purchase Agreement between Hoshin GigaMedia Center Inc. and Angel Fund (Asia) Investments Limited dated October 30, 2013

On October 30, 2013, Hoshin GigaMedia Center Inc. (“HGC”) and Angel Fund (Asia) Investments Limited (“Angel Fund”) entered into a Share Purchase Agreement whereby HGC sold all of its shareholdings (a total of 4,978,562 shares, approximately 13.5%) in SoftStar Entertainment Inc. (“SoftStar”) to Angel Fund for approximately US$2.5 million. Angel Fund also agreed to grant HGC a right of first refusal to subscribe up to 15% of newly issued SoftStar shares or convertible bond in the event of a capital increase by SoftStar.

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Other Material Contracts

Other material contracts are incorporated by reference to our annual reports for the year ended December 31, 2010, for the year ended December 31, 2011 and for the year ended December 31, 2012 on Form 20-F (File No. 000-30540) and for additional information on our material contracts, see Item 7, “Major Shareholders and Related Party Transactions — B. Related Party Transactions” in this annual report.

D. Exchange Controls

Foreign investment regulations of PRC may affect our ability to retrieve our capital investments in China. Under the current PRC regulations, conversion of Renminbi is permitted in China for routine current-account foreign exchange transactions, including trade and service related foreign exchange transactions, payment of dividends and service of foreign debts. Conversion of Renminbi for most capital-account items, such as direct investments, investments in PRC securities markets and repatriation of investments, however, is still subject to the approval of the State Administration of Foreign Exchange (SAFE) or its local competent branches. Foreign-invested enterprises, such as our PRC subsidiaries, may buy, sell and/or remit foreign currencies for current-account transactions at banks in the PRC with authorization to conduct foreign exchange business by complying with certain procedural requirements, such as presentment of valid commercial documents. For capital-account transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives, approval from SAFE or its local competent branches is a pre-condition. Capital investments by foreign-invested enterprises outside the PRC are subject to limitations and requirements in the PRC, such as prior approvals from the Ministry of Commerce, or MOFCOM, SAFE and the National Development and Reform Commission of the PRC.

E. Taxation

Singapore Tax Considerations

Taxation of Dividends Received by Singapore Resident Shareholders

On the basis that we are not tax resident in Singapore, dividends paid by us would be taxable in Singapore if they are received in Singapore or if they are considered, in the hands of a particular shareholder, to be derived in Singapore (for example if they constitute the income of a trade or business carried out in Singapore).

Foreign-sourced dividends received by a Singapore resident person on or after June 1, 2003 will be exempt from tax if certain conditions are met. The main conditions to be satisfied for such exemption are that:

• the dividends are received from a jurisdiction with a maximum tax rate on the trade or business income of a company of at least 15 percent; and

• the dividends themselves, or the income from which they are paid, have been subject to tax in the foreign jurisdiction or have been exempted from tax under an incentive granted for substantive business activities.

The normal tax rate for corporate profits in Singapore is 17 percent for the year of assessment 2012 and 2013 (i.e., for the income earned in the financial year or other basis period ended 2011 and 2012 respectively). Resident individuals are subject to tax at progressive rates of up to 20 percent.

If our shareholders are corporations, our shareholders will be regarded as being tax resident in Singapore if the control and management of our shareholders’ business is exercised in Singapore. For example, if the board of directors of a company meets and conducts the business of such company in Singapore, such company would generally be regarded as tax resident in Singapore. An individual will be regarded as being tax resident in Singapore in a year of assessment if, in the preceding year, he was physically present in Singapore or exercised an employment in Singapore (other than as director of a company) for 183 days or more, or if he resides in Singapore.

All foreign-sourced income received in Singapore (except for income received through a partnership in Singapore) on or after January 1, 2004 by tax resident individuals will be exempt from tax.

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Gains on Disposal of Shares

Singapore does not impose tax on capital gains. However, there are no specific laws or regulations which deal with the characterization of capital gains and hence, gains on disposal of shares may be construed to be of an income nature and subject to Singapore income tax if they arise from or are otherwise connected with the activities which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business in Singapore. You should consult your tax advisors concerning the Singapore tax consequences of acquiring, owning, selling or otherwise disposing the Shares.

Stamp Duty

There is no stamp duty payable in respect of the issuance and holding of our Shares. Where existing shares are acquired in Singapore, stamp duty is payable on the instrument of transfer of the shares at the rate of S$2.00 for every S$1,000 or any part thereof, of the consideration for or market value of the shares, whichever is higher. The stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where an instrument is executed outside Singapore, or no instrument of transfer is executed, no stamp duty is payable on the acquisition of existing shares. However, stamp duty would be payable if an instrument of transfer which is executed outside Singapore is received in Singapore.

Under Singapore law, our directors may not register a transfer of our Shares unless the instrument of transfer has been duly stamped.

Singapore Estate Duty

Estate duty has been abolished for deaths occurring on or after February 15, 2008.

You should consult your tax advisors regarding the non-Singapore estate duty consequences of your ownership of our Shares.

Goods and Services Tax (“GST”)

The sale of our Shares by an investor belonging in Singapore to another person belonging in Singapore is an exempt supply not subject to GST. Any GST directly or indirectly incurred by the investor in respect of this exempt supply would be a cost to the investor.

Where our Shares are sold by a GST-registered investor to a person belonging outside Singapore and that person is outside Singapore when the sale is executed, the sale should generally be considered as a taxable supply subject to GST at zero-rate. Any GST incurred by the investor in the making of such a supply, if the same is a supply in the course of or furtherance of a business, may be fully recoverable from the Comptroller of GST.

Services such as brokerage, handling and clearing services rendered by a GST-registered person to an investor belonging in Singapore in connection with the investor’s purchase, sale or holding of our Shares will be subject to GST at the rate of 7 percent. Similar services rendered to an investor belonging outside Singapore should generally be subject to GST at zero-rate.

U.S. Tax Considerations

U.S. Federal Income Tax Considerations for U.S. Persons

The following is a discussion of certain U.S. federal income tax considerations for investors in Shares that are U.S. persons (as defined below). This discussion is based on U.S. federal income tax law as in effect on the date hereof, which is subject to differing interpretations or change, possibly on a retroactive basis. This discussion applies only to U.S. persons that will acquire the Shares and will hold the Shares as “capital assets” (generally, property held for investment). This discussion is for general information only and does not address all of the tax considerations that may be relevant to you in light of your particular circumstances or if you are subject to special treatment under the U.S. federal income tax laws, including if you are a:

• bank;

• broker-dealer;

• financial institution or insurance company;

• tax-exempt entity;

• person holding Shares as part of a straddle, hedge, conversion or other integrated investment;

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• a person owning, actually or constructively, 10 percent or more of the combined voting power of all classes of our stock;

• a person whose “functional currency” is not the U.S. dollar;

• a partnership or a partner of such partnership; or

• a trader in securities that has elected the mark-to-market method of accounting for securities.

This discussion does not address any U.S. state, local or non-United States tax considerations, or any U.S. federal estate, gift or alternative minimum tax considerations.

As used in this discussion, the term “U.S. person” means:

• an individual who is a citizen or resident of the United States;

• a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created in or organized under the laws of the United States or any political subdivision thereof;

• an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

• a trust if (1) it is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) it has otherwise elected to be treated as a U.S. person under the Internal Revenue Code.

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds Shares, the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Shares, you are urged to consult your tax advisor as to the particular U.S. federal income tax consequences of an investment in the Shares that is applicable to you.

You are urged to consult your tax advisor concerning the particular U.S. federal, state, local and non-United States income and other tax considerations regarding the ownership and disposition of the Shares, including the application of the passive foreign investment company rules discussed below. Investors should carefully review the discussion below under “—Passive Foreign Investment Company Rules.”

Passive Foreign Investment Company

Due to the price of our Shares during 2013 and the composition of our assets (in particular, the retention of a large amount of cash and our significant portfolio of investment securities), we believe that is likely that we were classified as a passive foreign investment company (“PFIC”), for United States federal income tax purposes, for the taxable year ended December 31, 2013, and we will likely be a PFIC for our current taxable year ending December 31, 2014 unless our share value increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of non-passive income. In general, we will be classified as a PFIC for any taxable year if either (i) 75 percent or more of our gross income for such year is passive income or (ii) 50 percent or more of the average quarterly value of our assets (as generally determined on the basis of fair market value) produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are generally classified as passive and goodwill and other unbooked intangibles associated with active business activities may generally be classified as non-passive. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25 percent (by value) of the stock.

If we are classified as a PFIC for any taxable year during which you hold Shares, and unless you make a mark-to-market election (as described below), you will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to you (which generally means any distribution received by you in a taxable year that is greater than 125 percent of the average annual distributions received by you in the three preceding taxable years or your holding period for the Shares, if shorter), and (ii) any gain realized on the sale or other disposition, including a pledge, of our Shares. Under the PFIC rules:

• such excess distribution or gain will be allocated ratably over your holding period for the Shares;

• such amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we are classified as a PFIC (a “pre-PFIC year”) will be taxable as ordinary income;

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• such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to you for that year; and

• an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than the current taxable year or a pre-PFIC year.

As an alternative to the foregoing rules, a holder of “marketable stock” in a PFIC may make a mark-to-market election, provided that the Shares are “regularly traded” on a “qualified exchange”. Although we believe that, based on the current level of trading activity of our Shares on the NASDAQ Global Market, the Shares should qualify as being regularly traded on a qualified exchange, no assurance can be given that the Shares will continue to be readily tradable on an established securities market in the United States. If you make this election, you will generally (i) include in gross income for each taxable year the excess, if any, of the fair market value of your Shares at the end of the taxable year over the adjusted tax basis of the Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Shares over the fair market value of the Shares at the end of the taxable year, but only to the extent of the amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in the Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If you make a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, you will generally not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC. If you make a mark-to-market election, any gain you recognize upon the sale or other disposition of Shares will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary to the extent of the net amount previously included in income as a result of the mark-to-market election. In the case of a U.S. person who has held Shares during any taxable year in which we are classified as PFIC and continues to hold such Shares (or any portion thereof), and who is considering making a mark-to-market election, special tax rules may apply relating to purging the PFIC taint of such Shares. If a U.S. Holder makes a mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions, except that the reduced tax rate applicable to qualified dividend income (as discussed below in “ –Dividends”) would not apply.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investment held by us that is treated as an equity interest in a PFIC for United States federal income tax purposes.

We do not intend to provide the U.S. persons with the information necessary to permit U.S. persons to make qualified electing fund elections, which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.

Each U.S. person who holds a PFIC is required to file an annual report containing such information as the U.S. Treasury may require. In addition, if a U.S. person holds Shares in any year in which we are a PFIC, such holder will be required to file Internal Revenue Service Form 8621 regarding distributions received on the Shares, any gain realized on the disposition of the Shares, and any “reportable election.” You are urged to consult your tax advisor regarding the application of the PFIC rules, including the possibility of making a mark-to-market election.

Taxation of Dividends

Except as discussed above with respect to the passive foreign investment company tax rules, the amount of distributions you receive on your Shares (other than certain pro rata distributions of our Shares or rights to subscribe for Shares) will generally be reported as dividend income to you if the distributions are made from our current and accumulated earnings and profits as calculated according to U.S. federal income tax principles. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution paid will generally be reported as a “dividend” for U.S. federal income tax purposes. You will include such dividends in your gross income as ordinary income on the day you actually or constructively receive them. The amount of any distribution of property other than cash will be the fair market value of such property on the date it is distributed. A non-corporate recipient of dividend income will generally be subject to tax on dividend income from a “qualified foreign corporation” at a reduced United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income, so long as certain holding period requirements are met. A non-U.S. corporation generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program or with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States and (ii) the corporation is not a PFIC and is not treated as a PFIC with respect to you for the taxable year in which the dividend was paid and the preceding taxable year. There is currently no tax treaty in effect between the United States and Singapore. Although the Shares are currently tradable on the NASDAQ Global Market, which is an established securities market in the United States, no assurance can be given that the Shares will continue to be readily tradable on an established securities market in the United States. U.S. corporate holders will generally not be eligible for the dividends received deduction allowed to corporations.

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The amount of any distribution paid in a currency other than the U.S. dollar will equal the U.S. dollar value of the foreign currency you receive, calculated by reference to the exchange rate in effect on the date you actually or constructively receive the distribution, regardless of whether the foreign currency is actually converted into U.S. dollars. If you do not convert the foreign currency you receive as a dividend on the date of receipt, you will have a basis in such foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or loss you realize when you subsequently sell or otherwise dispose of such foreign currency generally will be ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.

Dividends will generally be treated as foreign source income for U.S. foreign tax credit purposes and generally will constitute passive category income. A U.S. person may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on Shares. A U.S. person who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credits are complex. Accordingly, you are urged to consult your tax advisor regarding the availability of a foreign tax credit under your particular circumstances.

Sale or Other Disposition of Shares

Except as discussed above with respect to the passive foreign investment company tax rules, a U.S. person generally will recognize capital gain or loss for U.S. federal income tax purposes upon a sale or other disposition of our Shares in an amount equal to the difference between the amount realized from the sale or disposition and the holder’s adjusted tax basis in the Shares. Such gain or loss generally will be long-term (taxable at a reduced rate for individuals) if, on the date of sale or disposition, the Shares were held by the holder for more than one year and will generally be treated as gain or loss from U.S. sources for foreign tax credit purposes. The deductibility of a capital loss may be subject to limitations. You are urged to consult your tax advisor regarding the consequences if a foreign withholding tax is imposed on a disposition of Shares, including the availability of the foreign tax credit under your particular circumstances.

Backup Withholding and Information Reporting

U.S. persons may be subject to information reporting to the Internal Revenue Service with respect to dividends on and proceeds from the sale or other disposition of our ADSs or common shares. Dividend payments with respect to our ADSs or common shares and proceeds from the sale or other disposition of our ADSs or common shares are not generally subject to United States backup withholding (provided that certain certification requirements are satisfied). You are advised to consult your tax advisor regarding the application of the United States information reporting and backup withholding rules to your particular circumstances.

Individuals who are U.S. Holders, and who hold “specified foreign financial assets”, including stock of a non-U.S. corporation that is not held in an account maintained by a U.S. “financial institution”, whose aggregate value exceeds US$50,000 during the tax year, may be required to attach to their tax returns for the year certain specified information. An individual who fails to timely furnish the required information may be subject to a penalty. Each U.S. person who is an individual is advised to consult its tax advisor regarding its reporting obligations under this legislation.

F. Dividends and Paying Agents

Not applicable.

G. Statements by Experts

Not applicable.

H. Documents on Display

The SEC allows us to “incorporate by reference” the information we file with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference in this annual report is considered to be part of this annual report. We therefore incorporate by reference in Item 19 of this annual report certain exhibits, which we filed with the SEC in prior filings. You may read and copy this annual report, including the exhibits incorporated by reference in this annual report, at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Additional information may also be obtained over the Internet at the SEC’s website at www.sec.gov.

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You may also request a copy of our SEC filings, at no cost, upon written request to our investor relations department at 8th Floor, No. 22, Lane 407, Section 2, Tiding Boulevard, Taipei 11492, Taiwan R.O.C, or by e-mail to: Brad.Miller@Gigamedia.com. A copy of each report submitted in accordance with applicable U.S. law is also available for public review at our principal executive offices.

As a foreign private issuer, we are exempt under the Securities Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Securities Exchange Act. In addition, we will not be required under the Securities Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Securities Exchange Act.

I. Subsidiary Information

Not applicable.

ITEM  11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risks in the normal course of business, including changes in interest rates and foreign currency exchange rates.

Foreign Currency Risk

Our subsidiaries conduct most of their business transactions in their own measurement currencies; therefore the foreign currency risks derived from operations are not significant. However, we hold some assets or liabilities in foreign currencies other than measurement currency and the value of these assets and liabilities are subject to foreign currency risks resulting from fluctuations in exchange rates between the foreign-denominated currency and the measurement currency. We have not used hedging transactions to reduce our exposure to exchange rate fluctuations; however, we may choose to do so in the future. For more information on foreign currency translations for our financial reporting purposes, see note 1(b) to our audited consolidated financial statements beginning on page F-1 in this annual report.

As of December 31, 2013, we had bank deposits of approximately US$2.4 million denominated in foreign currencies other than measurement currencies of the entities holding such assets. These assets are subject to foreign currency exchange risk. We recognized a realized foreign exchange loss of approximately US$32,000 and unrealized foreign exchange gain of approximately US$473,000 in the year ended December 31, 2013.

As of December 31, 2013, we had available-for-sale marketable securities and investments of approximately US$25.7 million which were denominated in foreign currencies other than measurement currencies of the entity holding such assets. Future fluctuation of the exchange rates could impact the periodic impairment assessment on other-than-temporary loss of these assets.

Based on the sensitivity analysis of our exposure to foreign currency exchange rate risk related our bank deposits and available-for-sale marketable securities which were denominated in a foreign currency other than functional currencies of the entities holding such assets, a hypothetical 10 percent change in the exchange rate between the U.S. dollar and the underlying currencies of those instruments subject to foreign currency exchange rate risk would result in a change of approximately 2.0 percent in our total equity as of December 31, 2013.

Interest Rate Risk

Our exposure to interest rates relates primarily to our short-term loans from various banks and our mid-term investments in fixed-income investments. The variations in fair value of the marketable equity securities that we owned as of December 31, 2013 do not have direct relationship with interest rates changes. Declines in interest rates over time will, however, reduce our interest income from our bank deposits. Increases in interest rates of the loans will increase our interest expenses and decrease market values of our mid-term fixed-income investments. As of December 31, 2013, we had approximately US$2.4 million in fixed-income securities and money market funds. As of December 31, 2013, we had approximately US$4.4 million of short-term loans, with a weighted average interest rate of approximately 1.52 percent. Based on our sensitivity analysis with respect to our short-term loans and mid-term investments in fixed-income investments, we have no significant exposure to fluctuations in interest rates. We have not entered into any interest rate swaps, caps or hedge contracts to modify our exposure to interest rate fluctuations.

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We did not include a quantitative tabular disclosure regarding the foreign currency risk and the interest rate risk. As noted above, we believe that the magnitude of selected hypothetical changes to such market risks on the consolidated financial statements is not significant. However, we cannot assure you that we will not be affected by these risks in the future.

Other Market Risks

We are also exposed to other market risks, which are mainly derived from our investments. Changes in the stock price, performance or net asset value of the companies that we invested and investment funds might have significant impact on our financial positions or operating results.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM  14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A. Material Modification to the Instruments Defining the Rights of Security Holders

None.

B. Material Modification to the Rights of Registered Securities by Issuing or Modifying or any Other Class of Securities

None.

C. Withdrawal or Substitution of a Material Amount of the Assets Securing any Registered Securities

Not applicable.

D. Change of Trustees or Paying Agents for any Registered Securities

None.

E. Use of Proceeds

Not applicable.

ITEM  15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and our chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of December 31, 2013. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based upon that evaluation, and taking into account the foregoing, our chief executive officer and chief financial officer have concluded that, as of December 31, 2013, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported on a timely basis, and these controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act was accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States (“US GAAP”). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and directors and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 1992”) in Internal Control — Integrated Framework. Based on our assessment using those criteria, our management has concluded that our internal control over financial reporting as of December 31, 2013 was effective.

This annual report does not include an audit report from our registered public accounting firm regarding the effectiveness of our internal control over financial reporting, as we are a non-accelerated filer exempted from section 404(b) of the Sarbanes-Oxley Act.

Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2013, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Mr. Casey K. TUNG, an independent director and member of our audit committee, is the audit committee financial expert.

ITEM 16B. CODE OF ETHICS

We have adopted a code of ethics, as defined in Item 16B of Form 20-F. Our code of ethics applies to our chief executive officer, chief financial officer and persons performing similar functions, as well as to our directors, other officers, employees and consultants. The code of ethics was amended on December 19, 2005, May 10, 2006 and February 13, 2009 in order to conform certain provisions in it with our newly adopted anti-fraud policy. The code of ethics was also amended on April 30, 2010 to incorporate non-competition and non-solicitation provisions and on March 18, 2013 to change certain titles within our Company and update email addresses. The full text of our code of ethics is available on our website, www.gigamedia.com If we further amend any provisions of our code of ethics that apply to our chief executive officer, chief financial officer or persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address. We will also provide any person without charge a copy of our code of ethics upon written request to our investor relations department at 8^th Floor, No. 22, Lane 407, Section 2, Tiding Boulevard, Taipei 114, Taiwan R.O.C., or by e-mail to: Brad.Miller@Gigamedia.com.

On December 19, 2005, our board of directors adopted an anti-fraud policy for the purpose of preventing fraud schemes, including fraudulent financial reporting misappropriation of assets, any fraud committed by senior management, and information technology fraud. According to our anti-fraud policy, our audit committee is responsible for monitoring the implementation of our anti-fraud policy and procedures, and an anti-fraud taskforce is assigned by our audit committee to be responsible for the anti-fraud hotline management, risk assessment, complaint investigation and resolution, and reporting to our chief executive officer, chief financial officer and audit committee.

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On May 10, 2006, our audit committee adopted a whistleblower program pursuant to our anti-fraud policy. The whistleblower program enables all employees to know how and when to use the whistleblower hotline and communicate or report, on a confidential or anonymous basis, without fear of retribution, concerns related to wrongdoings or violations, and ensures that all reported incidents are properly investigated.

On April 30, 2010, our board of directors adopted a non-competition provision under which all of our employees, consultants, officers and directors may not participate, invest, license, employ or being employed, or cooperate with any company or entity engaged in a line of business which may be competitive with the business of the Company within three months after termination of their employment of the Company, except in cases where the local law or the contract states otherwise. The Company may take legal actions against such employees, consultants, officers or directors in the event that non-competition obligations are being violated. An amended non-solicitation provision was also adopted, under which all our employees, consultants, officers and directors may not, during their employment or within twelve months after termination of the employment, directly or indirectly, solicit, entice, or attempt to approach, solicit or entice any of the other employees of the Company or its affiliates to terminate the employment.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table summarizes the aggregate fees billed to us by GHP Horwath, P.C. for services performed relating to the fiscal year ended December 31, 2012 and by KPMG for the fiscal year ended December 31, 2013.

For the Years Ended December 31,	2012		2013
	(in US$)		(in US$)
Audit Fees		702,452		374,000
Audit-Related Fees		8,060		0
Tax Fees		18,461		25,000
All Other Fees		0		0

A. Audit Fees

Audit fees consist of fees billed for the annual audit of our consolidated financial statements. Audit fees also include fees for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

B. Audit-Related Fees

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, and are not reported under the paragraph captioned “Audit Fees” above. Audit related fees billed in 2012 consisted of accounting consultations in connection with business dispositions.

C. Tax Fees

Tax fees include fees billed for tax compliance services, including the preparation of original and amended tax returns, and tax advisory services.

D. All Other Fees

All other fees are fees billed for services provided by the independent registered public accounting firm other than the services reported as audit fees, audit-related fees and tax fees above. No other fees were billed during 2012 and 2013.

E. Audit Committee Pre-Approval Policies and Procedures

In May 2005, we adopted our audit committee charter. Consistent with the SEC’s policies regarding auditor independence, our audit committee is directly responsible for the appointment, compensation, retention and oversight of the work of auditors engaged to provide us with audit, review or attest services. Our audit committee has sole discretion to review and pre-approve the appointment of auditors and to set their fees for the performance of audit and non-prohibited non-audit services in accordance with the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations promulgated thereunder, subject to the appointment, replacement or removal from office of our independent public accountants as approved by our shareholders at our Annual General Meeting.

The appointment of our independent registered public accounting firm, KPMG, as well as the scope of each audit, audit-related or non-prohibited, as well as any non-audit services provided pursuant to such appointment, and our auditors’ fees for all such services, were approved by our audit committee.

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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM  16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On May 20, 2011, our board of directors approved an US$11 million share repurchase program of GigaMedia’s common stock. Under the terms of the share repurchase program, GigaMedia could repurchase up to US$11 million worth of its issued and outstanding shares during the period starting from June 1, 2011 to November 30, 2011. The repurchases could be made from time to time on the open market at prevailing market prices pursuant to a Rule 10b5-1 plan, subject to restrictions relating to volume, pricing and timing. The timing and extent of any repurchases depended upon market conditions, the trading price of GigaMedia’s shares and other factors. This share repurchase program was implemented in a manner consistent with market conditions, in the interests of our shareholders, and in compliance with GigaMedia’s securities trading policy and relevant Singapore and U.S. laws and regulations. During 2011, repurchases under this program amounted to approximately 5.6 million shares at a cost of US$6.0 million. All of the treasury shares under this program were cancelled by the end of 2011. We did not have any share repurchases in 2012 and 2013.

Period	Total Number of ADSs		Average Price Paid per ADS		Total Number of ADSs Purchased as Part of Publicly Announced Program		Approximate Dollar Value of ADSs that May Yet Be Purchased Under the Program
June 2011 (from June 1, 2011)		1,387,352	$	1.25		1,387,352	$	9,263,633
July 2011		758,274	$	1.26		758,274	$	8,306,977
August 2011		1,001,485	$	1.00		1,001,485	$	7,302,783
September 2011		1,503,829	$	0.90		1,503,829	$	5,951,085
October 2011		971,218	$	0.99		971,218	$	4,986,272
November 2011 (ended November 30, 2011)		0	$	—		0	$	4,986,272

ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANTS

GHP Horwath, P.C. (“GHP”) was previously the independent auditors for GigaMedia Limited and its subsidiaries. On June 7, 2013, we dismissed GHP and engaged KPMG as our independent auditors for the year ended December 31, 2013. The decision to change auditors was based upon recommendation of our Audit Committee of our Board of Directors (at a meeting held on March 18, 2013). On June 7, 2013, our General Assembly of Shareholders resolved to appoint KPMG an independent registered public accounting firm, as our independent auditors for the year ended December 31, 2013, terminating the engagement of GHP for this role.

During the two fiscal years ended December 31, 2012 and the subsequent interim period through June 7, 2013, there were: (1) no disagreements between GHP and us on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreement if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement; (2) nor reportable events.

The audit reports of GHP on the consolidated financial statements of GigaMedia Limited and its subsidiaries as of and for the fiscal years ended December 31, 2012 and 2011 did not contain any adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of GHP on the effectiveness of internal control over financial reporting as of December 31, 2012 and 2011, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

A letter from GHP is attached as Exhibit 15.1 to this Annual Report on Form 20-F stating that they agree with the statements made by us relating to their firm in this Item 16F.

Prior to June 7, 2013, the date that KPMG was retained as our independent auditors:

(i) We did not consult with KPMG regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements;

(ii) Neither a written report nor oral advice was provided to us by KPMG that they concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; and

(iii) We did not consult KPMG regarding any matter that was either the subject of a “disagreement” (as defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions) or any of the reportable events set forth in Item 16F (a)(1)(v) of
Form 20-F.

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ITEM 16G. CORPORATE GOVERNANCE

Summary of Significant Differences in Corporate Governance Practices

Our Shares are currently listed on the NASDAQ Stock Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by NASDAQ as being applicable to listed companies. Under NASDAQ Rule 5615(a)(3), a foreign private issuer such as our Company may follow its home country practice in lieu of the requirements of the NASDAQ Rule 5600 Series, with certain exceptions, provided that it discloses each requirement that it does not follow and describes the home country practice followed in lieu of such requirements. In addition, NASDAQ has amended its Rule 5615(a)(3) to permit foreign private issuers to follow certain home country corporate governance practices without the need to seek an individual exemption from NASDAQ. However, a foreign private issuer must disclose in its annual report filed with the SEC each requirement it does not follow and the alternative home country practice it does follow.

We are incorporated under the laws of Singapore. We currently comply with the specifically mandated provisions of NASDAQ Rule 5615(a)(3). We are currently exempt from the DRS eligibility provisions of NASDAQ Rule 5255(c) as we are not allowed to issue of non-certificated securities under Singapore law. See Item 9, “The Offer and Listing” in this annual report. We have elected to voluntarily comply with other requirements of NASDAQ Rule 5615(a)(3) in all material aspects, notwithstanding that our home country does not mandate compliance; although we may in the future determine to cease voluntary compliance with those provisions of NASDAQ Rule 5615(a)(3).

ITEM  16H. MINE SAFETY DISCLOSURE

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

Our consolidated financial statements and the report thereon by our independent registered public accounting firm listed below are attached hereto as follows:

	Page
(a) Reports of Independent Registered Public Accounting Firms		F-1 F-2
(b) Consolidated Balance Sheets as of December 31, 2012 and 2013		F-3 F-4
(c) Consolidated Statements of Operations for the years ended December 31, 2011, 2012 and 2013		F-5
(d) Consolidated Statements of Comprehensive Loss for the years ended December 31, 2011, 2012 and 2013		F-6
(e) Consolidated Statements of Changes in Equity for the years ended December 31, 2011, 2012 and 2013		F-7
(f) Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2012 and 2013		F-8 F-9
(g) Notes to the consolidated financial statements		F-10 F-84

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ITEM 19. EXHIBITS

EXHIBIT	INDEX
1.1*	Amended Memorandum and Articles of Association of our Company
4.1	Share Purchase Agreement among Infocomm Asia Holdings Pte. Ltd., GigaMedia Asia Pacific Limited, Management Capital International Limited, and Roland Ong Toon Wah dated July 2, 2012, incorporated by reference to Exhibit 10.1 to our annual report for the year 2012 on Form 20-F filed with the SEC on April 30, 2013
4.2	Share Purchase Agreement among Infocomm Asia Holdings Pte. Ltd., GigaMedia Asia Pacific Limited, Spring Asia Limited and Roland Ong Toon Wah dated July 2, 2012, incorporated by reference to Exhibit 10.2 to our annual report for the year 2012 on Form 20-F filed with the SEC on April 30, 2013
4.3	Share Purchase Agreement between GigaMedia Capital Limited and Neowiz Corporation dated August 8, 2012, incorporated by reference to Exhibit 10.3 to our annual report for the year 2012 on Form 20-F filed with the SEC on April 30, 2013
4.4*	Novation Agreement among Megabiz Limited, Blueark Global Co., Ltd, and Nickelodeon Asia Holdings Pte. Ltd. dated September 24, 2013
4.5*	Share Purchase Agreement between Hoshin GigaMedia Center Inc. and Angel Fund (Asia) Investments Limited dated October 30, 2013
8.1*	List of Subsidiaries - See Item 4, “Information on the Company — C. Organization Structure”
11.1*	Code of Ethics, as last amended by the board of directors on April 30, 2010
12.1*	Certification by our Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act
12.2*	Certification by our Chief Financial Officer pursuant to Rule13a-14(b) of the Securities Exchange Act
13.1*	Certification by our Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2*	Certification by our Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Letter from GHP Horwath, P.C., to SEC
15.2*	Consent of KPMG, Independent Registered Public Accounting Firm
15.3*	Consent of GHP Horwath, P.C., Independent Registered Public Accounting Firm
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

73

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

GIGAMEDIA LIMITED
By:	/s/ Collin Hwang
	Collin Hwang Chief Executive Officer
	Date: April 30, 2014

74

GIGAMEDIA LIMITED AND SUBSIDIARIES

Index to Consolidated Financial Statements

	Page
Reports of Independent Registered Public Accounting Firms		F-1
Consolidated balance sheets as of December 31, 2012 and 2013		F-3
Consolidated statements of operations for the years ended December 31, 2011, 2012 and 2013		F-5
Consolidated statements of comprehensive loss for the years ended December 31, 2011, 2012 and 2013		F-6
Consolidated statements of changes in equity for the years ended December 31, 2011, 2012 and 2013		F-7
Consolidated statements of cash flows for the years ended December 31, 2011, 2012 and 2013		F-8
Notes to consolidated financial statements		F-10

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

GigaMedia Limited:

We have audited the accompanying consolidated balance sheet of GigaMedia Limited and subsidiaries (the “Company”) as of December 31, 2013, and the related consolidated statements of operations, comprehensive loss, changes in equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the financial position of GigaMedia Limited and subsidiaries as of December 31, 2013, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/S/ KPMG

Taipei, Taiwan (the Republic of China)

April 30, 2014

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

GigaMedia Limited

We have audited the accompanying consolidated balance sheet of GigaMedia Limited and subsidiaries (the “Company”) as of December 31, 2012, and the related consolidated statements of operations, comprehensive loss, changes in equity and cash flows for each of the years in the two-year period ended December 31, 2012. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GigaMedia Limited and subsidiaries as of December 31, 2012, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/S/ GHP Horwath, P.C.

Denver, Colorado

April 30, 2013

F-2

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2012 AND 2013

(in thousands of US dollars)

	December 31
	2012			2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 10)	$	62,731		$	58,801
Marketable securities - current (Note 11)		17,773			21,460
Accounts receivable - net (Note 12)		2,829			2,027
Prepaid expenses		801			750
Other current assets (Notes 13 and 25)		1,001			293
Total Current Assets		85,135			83,331
Marketable securities - noncurrent (Note 14)		4,292			6,048
Equity method investments (Note 15)		5,223			5,822
PROPERTY, PLANT AND EQUIPMENT
Land and buildings		1,243			1,211
Information and communication equipment		3,986			4,082
Office furniture and fixtures		295			184
Leasehold improvements		455			122
Other		28			—
		6,007			5,599
Less: Accumulated depreciation and amortization		(4,058	)		(3,922	)
		1,949			1,677
GOODWILL (Note 6)		16,934			—
INTANGIBLE ASSETS - NET (Note 7)		15,675			1,461
OTHER ASSETS
Refundable deposits		392			306
Prepaid licensing and royalty fees (Note 8)		8,644			4,666
Other (Note 5)		2,150			10
Total Other Assets		11,186			4,982
TOTAL ASSETS	$	140,394		$	103,321

(Continued)

F-3

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

DECEMBER 31, 2012 AND 2013

(in thousands of US dollars, except share data)

	December 31
	2012			2013
LIABILITIES & EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 16)	$	7,748		$	4,361
Accounts payable		324			1,178
Accrued compensation		1,233			380
Accrued expenses (Note 17)		5,182			2,617
Deferred revenue		3,174			2,441
Other current liabilities (Note 18)		3,986			3,862
Total Current Liabilities		21,647			14,839
OTHER LIABILITIES
Accrued pension liabilities (Note 19)		281			170
Other (Notes 20 and 25)		573			11
Total Other Liabilities		854			181
Total Liabilities		22,501			15,020
EQUITY (Note 22)
GigaMedia Shareholders’ Equity:
Common shares, no par value, and additional paid-in capital; issued and outstanding 50,720 thousand shares in 2012 and 50,723 thousand shares in 2013		304,851			305,072
Accumulated deficit		(178,241	)		(213,021	)
Accumulated other comprehensive loss		(8,379	)		(3,603	)
Total GigaMedia shareholders’ equity		118,231			88,448
Noncontrolling interest		(338	)		(147	)
Total Equity		117,893			88,301
COMMITMENTS AND CONTINGENCIES (Note 27)		—			—
TOTAL LIABILITIES AND EQUITY	$	140,394		$	103,321

The accompanying notes are an integral part of these consolidated financial statements.

F-4

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in thousands of US dollars, except for earnings per share amounts)

	2011			2012			2013
OPERATING REVENUES
Asian online game and service revenues	$	34,367		$	27,470		$	14,106
Other revenues		—			—			926
		34,367			27,470			15,032
COSTS OF REVENUES
Cost of Asian online game and service revenues		(14,413	)		(11,388	)		(6,425	)
Cost of other revenues		—			—			(1,159	)
		(14,413	)		(11,388	)		(7,584	)
GROSS PROFIT		19,954			16,082			7,448
OPERATING EXPENSES
Product development and engineering expenses		(1,956	)		(1,471	)		(1,698	)
Selling and marketing expenses		(10,079	)		(8,377	)		(4,815	)
General and administrative expenses		(18,101	)		(13,384	)		(6,324	)
Bad debt expense (Note 12)		(1,820	)		(169	)		(37	)
Impairment loss on goodwill (Notes 6 and 9)		(5,097	)		(12,489	)		(17,054	)
Impairment loss on intangible assets (Note 9)		(2,583	)		(15	)		(13,251	)
Impairment loss on prepaid licensing and royalty fees (Notes 8 and 9)		(247	)		(702	)		(2,752	)
Other		—			(49	)		(4	)
		(39,883	)		(36,656	)		(45,935	)
LOSS FROM OPERATIONS		(19,929	)		(20,574	)		(38,487	)
NON-OPERATING INCOME (EXPENSES)
Interest income		762			283			238
Gain on sales of marketable securities (Notes 11 and 14)		6,299			5,665			1,739
Interest expense		(426	)		(247	)		(49	)
Foreign exchange gain (loss), net		(365	)		434			45
Gain (loss) on equity method investments - net (Note 15)		(47,869	)		234			526
Gain on sale of T2CN (Note 5)		4,739			—			—
Impairment loss on marketable securities and investments (Note 9)		(13,327	)		(1,193	)		—
Gain on sale of equity method investments (Note 5)		—			2,480			1,220
Recovery of loss on termination of third-party contract (Note 4)		2,012			—			—
Other		469			(7	)		86
		(47,706	)		7,649			3,805
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(67,635	)		(12,925	)		(34,682	)
INCOME TAX (EXPENSE) BENEFIT (Note 25)		245			(671	)		(61	)
LOSS FROM CONTINUING OPERATIONS		(67,390	)		(13,596	)		(34,743	)
LOSS FROM DISCONTINUED OPERATIONS - NET OF TAX (Note 5)		(4,188	)		(2,521	)		(318	)
NET LOSS		(71,578	)		(16,117	)		(35,061	)
LESS: NET LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTERESTS		366			827			281
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA	($	71,212	)	($	15,290	)	($	34,780	)
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA
Loss from continuing operations - net of tax	($	67,024	)	($	12,769	)	($	34,462	)
Loss from discontinued operations - net of tax		(4,188	)		(2,521	)		(318	)
	($	71,212	)	($	15,290	)	($	34,780	)
LOSS PER SHARE ATTRIBUTABLE TO GIGAMEDIA
Basic:
Loss from continuing operations	($	1.23	)	($	0.25	)	($	0.68	)
Loss from discontinued operations		(0.08	)		(0.05	)		(0.01	)
Net loss	($	1.31	)	($	0.30	)	($	0.69	)
Diluted:
Loss from continuing operations	($	1.23	)	($	0.25	)	($	0.68	)
Loss from discontinued operations		(0.08	)		(0.05	)		(0.01	)
Net loss	($	1.31	)	($	0.30	)	($	0.69	)
WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE ATTRIBUTABLE TO GIGAMEDIA SHAREHOLDERS (Note 2)
Basic		54,268			50,720			50,720
Diluted		54,268			50,720			50,720

The accompanying notes are an integral part of these consolidated financial statements.

F-5

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE YEARS DECEMBER 31, 2011, 2012 AND 2013

(in thousands of US dollars)

	2011			2012			2013
NET LOSS	($	71,578	)	($	16,117	)	($	35,061	)
OTHER COMPREHENSIVE INCOME (LOSS) - NET OF TAX:
Unrealized gain (loss) on marketable securities		16,167			(24,004	)		4,698
Defined benefit pension plan adjustment		69			(323	)		15
Foreign currency translation adjustments		(1,813	)		1,814			57
Deconsolidation of subsidiaries		—			2,799			—
		14,423			(19,714	)		4,770
COMPREHENSIVE LOSS		(57,155	)		(35,831	)		(30,291	)
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTERESTS		366			(2,189	)		287
COMPREHENSIVE LOSS ATTRIBUTABLE TO GIGAMEDIA SHAREHOLDERS	($	56,789	)	($	38,020	)	($	30,004	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in thousands of US dollars and shares, except per share amounts)

	GIGAMEDIA SHAREHOLDERS
	Common shares and additional paid-in capital									Accumulated other comprehensive income (loss)
							Accumulated deficit (Note 22)						Noncontrolling interest			Total
	Shares			Amount
Balance as of January 1, 2011		56,263		$	309,332		($	91,739	)	($	72	)	($	2,420	)	$	215,101
Issuance of common shares from exercise of stock options and RSUs		79			—			—			—			—			—
Stock-based compensation		—			1,165			—			—			—			1,165
Acquisition of OneNet		—			—			—			—			111			111
Share repurchase and retirement of common shares (Note 22)		(5,622	)		(5,825	)		—			—			—			(5,825	)
Cumulative dividend to subsidiary preferred shares (Note 21)		—			—			—			—			(321	)		(321	)
Net loss		—			—			(71,212	)		—			(366	)		(71,578	)
Other comprehensive income		—			—			—			14,423			—			14,423
Balance as of December 31, 2011		50,720			304,672			(162,951	)		14,351			(2,996	)		153,076
Stock-based compensation		—			179			—			—			—			179
Reversal of cumulative dividend to subsidiary preferred shares (Note 21)		—			—			—			—			469			469
Net loss		—			—			(15,290	)		—			(827	)		(16,117	)
Other comprehensive income (loss)		—			—			—			(22,730	)		3,016			(19,714	)
Balance as of December 31, 2012		50,720			304,851			(178,241	)		(8,379	)		(338	)		117,893
Issuance of common shares from exercise of stock options and RSUs		3			2			—			—			—			2
Stock-based compensation		—			219			—			—			—			219
Acquisition of FingerRockz		—			—			—			—			478			478
Net loss		—			—			(34,780	)		—			(281	)		(35,061	)
Other comprehensive income (loss)		—			—			—			4,776			(6	)		4,770
Balance as of December 31, 2013		50,723		$	305,072		($	213,021	)	($	3,603	)	($	147	)	$	88,301

The accompanying notes are an integral part of these consolidated financial statements.

F-7

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in thousands of US dollars)

	2011			2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(71,578	)	($	16,117	)	($	35,061	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,080			1,224			408
Amortization		2,314			2,204			1,907
Stock-based compensation		1,165			179			219
Gain on sale of equity method investments		—			(2,480	)		(1,220	)
Impairment loss on goodwill		5,097			12,489			17,054
Impairment loss on intangible assets		2,583			15			13,251
Impairment loss on prepaid licensing and royalty fees		247			702			2,752
Provision for bad debt expenses		1,820			169			37
Loss on disposal of property, plant and equipment		49			208			4
Gain on sales of marketable securities		(6,299	)		(5,665	)		(1,739	)
Gain on sale of T2CN		(4,739	)		—			—
Loss (gain) on equity method investments		47,869			(234	)		(526	)
Impairment loss on marketable securities and investments		13,327			1,193			—
Gain on cancellation of warrant liabilities		(665	)		—			—
Other		200			377			(141	)
Net changes in operating assets and liabilities, net of business acquisitions and divestitures:
Accounts receivable		(153	)		1,537			767
Prepaid expenses		871			755			52
Other current assets		865			(174	)		708
Accounts payable		(336	)		(515	)		854
Accrued expenses		(452	)		(59	)		(2,223	)
Accrued compensation		(2,139	)		(831	)		(853	)
Other current liabilities		(1,334	)		(467	)		(1,017	)
Accrued pension liabilities		128			110			(111	)
Prepaid licensing and royalty fees		(3,007	)		(2,397	)		1,026
Other		(361	)		454			(453	)
Net cash used in operating activities		(12,448	)		(7,323	)		(4,305	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash		2,000			3,694			—
Cash dividends received from equity method investees		1,907			—			—
Proceeds from disposal of marketable securities		9,899			8,610			3,419
Divestiture of business, net of cash transferred		4,739			(1,308	)		—
Purchase of property, plant and equipment		(768	)		(429	)		(225	)
Proceeds from disposal of property, plant and equipment		117			76			35
Proceeds from disposal of businesses, net of transaction costs		—			1,735			3,258
Purchase of marketable securities		—			—			(2,460	)
Purchase of intangible assets		(1,274	)		(1,679	)		(1,227	)
Acquisitions, net of cash acquired		11			—			73
Advances to equity investees		(5,243	)		—			—
Decrease (increase) in refundable deposits		185			428			86
Other		(22	)		(10	)		(5	)
Net cash provided by investing activities		11,551			11,117			2,954

F-8

GIGAMEDIA LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in thousands of US dollars)

	2011			2012			2013
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment of short-term borrowings		(400	)		(4,348	)		(3,146	)
Repurchase and retirement of common shares		(5,825	)		—			—
Cash received from the exercise of stock options		—			—			2
Net cash used in financing activities		(6,225	)		(4,348	)		(3,144	)
Exchange difference		130			(712	)		565
NET DECREASE IN CASH AND CASH EQUIVALENTS		(6,992	)		(1,266	)		(3,930	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		70,989			63,997			62,731
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	63,997		$	62,731		$	58,801
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the year	$	436		$	248		$	53
Income tax paid (refunded) during the year	$	783		$	121		($	285	)

The accompanying notes are an integral part of these consolidated financial statements.

F-9

GIGAMEDIA LIMITED AND SUBSIDIARIES

Notes To Consolidated Financial Statements

December 31, 2011, 2012 AND 2013

NOTE 1. Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies

(a) Principal Activities

GigaMedia Limited (referred to hereinafter as GigaMedia, our Company, we, us, or our) is a diversified provider of online games and cloud computing services, with headquarters in Taipei, Taiwan.

Our Asian online game and service business operates a suite of play-for-fun online games and provides related services, mainly targeting online game players across Asia, including Greater China and Southeast Asia.

We began developing a new cloud computing business in the second half of 2012. The cloud business aims at providing an integrated platform of services and tools for small-to-medium enterprises in Greater China to increase flexibility, efficiency and competitiveness. We launched the business in April 2013.

In July 2012 we sold a non-controlling interest we held in an online gaming software and service business to BetClic Everest Group (“BEG”). (See Note 5, “Divestitures”, for additional information.) Prior to the disposal, through our equity investment, the gaming software and service business offered software solutions for online gaming, which was licensed under a software license and support service contract.

(b) Basis of Presentation

The accompanying consolidated financial statements of our Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Following the completion of the sale of 60 percent interest in our gaming software and service business in April 2010, we deconsolidated the results of the gaming software and service business and began accounting for the remaining interest under the equity method of accounting until the closing of the disposal transaction in July 2012 when we sold our remaining ownership. (See Note 5, “Divestitures”, for additional information.)

F-10

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI Network Technology (Shanghai) Co., Ltd. (“JIDI”), a wholly-owned subsidiary, and Shanghai JIDI Network Technology Co., Ltd. (“Shanghai JIDI”), a variable-interest entity controlled through a series of contractual arrangements. Therefore the results of these entities are reported as discontinued operations for all periods presented. (See Note 5, “Divestitures”, for additional information.)

(c) Summary of significant accounting policies

Principles of Consolidation

The consolidated financial statements include the accounts of GigaMedia and subsidiaries after elimination of all significant inter-company accounts and transactions. In addition, the accounts of our Company’s variable-interest entities are included in the consolidated financial statements. (See Note 3, “Variable-Interest Entities”, for additional information.) The accounting policies for other less than majority-owned investments are described in Note 1 below within the paragraphs headed “Marketable Securities” and “Investments”.

Foreign Currency Translation and Transactions

Assets and liabilities denominated in non-U.S. dollars are translated to U.S. dollars at year-end exchange rates. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. Cumulative translation adjustments resulting from this process are charged or credited to other comprehensive income. Gains and losses on foreign currency transactions are included in other income and expenses.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and also on assumptions that it believes are reasonable. Management assesses these estimates on a regular basis; however, actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment; allowances for doubtful accounts; the valuation of deferred tax assets, long-lived assets, inventory, investments and share-based compensation; and accrued pension liabilities, income tax uncertainties and other contingencies.

F-11

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Revenue Recognition

General

Revenues are recognized when persuasive evidence of an arrangement exists, delivery occurs and the customer takes ownership and assumes risks or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured.

Sales taxes assessed by governmental authorities on our revenue transactions are presented on a net basis and therefore are excluded from revenues in our consolidated financial statements.

Multiple-Element Arrangements

Our Company enters into multiple-element revenue arrangements, which may include any combination of services, software, and/or products. To the extent that a deliverable in a multiple-element arrangement is subject to specific accounting guidance, whether and/or how to separate multiple deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation) for that deliverable is accounted for in accordance with such specific guidance.

In addition to the aforementioned general policies, the following are the specific revenue recognition policies for each major category of revenue.

F-12

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Asian Online Game and Service Revenues

Online game revenues are earned through the sale of online game points, prepaid cards, game packs, through the sublicensing of certain games to distributors and through licensing fee revenues. Virtual online game points are sold to distributors or end-users who can make the payments through credit cards, Internet ATMs or telecommunication service operators. Physical prepaid cards and game packs are sold through distributors and convenience stores. Proceeds from sales of physical cards and game packs, net of sales discounts, and online game points are deferred when received and revenue is recognized upon the actual usage of the playing time or in-game virtual items by the end-users; over the estimated useful life of virtual items; or when the sold game points expire and can no longer be used to access the online games or products in accordance with our published game points expiration policy. Sublicensing revenues from the distributors are recognized based on end-users’ activation to the game system and when the performance obligations have been completed. Licensing fee revenues are recognized when the delivery of licensed products has occurred and the fee is fixed or determinable.

Sales of virtual online game points and licensing fee revenues are reported on a gross basis. In the sales of virtual online game points and game licenses, we act as principal and we have latitude in establishing price. Fixed percentage fees retained by service providers for payment processing related to our online game services are recognized as cost of online game revenues. We report sublicensing revenues on a net basis. In the sublicense agreements, we act as agent and the distributors are responsible for the operating and the marketing.

Online game and service revenues also include revenues derived from online advertising arrangements, sponsorship arrangements, or a combination of both. These service arrangements allow advertisers to place advertisements on particular areas of our Company’s websites and online game platforms over a stated period of time. Service revenues from online advertising arrangements are recognized ratably over the period of the contract when the collectability is reasonably assured.

Cloud Product and Service Revenues

Cloud service revenues are related to cloud computing services provided by our Company. Revenues are recorded net of discounts. Cloud service revenues are recognized for the period of time for which we provide services to the customer. Customers have a choice of paying either monthly or in advance for a certain period of time, for which they receive corresponding discounts. Our Company records any such advanced payment receipts as other current liabilities and amortizes such revenues over the subscription period.

F-13

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Revenues from the sales of equipment and other related products are recognized upon acceptance.

Deferred Revenues

Deferred revenues consist mainly of the prepaid income related to our Asian online game and service business. Deferred revenue represents proceeds received relating to the sale of game points and in-game items which are activated or charged to the respective player game account by players, but which have not been consumed by the players or expired. Deferred revenue is credited to profit or loss when the game points and in-game items are consumed or expired.

Prepaid Licensing and Royalty Fees

Our Company, through our subsidiaries, routinely enters into agreements with licensors to acquire licenses for using, marketing, distributing, selling and publishing multi-player online games.

Prepaid licensing fees paid to licensors are amortized on a straight-line basis over the shorter of the estimated useful economic life of the relevant online game or license period, which is usually within two to five years. The annual amortization is modified if the amount computed on the ratio of current gross revenues for a game license over the total of current and anticipated future gross revenues for that game license is greater than the amount computed using the straight-line method.

Prepaid royalty fees and related costs are initially deferred when paid to licensors and amortized as operating costs based on certain percentage of revenues generated by the licensee from operating the related online game in the specific country or region over the contract period.

F-14

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Fair Value Measurements

Our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

• Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Our Company generally determines or calculates the fair value of financial instruments using quoted market prices in active markets when such information is available; otherwise we apply appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating adjusted available market discount rate information and our Company’s estimates for non-performance and liquidity risk. These techniques rely extensively on the use of a number of assumptions, including the discount rate, credit spreads, and estimates of future cash flows. (See Note 9, “Fair Value Measurements”, for additional information.)

Cash Equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so near to their maturity that they present relatively insignificant risk from changes in interest rates. Commercial paper, negotiable certificates of deposit, time deposits and bank acceptances with original maturities of three months or less are considered to be cash equivalents. Pledged time deposits are excluded from cash and cash equivalents for purposes of the consolidated statements of cash flows.

F-15

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Marketable Securities

All of our Company’s investments in marketable securities are classified as available-for-sale. These marketable securities are stated at fair value with any unrealized gains or losses recorded in accumulated other comprehensive income (loss) within equity until realized.

Other-than-temporary impairments, if any, are charged to non-operating expense in the period in which the loss occurs. In determining whether an other-than-temporary impairment has occurred, our Company primarily considers, among other factors, the length of the time and the extent to which the fair value of an investment has been at a value less than cost. When an other-than-temporary loss is recorded, the fair value of the investment becomes the new cost basis of the investment and is not adjusted for subsequent recoveries in fair value. Realized gains and losses also are included in non-operating income and expense in the consolidated statements of operations. (See Note 9, “Fair Value Measurements”, for additional information.)

Investments

Equity investments in non-publicly traded securities of companies over which our Company has no ability to exercise significant influence are accounted for under the cost method.

For equity investment accounted for as available-for-sale, cash dividends are recognized as investment income upon a resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares.

F-16

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

For equity investments accounted under equity method, stock dividends received from investees as a result of appropriation of net earnings and additional paid-in capital are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the weighted-average method. Cash dividends are accounted for as a reduction to the original cost of investment.

Equity investments in companies over which our Company has the ability to exercise significant influence but does not hold a controlling financial interest are accounted for under the equity method and our Company’s income or loss on equity method investments is recorded in non-operating income or expenses. The difference between the cost of the acquisition and our Company’s share of the fair value of the net identifiable assets is recognized as goodwill and is included in the carrying amount of the investment. When our Company’s carrying value in an equity method investee is reduced to zero, no further losses are recorded in our Consolidated Financial Statements unless our Company guaranteed obligations of the investee or has committed to additional funding. When the investee subsequently reports income, our Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Unrealized losses that are considered other-than-temporary, if any, are charged to non-operating expenses. Realized gains and losses, measured against carrying amount, are also included in non-operating income and expenses. (See Note 9, “Fair Value Measurements”, for additional information.)

Receivables

Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. Our Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and our customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

F-17

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is recorded on a straight-line basis over useful lives that correspond to categories as follows:

Categories	Years
Buildings	50
Information and communication equipment	2 to 5
Office furniture and equipment	3 to 5
Leasehold improvements	1 to 5

Leasehold improvements are amortized over the shorter of the term of the lease or the economic useful life of the assets. Improvements and replacements are capitalized and depreciated over their estimated useful lives, while ordinary repairs and maintenance are expensed as incurred.

We have entered into agreements to lease certain of our Company’s land and buildings to a third party under operating leases, which were renewed in September and October 2013, and which expire no later than September 2016. As of December 31, 2012 and 2013, the carrying amount of the land and buildings under lease was approximately $1.2 million and $1.2 million, respectively. The rental income under the operating lease amounted to $72 thousand, $74 thousand and $74 thousand for 2011, 2012 and 2013, respectively. The minimum rental income to be received under this operating lease is $209 thousand through September 2016.

Business Acquisitions

Our Company accounts for its business acquisitions using the acquisition method. Under this method, our Company recognizes and measures the identifiable assets acquired, the liabilities assumed and any noncontrolling interest at their acquisition-date fair values, with limited exceptions. Acquisition-related costs are generally expensed as incurred.

F-18

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Intangible Assets and Goodwill

Intangible assets with finite lives are amortized by the straight-line method over their estimated useful lives, ranging from half a year to nine years. Intangible assets with indefinite useful lives are not amortized. Goodwill is not amortized.

Impairment of Intangible Assets, Goodwill and Long-Lived Assets

Goodwill is reviewed for impairment annually or sooner when circumstances indicate an impairment may exist, using a fair-value approach at the reporting unit level. A reporting unit is the operating segment, or a business, which is one level below that operating segment (the “component” level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. In connection with our goodwill impairment test, we first assess qualitative factors as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

Intangible assets with indefinite useful lives are tested for impairment at the reporting unit level, at least annually, or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future discounted cash flows. Impairment is measured as the difference between the carrying amounts and the fair value of the assets, and is recognized as a loss from operations. In connection with our impairment test for the intangible assets with indefinite useful lives, we first assess qualitative factors as a basis for determining whether it is necessary to perform the quantitative impairment test.

F-19

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Long-lived assets other than goodwill and intangible assets not being amortized are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future undiscounted cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured by the extent to which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value, and is recognized as a loss from operations.

(See Note 9, “Fair Value Measurements”, for additional information.)

Software Cost

Costs to develop our Asian online game products are capitalized after technological feasibility has been established, and when the product is available for general release to customers, costs are expensed. Costs incurred prior to the establishment of technological feasibility are expensed when incurred and are included in product development and engineering expenses. Capitalized amounts are amortized using the straight-line method, which is applied over the estimated useful economic life of the software, ranging from half a year to five years. The annual amortization is modified if the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product is greater than the amount computed using the straight-line method.

We capitalize certain costs incurred to purchase or to internally create and implement internal-use computer software, which includes software coding, installation, testing and certain data conversion. These capitalized costs are amortized on a straight-line basis over the shorter of the useful economic life of the software or its contractual license period, which is typically three years.

F-20

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Product Development and Engineering

Product development and engineering expenses primarily consist of research compensation, depreciation and amortization, and are expensed as incurred.

Advertising

Direct-response advertising costs incurred in relation to the acquisition or origination of a customer relationship are capitalized and deferred. The deferred costs are recognized as expense in the Consolidated Statements of Operations over the estimated lives of customer relationships. Costs of broadcast advertising are recorded as expenses as advertising airtime is used. Other advertising expenditures are expensed as incurred.

Advertising expenses incurred in 2011, 2012 and 2013 totaled $3.5 million, $3.2 million and $676 thousand, respectively. As of December 31, 2012 and 2013, prepaid advertising amounted to $1 thousand and $1 thousand, respectively.

Leases

Leases for which substantially all of the risks and rewards of ownership remain with the leasing company are accounted for as operating leases. Payments made under operating leases, net of any incentives received by our Company from the leasing company, are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Leases are classified as capital leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under capital leases are recognized as assets of our Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a lease obligation. Lease payments are apportioned between finance charges and a reduction of the lease obligation in order to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss.

F-21

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to employees. We measure share-based compensation cost at the grant date, based on the estimated fair value of the award. Share-based compensation is recognized for the portion of the award that is ultimately expected to vest, and the cost is amortized on a straight-line basis (net of estimated forfeitures) over the vesting period. Our Company estimates the fair value of stock options using the Black-Scholes valuation model. The cost is recorded in operating costs and operating expenses in the consolidated statements of operations based on the employees’ respective function.

For shares and stock options granted to non-employees, we measure the fair value of the equity instruments granted at the earlier of the performance commitment date or when the performance is completed.

Retirement Plan and Net Periodic Pension Cost

Under our defined benefit pension plan, net periodic pension cost, which includes service cost, interest cost, expected return on plan assets, amortization of unrecognized net transition obligation and gains or losses on plan assets, is recognized based on an actuarial valuation report. We recognize the funded status of pension plans and non-pension post-retirement benefit plans (retirement-related benefit plans) as an asset or a liability in the consolidated balance sheets.

Under our defined contribution pension plans, net periodic pension cost is recognized as incurred.

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities. We recognize the investment tax credit associated with the purchase of intangible assets and technology, research and development expenditures, employee compensation and certain equity investments using the flow-through method. Deferred tax assets and liabilities are measured using the enacted tax rate and laws that will be in effect when the related temporary differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that will more-likely-than-not be realized. In assessing the likelihood of realization, management considers estimates of future taxable income.

F-22

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

In addition, we recognize the financial statement impact of a tax position when it is more-likely-than-not that the position will be sustained upon examination. If the tax position meets the more-likely-than-not recognition threshold, the tax effect is measured at the largest amount that is greater than a 50 percent likely of being realized upon settlement. Interest and penalties on an underpayment of income taxes are reflected as income tax expense in the consolidated financial statements.

Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income for the period by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares, composed of incremental common shares issuable upon the exercise of warrants and options in all periods, are included in the computation of diluted earnings per share to the extent such shares are dilutive. Diluted EPS also takes into consideration the effect of dilutive securities issued by subsidiaries. In a period in which a loss is incurred, only the weighted average number of common shares issued and outstanding is used to compute the diluted loss per share, as the inclusion of potential common shares would be anti-dilutive. Therefore, for the years ended December 31, 2011, 2012 and 2013, basic and diluted loss per share are the same.

Noncontrolling Interest

Noncontrolling interest in the equity of a subsidiary is accounted for and reported as equity. Changes in our Company’s ownership interest in a subsidiary that do not result in deconsolidation are accounted for as equity transactions. Any retained noncontrolling equity investment upon the deconsolidation of a subsidiary is initially measured at fair value.

F-23

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Reclassifications

Certain amounts in 2011 and 2012 have been reclassified to conform to the presentation in our consolidated financial statements as of and for the year ended December 31, 2013.

Segment Reporting

We use the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by our Company’s chief operating decision maker for making operating decisions, allocating resources and assessing performance as the source for determining our operating segments. Our Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer.

Segment profit and loss is determined on a basis that is consistent with how our Company reports operating income (loss) in its consolidated statements of operations. Our Company does not report segment asset information to the CODM. Consequently, no asset information by segment is presented. There are no intersegment transactions.

Discontinued Operations

Discontinued operations are reported when a component of an entity either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of business or geographical area of operations, (b) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale. Discontinued operations are presented separately in the accompanying consolidated statements of operations and prior period financial statements are revised to present discontinued operations retrospectively.

F-24

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(d) Recent Accounting Pronouncements Not Yet Adopted

The FASB issued Accounting Standards Update (“ASU”) 2013-04, Liabilities (Topic 405); Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date, in February 2013. This update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed as the sum of the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the entity expects to pay on behalf of its co-obligors. The update is effective for our fiscal years beginning January 1, 2014, and is to be applied retrospectively to all prior years presented for those obligations resulting from joint and several liability arrangements within the Update’s scope that exist at the beginning of the fiscal year of adoption. We do not expect the initial adoption of the updated guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

NOTE 2. LOSS PER SHARE

The following table provides a reconciliation of the denominators of the basic and diluted per share computations:

(in thousand shares)	2011		2012		2013
Weighted average number of outstanding shares
Basic		54,268		50,720		50,720
Effect of dilutive securities
Employee share-based compensation		—		—		—
Diluted		54,268		50,720		50,720

Options to purchase 1,432 thousand, 1,444 thousand and 1,149 thousand shares of common stock were not included in dilutive securities for the years ended December 31, 2011, 2012 and 2013, respectively, as the effect would be anti-dilutive.

F-25

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 3. VARIABLE-INTEREST ENTITIES

Shanghai JIDI

In order to comply with foreign ownership restrictions and to hold the necessary licenses required, through June 2012 we had operated our Asian online game and service business in the People’s Republic of China (“PRC”) through our VIE, Shanghai JIDI. We had no ownership interest in Shanghai JIDI and relied on a series of contractual arrangements that were intended to give us effective control over Shanghai JIDI. Those contractual arrangements were duly executed and the share pledge agreements were registered with local government authority in compliance with PRC legal requirements. Therefore, we effectively controlled Shanghai JIDI, and were the primary beneficiary of Shanghai JIDI. Shanghai JIDI held an Internet Content Provider (“ICP”) license, an Internet cultural operation license and an Internet publishing license. The financial results of Shanghai JIDI had been included in our consolidated financial statements since January 2011. In June 2012, our board of directors approved a plan to dispose of Shanghai JIDI. As a result, Shanghai JIDI’s operations had been accounted for as discontinued operations. (See Note 5, “Divestitures”, for additional information.) In May 2013, we were notified by the competent authority that Shanghai JIDI had completed the dissolution procedures and was duly deregistered.

For the years ended December 31, 2011 and 2012, and the period from January to May 2013, total revenues and net loss of Shanghai JIDI (which are included within discontinued operations) were as follows:

(in US$ thousands)	2011			2012			2013
Total revenues	$	29		$	100		$	—
Net loss	$	(2,110	)	$	(888	)	$	—

F-26

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 4. ACQUISITIONS

Monsoon

Through Infocomm Asia Holdings Pte Ltd. (“IAHGames”), our then subsidiary in Southeast Asia, we made an equity investment in Monsoon Online Pte Ltd. (“Monsoon”), an operator and distributor of online games in Southeast Asia, in connection with our acquisition of a controlling financial interest in IAHGames with effect from July 1, 2010. In connection with a strategic alliance, Monsoon entered into various agreements with a game licensor to distribute selected games in Southeast Asia (collectively referred to as the “Distribution Partnership”). Although IAHGames owned 100 percent of the common stock of Monsoon, we could not consolidate Monsoon at the time of the acquisition as the game licensor had substantive participating rights in Monsoon’s business operations pursuant to Monsoon’s management agreement. In September 2011, IAHGames, Monsoon and the game licensor entered into an agreement whereby all parties agreed to terminate early Monsoon’s management agreement and other agreements with the game licensor which had granted the licensor the abovementioned substantive participating rights in connection with Monsoon. The agreement was effective from August 31, 2011. Starting from September 1, 2011, IAHGames had effective control over Monsoon and had consolidated Monsoon thereon.

The agreement was effective from the third quarter of 2011. In January 2012, IAHGames’ and Monsoon’s commitments under the Distribution Partnership with the game licensor were fully terminated. The execution and closing of this agreement resulted in the following significant financial statement impacts in our consolidated statements of operations:

(in US$ thousands)	2011
Gain on cancellation of warrant liabilities	$	665
Gain on reversal of impairment of prepaid expenses		1,347
Recovery of loss on termination of third-party contract	$	2,012

FingerRockz

On October 18, 2013, we subscribed in cash to 405 thousand new common shares of FingerRockz Co., Ltd. (“FingerRockz”), which represents a controlling financial interest of 51.6 percent of the ownership; thereupon we began consolidating FingerRockz. FingerRockz is a mobile game developer and publisher in Taiwan, and we acquired it purposely to enhance our research and development capabilities for mobile games. This primary factor among others, contributed to a purchase price in excess of the fair value of the net identifiable assets acquired and liabilities assumed, and intangible assets. In the acquisition, the most appealing asset to our Company was FingerRockz’s creative team. Because the assembled workforce was not an identifiable asset to be recognized separately from goodwill, the value attributed to it was subsumed into goodwill. The goodwill related to this acquisition is not expected to be deductible for tax purpose.

F-27

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following table summarizes the consideration paid for the acquisition and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

(In US$ thousands)	Amount
Consideration and noncontrolling interest:
The consideration transferred	$	510
The fair value of noncontrolling interest in FingerRockz		478
	$	988
Identifiable assets acquired and liabilities assumed:
Cash, receivables and other current assets	$	585
Customer contracts		67
Payables and other current liabilities		(160	)
Net		492
Goodwill		496
	$	988

F-28

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following unaudited pro forma results of operations for the years ended December 31, 2012 and 2013 are presented as if the acquisition had been consummated on January 20, 2012, the inception of FingerRockz:

	For the years ended December 31 (unaudited)
(in US$ thousands, except for loss per share)	2012			2013
Net revenues	$	27,477		$	15,040
Net loss attributable to GigaMedia shareholders	$	(15,334	)	$	(34,845	)
Basic and diluted loss per share	$	(0.30	)	$	(0.69	)

The above unaudited pro forma information does not reflect any incremental direct costs, including any restructuring charges to be recorded in connection with the acquisition, or any potential cost savings that may result from the consolidation of certain operations of our Company or FingerRockz. Accordingly, the unaudited pro forma financial information above not necessarily indicative the actual results that would have occurred had the acquisition of FingerRockz been combined during the periods presented, nor it necessarily indicative of future consolidated results of operations.

NOTE 5. DIVESTITURES

T2CN

On December 14, 2011, we completed the sale of our equity method investee T2CN. Pursuant to the agreement, we sold all of our ownership interest in T2CN to Hornfull Limited in exchange for a cash payment of $4.7 million, resulting in a gain of $4.7 million being recognized in 2011. Hornfull Limited also reimbursed us $790 thousand in cash for legal fees incurred by us in connection with the T2CN dispute.

F-29

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

IAHGames

In July 2012, we entered into agreements to sell a 60 percent ownership in IAHGames, together with the sale of a 100 percent ownership in Spring Asia Limited (“Spring Asia”), which has a 30 percent interest in Game First International Corporation (“GFI”), to IAHGames’ management and Management Capital International Limited (“MCIL”), a British Virgin Islands company owned by IAHGames’ management. We retained a 20 percent ownership in IAHGames. Upon the closing of the agreements, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method.

Our Company accounted for the deconsolidation of and the retained noncontrolling investment in IAHGames in August 2012 at fair value.

In consideration for the sale of IAHGames and Spring Asia, we were to receive $3 million in cash. The consideration was to be collected in four equal installments, with the first due upon closing, the second due in October 2012, the third due in January 2013 and the fourth due in April 2013. The payments were collateralized by the shares of Spring Asia and were only released from the escrow in proportion to the payment made upon each installment. The first installment of $750 thousand was received upon the closing on August 15, 2012. However, the buyer had defaulted on the remaining three installments. Considering the uncertainty as to the collectability of the remaining three installments, we had deferred the disposal gain of $211 thousand against the consideration installments receivable of $2,250 thousand as of December 31, 2012. The deferred gain was determined as follows:

(In US$ thousand)	Amount
The fair value of consideration received and receivable, net of any transaction costs, plus	$	3,000
The fair value of the 20% retained noncontrolling investment in IAH at the date of deconsolidation		—
		3,000
The carrying amount (credit balance) of IAHGames at the date of deconsolidation		(14,536	)
Net receivables due to GigaMedia from IAHGames waived upon the closing of the sale		17,542
Other comprehensive income component of equity related to IAHGames at the date of the deconsolidation		(217	)
		2,789
Deferred gain on deconsolidation of IAH	$	211

F-30

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

On April 17, 2013, we entered into a settlement agreement with IAHGames, IAHGames’ management, and MCIL. Pursuant to the settlement agreement, either IAHGames or IAHGames’ management was to pay us $2,258 thousand, which included interest, to fulfill IAHGames’ obligation under the aforementioned sale of ownership in Spring Asia. In addition, MCIL was to purchase all of our remaining shares in IAHGames for a consideration of $1,000 thousand. The payments were received in May 2013. Upon the receipt of these payments, the above deferred gain and disposal gain for the remaining shares were recognized in the non-operating income accordingly.

JIDI Network Technology (Shanghai) Co., Ltd. (“JIDI”)

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI, a wholly-owned subsidiary, and Shanghai JIDI, a VIE controlled through a series of contractual arrangements.

Results for JIDI and Shanghai JIDI operations are reported as discontinued operations for all periods presented. The carrying amounts of the remaining assets and liabilities, if any, of JIDI and Shanghai JIDI were not significant to our consolidated financial statements as of December 31, 2012 and 2013, and we recorded a loss of approximately $588 thousand in connection with the disposal of property, plant and equipment, which was included within discontinued operations in 2012. The process of liquidation and dissolution was completed by the end of 2013. Summarized financial information for discontinued operations of JIDI and Shanghai JIDI are as follows:

(in US$ thousands)	2011			2012			2013
Revenue	$	29		$	100		$	—
Loss from discontinued operations before tax	$	(4,240	)	$	(2,521	)	$	(318	)
Income tax expense		—			—			—
Loss from discontinued operations	$	(4,240	)	$	(2,521	)	$	(318	)

F-31

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Non-controlling Interest in Gaming software and service business

We held a non-controlling equity interest in a gaming software and service business to July 2012, when we entered into another agreement with BEG to sell our non-controlling ownership interest, along with the shareholders loan (discussed in more detail in Note 26, “Related-Party Transactions”), for a consideration of $1.7 million. Of this consideration, $985 thousand was paid to us in cash, while the remainder related to the extinguishment of a 2009 tax liability. The closing of the sale occurred in August 2012. The sale resulted in the recognition of a gain of $2.5 million, net of transaction costs.

NOTE 6. GOODWILL

The following table summarizes the changes to our Company’s goodwill:

(In US$ thousands)	2011			2012			2013
Balance at beginning of year	$	39,493		$	28,437		$	16,934
Acquisition - OneNet and FingerRockz (Note 4)		1,049			—			496
Impairment charge - IAHGames, OneNet, FunTown and FingerRockz (Note 9)		(5,097	)		(12,489	)		(17,054	)
Reversal of contingent payment of minimum guarantee under licensing agreement		(5,885	)		—			—
Translation adjustment		(1,123	)		986			(376	)
Balance at end of year	$	28,437		$	16,934		$	—

F-32

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

By the acquisition of FingerRockz in 2013, we obtained its mobile platform development experience which now constitutes an important complement to FunTown’s R&D capacity in mobile games. We reassigned its role and developed our estimates of future cash flows from mobile games accordingly. Therefore, for the purpose of testing goodwill for impairment, we determined FingerRockz to be an integral part of FunTown with respect to determining reporting unit, and goodwill arising from the acquisition of FingerRockz was reassigned to FunTown.

F-33

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 7. INTANGIBLE ASSETS - NET

The following table summarizes our Company’s intangible assets, by major asset class:

	December 31, 2012
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,603	$	2,603	$	—
Capitalized software development cost		3,480		1,414		2,066
Customer relationships		6,274		4,880		1,394
Other		137		133		4
		12,494		9,030		3,464
With indefinite-life intangible assets
Trade name and trademark		12,211		—		12,211
	$	24,705	$	9,030	$	15,675

	December 31, 2013
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,536	$	2,536	$	—
Capitalized software development cost		3,130		2,471		659
Customer relationships		6,112		5,433		679
Other		141		18		123
		11,919		10,458		1,461
With indefinite-life intangible assets
Trade name and trademark		—		—		—
	$	11,919	$	10,458	$	1,461

F-34

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Intangible assets with finite lives are amortized over their estimated useful lives ranging from 0.5 to 9 years, with the overall weighted-average life of 5.6 years.

For the years ended December 31, 2011, 2012 and 2013, total amortization expense of intangible assets were $2.3 million, $2.2 million and $1.9 million, respectively, which includes amortization of capitalized software development costs of $962 thousand, $1.1 million and $1.2 million. As of December 31, 2013, based on the current amount of intangibles subject to amortization, the estimated amortization expense for each of the following years is as follows:

(In US$ thousands)	Amount
2014	$	1,104
2015		202
2016		147
2017		8
	$	1,461

NOTE 8. PREPAID LICENSING AND ROYALTY FEES

The following table summarizes changes to our Company’s prepaid licensing and royalty fees:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	4,214		$	7,103		$	8,644
Net operating additions		3,379			2,395			(908	)
Acquisition - OneNet		129			—			—
Deconsolidation - IAHGames		—			(152	)		—
Impairment charges (Note 9)		(247	)		(702	)		(3,070	)
Impairment charges (Note 9) recorded in loss from discontinued operations		(372	)		—			—
Balance at end of year	$	7,103		$	8,644		$	4,666

F-35

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 9. FAIR VALUE MEASUREMENTS

The following table presents the carrying amounts and estimated fair values of our Company’s financial instruments at December 31, 2012 and 2013.

(in US$ thousands)	2012				2013
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and cash equivalents	$	62,731	$	62,731	$	58,801	$	58,801
Marketable securities - current		17,773		17,773		21,460		21,460
Accounts receivable		2,829		2,829		2,027		2,027
Marketable securities - noncurrent		4,292		4,292		6,048		6,048
Refundable deposits		392		392		306		306
Other receivable - noncurrent		2,039		2,039		—		—
Financial liabilities
Accounts payable		324		324		1,178		1,178
Accrued compensation		1,233		1,233		380		380
Accrued expenses		5,182		5,182		2,617		2,617
Short-term borrowings		7,748		7,748		4,361		4,361

The carrying amounts shown in the table are included in the consolidated balance sheets under the indicated captions, except for Other receivable - noncurrent, which is included in Other assets - other.

The fair values of the financial instruments shown in the above table as of December 31, 2012 and 2013 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an arm’s length transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. In situations where there is little market activity for the asset or liability at the measurement date, the fair value measurement reflects our Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by us based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

F-36

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

• Cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and expenses, and short-term borrowings: The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments.

• Marketable securities: Open-end fund, debt and equity securities classified as available for sale are measured using quoted market prices at the reporting date multiplied by the quantity held. Equity securities under resale restriction are measured with estimated restriction discount. Redeemable preferred shares are measured using valuation techniques.

• Refundable deposits: Measurement of refundable deposits with no fixed maturities is based on carrying amounts.

• Other receivable – noncurrent: Considering the uncertainty of collectability being mitigated by the short maturity and the equity securities pledged as collateral, we determined that its carrying amount approximated the fair value.

Significant Unobservable Inputs

The table below presents the ranges of significant unobservable inputs used to value our Company’s level 3 financial instruments. These ranges represent the significant unobservable inputs that were used in the valuation of each type of financial instrument. These inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of our level 3 financial instruments.

F-37

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2012
Debt securities – Preferred shares with redemption rights	Recoverability considering: •       Undiscounted cash flow forecast •       Long-term growth rate •       Discount rate •       Volatility •       Redemption date	•       KRW -8.2 billion ~ 22.1 billion, (equivalent to -$7.7 million ~$20.8 million) •       3% •       17.8% •       44.7% •       1 year later
Equity securities – Listed securities under resale restriction	•       Restriction discount	•       34.81%

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2013
Debt securities – Preferred shares with redemption rights	•       Price/Sales per share ratio for selective comparable companies •       Discount for lack of marketability	•       2.5 times ~ 5.9 times •       25%

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

Our Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below.

F-38

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Assets and liabilities measured at fair value on a recurring basis are summarized as below:

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2012
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	1,514	$	—	$	1,514
Marketable securities - current
Equity securities		17,773		—		—		17,773
Marketable securities - noncurrent
Debt securities		—		—		2,727		2,727
Equity securities		—		—		1,565		1,565
	$	17,773	$	1,514	$	4,292	$	23,579

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2013
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	14,638	$	—	$	14,638
Marketable securities - current
Open-end fund		336		—		—		336
Equity securities		21,124		—		—		21,124
Marketable securities - noncurrent
Debt securities		—		2,109		3,939		6,048
	$	21,460	$	16,747	$	3,939	$	42,146

Our Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1 for the years ended December 31, 2012 and 2013.

Level 1 and 2 measurements:

Cash equivalents – time deposits are convertible into a known amount of cash and are subject to an insignificant risk of change in value. Certain marketable securities are valued using a market approach based on the quoted market prices of identical instruments when available, or other observable inputs such as trading prices of identical instruments in inactive markets. The fair values of the marketable equity securities that have publicly quoted trading prices are valued using those observable prices, unless adjustments are required to available observable inputs.

F-39

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

In 2011, 2012 and 2013, we recorded unrealized gains (losses) of $16.2 million, $(24.0) million and $4.7 million, respectively, on marketable securities, which are included in other comprehensive income.

Level 3 measurements:

For assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2012 and 2013, a reconciliation of the beginning and ending balances are presented as follows:

(in US$ thousands)	Marketable Securities - Debt and Equity Securities
	2012			2013
Balance at beginning of year	$	5,454		$	4,292
Total gains or (losses) (realized/unrealized)
included in earnings		(493	)		985
included in other comprehensive income		—			1,212
Sale		(2,727	)		(2,550	)
Transfer into Level 3		2,058			—
Balance at end of year	$	4,292		$	3,939
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(493	)	$	—

F-40

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Realized and unrealized gains (or losses) included in income for 2012 and 2013 for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in the consolidated statements of operations within the following line items:

(in US$ thousands)	Gain on sales of marketable securities			Impairment loss on marketable securities and investments			Recovery of loss on termination of third-party contract
Total gains (losses) included in earnings
for 2011	$	—		$	—		$	665
for 2012		3,370			(493	)		—
for 2013		985			—			—
Change in unrealized gains (losses) relating to assets still held at the reporting date
for 2011	$	(674	)	$	—		$	—
for 2012		352			(493	)		—
for 2013		1,212			—			—

The marketable equity securities were transferred from Level 2 to Level 3 in 2012 to reflect the fact of dwindled market transaction volume of the investee’s shares, and the auditors’ report on its interim financial statements including an explanatory paragraph about uncertainties regarding the investee’s ability to continue as a going-concern.

The fair values of the marketable debt and equity securities are derived using a discounted cash flow method with unobservable inputs or adopting a market approach using observable inputs of guideline public companies that market participants would use in pricing the securities. The discounted cash flow method incorporates adjusted available market discount rate information and our Company’s estimates of liquidity risk, and other cash flow model related assumptions.

In 2011, 2012 and 2013, we recognized other-than-temporary impairments of $0, $493 thousand and $0, respectively, related to marketable debt and equity securities, which is included in non-operating expenses within “impairment loss on marketable securities and investments” in the consolidated statements of operations.

F-41

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis include measuring impairment when required for long-lived assets. For GigaMedia, long-lived assets measured at fair value on a nonrecurring basis include investments accounted for under the equity method and cost method, property, plant, and equipment, intangible assets, prepaid licensing and royalty fees, and goodwill.

Assets and liabilities measured at fair value on a nonrecurring basis that were determined to be impaired as of December 31, 2012 and 2013 are summarized as below:

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2012
(a) Goodwill - Resulting from acquisition of FunTown	$	—	$	—	$	16,934	$	16,934	$	12,489
(b) Intangible assets - Capitalized software cost		—		—		—		—		15
(c) Prepaid licensing and royalty fees		—		—		—		—		702
(d) Investments - Cost-method		—		—		—		—		700
Total	$	—	$	—	$	16,934	$	16,934	$	13,906

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2013
(a) Goodwill - Resulting from acquisition of FunTown and FingerRockz	$	—	$	—	$	—	$	—	$	17,054
(b) Intangible assets - Trade name and Capitalized software cost		—		—		—		—		13,251
(c) Prepaid licensing and royalty fees		—		—		—		—		2,752
Total	$	—	$	—	$	—	$	—	$	33,057

F-42

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(a) Impairment losses on goodwill which was determined to be impaired:

The fair value of the Asian online game reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. In the 2012 goodwill impairment assessment, we estimated future net cash flow using management’s internally developed estimates and included a terminal value calculated using a long-term future growth rate of 0% based on analysis of the current and expected future economic conditions. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 7% and a weighted average cost of capital to discount these expected future cash flows of 17%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $16.9 million. Consequently, a goodwill impairment charge of $12.5 million was recognized in 2012.

In 2013, due to a continued slowdown in demand for our casual online games and the unexpected loss of a key licensed game, we experienced a significant decline in revenues and a negative operating margin in Taiwan from our previous future cash flow expectations from this reporting unit. Further, in the Fall of 2013 we went through an internal restructuring of our operations and made a business decision to transition from PC-based games to browser/mobile games and social casino games. Also our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the revised fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, we developed our expected future net cash flows based on historical data and internally developed estimates as part of our updated long-term strategic plan and included a terminal value of $0. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 28% and a weighted average cost of capital to discount these expected future cash flows of 13%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $0. Consequently, a goodwill impairment charge of $17.1 million was recognized in 2013.

F-43

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(b) Impairment losses on certain intangible assets which were determined to be impaired:

In 2012 and 2013, the trade name arising from the acquisition of FunTown and certain capitalized software development costs were fully written down, resulting in impairment charges of $15 thousand and $13.3 million, respectively, included in operating expenses within “impairment loss on intangible assets” in the consolidated statements of operations. The impairment charge for the Trade name of FunTown is a result of our repositioning of it as described above, while the impairment charges for the capitalized software costs were the result of certain projects within our Asian online game and service business that we ceased further development on, and as a result, we recorded a full impairment of the carrying value of the assets related to these projects.

(c) Impairment losses on certain prepaid licensing and royalty fees which were determined to be impaired:

In 2012 and 2013, certain prepaid licensing and royalty fees were fully written down, resulting in impairment charges of $702 thousand and $2.8 million, respectively. This impairment is included in operating expenses in the consolidated statements of operations. The impairment charges for the prepaid licensing and royalty fees related to certain licensed games within our Asian online game and service business that we stopped operating or for which the carrying amounts of the related assets were determined not to be recoverable from their expected future undiscounted cash flows. The licensing fee games and related royalties are re-valued on when impairment exists, using unobservable inputs such as discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk, along with other cash flow model related assumptions.

(d) Impairment losses on certain cost method investments which were determined to be impaired:

In 2012, certain cost method investments were fully written down, resulting in an impairment charge of $700 thousand. The impairment charges are included in non-operating expenses within “impairment loss on marketable securities and investments” in the consolidated statements of operations.

Cost method and equity method investments are measured at fair value on a nonrecurring basis when declines in fair value are determined to be other-than-temporary, using other observable inputs such as trading prices of similar classes of the stock or using discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk.

F-44

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

	December 31
(in US$ thousands)	2012		2013
Cash and savings accounts	$	61,217	$	44,163
Time deposits		1,514		14,638
	$	62,731	$	58,801

We maintain cash and cash equivalents in bank accounts with major financial institutions with high credit ratings located in the following jurisdictions:

	December 31
(in US$ thousands)	2012		2013
Taiwan	$	59,195	$	55,661
Hong Kong		2,809		2,956
Malaysia		100		133
PRC		626		—
Others		1		51
	$	62,731	$	58,801

F-45

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 11. MARKETABLE SECURITIES – CURRENT

Marketable securities – current consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities:
Equity securities	$	17,773	$	21,124
Open-end fund		—		336
	$	17,773	$	21,460

All of our Company’s marketable securities – current are classified as available-for-sale. As of December 31, 2012 and 2013, the balances of unrealized gains for marketable securities - current were $14.4 million and $17.9 million, respectively. During 2011, 2012 and 2013, realized gains from the disposal of marketable securities - current amounted to $535 thousand, $2.3 million, and $754 thousand, respectively. The costs for calculating gains on disposal were based on each security’s average cost.

NOTE 12. ACCOUNTS RECEIVABLE – NET

Accounts receivable consist of the following:

	December 31
(in US$ thousands)	2012			2013
Accounts receivable	$	2,959		$	2,082
Less: Allowance for doubtful accounts		(130	)		(55	)
	$	2,829		$	2,027

F-46

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following is a summary of the changes in our Company’s allowance for doubtful accounts during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	842		$	2,594		$	130
Additions: Provision for bad debt expense		1,820			169			37
Less: Write-offs		(61	)		(269	)		(109	)
Deconsolidation - IAHGames		—			(2,370	)		—
Translation adjustment		(7	)		6			(3	)
Balance at end of year	$	2,594		$	130		$	55

NOTE 13. OTHER CURRENT ASSETS

Other current assets consist of the following:

	December 31
(in US$ thousands)	2012			2013
Loans receivable - current	$	3,437		$	3,394
Less: Allowance for loans receivable - current		(3,437	)		(3,394	)
Deferred income tax assets - current, net (Note 25)		840			—
Other		161			293
	$	1,001		$	293

The following is a reconciliation of changes in our Company’s allowance for loans receivable - current during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011		2012			2013
Balance at beginning of year	$	5,057	$	5,057		$	3,437
Additions: Provision for bad debt expenses		—		—			—
Less: Writes-offs		—		(1,620	)		—
Less: Reversal for collection of bad debt		—		—			(54	)
Translation adjustment		—		—			11
Balance at end of year	$	5,057	$	3,437		$	3,394

F-47

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 14. MARKETABLE SECURITIES – NONCURRENT

Marketable securities – noncurrent consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities
Debt securities	$	2,727	$	6,048
Equity securities		1,565		—
	$	4,292	$	6,048

Our Company’s marketable securities - noncurrent are invested in convertible preferred shares, corporate bonds and publicly-traded common shares and are classified as available-for-sale securities.

The preferred shares are convertible into common shares on 1:1 basis, subject to certain adjustments, and shall be automatically converted upon certain conditions outlined in the agreements. The convertible preferred shares are all redeemable based upon certain agreed-upon conditions.

The embedded conversion options of the convertible preferred shares do not meet the definition of derivative instruments and therefore are not bifurcated from the preferred share investment.

We have also considered and determined whether our investments in preferred shares are in-substance common shares which should be accounted for under the equity method. Given that our convertible preferred shares have substantive redemption rights and thus do not meet the criteria of in-substance common shares, we have accounted for them as debt securities.

As of December 31, 2012 and 2013, the balances of unrealized gains for marketable securities - noncurrent were $0 and $1.2 million, respectively. During 2011, 2012 and 2013, realized gains from the disposal of marketable securities — non-current amounted to $5.8 million, $3.4 million and $985 thousand, respectively. Gains on disposal were based on the security’s average cost.

F-48

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 15. INVESTMENTS

Investments consist of the following:

	December 31
(in US$ thousands)	2012		2013
Investments accounted for under the equity method	$	5,223	$	5,822

Our Company’s investments accounted for under the equity method primarily consist of the following: (a) through July 31, 2012, a 40 percent equity interest investment, later diluted to 33.66 percent interest in Mangas Everest S.A.S. (“Mangas Everest”), which is engaged in the gaming software and service business (See Note 5 “Divestitures” for additional information); (b) through August 15, 2012, a 30 percent equity interest investment in Game First International Corporation (“GFI”), an operator and distributor of online games in Taiwan (See Note 5 “Divestitures”, for additional information); (c) through August 31, 2011, a 100 percent equity interest investment in Monsoon Online Pte Ltd. (“Monsoon”), an operator and distributor of online games in Southeast Asia (See Note 4 “Acquisitions” for additional information); (d) from July 2012 to May 2013, a 20 percent equity interest investment in Infocomm Asia Holdings Pte Ltd. (“IAHGames”), an online game operator, publisher and distributor in Southeast Asia (See Note 5 “Divestitures”, for additional information); and (e) an 18 percent equity interest investment in East Gate Media Contents & Technology Fund (“East Gate”), a Korean Fund Limited Partnership that invests in online game businesses and films. The investments in these companies amounted to $5.2 million and $5.8 million as of December 31, 2012 and 2013, respectively.

As of December 31, 2011, our share of the underlying net assets of Mangas Everest exceeded the carrying value of our investment by $9.3 million. The excess results from the difference between the fair value we assigned to the 40 percent retained interest in Mangas Everest at the date the business was deconsolidated, compared to 40 percent of the total fair value of Mangas Everest as determined by BEG, the purchaser of the 60 percent interest.

F-49

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

In 2011 and 2012 (through July 31, 2012 when we sold the remaining 33.66 percent interest to BEG), we recognized our share of losses in Mangas Everest under the equity method of accounting which totaled $49.7 million, and $0, respectively, which resulted in a negative investment balance as of July 31, 2012. We charged this negative investment balance against the loan receivable that Mangas Everest had outstanding to us as of July 31, 2012. (See Note 26, “Related Party Transactions”, for additional information.)

We, through IAHGames, made an equity investment in Monsoon in connection with our acquisition of a controlling financial interest in IAHGames. Although IAHGames owned 100 percent of the common stock of Monsoon, prior to September 2011 we determined that Monsoon could not be consolidated by IAHGames due to the substantive participating rights that the game licensor had in Monsoon pursuant to Monsoon’s management agreement. In 2011 (through August 31, 2011), we recognized our share of gains under the equity method of accounting which totaled $230 thousand. (See Note 26, “Related Party Transactions”, for additional information.)

In September 2011, IAHGames, Monsoon and the game licensor entered a transition agreement to early terminate the previous agreement in which the abovementioned substantive participating rights were granted, effective August 31, 2011, and thus restored IAHGames’ full control in Monsoon. Therefore, starting September 1, 2011, we had consolidated Monsoon until July 2012 when we deconsolidated IAHGames. (See Note 4, “Acquisition”, for additional information.)

In July 2012, we entered into agreements to sell a 60 percent ownership in IAHGames to IAHGames’ management and Management Capital International Limited (“MCIL”), a British Virgin Islands company owned by IAHGames’ management. As we only retained a 20 percent ownership in IAHGames, upon the closing of the agreements, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method up to May 2013 when we sold the remaining interest in IAHGames to IAHGames’ management and MCIL. (See Note 5, “Divestitures” for additional information.)

F-50

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Our Company has an 18 percent interest in East Gate, a Korean Limited Partnership. We account for this limited partnership investment under the equity method accounting since we have the ability to exercise significant influence over partnership operating and financial policies based on the terms of the partnership agreement.

NOTE 16. SHORT-TERM BORROWINGS

As of December 31, 2012 and 2013, unsecured short-term borrowings totaled $7.7 million and $4.4 million, respectively. These amounts were borrowed from certain financial institutions. The annual interest rates on these borrowings was 1.42 percent for 2012, and ranged from 1.50 percent to 1.60 percent for 2013. The maturity dates fell in mid-January 2013 as of December 31, 2012 and in late January 2014 as of December 31, 2013. As of December 31, 2012 and 2013, the weighted-average interest rate on total short-term borrowings was 1.42 percent and 1.52 percent, respectively.

As of December 31, 2012 and 2013, the total amount of unused lines of credit available for borrowing under these agreements was approximately $6.9 million and $9.9 million, respectively.

During the period from January 2014 to March 2014, we repaid certain short-term borrowings totaling $11.9 million, and renewed short-term borrowing agreements totaling $11.9 million.

F-51

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 17. ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31
(in US$ thousands)	2012		2013
Accrued professional fees	$	1,319	$	740
Accrued royalties		967		128
Accrued advertising expenses		696		421
Accrued incentive to distributors		172		137
Accrued director compensation and liability insurance		513		424
Other		1,515		767
	$	5,182	$	2,617

NOTE 18. OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Income taxes payable	$	1,381	$	1,560
Deferred tax liabilities (Note 25)		2,207		1,987
Other		398		315
	$	3,986	$	3,862

F-52

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 19. PENSION BENEFITS

Our Company and our subsidiaries have defined benefit and defined contribution pension plans that cover substantially all of our employees.

Defined Benefit Pension Plan

We have a defined benefit pension plan in accordance with the Labor Standards Law of the Republic of China (R.O.C.) for our employees located in Taiwan, covering substantially all full-time employees for services provided prior to July 1, 2005, and employees who have elected to remain in the defined benefit pension plan subsequent to the enactment of the Labor Pension Act on July 1, 2005. Under the defined benefit pension plan, employees are entitled to a lump sum retirement benefit upon retirement equivalent to the aggregate of 2 months’ pensionable salary for each of the first 15 years of service and 1 month’s pensionable salary for each year of service thereafter subject to a maximum of 45 months’ pensionable salary. The pensionable salary is the monthly average salary or wage of the final six months prior to approved retirement.

We use a December 31 measurement date for our defined benefit pension plan. As of December 31, 2012 and 2013, the accumulated benefit obligation amounted to $429 thousand and $360 thousand, respectively, and the funded status of accrued pension liability amounted to $281 thousand and $170 thousand, respectively. The fair value of plan assets amounted to $291 thousand and $300 thousand as of December 31, 2012 and 2013, respectively. The accumulated other comprehensive income amounted to $2 thousand and $0 as of December 31, 2012 and 2013, respectively. The net periodic benefit cost (income) for 2011, 2012 and 2013 amounted to $(18) thousand, $30 thousand and ($77) thousand, respectively.

F-53

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2013 and 2012:

	December 31
(in US$ thousands)	2012		2013
Benefit Obligation	$	572	$	470
Fair value of plan assets		291		300
	$	281	$	170
Amounts recognized in the balance sheet consist of:
Noncurrent liabilities	$	281	$	170
Accumulated other comprehensive income		2		—
Net amount recognized	$	279	$	170
Amounts recognized in accumulated comprehensive income consist of:
Unrecognized net gain	$	2	$	—

Weighted average assumptions used to determine benefit obligations for 2013 and 2012 were as follows:

	December 31
	2012			2013
Discount rate		1.75	%		2.00	%
Rate of compensation increase		1.50	%		1.50	%
Rate of return on plan assets		1.75	%		2.00	%

Management determines the discount rate and rate of return on plan assets based on the yields of twenty year ROC central government bonds which is in line with the respective employees remaining service period and the historical rate of return on the above mentioned Fund mandated by the ROC Labor Standard Law.

We have contributed an amount equal to 2 percent of the salaries and wages paid to all qualified employees located in Taiwan to a pension fund (the “Fund”). The Fund is administered by a pension fund monitoring committee (the “Committee”) and deposited in the Committee’s name in the Bank of Taiwan. Our Company makes pension payments from our account in the Fund unless the Fund is insufficient, in which case we make payments from internal funds as payments become due. We seek to maintain a normal, highly liquid working capital balance to ensure payments are made timely.

F-54

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

We expect to make a contribution of $17 thousand to the Fund in 2014. We do not expect to make any benefit payments through 2020.

Defined Contribution Pension Plans

We have provided defined contribution plans for employees located in Taiwan and Hong Kong. Contributions to the plans are expensed as incurred.

Taiwan

Pursuant to the new “Labor Pension Act” enacted on July 1, 2005, our Company has a defined contribution pension plan for our employees located in Taiwan. For eligible employees who elect to participate in the defined contribution pension plan, we contribute no less than 6 percent of an employee’s monthly salary and wage and up to the maximum amount of NT$9 thousand (approximately $302), to each of the eligible employees’ individual pension accounts at the Bureau of Labor Insurance each month. Pension payments to employees are made either by monthly installments or in a lump sum from the accumulated contributions and earnings in employees’ individual accounts.

Hong Kong

According to the relevant Hong Kong regulations, we provide a contribution plan for the eligible employees in Hong Kong. We must contribute at least 5 percent of the employees’ total salaries. For this purpose, the monthly relevant contribution to their individual contribution accounts is subject to a cap of HK$1.25 thousand (approximately $161). After the termination of employment, the benefits still belong to the employees in any circumstances.

The total amount of defined contribution pension expenses pursuant to our defined contribution plans for the years ended December 31, 2011, 2012, and 2013 were $896 thousand, $585 thousand, and $357 thousand, respectively.

F-55

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 20. OTHER LIABILITIES - OTHER

Other liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Deferred tax liabilities (Note 25)	$	561	$	—
Other		12		11
	$	573	$	11

NOTE 21. SUBSIDIARY PREFERRED SHARES

In connection with our acquisition of a controlling financial interest in IAHGames, that subsidiary had Class A preferred shares, which were owned by the noncontrolling shareholders. As August 15, 2012 when we deconsolidated IAHGames, these Class A preferred shares were valued at $1.3 million, and represented 8.9 percent of IAHGames’ accumulated voting interest. The holder of the Class A preferred shares was entitled to cumulative dividends at 10 percent per annum. The preferred shares were redeemable at the holder’s option at any time after the expiration of certain licensed games, and were convertible into ordinary shares at any time. Pursuant to agreements entered into in connection with our acquisition of IAHGames in July 2010, all Class A preferred shares were to be converted to ordinary shares of IAHGames at the acquisition date. The preferred shares were fully converted into ordinary shares by the closing date when we sold 60 percent of IAHGames. (See Note 5, “Divestitures”, for additional information.)

Since the Class A preferred shares were never currently redeemable and it was not probable that they would become redeemable as a result of our acquisition of IAHGames, the subsequent adjustment for accretion was not required. However, the cumulative dividends and the reversal of dividends upon the conversion described above for these Class A preferred shares of $321 thousand and $(469) thousand for the years ended December 31, 2011 and the period from January 1, 2012 to July 31, 2012, respectively, are included as a component of “net income (loss) attributable to the noncontrolling interest” in the consolidated statement of operations.

F-56

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 22. EQUITY

In accordance with Singapore law, the holders of ordinary shares that do not have par value, are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the general meeting of our company. All shares rank equally with regard to our company’s residual assets. In addition, we are not required to have a number of authorized common shares to be issued.

In accordance with R.O.C. law, an appropriation for legal reserve amounting to 10 percent of a company’s net profit is required until the reserve equals the aggregate par value of such Taiwan company’s issued capital stock. As of December 31, 2012 and 2013, the legal reserves of Hoshin GigaMedia Center Inc. (“Hoshin GigaMedia”) were $3.0 million for each period. The reserve can only be used to offset a deficit or be distributed as a stock dividend of up to 50 percent of the reserve balance when the reserve balance has reached 50 percent of the aggregate paid-in capital of Hoshin GigaMedia.

Under PRC laws and regulations, there were certain foreign exchange restrictions on our Company’s PRC subsidiaries and VIE subsidiaries with respect to transferring certain of their net assets to our Company either in the form of dividends, loans or advances. As of December 31, 2012 and 2013, our Company’s total restricted net assets, which included paid up capital of PRC subsidiaries and the net assets of VIE subsidiaries in which our Company had no legal ownership, were approximately $1.5 million and $0, respectively.

F-57

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

On May 20, 2011, our board of directors approved an $11 million share repurchase program of GigaMedia’s common stock. Under the terms of the share repurchase program, GigaMedia could repurchase up to $11 million worth of its issued and outstanding shares during the period starting from June 1, 2011 to November 30, 2011. The repurchases could be made from time to time on the open market at prevailing market prices pursuant to a Rule 10b5-1 plan, subject to restrictions relating to volume, pricing and timing. The timing and extent of any repurchases depended upon market conditions, the trading price of GigaMedia’s shares and other factors. This share repurchase program was implemented in a manner consistent with market conditions, in the interests of our shareholders, and in compliance with GigaMedia’s securities trading policy and relevant Singapore and U.S. laws and regulations. During 2011, repurchases under this program amounted to approximately 5.6 million shares at a cost of $6.0 million. All of the treasury shares under this program were cancelled by the end of 2011.

NOTE 23. COMPREHENSIVE INCOME

The accumulated balances for each classification of other comprehensive income are as follows:

(in US$ thousands)	Foreign currency items			Unrealized gain on securities			Pension and post retirement benefit plans			Accumulated other comprehensive income
Balance at January 1, 2011	$	(22,554	)	$	22,243		$	239		$	(72	)
Net current period change		(1,813	)		22,466			69			20,722
Reclassification adjustments for gains reclassified into income		—			(6,299	)		—			(6,299	)
Balance at December 31, 2011		(24,367	)		38,410			308			14,351
Net current period change		1,814			(18,339	)		(323	)		(16,848	)
Reclassification adjustments for gains reclassified into income		—			(5,665	)		—			(5,665	)
Deconsolidation of subsidiaries		(217	)		—			—			(217	)
Balance at December 31, 2012		(22,770	)		14,406			(15	)		(8,379	)
Net current period change		(801	)		6,437			15			5,651
Reclassification adjustments for gains reclassified into income		864			(1,739	)		—			(875	)
Balance at December 31, 2013	$	(22,707	)	$	19,104		$	—		$	(3,603	)

F-58

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

There were no significant tax effects allocated to each component of other comprehensive income for the years ended December 31, 2011, 2012 and 2013.

F-59

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 24. SHARE-BASED COMPENSATION

The following table summarizes the total stock-based compensation expense recognized in our consolidated statements of operations:

(in US$ thousands)	2011			2012			2013
Cost of online game and service revenues	$	—		$	—		$	—
Product development & engineering expenses		—			—			—
Selling and marketing expenses		62			20			—
General and administrative expenses		1,103			159			219
Pre-tax stock-based compensation expense		1,165			179			219
Income tax (benefit) expense		(109	)		(41	)		27
Total stock-based compensation expense reported in continuing operations	$	1,056		$	138		$	246
Total stock-based compensation expense reported in discontinued operations, net of tax	$	—		$	—		$	—

There were no significant capitalized stock-based compensation costs at December 31, 2012 and 2013. There was no recognized stock-based compensation tax benefit for the years ended December 31, 2013 and 2012, as our Company recorded a full allowance on net deferred tax assets as of December 31, 2013 and 2012.

(a) Overview of Stock-Based Compensation Plans

2002 Employee Share Option Plan

At the June 2002 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2002 Employee Share Option Plan (the “2002 Plan”) under which up to three million common shares of our Company have been reserved for issuance. All employees, officers, directors, supervisors, advisors, and consultants of our Company are eligible to participate in the 2002 Plan. The 2002 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, the eligible individuals who are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and the vesting schedule. The maximum contractual term for the options under the 2002 Plan is 10 years.

F-60

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

2004 Employee Share Option Plan

At the June 2004 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2004 Employee Share Option Plan (the “2004 Plan”) under which up to seven million common shares of our Company have been reserved for issuance. All employees, officers, directors, supervisors, advisors, and consultants of our Company are eligible to participate in the 2004 Plan. The 2004 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, the eligible individuals who are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and the vesting schedule. The maximum contractual term for the options under the 2004 Plan is 10 years.

2006 Equity Incentive Plan

At the June 2006 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2006 Equity Incentive Plan (the “2006 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2006 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2006 Plan. The maximum contractual term for the options under the 2006 Plan is 10 years.

2007 Equity Incentive Plan

At the June 2007 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2007 Equity Incentive Plan (the “2007 Plan”) under which up to two million common shares of our Company have been reserved for issuance. The 2007 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2007 Plan. The maximum contractual term for the options under the 2007 Plan is 10 years.

F-61

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

2008 Equity Incentive Plan

At the June 2008 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2008 Equity Incentive Plan (the “2008 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2008 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2008 Plan. The maximum contractual term for the options under the 2008 Plan is 10 years.

2008 Employee Share Purchase Plan

At the June 2008 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2008 Employee Share Purchase Plan (the “2008 ESPP”) under which up to two hundred thousand common shares of our Company were reserved for issuance. Any person who is regularly employed by our Company or our designated subsidiaries shall be eligible to participate in the 2008 ESPP. Pursuant to the 2008 ESPP, our Company would offer the shares to qualified employees on favorable terms. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2008 ESPP. The 2008 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been subscribed by qualified employees under the 2008 ESPP.

2009 Equity Incentive Plan

At the June 2009 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2009 Equity Incentive Plan (the “2009 Plan”) under which up to one and a half million common shares of our Company have been reserved for issuance. The 2009 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2009 Plan. The maximum contractual term for the options under the 2009 Plan is 10 years.

2009 Employee Share Purchase Plan

At the June 2009 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2009 Employee Share Purchase Plan (the “2009 ESPP”) under which up to two hundred thousand common shares of our Company have been reserved for issuance. To be eligible, employees must be regularly employed by us or our designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2009 ESPP. The 2009 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been issued to employees under the 2009 ESPP.

F-62

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

2010 Equity Incentive Plan

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Equity Incentive Plan (the “2010 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2010 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2010 Plan. The maximum contractual term for the options under the 2010 Plan is 10 years.

2010 Employee Share Purchase Plan

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Employee Share Purchase Plan (the “2010 ESPP”) under which up to two hundred thousand common shares of our Company have been reserved for issuance. To be eligible, employees must be regularly employed by us or our designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2010 ESPP. The 2010 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been issued to employees under the 2010 ESPP.

F-63

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Summarized below are the general terms of our stock-based compensation plans, for which awards have been granted as of December 31, 2013.

Stock-Based compensation plan	Granted awards			Vesting schedule	Options’ exercise price	RSUs’ grant date fair value
2002 Plan		3,000,000		immediately upon granting	$0.79	—
2004 Plan		7,703,185	(1)	immediately upon granting to four years	$0.79~$2.55	—
2006 Plan		1,217,333	(2)	immediately upon granting to four years	$0.8101~$16.60	$2.91~$16.01
2007 Plan		3,205,217	(3)	immediately upon granting to four years	$1.20~$18.17	$2.47~$15.35
2008 Plan		1,000,000		immediately upon granting to six years	$2.47~$4.24	—
2009 Plan		2,500,000	(4)	immediately upon granting to four years	$0.955~$2.47	—
2010 Plan		2,200,000	(5)	three years	$0.8101~$1.14	—

(1) The granted awards, net of forfeited or canceled shares, were within reserved shares of seven million common shares.

(2) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

(3) The granted awards, net of forfeited or canceled shares, were within reserved shares of two million common shares.

(4) The granted awards, net of forfeited or canceled shares, were within reserved shares of one and a half million common shares.

(5) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

Options and Restricted Stock Units (“RSUs”) generally vest over the schedule described above. Certain RSUs provide for accelerated vesting if there is a change in control. All options and RSUs are expected to be settled by issuing new shares.

F-64

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(b) Options

In 2011, 2012 and 2013, 0, 0 and 3,000 options were exercised, and cash received from the exercise of stock options was $0, $0 and $2 thousand, respectively, which resulted in no significant tax benefit realized on a consolidated basis.

Our Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options granted to employees. The following table summarizes the assumptions used in the model for options granted during 2012 and 2013:

	2012	2013
Option term (years)	5.73	5.8
Volatility	59.76%~67.02%	59.46%~61.84%
Weighted-average volatility	62%	61%
Risk-free interest rate	0.885%~1.152%	0.930%~1.610%
Dividend yield	0%	0%
Weighted-average fair value of option granted	$0.54	$0.60

Option term. The expected term of the options granted represents the period of time that they are expected to be outstanding. Our Company estimates the expected term of options granted based on historical experience with grants and option exercises.

Expected volatility rate. An analysis of historical volatility was used to develop the estimate of expected volatility.

Risk-free interest rate. The risk-free interest rate is based on yields of U.S. Treasury bonds for the expected term of the options.

Expected dividend yield. The dividend yield is based on our Company’s current dividend yield.

F-65

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Option transactions during the last three years are summarized as follows:

	2011					2012					2013
	Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Balance at January 31	$	2.33		9,780		$	2.13		9,493		$	1.97		9,210
Options granted		1.06		1,060			0.96		2,070			1.09		620
Options exercised		—		—			—		—			0.79		(3	)
Options Forfeited / canceled / expired		2.72		(1,347	)		1.74		(2,353	)		1.28		(604	)
Balance at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055
Exercisable at December 31	$	2.19		7,754		$	2.15		7,584		$	2.13		7,770			1.87	$	1,021
Vested and expected to vest at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between GigaMedia’s closing stock price on the last trading day of 2013 and the fair value of the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on December 31, 2013. This amount changes based on the fair market value of GigaMedia’s stock. The total intrinsic value of options exercised for the years ended December 31, 2011, 2012, and 2013 were $0, $0, and $600 thousand, respectively.

As of December 31, 2013, there was approximately $348 thousand of unrecognized compensation cost related to nonvested options. That cost is expected to be recognized over a period of 2.16 years.

F-66

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The following table sets forth information about stock options outstanding at December 31, 2013:

Options outstanding				Option currently exercisable
Exercise price	No. of Shares (in thousands)		Weighted average remaining contractual life	Exercise price	No. of Shares (in thousands)
Under $1		6,188	1.88 years	Under $1		5,175
$  1~$10		2,419	5.72 years	$  1~$10		1,979
$10~$20		616	3.65 years	$10~$20		616
		9,223				7,770

(c) RSUs

The fair value of RSUs is determined and fixed on the grant date based on our stock price. The fair value of RSUs granted during the years ended December 31, 2011, 2012 and 2013 was $1.0 million, $0 and $0, respectively. The total fair value of RSUs vested during the years ended December 31, 2011, 2012 and 2013 was $0.2 million, $0 and $0, respectively, which resulted in no significant tax benefit realized on a consolidated basis.

As of December 31 2012 and 2013, there was no unrecognized compensation cost related to nonvested RSUs. Our Company received no cash from employees as a result of employee stock award vesting and the forfeiture of RSUs during 2011, 2012 and 2013.

F-67

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 25. INCOME TAXES

Loss from continuing operations before income taxes by geographic location is as follows:

(in US$ thousands )	2011			2012			2013
Taiwan operations	$	(770	)	$	(14,871	)	$	(33,077	)
Non-Taiwan operations		(66,865	)		1,946			(1,605	)
	$	(67,635	)	$	(12,925	)	$	(34,682	)

Income tax provision (benefit) from continuing operations by geographic location is as follows:

(in US$ thousands )	2011			2012		2013
Taiwan operations	$	33		$	456	$	248
Non-Taiwan operations		(278	)		215		(187	)
	$	(245	)	$	671	$	61

Our ultimate parent company is based in Singapore. It reported no pretax income or loss.

The components of income tax provision (benefit) from continuing operations by taxing jurisdiction are as follows:

( in US$ thousands )	2011			2012		2013
Taiwan:
Current	$	—		$	410	$	(131	)
Deferred		33			46		379
	$	33		$	456	$	248
Non-Taiwan:
Current	$	(539	)	$	215	$	(187	)
Deferred		261			—		—
	$	(278	)	$	215	$	(187	)
Total current income tax expense (benefit)	$	(539	)	$	625	$	(318	)
Total deferred income tax expense (benefit)	$	294		$	46	$	379
Total income tax provision (benefit)	$	(245	)	$	671	$	61

F-68

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

A reconciliation of our effective tax rate related to continuing operations to the statutory tax rate in Taiwan, where our major operations are based, is as follows:

	2011			2012			2013
Taiwan statutory rate, including taxes on income and retained earnings		23.85	%		23.85	%		23.85	%
Foreign tax differential		1.02	%		(0.17	%)		(3.71	%)
Non-deductible items - impairment charges on goodwill		(1.82	%)		(16.43	%)		(10.39	%)
Changes in unrecognized tax benefits		0.00	%		0.00	%		(4.12	%)
Tax-exempted income in foreign jurisdictions		0.00	%		0.00	%		3.12	%
Adjustment for prior year payable		0.00	%		0.00	%		0.55	%
Change in valuation allowance		(21.70	%)		(4.00	%)		(10.17	%)
Tax effect of earnings for equity method investees and certain subsidiaries		(0.02	%)		(4.38	%)		0.00	%
Other		(0.99	%)		(4.06	%)		0.69	%
Effective rate		0.34	%		(5.19	%)		(0.18	%)

The provision (benefit) for income taxes attributable to discontinued operations was $0 for each of the years ended December 31, 2011, 2012 and 2013, respectively.

Significant components of our deferred tax assets consist of the following:

(in US$ thousands)	December 31
	2012			2013
Net operating loss carryforwards	$	3,248		$	4,072
Loss on equity method investment		15,621			—
Share-based compensation		234			267
Intangible assets		354			738
Property, plant and equipment		100			86
Other		(275	)		109
		19,282			5,272
Less: valuation allowance		(18,333	)		(5,216	)
Deferred tax assets - net	$	949		$	56

As of December 31, 2012 and 2013, $840 thousand and $0, respectively, of the net deferred tax assets were reported as current and included in other current assets on the balance sheet.

F-69

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Significant components of our deferred tax liabilities consist of the following:

(in US$ thousands)	December 31
	2012		2013
Depreciation and amortization	$	255	$	—
Investment in affiliated companies, principally due to undistributed income		2,207		1,987
Capitalized software development costs		306		56
Deferred tax liabilities	$	2,768	$	2,043

As of December 31, 2012 and 2013, $561 thousand and $0, respectively, of deferred tax liabilities were reported as non-current deferred tax liabilities and included in other liabilities.

A reconciliation of the beginning and ending amounts of our valuation allowance on deferred tax assets for the years ended December 31, 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	7,402		$	25,256		$	18,333
Subsequent utilization of valuation allowance		(270	)		(4	)		(7	)
Additions to valuation allowance		15,597			214			3,527
Divestitures		—			(7,026	)		(16,616	)
Acquisitions		2,491			—			—
Exchange differences		36			(107	)		(21	)
Balance at end of year	$	25,256		$	18,333		$	5,216

Under ROC Income Tax Acts, the tax loss carryforward in the preceding ten years would be deducted from income tax for Taiwan operations. The Statutory losses would be deducted from undistributed earnings tax and were not subject to expiration from Taiwan operations.

F-70

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

As of December 31, 2013, we had net operating loss carryforwards available to offset future income, amounting to $20.1 million. Below is the breakdown of the expiration of the net operating loss carryforwards in major jurisdictions:

Jurisdiction	Amount		Expiring year
Hong Kong		9,975	indefinite
Taiwan		10,170	2020~2023
		20,145

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding the effects of accrued interest) for the years 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	3,887		$	4,714		$	4,202
Increase related to prior year tax positions		965			573			706
Deconsolidation of IAHGames		—			(1,072	)		—
Exchange differences		(138	)		(13	)		63
Balance at end of year	$	4,714		$	4,202		$	4,971

F-71

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

As of December 31, 2011, 2012 and 2013, there were approximately $4.7 million, $4.2 million and $5.0 million of unrecognized tax benefits that if recognized would affect the effective tax rate. As of December 31, 2011, 2012 and 2013, $2.3 million, $2.8 million and $2.9 million of the total unrecognized tax benefit were presented as a reduction of a deferred tax asset that, if recognized, would be offset by a valuation allowance.

There were no interest and penalties related to income tax liabilities recognized for the years ended December 31, 2011, 2012 and 2013.

Our major tax jurisdictions are located in Taiwan. As of December 31, 2013, the income tax filings under tax jurisdictions located in Taiwan have been examined for the years through 2008 and for 2011, but we have filed appeals for the 2008 and 2011 tax filings. Our Company also files income tax returns in the United States federal and state jurisdictions.

In 2011, 2012 and 2013, our unrecognized tax benefits were related to amortization of goodwill and intangible assets resulting from the acquisition of FunTown. The income tax authority has made decisions on the amortization for our 2006, 2007 and 2008 tax filings. We have filed appeals against the unfavorable parts of the decision regarding these amortization adjustments, appending further response from the tax authority.

In 2011, our unrecognized tax benefits increased due to IAHGames. These unrecognized tax benefits primarily related to certain related party transactions.

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons such as current year tax positions, expiration of statutes of limitations, litigation, legislative activity, or other changes in facts regarding realizability. Taiwanese entities are customarily examined by the tax authorities and it is possible that a future examination will result in positive or negative adjustment to our unrecognized tax benefit within the next 12 months; however management does not expect that the total amount of unrecognized tax benefit will change significantly within the next 12 months of December 31, 2013.

F-72

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 26. RELATED-PARTY TRANSACTIONS

In 2011, to support our current operations we had short-term indebtedness from Waterland Financial Holdings (“Waterland”), a key manager of which was one of our directors. The largest amounts of outstanding short-term indebtedness to Waterland during the year ended December 31, 2011 was $1.7 million. As of December 31, 2012 and 2013, we did not have any indebtedness owed to Waterland.

We, through IAHGames, made an equity investment in Monsoon in connection with our acquisition of IAHGames with effect from July 1, 2010. In 2010, prior to our acquisition, IAHGames loaned $5.0 million to Monsoon to support Monsoon’s current operations at interest of 7 percent per annum. In addition, from September to December 2010, IAHGames, then one of our subsidiaries, loaned an additional $5.1 million to Monsoon to support its operation at an interest rate of 7 percent per annum. The largest amount outstanding to Monsoon from July 1, 2010 through August 31, 2011, after which we began to consolidate Monsoon, was $10.3 million. As of August 31, 2011, the net book value of the loans receivable was $3.2 million, after being reduced in connection with absorbing additional losses of Monsoon as discussed in more detail in Note 15, “Investments”. Upon the deconsolidation of IAHGames’ operations of in August 2012, the loans receivable were deconsolidated as well. (See Note 5, “Divestitures”, for additional information.)

During 2011, our Company entered into loan agreements in the aggregate of $5.2 million with Mangas Everest, with interest rates of 3 percent per annum. As of December 31, 2011, the net book value of this loan receivable was nil after being reduced in connection with absorbing additional losses of Mangas Everest (as discussed in more detail in Note 15, “Investments”) and considering the financial status of Mangas Everest, from which we do not expect to collect all principal and interest. We also reversed the interest recognized previously on these loans and ceased to recognize interest income going forward. Upon the closing of the sale of our remaining ownership in the gaming software and service business in August 2012, the rights and interest in and to the loan agreements were also assigned to BEG. (See Note 5, “Divestitures”, for additional information.)

F-73

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 27. COMMITMENTS AND CONTINGENCIES

Commitments

(a) Operating Leases

We rent certain properties which are used as office premises under lease agreements that expire at various dates through 2016. The following table sets forth our future aggregate minimum lease payments required under these operating leases, as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	941
2015		754
2016		138
	$	1,833

Rental expense for operating leases amounted to $2.5 million, $1.8 million and $1.0 million for the years ended December 31, 2011, 2012 and 2013, respectively.

F-74

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(b) Service agreement

We entered in to certain maintenance and out-sourcing service agreement in 2013 regarding our cloud business operations. The following table sets forth our future aggregate minimum payments required under this agreement as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	214
2015		251
2016		42
	$	507

The service fee under this agreement amounted to $111 thousand for the year ended December 31, 2013.

(c) License Agreements

We have contractual obligations under various license agreements to pay the licensors license fees and minimum guarantees against future royalties. The following table summarizes the committed license fees and minimum guarantees against future royalties set forth in our significant license agreements as of December 31, 2013.

(in US$ thousands)	License fees		Minimum guarantees against future royalties		Total
Minimum required payments:
In 2014	$	100	$	100	$	200
After 2014		5,300		1,500		6,800
	$	5,400	$	1,600	$	7,000

The initial minimum guarantees against future royalties and license fees are not required to be paid until the licensed games are commercially released or until certain milestones are achieved, as stipulated in the individual license agreements. The remaining minimum guarantees are generally required to be paid within three years subsequent to the commercial release dates of the licensed games.

F-75

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(d) Guaranty

In 2008, Cambridge Interactive Development Corp. (“CIDC”), a then wholly owned subsidiary of GigaMedia, entered into a lease agreement (the “CIDC Lease”) for an office in Delaware. The term of the CIDC Lease is for the period from October 1, 2008 through September 30, 2014. Pursuant to the CIDC Lease, CIDC deposited approximately $690 thousand with a bank in exchange for a letter of credit issued by the bank (the “CIDC L/C”) and GigaMedia’s guaranty of all of CIDC’s obligations under the CIDC Lease.

In July 2012, we entered into an agreement with BEG to sell and assign our remaining ownership interest in and all rights and interests related to the shareholders loans to Mangas Everest (including the CIDC lease) (the “Mangas Agreement”). Pursuant to the Mangas Agreement, BEG was to use all its reasonable efforts to procure the cancellation and return of the CIDC L/C to GigaMedia and the landlord’s release of GigaMedia’s lease guaranty by September 30, 2012; and unless and until BEG procures the cancellation and return of the CIDC L/C and landlord’s release of GigaMedia’s lease guaranty, BEG is obligated to indemnify and hold GigaMedia (and any Affiliate thereof) harmless from any and all losses, costs and expenses that may be borne by GigaMedia (and any Affiliate thereof) arising under or in connection with the CIDC L/C and/or GigaMedia’s lease guaranty.

In accordance with the Mangas Agreement, BEG procured that the bank cancel the CIDC L/C and issue to BEG a new letter of credit under the same terms and conditions as the CIDC L/C. BEG, however, did not obtain the landlord’s consent to release us from our lease guaranty within the allotted time. BEG’s major shareholders, therefore, issued a separate guaranty to us wherein they are obligated to indemnify and hold GigaMedia (and any Affiliate thereof) harmless from any and all losses, costs and expenses arising under or in connection with the CIDC Lease. GigaMedia’s commitment amount under this lease guaranty has been constantly reduced as Mangas Everest’s subsidiary who assumed the CIDC Lease makes its monthly rental payments. The leasee is current on its monthly payments through March 2014.

F-76

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Contingencies

We are subject to legal proceedings and claims that arise in the normal course of business. Currently there are no outstanding claims or litigation against us.

F-77

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

NOTE 28. SEGMENT INFORMATION

We currently have two operating segments: an Asian online game and service business segment, and a cloud service business segment (began in 2013). The Asian online game and service business segment mainly derives its revenues from recognizing the usage of game playing time or in-game items by the end-users. The cloud service business segment mainly derives its revenues from providing cloud products and services to small-to-medium and larger enterprises.

F-78

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Financial information for each operating segment was as follows as of and for the years ended December 31, 2011, 2012, and 2013:

(in US$ thousands)	Asian online game and service
2011:
Segment profit or loss:
Net revenue from external customers	$	34,367
Loss from operations	$	(10,931	)
Share-based compensation	$	308
Impairment loss on intangible assets	$	2,583
Impairment loss on prepaid licensing and royalty fees	$	247
Impairment loss on goodwill	$	5,097
Interest income	$	492
Interest expense	$	(50	)
Gain on sales of marketable securities	$	6,299
Foreign exchange loss	$	(282	)
Gain on equity method investments - net	$	1,846
Impairment loss on marketable securities and investments	$	13,327
Depreciation	$	1,790
Amortization, including intangible assets	$	2,251
Income tax expense	$	859

F-79

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in US$ thousands)	Asian online game and service
2012:
Segment profit or loss:
Net revenue from external customers	$	27,470
Loss from operations	$	(12,271	)
Share-based compensation	$	199
Impairment loss on intangible assets	$	15
Impairment loss on prepaid licensing and royalty fees	$	702
Impairment loss on goodwill	$	12,489
Contract termination costs	$	49
Interest income	$	9
Interest expense	$	44
Gain on sales of marketable securities	$	5,665
Foreign exchange gain	$	55
Gain on equity method investments - net	$	234
Impairment loss on marketable securities and investments	$	1,193
Depreciation	$	1,059
Amortization, including intangible assets	$	2,181
Income tax expense	$	710

F-80

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in US$ thousands)	Asian online game and service			Cloud service business			Total
2013:
Segment profit or loss:
Net revenue from external customers	$	14,106		$	925		$	15,031
Loss from operations	$	(33,677	)	$	(1,218	)	$	(34,895	)
Share-based compensation	$	(225	)	$	69		$	(156	)
Impairment loss on intangible assets	$	13,251		$	—		$	13,251
Impairment loss on prepaid licensing and royalty fees	$	2,752		$	—		$	2,752
Impairment loss on goodwill	$	17,054		$	—		$	17,054
Interest income	$	9		$	—		$	9
Interest expense	$	8		$	—		$	8
Gain on sales of marketable securities	$	1,739		$	—		$	1,739
Foreign exchange gain	$	236		$	—		$	236
Gain on equity method investments - net	$	526		$	—		$	526
Depreciation	$	336		$	8		$	344
Amortization, including intangible assets	$	1,862		$	42		$	1,904
Income tax expense	$	150		$	78		$	228

F-81

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

The reconciliations of segment information to GigaMedia’s consolidated totals are as follows:

(in US$ thousands)	2011			2012			2013
Income (loss) from operations:
Total segments	$	(10,931	)	$	(12,271	)	$	(34,895	)
Other**		(204	)		7			—
Adjustment*		(8,794	)		(8,310	)		(3,592	)
Total GigaMedia consolidated	$	(19,929	)	$	(20,574	)	$	(38,487	)
Share-based compensation
Total segments	$	308		$	199		$	(156	)
Adjustment*		857			(20	)		375
Total GigaMedia consolidated	$	1,165		$	179		$	219
Impairment loss on intangible assets:
Total segments	$	2,583		$	15		$	13,251
Adjustment*		—			—			—
Total GigaMedia consolidated	$	2,583		$	15		$	13,251
Impairment loss on prepaid licensing and royalty fees:
Total segments	$	247		$	702		$	2,752
Adjustment*		—			—			—
Total GigaMedia consolidated	$	247		$	702		$	2,752
Interest income:
Total segments	$	492		$	9		$	9
Adjustment*		270			274			229
Total GigaMedia consolidated	$	762		$	283		$	238
Interest expense:
Total segments	$	(50	)	$	44		$	8
Adjustment*		476			203			41
Total GigaMedia consolidated	$	426		$	247		$	49
Gain on sales of marketable securities:
Total segments	$	6,299		$	5,665		$	1,739
Adjustments*		—			—			—
Total GigaMedia consolidated	$	6,299		$	5,665		$	1,739
Foreign exchange gain (loss):
Total segments	$	(282	)	$	55		$	236
Adjustments*		(83	)		379			(191	)
Total GigaMedia consolidated	$	(365	)	$	434		$	45

F-82

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

(in US$ thousands)	2011			2012			2013
Gain (loss) on equity method investments - net:
Total segments	$	1,846		$	234		$	526
Other**		(49,715	)		—			—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	(47,869	)	$	234		$	526
Impairment loss on marketable securities and investments:
Total segments	$	13,327		$	1,193		$	—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	13,327		$	1,193		$	—
Depreciation:
Total segments	$	1,790		$	1,059		$	344
Adjustments*		290			165			64
Total GigaMedia consolidated	$	2,080		$	1,224		$	408
Amortization:
Total segments	$	2,251		$	2,181		$	1,904
Adjustments*		63			23			3
Total GigaMedia consolidated	$	2,314		$	2,204		$	1,907
Income tax expense (benefit):
Total segments	$	859		$	710		$	228
Other**		(934	)		37			—
Adjustments*		(170	)		(76	)		(167	)
Total GigaMedia consolidated	$	(245	)	$	671		$	61

* Adjustment items include corporate and certain back-office costs and expenses not attributable to any specific segment. As of December 31, 2011, 2012 and 2013, the compensation related was approximately $4.3 million, $4.2 million and $2.1 million, respectively; accrued professional fees was approximately $2.3 million, $911 thousand and $125 thousand, respectively.

** Other items relate to the results of operations arising from our non-controlling interest in the online gaming software and service business before we disposed of it in July 2012.

Major Customers

No single customer represented 10 percent or more of GigaMedia’s total net revenues in any period presented.

F-83

GIGAMEDIA LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

YEARS ENDED DECEMBER 31, 2011, 2012 AND 2013

Geographic Information

Revenues by geographic area are attributed by country of the server location. Revenue from by geographic region is as follows:

(in US$ thousands)
Geographic region / country	2011		2012		2013
Taiwan	$	21,214	$	18,744	$	11,793
Hong Kong		5,061		4,703		3,239
Singapore		4,150		2,004		—
Malaysia		2,228		1,550		—
Thailand		1,447		204		—
Others		267		265		—
	$	34,367	$	27,470	$	15,032

Net tangible long-lived assets by geographic region are as follows:

(in US$ thousands)	December 31,
Geographic region / country	2011		2012		2013
Taiwan	$	2,375	$	1,932	$	1,657
PRC		763		—		—
Hong Kong		107		17		20
Singapore		551		—		—
Thailand		380		—		—
Other		112		—		—
	$	4,288	$	1,949	$	1,677

NOTE 29. SUBSEQUENT EVENT

On April 10, 2014 (with supplemental modification on April 15, 2014), we entered into a short-term loan agreement on an arm’s-length basis with Wen He Investment Ltd. (“Wen He”) to finance its purchase from a third-party 15 million common shares of a company in Taiwan. The amount of the loan is approximately $18.8 million, maturing on May 10, 2014, and carries an interest rate of 5% per annum. The term of the loan also requires that all of the shares so purchased by Wen He be pledged to us as collateral together with the personal guarantee of another major shareholder of the Taiwan company. We entered into this loan agreement because we believe it will support the growth of our online games business.

F-84

EX-1.1

Exhibit 1.1

THE COMPANIES ACT, CAP. 50

PUBLIC COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

of

GIGAMEDIA LIMITED

1.	The name of the Company is “Gigamedia Limited”.
2.	The Registered Office of the Company will be situate in the Republic of Singapore.
3.	The objects for which the Company is established are:-
	(1)	To carry on the business of investment holding, and in particular to invest the moneys of the Company in or otherwise to acquire and hold shares, stocks, debentures, debenture stock, scrip, loans, bonds, obligations, notes, securities and investments issued or guaranteed by any company or trust constituted or carrying on business in any part of the world, and in the funds or loans or other securities and investments of or issued or guaranteed by any government, state, or dominion, public body or authority, supreme, municipal local or otherwise, in the Republic of Singapore or elsewhere.
	(2)	To acquire any such shares, stocks, debentures, debenture stock, scrip, loans, bonds, obligations, notes, securities and investments by original subscription, contract, tender, purchase exchange or otherwise, and whether or not fully paid up, and to make payments thereon as called up or in advance of calls or otherwise, and to subscribe for the same, either conditionally or otherwise, and to exercise and enforce all rights and powers conferred by or incident to the ownership thereof.
	(3)	To exercise and enforce all rights and powers conferred by or incident to the ownership of any such shares, stocks, obligations or other securities including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of some proportion of the issued or nominal amount thereof.

(4)	To vary or transpose by sale, exchange or otherwise from time to time as may be considered expedient any of the Company’s investments for the time being.
(5)	To acquire by purchase, lease, exchange or otherwise and hold by way of investment, land, buildings and immovable property of any tenure or description whatsoever in the Republic of Singapore or elsewhere, and to mortgage, lease or let out the property of the Company or any part thereof for such consideration as the Company may think fit.
(6)	To provide on such terms as may be thought fit those services for the companies in which the Company has invested which are suitable and convenient to be provided by a holding company and in particular, and without prejudice to the generality of the foregoing, to provide managerial, executive, supervisory, financial and accounting, investment and administrative services and office accommodation and equipment facilities to any such company.
(7)	To assist and participate in the privatisation of assets by the government of the Republic of Singapore.
(8)	To carry on any other business which may seem to the Company capable of being conveniently carried on in connection with its business or calculated directly or indirectly to enhance the value of or render profitable any of the Company’s properties or rights.
(9)	To acquire and undertake the whole or any part of the business, property, and liabilities of any person or company carrying on any business which the Company is authorized to carry on, or possessed of property suitable for the purposes of the Company.
(10)	To apply for, purchase, or otherwise acquire any patents, patent rights, copyrights, trade marks, formulae, licences, concessions, and the like, conferring any exclusive or non-exclusive or limited right to use, or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company; and to use, exercise, develop, or grant licences in respect of, or otherwise turn to account, the property, rights, or information so acquired.
(11)	To amalgamate or enter into partnership or into any arrangement for sharing of profits, union of interest, co-operation, joint adventure, reciprocal concession, or otherwise, with any person or company carrying on or engaged in or about to carry on or engage in any business or transaction which the Company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit the Company.
(12)	To take, or otherwise acquire, and hold shares, debentures, or other securities of any other company.

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(13)	To enter into any arrangements with any government or authority, supreme, municipal, local, or otherwise, that may seem conducive to the Company’s objects, or any of them; and to obtain from any such government or authority any rights, privileges, and concessions which the Company may think it desirable to obtain; and to carry out, exercise, and comply with any such arrangements, rights, privileges, and concessions.
(14)	To establish and support or aid in the establishment and support of associations, institutions, funds, trusts, and conveniences calculated to benefit employees or directors or past employees or directors of the Company or its predecessors in business, or the dependants or connections of any such persons; and to grant pensions and allowances, and to make payments towards insurance; and to subscribe or guarantee money for charitable or benevolent objects, or for any exhibition, or for any public, general, or useful object.
(15)	To promote any other company or companies for the purpose of acquiring or taking over all or any of the property, rights, and liabilities of the Company, or for any other purpose which may seem directly or indirectly calculated to benefit the Company.
(16)	To purchase, take on lease or in exchange, hire, or otherwise acquire any movable or immovable properties and any rights or privileges which the Company may think necessary or convenient for the purposes of its business, and in particular any land, buildings, easements, machinery, plant, and stock-in-trade.
(17)	To construct, improve, maintain, develop, work, manage, carry out, or control any buildings, works, factories, mills, roads, ways, tram-ways, railways, branches or sidings, bridges, reservoirs, water-courses, wharves, warehouses, electric works, shops, stores, and other works, and conveniences which may seem calculated directly or indirectly to advance the Company’s interests; and to contribute to, subsidize, or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out, or control thereof.
(18)	To enter into any guarantee, contract of indemnity or suretyship and in particular (without prejudice to the generality of the foregoing) to guarantee, support or secure, with or without consideration, whether by personal obligation or by mortgaging or charging all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company or by both such methods or in any other manner, the performance of any obligations or commitments of, and the repayment or payment of the principal amounts of and any premiums, interest, dividends and other moneys payable on or in respect of any securities or liabilities of, any person, including (without prejudice to the generality of the foregoing) any company which is for the time being a subsidiary or a holding company of the Company or another subsidiary of a holding company of the Company or otherwise associated with the Company.

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(19)	To lend and advance money or give credit to any person or company and on such terms as may be considered expedient, and either with or without security; to secure or undertake in any way the repayment of moneys lent or advanced to or the liabilities incurred by any person or company, and otherwise to assist any person or company.
(20)	To borrow or raise or secure the payment of money in such manner as the Company may think fit and to secure the same or the repayment or performance of any debt, liability, contract, guarantee or other engagement incurred or to be entered into by the Company in any way and in particular by the issue of debentures perpetual or otherwise, charged upon all or any of the Company’s property (both present and future), including its uncalled capital; and to purchase, redeem, or pay off any such securities.
(21)	To invest and deal with the money of the Company not immediately required in such manner as may from time to time be thought fit.
(22)	To enter into or to invest in any interest rate exchange contracts, currency exchange contracts, forward contracts, futures contracts, options (including, without limitation, interest rate or currency options) and other derivative or financial instruments or products, whether or not entered into or acquired for the purpose of hedging against or minimising any loss concerning the assets and business of the Company and in relation thereto, the Company may pay any margin or margin calls or other demands concerning any such contracts or instruments entered into or acquired by the Company.
(23)	To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the placing of any of the shares in the Company’s capital or any debentures, or other securities of the Company, or in or about the organization, formation, or promotion of the Company or the conduct of its business.
(24)	To draw, make, accept, endorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, and other negotiable or transferable instruments.
(25)	To sell or dispose of the undertaking of the Company or any part thereof for such consideration as the Company may think fit, and in particular for shares, debentures, or securities of any other company having objects altogether or in part similar to those of the Company.
(26)	To adopt such means of making known and advertising the business and products of the Company as may seem expedient.
(27)	To apply for, secure, acquire by grant, legislative enactment, assignment, transfer, purchase, or otherwise, and to exercise, carry out, and enjoy any charter, licence, power, authority, franchise, concession, right, or privilege, which any Government or authority or any corporation or other public body may be empowered to grant; and to pay for, aid in, and contribute towards carrying the same into effect; and to appropriate any of the Company’s shares, debentures, or other securities and assets to defray the necessary costs, charges, and expenses thereof.

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(28)	To apply for, promote, and obtain any statute, order, regulation, or other authorization or enactment which may seem calculated directly or indirectly to benefit the Company; and to oppose any bills, proceedings, or applications which may seem calculated directly or indirectly to prejudice the Company’s interests.
(29)	To procure the Company to be registered or recognized in any country or place outside the Republic of Singapore.
(30)	To sell, improve, manage, develop, exchange, lease, dispose of, turn to account, or otherwise deal with all or any part of the property and rights of the Company.
(31)	To issue and allot fully or partly paid shares in the capital of the Company in payment or part payment of any movable or immovable property purchased or otherwise acquired by the Company or any services rendered to the Company.
(32)	To distribute any of the property of the Company among the members in kind or otherwise but so that no distribution amounting to a reduction of capital shall be made without the sanction required by law.
(33)	To take or hold mortgages, liens, and charges to secure payment of the purchase price, or any unpaid balance of the purchase price, of any part of the Company’s property of whatsoever kind sold by the Company, or any money due to the Company from purchasers and others.
(34)	To undertake and transact all kinds of agency or secretarial business and also to undertake and execute any trusts, the undertaking whereof may seem desirable, and either gratuitously or otherwise.
(35)	To transact any lawful business in aid of the Republic of Singapore in the prosecution of any war or hostilities in which the Republic of Singapore is engaged.
(36)	To carry out all or any of the objects of the Company and do all or any of the above things in any part of the world and either as principal, agent, contractor, or trustee, or otherwise, and by or through trustees or agents or otherwise, and either alone or in conjunction with others.

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	(37)	To do all such other things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the Company. AND IT IS HEREBY DECLARED that the word “company” in this Memorandum when not referring to this Company shall be deemed to include any corporation partnership association club or other body of persons whether incorporated or not and wherever incorporated or domiciled and whether now existing or hereafter to be formed AND further that unless the context or subject matter is inconsistent therewith words signifying the singular number shall be deemed and taken to include the plural and vice versa AND further that the objects specified in each of the paragraphs in this Memorandum shall be regarded as independent objects, and accordingly, shall in no way be limited or restricted (except when otherwise expressed in such paragraph), by reference to the objects indicated in any other paragraph or the name of the Company, but may be carried out in as full and ample a manner and construed in as wide a sense as if each of the said paragraphs defined the objects of a separate, distinct and independent company.
4.	The liability of the members is limited.
5.	The Company shall have power to increase or reduce the capital to consolidate or subdivide the shares into shares of larger or smaller amounts, and to issue all or any part of the original or any additional capital as fully paid or partly paid shares and with any special or preferential rights or privileges or subject to any special terms or conditions, and either with or without any special designation, and also from time to time to alter, modify, commute, abrogate or deal with any such rights, privileges, terms, conditions or designations in accordance with the regulations for the time being of the Company.		Amended by Ordinary Resolution on 29.6.2005. Struck out language deemed deleted as of 30.1.2006 by Section 22(1A) of the Act.

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WE, the several persons whose names, addresses and descriptions are subscribed, are desirous of being formed into a Company in pursuance of this Memorandum of Association and respectively agree to take the number of shares in the capital of the Company set opposite our respective names:-

	NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS	Number of shares taken by each Subscriber
SGD	CHRISTINE CHAN MENG YOOK 11C SWISS CLUB ROAD SINGAPORE 288103 ADVOCATE & SOLICITOR	ONE
SGD	LIM MEI 56 JALAN AMPANG SINGAPORE 268638 ADVOCATE & SOLICITOR	ONE
TOTAL NUMBER OF SHARES TAKEN		TWO

Dated this 11th day of September 1999.

Witness to the above signatures:-

SGD THEODORA LIM RERN SING Advocate & Solicitor c/o Allen & Gledhill Advocates & Solicitors 36 Robinson Road #18-01 City House Singapore 068877

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THE COMPANIES ACT, CAP. 50

PUBLIC COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

of

GIGAMEDIA LIMITED

PRELIMINARY
1. The regulations contained in Table “A” in the Fourth Schedule to the Companies Act, Cap. 50 shall not apply to the Company, but the following shall subject to repeal, addition and alteration as provided by the Act or these Articles be the regulations of the Company.		Table “A” not to apply.
2. In these Articles, if not inconsistent with the subject or context, the words standing in the first column of the Table next hereinafter contained shall bear the meanings set opposite to them respectively in the second column thereof:-		Interpretation. Amended by AGM held on 29.6.2006
WORDS	MEANINGS
“The Act”	The Companies Act, Cap. 50 or any statutory modification, amendment or re-enactment thereof for the time being in force or any and every other act for the time being in force concerning companies and affecting the Company and any reference to any provision of the Act is to that provision as so modified, amended or re-enacted or contained in any such subsequent Companies Act.
“These Articles”	These Articles of Association or other regulations of the Company for the time being in force.
“The Company”	The abovenamed Company by whatever name from time to time called.
“Directors”	The Directors for the time being of the Company or such number of them as have authority to act for the Company.
“Director”	Includes any person acting as a Director of the Company and includes any person duly appointed and acting for the time being as an Alternate Director.
“Dividend”	Includes bonus.

“Member”	A Member of the Company.
“Month”	Calendar month.
“Office”	The Registered Office of the Company for the time being.
“Paid Up”	Includes credited as paid up.
“Register”	The Register of Members.
“Seal”	The Common Seal of the Company or in appropriate cases the Official Seal or duplicate Common Seal.
“Secretary”	The Secretary or Secretaries appointed under these Articles and shall include any person entitled to perform the duties of Secretary temporarily.
“Singapore”	The Republic of Singapore.
“Treasury Shares”	Shall have the meaning ascribed to it respectively in the Act.
“Writing” and “Written”	Includes printing, lithography, typewriting and any other mode of representing or reproducing words in a visible form.
“Year”	Calendar Year.
References in these Articles to “member” or “holders” of shares or class of shares shall except where otherwise expressly provided in these Articles, exclude the Company where it is a member or holder of shares in relation to shares held by it as Treasury Shares. Words denoting the singular number only shall include the plural and vice versa. Words denoting the masculine gender only shall include the feminine gender. Words denoting persons shall include corporations. Save as aforesaid, any word or expression used in the Act and the Interpretation Act, Cap. 1 shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. Any reference in these Articles to any enactment is a reference to that enactment as for the time being amended or re-enacted. A Special Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these Articles. The headnotes and marginal notes are inserted for convenience only and shall not affect the construction of these Articles.

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BUSINESS
3. Subject to the provisions of the Act, any branch or kind of business which by the Memorandum of Association of the Company or these Articles is expressly or by implication authorised to be undertaken by the Company may be undertaken by the Directors at such time or times as they shall think fit, and further may be suffered by them to be in abeyance, whether such branch or kind of business may have been actually commenced or not, so long as the Directors may deem it expedient not to commence or proceed with such branch or kind of business.	Any branch of business either expressly or by implication authorised may be undertaken by Directors.
PUBLIC COMPANY
4. The Company is a public company.	Public Company.
TREASURY SHARES
5. The Company shall not exercise any right in respect of Treasury Shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its Treasury Shares in the manner authorised by, or prescribed pursuant to, the Act.	Treasury Shares. Amended by AGM held on 29.6.2006
6. (a) Except as is otherwise expressly permitted by the Act, the Company shall not give, whether directly or indirectly and whether by means of the making of a loan, the giving of a guarantee, the provision of security, the release of an obligation or the release of a debt or otherwise, any financial assistance for the purpose of, or in connection with, the acquisition or proposed acquisition of shares or units of shares in the Company or its holding company.	Prohibition against financial assistance.
(b) The Company may, subject to and in accordance with the Act, purchase or otherwise acquire its issued ordinary shares on such terms and in such manner as the Company may from time to time think fit. If required by the Act, Aany share that is so purchased or acquired by the Company shall, unless held in treasury in accordance with the Act, be deemed to be cancelled immediately on purchase or acquisition by the Company. On the cancellation of a share as aforesaid, the rights and privileges attached to that share shall expire. In any other instance, the Company may hold or deal with any such share which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Act.	Company may acquire its own issued ordinary shares. Amended by AGM held on 29.6.2006
7. Save as provided by Section 161 of the Act, no shares may be issued by the Directors without the prior approval of the Company in General Meeting but subject thereto and to the provisions of these Articles, the Directors may allot or grant options over or otherwise dispose of the same to such persons on such terms and conditions and at such time as the Company in General Meeting may approve.	Issue of Shares. Amended by AGM held on 29.6.2006
8. The rights attached to shares issued upon special conditions shall be clearly defined in the Memorandum of Association or these Articles. Without prejudice to any special right previously conferred on the holders of any existing shares or class of shares but subject to the Act and these Articles, shares in the Company may be issued by the Directors and any such shares may be issued with such preferred, deferred, or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Directors determine.	Special Rights.

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9. If at any time the share capital is divided into different classes, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may subject to the provisions of the Act, whether or not the Company is being wound up, be varied or abrogated with the sanction of a Special Resolution passed at a separate General Meeting of the holders of shares of the class and to every such Special Resolution the provisions of Section 184 of the Act shall with such adaptations as are necessary apply. To every such separate General Meeting the provisions of these Articles relating to General Meetings shall mutatis mutandis apply; but so that the necessary quorum shall be two persons at least holding or representing by proxy or by attorney one-third of the issued shares of the class Provided always that where the necessary majority for such a Special Resolution is not obtained at the Meeting, consent in writing if obtained from the holders of three-fourths of the issued shares of the class concerned, within two months of the Meeting shall be as valid and effectual as a Special Resolution, carried at the Meeting.	Variation of rights.
10. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the shares of that class or by these Articles as are in force at the time of such issue, be deemed to be varied by the creation or issue of further shares ranking equally therewith.	Creation or issue of further shares with special rights.
11. The Company may pay commissions or brokerage on any issue of shares at such rate or amount and in such manner as the Directors may deem fit. Such commissions or brokerage may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other.	Power to pay commission and brokerage.
	Amended by AGM held on 29.6.2006
12. If any shares of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or the provisions of any plant which cannot be made profitable for a long period, the Company may, subject to the conditions and restrictions mentioned in the Act pay interest on so much of the share capital as is for the time being paid up and may charge the same to capital as part of the cost of the construction or provision.	Power to charge interest on capital.
13. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share, except an absolute right to the entirety thereof in the registered holder.	Exclusion of equities.
14. If two or more persons are registered as joint holders of any share any one of such persons may give effectual receipts for any dividend payable in respect of such share and the joint holders of a share shall, subject to the provisions of the Act, be severally as well as jointly liable for the payment of all instalments and calls and interest due in respect of such shares. Such joint holders shall be deemed to be one Member and the delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders.	Joint holders.

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15. No person shall be recognised by the Company as having title to a fractional part of a share or otherwise than as the sole or a joint holder of the entirety of such share.	Fractional part of a share.
16. If by the conditions of allotment of any shares the whole or any part of the amount of the issue price thereof shall be payable by instalments every such instalment shall, when due, be paid to the Company by the person who for the time being shall be the registered holder of the share or his personal representatives, but this provision shall not affect the liability of any allottee who may have agreed to pay the same.	Payment of instalments.
17. The certificate of title to shares in the capital of the Company shall be issued under the Seal in such form as the Directors shall from time to time prescribe and shall bear the autographic or facsimile signatures of at least one Director and the Secretary or some other person appointed by the Directors, and shall specify the number and class of shares to which it relates and the amounts paid and amounts (if any) unpaid thereon. The facsimile signatures may be reproduced by mechanical or other means provided the method or system of reproducing signatures has first been approved by the Auditors of the Company.	Share Certificates. Amended by AGM held on 29.6.2006
18. Every person whose name is entered as a Member in the Register shall be entitled within two months after allotment or within one month after the lodgment of any transfer to one certificate for all his shares of any one class or to several certificates in reasonable denominations each for a part of the shares so allotted or transferred. Where a Member transfers part only of the shares comprised in a certificate or where a Member requires the Company to cancel any certificate or certificates and issue new certificates for the purpose of subdividing his holding in a different manner the old certificate or certificates shall be cancelled and a new certificate or certificates for the balance of such shares issued in lieu thereof and the Member shall pay a fee not exceeding $2/- for each such new certificate as the Directors may determine.	Entitlement to certificates.
19. If any certificate or other document of title to shares or debentures be worn out or defaced, then upon production thereof to the Directors, they may order the same to be cancelled and may issue a new certificate in lieu thereof. For every certificate so issued there shall be paid to the Company a fee not exceeding $2/- as the Directors may determine. Subject to the provisions of the Act and the requirements of the Directors thereunder, if any certificate or document be lost or destroyed or stolen, then upon proof thereof to the satisfaction of the Directors and on such indemnity as the Directors deem adequate being given, and on the payment of a fee not exceeding $2/- as the Directors may determine, a new certificate or document in lieu thereof shall be given to the person entitled to such lost or destroyed or stolen certificate or document.	New certificates may be issued. Amended by AGM held on 29.6.2006
RESTRICTION ON TRANSFER OF SHARES
20. Subject to the restrictions of these Articles any Member may transfer all or any of his shares, but every transfer must be in writing and in the usual common form, or in any other form which the Directors may approve. The instrument of transfer of a share shall be signed both by the transferor and by the transferee, and by the witness or witnesses thereto and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register in respect thereof. Shares of different classes shall not be comprised in the same instrument of transfer.	Form of Transfer.

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21. All instruments of transfer which shall be registered shall be retained by the Company, but any instrument of transfer which the Directors may refuse to register shall (except in any case of fraud) be returned to the party presenting the same.	Retention of Transfers.
22. No share shall in any circumstances be transferred to any infant or bankrupt or person of unsound mind.	Infant, bankrupt or unsound mind.
23. The Directors may, in their absolute discretion, decline to register any transfer of shares on which the Company has a lien or to a person of whom they do not approve but shall in such event, within one month after the date on which the transfer was lodged with the Company send to the transferor and transferee notice of the refusal. If the Directors refuse to register a transfer they shall within one month of the date of application for the transfer by notice in writing to the applicant state the facts which are considered to justify the refusal to register the transfer.	Directors’ power to decline to register.
24. The Directors may decline to register any instrument of transfer unless:- (a)    such fee not exceeding $2/- or such other sum as the Directors may from time to time require under the provisions of these Articles, is paid to the Company in respect thereof; and (b)    the amount of proper duty (if any) with which each instrument of transfer is chargeable under any law for the time being in force relating to stamps is paid; and (c)    the instrument of transfer is deposited at the Office or at such other place (if any) as the Directors may appoint accompanied by a certificate of payment of stamp duty (if any), the certificates of the shares to which the transfer relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do.	Instrument of transfer. Amended by AGM held on 29.6.2006
25. The Company shall provide a book to be called “Register of Transfers” which shall be kept under the control of the Directors, and in which shall be entered the particulars of every transfer of shares.	Register of Transfers.
26. The Register may be closed at such times and for such periods as the Directors may from time to time determine not exceeding in the whole thirty days in any year.	Closure of Register.

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TRANSMISSION OF SHARES
27. In case of the death of a Member, the survivor or survivors, where the deceased was a joint holder, and the executors or administrators of the deceased, where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing herein shall release the estate of a deceased Member (whether sole or joint) from any liability in respect of any share held by him.	Transmission on death.
28. Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may, upon producing such evidence of title as the Directors shall require, be registered himself as holder of the share upon giving to the Company notice in writing of such his desire or transfer such share to some other person. If the person so becoming entitled shall elect to be registered himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have another person registered he shall testify his election by executing to that person a transfer of the share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers shall be applicable to any such notice or transfer as aforesaid as if the death or bankruptcy of the Member had not occurred and the notice or transfer were a transfer executed by such Member.	Persons becoming entitled on death or bankruptcy of Member may be registered.
29. Save as otherwise provided by or in accordance with these Articles a person becoming entitled to a share in consequence of the death or bankruptcy of a Member shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof to exercise any right conferred by membership in relation to Meetings of the Company until he shall have been registered as a Member in respect of the share.	Rights of un-registered executors and trustees.
30. There shall be paid to the Company in respect of the registration of any probate, letters of administration, certificate of marriage or death, power of attorney or other document relating to or affecting the title to any shares, such fee not exceeding $2/- as the Directors may from time to time require or prescribe.	Fee for registration of probate etc.
CALLS ON SHARES
31. The Directors may from time to time make such calls as they think fit upon the Members in respect of any moneys unpaid on their shares and not by the terms of the issue thereof made payable at fixed times, and each Member shall (subject to receiving at least fourteen days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. A call may be revoked or postponed as the Directors may determine.	Calls on shares. Amended by AGM held on 29.6.2006
32. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments.	Time when made.
33. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum due from the day appointed for payment thereof to the time of actual payment at such rate not exceeding ten per cent per annum as the Directors determine, but the Directors shall be at liberty to waive payment of such interest wholly or in part.	Interest on calls.

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34. Any sum which by the terms of issue of a share becomes payable upon allotment or at any fixed date, shall for all purposes of these Articles be deemed to be a call duly made and payable on the date, on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of the Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.	Sum due on allotment. Amended by AGM held on 29.6.2006
35. The Directors may on the issue of shares differentiate between the holders as to the amount of calls to be paid and the times of payments.	Power to differentiate.
36. The Directors may, if they think fit, receive from any Member willing to advance the same all or any part of the moneys uncalled and unpaid upon the shares held by him and such payments in advance of calls shall extinguish, so far as the same shall extend, the liability upon the shares in respect of which it is made, and upon the moneys so received or so much thereof as from time to time exceeds the amount of the calls then made upon the shares concerned the Company may pay interest at such rate not exceeding ten per cent per annum as the Member paying such sum and the Directors agree upon.	Payment in advance of calls. Amended by AGM held on 29.6.2006
FORFEITURE AND LIEN
37. If any Member fails to pay in full any call or instalment of a call on the day appointed for payment thereof, the Directors may at any time thereafter serve a notice on such Member requiring payment of so much of the call or instalment as is unpaid together with any interest and expenses which may have accrued.	Notice requiring payment of calls.
38. The notice shall name a further day (not being less than fourteen days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call was made will be liable to be forfeited.	Notice to state time and place.
39. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before the forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder.	Forfeiture on non- compliance with notice.
40. A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto, or to any other person, upon such terms and in such manner as the Directors shall think fit, and at any time before a sale, re-allotment or disposition the forfeiture or surrender may be cancelled on such terms as the Directors think fit. To give effect to any such sale, the Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such person as aforesaid.	Sale of shares forfeited.

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41. A Member whose shares have been forfeited or surrendered shall cease to be a Member in respect of the shares, but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were payable by him to the Company in respect of the shares with interest thereon at ten per cent per annum (or such lower rate as the Directors may approve) from the date of forfeiture or surrender until payment, but such liability shall cease if and when the Company receives payment in full of all such money in respect of the shares and the Directors may waive payment of such interest either wholly or in part.	Rights and liabilities of Members whose shares have been forfeited or surrendered.
42. The Company shall have a first and paramount lien and charge on every share (not being a fully paid share) registered in the name of each Member (whether solely or jointly with others) and on the dividends declared or payable in respect thereof for all calls and instalments due on any such share and interest and expenses thereon but such lien shall only be upon the specific shares in respect of which such calls or instalments are due and unpaid and on all dividends from time to time declared in respect of the shares. The Directors may resolve that any share shall for some specified period be exempt from the provisions of this Article.	Company’s lien.
43. The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen days after notice in writing stating and demanding payment of the sum payable and giving notice of intention to sell in default, shall have been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy. To give effect to any such sale, the Directors may authorise some person to transfer the shares sold to the purchaser thereof.	Sale of shares subject to lien.
44. The proceeds of the sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale.	Application of proceeds of such sale.
45. A statutory declaration in writing that the declarant is a Director of the Company and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts stated therein as against all persons claiming to be entitled to the share, and such declaration and the receipt of the Company for the consideration (if any) given for the share on the sale, re-allotment or disposal thereof together with the certificate of proprietorship of the share under Seal delivered to a purchaser or allottee thereof shall (subject to the execution of a transfer if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall be registered as the holder of the share and shall not be bound to see to the application of the purchase money (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, surrender, sale, re-allotment or disposal of the share.	Title to shares forfeited or surrendered or sold to satisfy a lien.
ALTERATION OF CAPITAL
46. (deleted by AGM held on 29.6.2006)

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47. Subject to any special rights for the time being attached to any existing class of shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company or otherwise.	Rights and privileges of new shares.
48. (deleted by AGM held on 29.6.2006)
49. Except so far as otherwise provided by the conditions of issue or by these Articles all new shares shall be subject to the provisions of these Articles with reference to allotments, payment of calls, lien, transfer, transmission, forfeiture and otherwise.	New shares otherwise subject to provisions of Articles.
50. The Company may by Ordinary Resolution:- (a)    consolidate and divide all or any of its shares; (b)    subdivide its shares or any of them (subject nevertheless to the provisions of the Act) provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and (c)    subject to the provisions of these Articles and the Act, convert any class of shares into any other class of shares.	Power to consolidate, subdivide and convert shares. Amended by AGM held on 29.6.2006
51. The Company may by Special Resolution reduce its share capital or any undistributable reserve in any manner and with and subject to any incident authorised and consent required by law. Without prejudice to the generality of the foregoing, upon cancellation of a share purchased or otherwise acquired by the Company pursuant to these Articles and the Act, the number of the issued shares of the Company shall be diminished by the number of the shares so cancelled, and, where any such cancelled share was purchased or acquired out of the capital of the Company, the amount of share capital of the Company shall be reduced accordingly.	Power to reduce capital. Amended by AGM held on 29.6.2006
STOCK
52. The Company may by Ordinary Resolution convert any paid up i shares into stock and may from time to time by like resolution reconvert any stock into paid up shares.	Power to convert into stock. Amended by AGM held on 29.6.2006
53. The holders of stock may transfer the same or any part thereof in the same manner and subject to the same Articles as and subject to which the shares from which the stock arose might previously to conversion have been transferred or as near thereto as circumstances admit but no stock shall be transferable except in such units as the Directors may from time to time determine.	Transfer of stock. Amended by AGM held on 29.6.2006

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54. The holders of stock shall, according to the number of stock units held by them, have the same rights, privileges and advantages as regards dividend, return of capital, voting and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except as regards dividend and return of capital and the assets on winding up) shall be conferred by the number of stock units which would not if existing in shares have conferred that privilege or advantage; and no such conversion shall affect or prejudice any preference or other special privileges attached to the shares so converted.	Rights of stockholders. Amended by AGM held on 29.6.2006
55. All such of the provisions of these Articles as are applicable to paid up shares shall apply to stock and the words “share” and “shareholder” or similar expressions herein shall include “stock” or “stockholder”.	Interpretation.
GENERAL MEETINGS
56. (a) Subject to the provisions of the Act the Company shall in each year hold a general meeting as its Annual General Meeting in addition to any other meetings in that year and not more than fifteen months shall elapse between the date of one Annual General Meeting of the Company and that of the next. Provided that so long as the Company holds its First Annual General Meeting within eighteen months of its incorporation, it need not hold it in the year of its incorporation or in the following year.	Annual General Meeting.
(b) All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings.	Extraordinary General Meetings.
(c) The time and place of any General Meeting shall be determined by the Directors.	Time and Place.
57. The Directors may, whenever they think fit, convene an Extraordinary General Meeting and Extraordinary General Meetings shall also be convened on such requisition or, in default, may be convened by such requisitionists, as provided by Section 176 of the Act. If at any time there are not within Singapore sufficient Directors capable of acting to form a quorum at a meeting of Directors, any Director may convene an Extraordinary General Meeting in the same manner as nearly as possible as that in which meetings may be convened by the Directors.	Calling Extraordinary General Meetings.
NOTICE OF GENERAL MEETINGS
58. Subject to the provisions of the Act as to Special Resolutions and special notice, at least fourteen days’ notice in writing (exclusive both of the day on which the notice is served or deemed to be served and of the day for which the notice is given) of every General Meeting shall be given in the manner hereinafter mentioned to such persons (including the Auditors) as are under the provisions herein contained entitled to receive notice from the Company. Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed:- (a)    in the case of an Annual General Meeting by all the Members entitled to attend and vote thereat; and (b)    in the case of an Extraordinary General Meeting by that number or majority in number of the Members having a right to attend and vote thereat as is required by the Act. Provided also that the accidental omission to give notice to, or the non-receipt by, any person entitled thereto shall not invalidate the proceedings at any General Meeting.	Notice of Meetings.

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59. (a) Every notice calling a General Meeting shall specify the place and the day and hour of the Meeting, and there shall appear with reasonable prominence in every such notice a statement that a Member entitled to attend and vote is entitled to appoint a proxy to attend and to vote instead of him and that a proxy need not be a Member of the Company. (b) In the case of an Annual General Meeting, the notice shall also specify the Meeting as such. (c) In the case of any General Meeting at which business other than routine business is to be transacted, the notice shall specify the general nature of the business; and if any resolution is to be proposed as a Special Resolution or as requiring special notice, the notice shall contain a statement to that effect.	Contents of notice.
60. Routine business shall mean and include only business transacted at an Annual General Meeting of the following classes, that is to say:- (a)    Declaring dividends; (b)    Reading, considering and adopting the balance sheet, the reports of the Directors and Auditors, and other accounts and documents required to be annexed to the balance sheet; (c)    Appointing Auditors and fixing the remuneration of Auditors or determining the manner in which such remuneration is to be fixed; and (d)    Fixing the remuneration of the Directors proposed to be paid under Article 85.	Routine Business.
61. No business shall be transacted at any General Meeting unless a quorum is present. Save as herein otherwise provided, the quorum at any General meeting shall be at least two members holding an aggregate not less than 33 1/3 per cent. of the total number of fully paid shares of the Company (excluding Treasury Shares) for the time being, present in person or by proxy. For the purpose of this Article, “Member” includes a person attending by proxy or by attorney or as representing a corporation which is a Member.	Quorum. Amended by AGM held on 29.6.2006
62. If within 30 minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if that day is a public holiday then to the next business day following that public holiday) at the same time and place or such other day, time or place as the Directors may by not less than ten days’ notice appoint. At the adjourned meeting any one or more members present in person or by proxy shall be a quorum.	Adjournment if quorum not present. Amended by AGM held on 30.06.2004

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63. Subject to the provisions of the Act, a resolution in writing signed by every Member of the Company entitled to vote or being a corporation by its duly authorised representative shall have the same effect and validity as an Ordinary Resolution of the Company passed at a General Meeting duly convened, held and constituted, and may consist of several documents in the like form, each signed by one or more of such Members.	Resolution in writing.
64. The Chairman of the Board of Directors shall preside as Chairman at every General Meeting. If there be no such Chairman or if at any Meeting he be not present within fifteen minutes after the time appointed for holding the Meeting or be unwilling to act, the Members present shall choose some Director to be Chairman of the Meeting or, if no Director be present or if all the Directors present decline to take the Chair, one of their number present, to be Chairman.	Chairman.
65. The Chairman may, with the consent of any Meeting at which a quorum is present (and shall if so directed by the Meeting) adjourn the Meeting from time to time and from place to place, but no business shall be transacted at any adjourned Meeting except business which might lawfully have been transacted at the Meeting from which the adjournment took place. When a Meeting is adjourned for thirty days or more, notice of the adjourned Meeting shall be given as in the case of the original Meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned Meeting.	Adjournment.
66. At any General Meeting a resolution put to the vote of the Meeting shall be decided by a poll. No resolution put to the vote at any General Meeting shall be decided on a show of hands.	Method of voting.
67. A poll shall be taken in such manner (including the use of ballot or voting papers or tickets) as the Chairman may direct and the result of a poll shall be deemed to be the resolution of the Meeting at which the poll was taken. The Chairman may, and if so requested shall, appoint scrutineers and may adjourn the Meeting to some place and time fixed by him for the purpose of declaring the result of the poll.	Taking a poll.
68. If any votes be counted which ought not to have been counted or might have been rejected, the error shall not vitiate the result of the voting unless it be pointed out at the same Meeting or at any adjournment thereof and not in any case unless it shall in the opinion of the Chairman be of sufficient magnitude.	Votes counted in error.
69. In the case of equality of votes on a poll, the Chairman of the Meeting at which the poll is taken shall be entitled to a casting vote.	Chairman’s casting vote.
VOTES OF MEMBERS
70. Subject to these Articles and to any special rights or restrictions as to voting attached to any class of shares hereinafter issued on a poll every Member who is present in person or by proxy or attorney or in the case of a corporation by a representative shall have one vote for every share of which he is the holder.	Voting rights of Members.

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71. Where there are joint registered holders of any share any one of such persons may vote and be reckoned in a quorum at any Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative as if he were solely entitled thereto and if more than one of such joint holders be so present at any Meeting that one of such persons so present whose name stands first in the Register in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof.	Voting rights of joint holders.
72. A Member of unsound mind or whose person or estate is liable to be dealt with in any way under the law relating to mental disorders may vote on a poll by his committee, curator bonis or such other person as properly has the management of his estate and any such committee, curator bonis or other person may vote by proxy or attorney, provided that such evidence as the Directors may require of the authority of the person claiming to vote shall have been deposited at the Office not less than forty eight hours before the time appointed for holding the Meeting.	Voting rights of Members of unsound mind.
73. Subject to the provisions of these Articles every Member shall be entitled to be present and to vote at any General Meeting either personally or by proxy or by attorney or in the case of a corporation by a representative and to be reckoned in a quorum in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid.	Right to vote.
74. No objection shall be raised to the qualification of any voter except at the Meeting or adjourned Meeting at which the vote objected to is given or tendered and every vote not disallowed at such Meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the Meeting whose decision shall be final and conclusive.	Objections.
75. On a poll votes may be given either personally or by proxy or by attorney or in the case of a corporation by its representative and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.	Votes on a poll.
76. An instrument appointing a proxy shall be in writing and:-	Appointment of proxies.
(a)    in the case of an individual shall be signed by the appointor or by his attorney; and
(b)    in the case of a corporation shall be either under the common seal or signed by its attorney or by an officer on behalf of the corporation.
The Directors may, but shall not be bound to, require evidence of the authority of any such attorney or officer.
76A. A Member shall be entitled to appoint more than two proxies to attend and vote at the same meeting, and any such proxies shall be entitled to nominate a person or persons other than himself as the proxy or proxies appointed by the Member.	Multiple proxies Amended by AGM held on 29.06.2005
77. A proxy need not be a Member of the Company.	Proxy need not be a Member.

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78. An instrument appointing a proxy or the power of attorney or other authority, if any, must be left at the Office or such other place (if any) as is specified for the purpose in the notice convening the Meeting not less than forty-eight hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which it is to be used and in default shall not be treated as valid unless the Directors otherwise determine.	Deposit of proxies.
79. An instrument appointing a proxy shall be in such form as any Director may approve. An instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the Meeting as for the Meeting to which it relates and need not be witnessed.	Form of proxies. Amended by AGM held on 29.06.2005
80. A vote given in accordance with the terms of an instrument of proxy (which for the purposes of these Articles shall also include a power of attorney) shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy, or of the authority under which the proxy was executed or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Office (or such other place as may be specified for the deposit of instruments appointing proxies) before the commencement of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the proxy is used.	Intervening death or insanity of principal not to revoke proxy.
81. Any corporation which is a Member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any Meeting of the Company or of any class of Members of the Company and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual Member of the Company and such corporation shall for the purposes of these Articles (but subject to the Act) be deemed to be present in person at any such meeting if a person so authorised is present thereat.	Corporations acting by representatives. Amended by AGM held on 29.6.2006
DIRECTORS
82. Subject to the other provisions of Section 145 of the Act the number of the Directors all of whom shall be natural persons shall not be less than two nor unless otherwise determined by a General Meeting more than fifteen.	Number of Directors.
83. The first Directors of the Company are:-	First Directors.
CHRISTINE CHAN MENG YOOK LIM MEI
84. A Director need not be a Member and shall not be required to hold any share qualification unless and until otherwise determined by the Company in General Meeting but shall be entitled to attend and speak at General Meetings.	Qualification.
85. Subject to Section 169 of the Act, the remuneration of the Directors shall be determined from time to time by the Company in General Meeting, and shall be divisible among the Directors in such proportions and manner as they may agree and in default of agreement equally, except that in the latter event any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for the proportion of remuneration related to the period during which he has held office.	Remuneration of Directors.

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86. The Directors shall be entitled to be repaid all travelling or such reasonable expenses as may be incurred in attending and returning from meetings of the Directors or of any committee of the Directors or General Meetings or otherwise howsoever in or about the business of the Company in the course of the performance of their duties as Directors.	Travelling expenses.
87. Any Director who is appointed to any executive office or serves on any committee or who otherwise performs or renders services, which in the opinion of the Directors are outside his ordinary duties as a Director, may, subject to Section 169 of the Act, be paid such extra remuneration as the Directors may determine.	Extra Remuneration.
88. (a) Other than the office of Auditor, a Director may hold any other office or place of profit under the Company and he or any firm of which he is a member may act in a professional capacity for the Company in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine. Subject to the Act, no Director or intending Director shall be disqualified by his office from contracting or entering into any arrangement with the Company either as vendor, purchaser or otherwise nor shall such contract or arrangement or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested be avoided nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason only of such Director holding that office or of the fiduciary relation thereby established.	Power of Directors to hold office of profit and to contract with Company.
(b) Every Director shall observe the provisions of Section 156 of the Act relating to the disclosure of the interests of the Directors in contracts or proposed contracts with the Company or of any office or property held by a Director which might create duties or interests in conflict with his duties or interests as a Director. Subject to such disclosure, a Director shall be entitled to vote in respect of any contract or arrangement in which he is interested and he shall be taken into account in ascertaining whether a quorum is present.	Directors to observe Section 156 of the Act.
89. (a) A Director may be or become a director of or hold any office or place of profit (other than as Auditor) or be otherwise interested in any company in which the Company may be interested as vendor, purchaser, shareholder or otherwise and unless otherwise agreed shall not be accountable for any fees, remuneration or other benefits received by him as a director or officer of or by virtue of his interest in such other company.	Holding of office in other companies.
(b) The Directors may exercise the voting power conferred by the shares in any company held or owned by the Company in such manner and in all respects as the Directors think fit in the interests of the Company (including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors of such company or voting or providing for the payment of remuneration to the directors of such company) and any such Director of the Company may vote in favour of the exercise of such voting powers in manner aforesaid notwithstanding that he may be or be about to be appointed a director of such other company.	Directors may exercise voting power conferred by Company’s shares in another company.

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CHIEF EXECUTIVE OFFICERS
90. The Directors may from time to time appoint one or more of their body to be Chief Executive Officer or Chief Executive Officers of the Company and may from time to time (subject to the provisions of any contract between him or them and the Company) remove or dismiss him or them from office and appoint another or others in his or their places.	Appointment of Chief Executive Officers. Amended by AGM held on 30.06.2004
91. A Chief Executive Officer shall subject to the provisions of any contract between him and the Company be subject to the same provisions as to resignation and removal as the other Directors of the Company and if he ceases to hold the office of Director from any cause he shall ipso facto and immediately cease to be a Chief Executive Officer.	Resignation and removal of Chief Executive Officer. Amended by AGM held on 30.06.2004
92. The remuneration of a Chief Executive Officer shall from time to time be fixed by the Directors and may subject to these Articles be by way of salary or commission or participation in profits or by any or all of these modes.	Remuneration of Chief Executive Officer. Amended by AGM held on 30.06.2004
93. The Directors may from time to time entrust to and confer upon a Chief Executive Officer for the time being such of the powers exercisable under these Articles by the Directors as they may think fit and may confer such powers for such time and to be exercised on such terms and conditions and with such restrictions as they think expedient and they may confer such powers either collaterally with or to the exclusion of and in substitution for all or any of the powers of the Directors in that behalf and may from time to time revoke withdraw alter or vary all or any of such powers.	Powers of Chief Executive Officer. Amended by AGM held on 30.06.2004
VACATION OF OFFICE OF DIRECTOR
94. The office of a Director shall be vacated in any one of the following events, namely:-	Vacation of office of Director.
(a) if he becomes prohibited from being a Director by reason of any order made under the Act; (b) if he ceases to be a Director by virtue of any of the provisions of the Act or these Articles; (c) if he resigns by writing under his hand left at the Office; (d) if he has a receiving order made against him or suspends payments or compounds with his creditors generally; or (e) if he is found lunatic or becomes of unsound mind.

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APPOINTMENT AND REMOVAL OF DIRECTORS
95. The Company may by Ordinary Resolution remove any Director before the expiration of his period of office, notwithstanding anything in these Articles or in any agreement between the Company and such Director.	Removal of Directors.
96. The Company may by Ordinary Resolution appoint another person in place of a Director removed from office under the immediately preceding Article.	Appointment in place of Director removed.
97. The Directors shall have power at any time and from time to time to appoint any person to be a Director either to fill a casual vacancy or as an additional Director but so that the total number of Directors shall not at any time exceed the maximum number fixed by or in accordance with these Articles.	Directors’ power to fill casual vacancies and to appoint additional Director.
ALTERNATE DIRECTORS
98. (a) Any Director may at any time by writing under his hand and deposited at the Office or by telefax, telex or by cable sent to the Secretary appoint any person to be his Alternate Director and may in like manner at any time terminate such appointment. Any appointment or removal by telefax, telex or cable shall be confirmed as soon as possible by letter, but may be acted upon by the Company meanwhile.	Appointment of Alternate Directors.
(b) A Director or any other person may act as an Alternate Director to represent more than one Director and such Alternate Director shall be entitled at Directors’ meetings to one vote for every Director whom he represents in addition to his own vote if he is a Director.
(c) The appointment of an Alternate Director shall ipso facto determine on the happening of any event which if he were a Director would render his office as a Director to be vacated and his appointment shall also determine ipso facto if his appointor ceases for any reason to be a Director.
(d) An Alternate Director shall be entitled to receive notices of meetings of the Directors and to attend and vote as a Director at any such meeting at which the Director appointing him is not personally present and generally, if his appointor is absent from Singapore or is otherwise unable to act as such Director, to perform all functions of his appointor as a Director (except the power to appoint an Alternate Director) and to sign any resolution in accordance with the provisions of Article 104.
(e) An Alternate Director shall not be taken into account in reckoning the minimum or maximum number of Directors allowed for the time being under these Articles but he shall be counted for the purpose of reckoning whether a quorum is present at any meeting of the Directors attended by him at which he is entitled to vote Provided that he shall not constitute a quorum under Article 101 if he is the only person present at the meeting notwithstanding that he may be an Alternate to more than one Director.
(f) An Alternate Director may be repaid by the Company such expenses as might properly be repaid to him if he were a Director and he shall be entitled to receive from the Company such proportion (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct, but save as aforesaid he shall not in respect of such appointment be entitled to receive any remuneration from the Company.
(g) An Alternate Director shall not be required to hold any share qualification.

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PROCEEDINGS OF DIRECTORS
99. (a) The Directors may meet together for the despatch of business, adjourn or otherwise regulate their meetings as they think fit. Subject to the provisions of these Articles questions arising at any meeting shall be determined by a majority of votes and in case of an equality of votes the Chairman of the meeting shall have a second or casting vote.	Meetings of Directors.
(b) Any Director or his Alternate may participate at a meeting of the Directors by conference telephone or by means of a similar communication equipment whereby all persons participating in the meeting are able to hear each other in which event such Director or his Alternate shall be deemed to be present at the meeting. A Director or his Alternate participating in a meeting in the manner aforesaid may also be taken into account in ascertaining the presence of a quorum at the meeting. Such a meeting shall be deemed to take place where the largest group of Directors present for purposes of the meeting is assembled or, if there is no such group, where the Chairman is present.	Participation in a Meeting by conference telephone.
100. A Director may and the Secretary on the requisition of a Director shall at any time summon a meeting of the Directors but it shall not be necessary to give notice of a meeting of Directors to any Director for the time being absent from Singapore.	Convening meetings of Directors.
101. The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed at any other number shall be two. A meeting of the Directors at which a quorum is present shall be competent to exercise all the powers and discretions for the time being exercisable by the Directors.	Quorum.
102. The continuing Directors may act notwithstanding any vacancies in their body but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling up such vacancies or of summoning General Meetings of the Company but not for any other purpose. If there be no Directors or Director able or willing to act, then any two Members may summon a General Meeting for the purpose of appointing Directors.	Proceedings in case of vacancies.
103. The Directors may from time to time elect a Chairman and if desired a Deputy Chairman and determine the period for which he is or they are to hold office. The Deputy Chairman will perform the duties of the Chairman during the Chairman’s absence for any reason. The Chairman and in his absence the Deputy Chairman shall preside as Chairman at meetings of the Directors but if no such Chairman or Deputy Chairman be elected or if at any meeting the Chairman and the Deputy Chairman be not present within five minutes after the time appointed for holding the same, the Directors present shall choose one of their number to be Chairman of such meeting.	Chairman of Directors.

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104. A resolution in writing signed by all the Directors for the time being and being not less than are sufficient to form a quorum shall be as effective as a resolution passed at a meeting of the Directors duly convened and held, and may consist of several documents in the like form each signed by one or more of the Directors. Provided that where a Director has appointed an Alternate Director, the Director or (in lieu of the Director) his Alternate Director may sign. The expressions “in writing” and “signed” include approval by any such Directors by telex, telefax, cable, telegram or any form of electronic communication approved by the Directors for such purpose from time to time incorporating, if the Directors deem necessary, the use of security and/or identification procedures and devices approved by the Directors.	Resolutions in writing. Amended by AGM held on 29.6.2006
105. The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the Directors.	Power to appoint committees.
AUDIT COMMITTEE OF THE BOARD OF DIRECTOR
105A. (a) PURPOSE The Audit Committee shall provide assistance to the corporate directors in fulfilling their responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports of the Company. The Audit Committee primary duties and responsibilities are to:	Audit Committee Amended by AGM held on 30.06.2000
1       Oversee that management has maintained the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Company. 2       Oversee that management has established and maintained processes to assure that an adequate system of internal control is functioning with the Company. 3       Oversee that management has established and maintained processes to assure compliance by the Company with all applicable laws, regulations and corporate policy. The Audit Committee will fulfill these responsibilities primarily by carrying out the activities enumerated in Section (d) of this Article.
(b) COMPOSITION
On or before March 1, 2001, the Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be independent directors, and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. All members of the Audit Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Audit Committee shall have accounting or related financial management expertise. Audit Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Company or an outside consultant.

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The members of the Audit Committee shall be elected by the Board at the annual organizational meeting of the Board or until their successors shall be duly elected and qualified. Unless a Chairperson is elected by the full Board, the members of the Audit Committee may designate a Chairperson by majority vote of the full Audit Committee membership.

(c) MEETINGS

The Audit Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Audit Committee should meet at least annually with management, the director of the internal auditing department and the independent accountants separately to discuss any matters that the Audit Committee or each of these groups believe should be discussed privately. In addition, the Audit Committee or at least its Chairperson should meet with the independent accountants and management quarterly to review the Company’s financials consistent with Section (d)(3) below.

(d) RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee shall:

Documents/Reports Review

(1)    Review and reassess, at least annually, the adequacy of this Article. Make recommendations to the Directors, as conditions dictate, to update this Article.

(2)    Review with management and the independent accountants the Company’s annual financial statements, including a discussion with the independent accountants of the matters required to be discussed by Statement of Auditing Standards No. 61 (“SAS No. 61”).

Independent Accountants

(3)    Review the performance of the independent accountants and make recommendations to the Board regarding the appointment or termination of the independent accountants. The Audit Committee and the Board of Directors have the ultimate authority and responsibility to select, evaluate, and where appropriate, replace the outside auditor. The independent accountants are ultimately accountable to the Audit Committee and the entire Board of Directors for such accountant’s review of the financial statements and controls of the Company. On an annual basis, the Audit Committee should review and discuss with the accountants all significant relationships the accountants have with the Company to determine the accountants’ independence.

(4)    Oversee independence of the accountants by:

•   Receiving from the accountants, on a periodic basis, a formal written statement delineating all relationships between the accountants and the Company consistent with Independence Standards Board Standard 1 (“ISBS No. 1”);

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•   Reviewing, and actively discussing with the Board, if necessary, and the accountants, on a periodic basis, any disclosed relationships or services between the accountants and the Company or any other disclosed relationships or services that may impact the objectivity and independence of the accountants; and •   Recommending, if necessary, that the Board take certain action to satisfy itself of the auditors’ independence.
Financial Reporting Process (5)    In consultation with the independent accountants and the internal auditors, review the integrity of the Company’s financial reporting processes, both internal and external. (6)    Review any significant disagreement among management and the independent accountants or the internal auditing department in connection with the preparation of the financial statements. Legal Compliance/General (7)    Report through its Chairperson to the Board of Directors following meetings of the Audit Committee. (8)    Maintain minutes or other records of meetings and activities of the Audit Committee.
106. The meetings and proceedings of any such committee consisting of two or more members shall be governed by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are applicable and are not superseded by any regulations made by the Directors under the last preceding Article.	Proceedings at committee meetings.
107. All acts done by any meeting of Directors or of a committee of Directors or by any person acting as Director shall as regards all persons dealing in good faith with the Company, notwithstanding that there was some defect in the appointment of any such Director or person acting as aforesaid or that they or any of them were disqualified or had vacated office or were not entitled to vote be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director and had been entitled to vote.	Validity of acts of Directors in spite of some formal defect.
GENERAL POWERS OF THE DIRECTORS
108. The management of the business of the Company shall be vested in the Directors who (in addition to the powers and authorities by these Articles or otherwise expressly conferred upon them) may exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by the Act expressly directed or required to be exercised or done by the Company in General Meeting; provided that the Directors shall not carry into effect any proposals for disposing of the whole or substantially the whole of the Company’s undertaking or property unless those proposals have been approved by the Company in General Meeting. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article.	General powers of Directors to manage Company’s business. Amended by AGM held on 29.6.2006

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109. The Directors may from time to time by power of attorney appoint any company, firm or person or any fluctuating body of persons whether nominated directly or indirectly by the Directors to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with such attorney as the Directors may think fit and may also authorise any such attorney to subdelegate all or any of the powers, authorities and discretions vested in him.	Power to appoint attorneys.
110. All cheques, promissory notes, drafts, bills of exchange, and other negotiable or transferable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by Resolution determine.	Signature of cheques and bills.
BORROWING POWERS
111. The Directors may borrow or raise money from time to time for the purpose of the Company or secure the payment of such sums as they think fit and may secure the repayment or payment of such sums by mortgage or charge upon all or any of the property or assets of the Company or by the issue of debentures or otherwise as they may think fit.	Directors’ borrowing powers. Amended by AGM held on 29.6.2006
SECRETARY
112. The Secretary or Secretaries shall and a Deputy or Assistant Secretary or Secretaries may be appointed by the Directors for such term, at such remuneration and upon such conditions as they may think fit, and any Secretary, Deputy or Assistant Secretary so appointed may be removed by them, but without prejudice to any claim he may have for damages for breach of any contract of service between him and the Company. The appointment and duties of the Secretary or Secretaries shall not conflict with the provisions of the Act and in particular Section 171 thereof.	Secretary.
SEAL
113. (a) The Directors shall provide for the safe custody of the Seal, which shall only be used by the authority of the Directors or a committee of Directors authorised by the Directors in that behalf, and every instrument to which the Seal shall be affixed shall (subject to the provisions of these Articles as to certificates for shares) be signed by a Director and shall be countersigned by the Secretary or by a second Director or by some other person appointed by the Directors in place of the Secretary for the purpose.	Seal.
(b) The Company may exercise the powers conferred by the Act with regard to having an Official Seal for use abroad, and such powers shall be vested in the Directors.	Official Seal.

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(c) The Company may have a duplicate Common Seal as referred to in Section 124 of the Act which shall be a facsimile of the Common Seal with the addition on its face of the words “Share Seal”.	Share Seal.
AUTHENTICATION OF DOCUMENTS
114. Any Director or the Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any documents affecting the constitution of the Company and any resolutions passed by the Company or the Directors, and any books, records, documents and accounts relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any books, records, documents or accounts are elsewhere than at the Office, the local manager and other officer of the Company having the custody thereof shall be deemed to be a person appointed by the Directors as aforesaid.	Power to authenticate documents.
115. A document purporting to be a copy of a resolution of the Directors or an extract from the minutes of a meeting of Directors which is certified as such in accordance with the provisions of the last preceding Article shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that such extract is a true and accurate record of a duly constituted meeting of the Directors. Any authentication or certification made pursuant to this Article and Article 114 above may be made by any electronic means approved by the Directors for such purpose from time to time incorporating, if the Directors deem necessary, the use of security and/or identification procedures and devices approved by the Directors.	Certified copies of resolution of the Directors. Amended by AGM held on 29.6.2006
DIVIDENDS AND RESERVES
116. The Company may by Ordinary Resolution declare dividends but (without prejudice to the powers of the Company to pay interest on share capital as hereinbefore provided) no dividend shall be payable except out of the profits of the Company, or in excess of the amount recommended by the Directors.	Payment of dividends.
117. Subject to any rights or restrictions attached to any shares or class of shares and except as otherwise permitted under the Act:	Apportionment of dividends.
(a) all dividends in respect of shares must be paid in proportion to the number of shares held by a member but where shares are partly paid all dividends must be apportioned and paid proportionately to the amounts paid or credited as paid on the partly paid shares; and	Amended by AGM held on 29.6.2006
(b) all dividends must be apportioned and paid proportionately to the amounts so paid or credited as paid during any portion or portions of the period in respect of which the dividend is paid.
For the purposes of this Article, an amount paid or credited as paid on a share in advance of a call is to be ignored.

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118. If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay the fixed preferential dividends on any class of shares carrying a fixed preferential dividend expressed to be payable on a fixed date on the half-yearly or other dates (if any) prescribed for the payment thereof by the terms of issue of the shares, and subject thereto may also from time to time pay to the holders of any other class of shares interim dividends thereon of such amounts and on such dates as they may think fit.	Payment of preference and interim dividends.
119. (deleted by AGM held on 29.6.2006)
120. No dividend or other moneys payable on or in respect of a share shall bear interest against the Company.	Dividends not to bear interest.
121. The Directors may deduct from any dividend or other moneys payable to any Member on or in respect of a share all sums of money (if any) presently payable by him to the Company on account of calls or in connection therewith.	Deduction of debts due to Company.
122. The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists.	Retention of dividends on shares subject to lien.
123. The Directors may retain the dividends payable on shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a Member or which any person under those provisions is entitled to transfer until such person shall become a Member in respect of such shares or shall duly transfer the same.	Retention of dividends on shares pending trans- mission.
124. The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends unclaimed after being declared may be invested or otherwise made use of by the Directors for the benefit of the Company and any dividend unclaimed after a period of six years from the date of declaration of such dividend may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person entitled thereto prior to the forfeiture.	Unclaimed dividends.
125. The Company may, upon the recommendation of the Directors, by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets and in particular of paid up shares or debentures of any other company or in any one or more of such ways; and the Directors shall give effect to such Resolution and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to the Directors.	Payment of dividend in specie.

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126. Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or, if several persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder to any one of such persons or to such persons and such address as such persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque if purporting to be endorsed or the receipt of any such person shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby.	Dividends payable by cheque.
127. A transfer of shares shall not pass the right to any dividend declared on such shares before the registration of the transfer.	Effect of transfer.
RESERVES
128. The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for meeting contingencies or for the gradual liquidation of any debt or liability of the Company or for repairing or maintaining the works, plant and machinery of the Company or for special dividends or bonuses or for equalising dividends or for any other purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits which they may think it not prudent to divide.	Power to carry profit to reserve.
BONUS ISSUES AND CAPITALISATION OF PROFITS AND RESERVES
129. (A) The Directors may, with the sanction of an Ordinary Resolution of the Company :
(a) issue bonus shares for which no consideration is payable to the Company to the persons registered as holders of shares in the Register at the close of business on:	Power to issue free bonus shares and/or to capitalise reserves.
(i)     the date of the Ordinary Resolution (or such other date as may be specified therein or determined as therein provided); or (ii)    such other date as may be determined by the Directors, in the proportion to their then holdings of shares; and/or	Amended by AGM held on 29.6.2006
(b) capitalise any sum standing to the credit of any of the Company’s reserve accounts or other undistributable reserve) or any sum standing to the credit of profit and loss account by appropriating such sum to the persons registered as holders of shares in the Register of Members at the close of business on: (i)     the date of the Resolution (or such other date as may be specified therein or determined as therein provided); or

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(ii)    such other date as may be determined by the Directors, in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full new shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, new shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid.
(B) The Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue and/or capitalisation under Article 129(A), with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such bonus issue and/or capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.	Power of Directors to give effect to bonus issues and/or capitalisations.
130. In addition and without prejudice to the powers provided for by Article 129, the Directors shall have power to issue shares for which no consideration is payable and/or to capitalise any undivided profits or other moneys of the Company not required for the payment or provision of any dividend on any shares entitled to cumulative or non-cumulative preferential dividends (including profits or other moneys carried and standing to any reserve or reserves) and to apply such profits or other moneys in paying up in full new shares, in each case on terms that such shares shall, upon issue, be held by or for the benefit of participants of any share incentive or option scheme or plan implemented by the Company and approved by shareholders in General Meeting and on such terms as the Directors shall think fit.	Power to issue free shares and/or to capitalise reserves for employee share- based incentive plans Amended by AGM held on 29.6.2006
MINUTES AND BOOKS
131. The Directors shall cause minutes to be made in books to be provided for the purpose:-	Minutes.
(a)    of all appointments of officers made by the Directors; (b)    of the names of the Directors present at each meeting of Directors and of any committee of Directors; and (c)    of all Resolutions and proceedings at all Meetings of the Company and of any class of Members, of the Directors and of committees of Directors.
132. The Directors shall duly comply with the provisions of the Act and in particular the provisions in regard to registration of charges created by or affecting property of the Company, in regard to keeping a Register of Directors, Managers, Secretaries and Auditors, the Register, a Register of Mortgages and Charges and a Register of Directors’ Share and Debenture Holdings and in regard to the production and furnishing of copies of such Registers and of any Register of Holders of Debentures of the Company.	Keeping of Registers, etc.

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133. Any register, index, minute book, book of accounts or other book required by these Articles or by the Act to be kept by or on behalf of the Company may be kept either by making entries in bound books or by recording them in any other manner. In any case in which bound books are not used, the Directors shall take adequate precautions for guarding against falsification and for facilitating discovery.	Form of registers, etc.
ACCOUNTS
134. The Directors shall cause to be kept such accounting and other records as are necessary to comply with the provisions of the Act and shall cause those records to be kept in such manner as to enable them to be conveniently and properly audited.	Directors to keep proper accounts.
135. Subject to the provisions of Section 199 of the Act, the books of accounts shall be kept at the Office or at such other place or places as the Directors think fit within Singapore. No Member (other than a Director) shall have any right of inspecting any account or book or document or other recording of the Company except as is conferred by law or authorised by the Directors or by an Ordinary Resolution of the Company.	Location and inspection.
136. In accordance with the provisions of the Act the Directors shall cause to be prepared and to be laid before the Company in General Meeting such profit and loss accounts, balance sheets, group accounts (if any) and reports as may be necessary.	Presentation of accounts.
137. A copy of every balance sheet and profit and loss account which is to be laid before a General Meeting of the Company (including every document required by the Act to be annexed thereto) together with a copy of every report of the Auditors relating thereto and of the Directors’ report shall not less than fourteen days before the date of the Meeting be sent to every Member of, and every holder of debentures (if any) of, the Company and to every other person who is entitled to receive notices from the Company under the provisions of the Act or of these Articles Provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware or to more than one of the joint holders of a share in the Company or the several persons entitled thereto in consequence of the death or bankruptcy of the holder or otherwise but any Member to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.	Copies of accounts.
AUDITORS
138. Auditors shall be appointed and their duties regulated in accordance with the provisions of the Act. Every Auditor of the Company shall have a right of access at all times to the accounting and other records of the Company and shall make his report as required by the Act.	Appointment of Auditors.
139. Subject to the provisions of the Act all acts done by any person acting as an Auditor shall, as regards all persons dealing in good faith with the Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment.	Validity of acts of Auditors in spite of some formal defect.

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140. The Auditors shall be entitled to attend any General Meeting and to receive all notices of and other communications relating to any General Meeting to which any Member is entitled and to be heard at any General Meeting on any part of the business of the Meeting which concerns them as Auditors.	Auditors’ right to receive notices of and attend at General Meetings.
NOTICES
141. (a) Any notice may be given by the Company to any Member in any of the following ways:-	Service of notice.
(i)     by delivering the notice personally to him; or
(ii)    by sending it by prepaid mail to him at his registered address in Singapore or where such address is outside Singapore by prepaid air-mail; or
(iii)  by sending a cable or telex or telefax or by electronic mail containing the text of the notice to him at his registered address in Singapore or where such address is outside Singapore to such address or to any other address as might have been previously notified by the Member concerned to the Company.
(b) Any notice or other communication served under any of the provisions of these Articles on or by the Company or any officer of the Company may be tested or verified by telex or telefax or electronic mail or telephone or such other manner as may be convenient in the circumstances but the Company and its officers are under no obligation so to test or verify any such notice or communication.
141A. Without prejudice to the provisions of Article 141, any notice or document (including, without limitations, any accounts, balance-sheet or report) which is required or permitted to be given, sent or served under the Act or under these Articles by the Company, or by the Directors, to a member or an officer or Auditor of the Company may be given, sent or served using electronic communications to the current address of that person in accordance with the provisions of, or as otherwise provided by, the Act and/or any other applicable regulations or procedures. Such notice or document shall be deemed to have been duly given, sent or served upon transmission of the electronic communication to the current address of such person or as otherwise provided under the Act and/or any other applicable regulations or procedures.	Electronic communications. Amended by AGM held on 29.6.2006
142. All notices and documents (including a share certificate) with respect to any shares to which persons are jointly entitled shall be given to whichever of such persons is named first on the Register and notice so given shall be sufficient notice to all the holders of such shares.	Service of notices in respect of joint holders.
143. Any Member with a registered address shall be entitled to have served upon him at such address any notice to which he is entitled under these Articles.	Members shall be served at registered address.

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144. A person entitled to a share in consequence of the death or bankruptcy of a Member or otherwise upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share, and upon supplying also an address for the service of notice, shall be entitled to have served upon him at such address any notice or document to which the Member but for his death or bankruptcy or otherwise would be entitled and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share. Save as aforesaid any notice or document delivered or sent by post to or left at the registered address of any Member or given, sent or served to any member using electronic communications in pursuance of these Articles shall (notwithstanding that such Member be then dead or bankrupt or otherwise not entitled to such share and whether or not the Company shall have notice of the same) be deemed to have been duly served in respect of any share registered in the name of such Member as sole or joint holder.	Service of notices after death etc. of a Member. Amended by AGM held on 29.6.2006
145. (a) Any notice given in conformity with Article 141 shall be deemed to have been given at any of the following times as may be appropriate:- (i)     when it is delivered personally to the Member, at the time when it is so delivered; (ii)    when it is sent by prepaid mail to an address in Singapore or by prepaid airmail to an address outside Singapore, on the day following that on which the notice was put into the post; and (iii)  when the notice is sent by cable or telex or telefax or electronic mail, the day it is so sent.	When service effected.
(b) In proving such service or sending, it shall be sufficient to prove that the letter containing the notice or document was properly addressed and put into the post office as a prepaid letter or airmail letter as the case may be or that a telex or telefax or electronic mail was properly addressed and transmitted or that a cable was properly addressed and handed to the relevant authority for despatch.
146. Any notice on behalf of the Company or of the Directors shall be deemed effectual if it purports to bear the signature of the Secretary or other duly authorised officer of the Company, whether such signature is printed or written.	Signature on notice.
147. When a given number of days’ notice or notice extending over any other period is required to be given the day of service shall, unless it is otherwise provided or required by these Articles or by the Act, be not counted in such number of days or period.	Day of service not counted.
148. (a) Notice of every General Meeting shall be given in manner hereinbefore authorised to:- (i)     every Member; (ii)    every person entitled to a share in consequence of the death or bankruptcy or otherwise of a Member who but for the same would be entitled to receive notice of the Meeting; and	Notice of General Meeting.

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(iii)  the Auditor for the time being of the Company. (b) No other person shall be entitled to receive notices of General Meetings.
149. The provisions of Articles 141, 145, 146 and 147 shall apply mutatis mutandis to notices of meetings of Directors or any committee of Directors.	Notice of meetings of Directors or any committee of Directors.
WINDING UP
150. If the Company is wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of a Special Resolution, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds and may for such purpose set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The Liquidator may, with the like authority, vest the whole or any part of the assets in trustees upon such trusts for the benefit of Members as the Liquidator with the like authority thinks fit and the liquidation of the Company may be closed and the Company dissolved but so that no Member shall be compelled to accept any shares or other securities in respect of which there is a liability.	Distribution of assets in specie.
INDEMNITY
151. Subject to the provisions of the Act, every Director, Auditor, Secretary or other officer of the Company shall be entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities incurred by him in the execution and discharge of his duties or in relation thereto and in particular and without prejudice to the generality of the foregoing no Director, Manager, Secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other Director or officer or for joining in any receipt or other act for conformity or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto unless the same shall happen through his own negligence, wilful default, breach of duty or breach of trust.	Indemnity of Directors and officers.
SECRECY
152. No Member shall be entitled to require discovery of or any information respecting any detail of the Company’s trade or any matter which may be in the nature of a trade secret, mystery of trade or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Directors it will be inexpedient in the interest of the Members of the Company to communicate to the public save as may be authorised by law.	Secrecy.

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STOCK MARKET RULES
153. Upon listing of its shares on any stock market, the Company shall, to the extent permitted under Singapore law, comply with all rules of such stock market(s) as regarding corporate governance.	Stock Market Rules. Amended by EGM held on 15.11.1999

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NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS

/s/ CHRISTINE CHAN MENG YOOK

CHRISTINE CHAN MENG YOOK

11C SWISS CLUB ROAD

SINGAPORE 288103

ADVOCATE & SOLICITOR

/s/ LIM MEI

LIM MEI

56 JALAN AMPANG

SINGAPORE 268638

ADVOCATE & SOLICITOR

Dated this 11th day of September 1999.

Witness to the above signatures:-

/s/ THEODORA LIM RERN SING

THEODORA LIM RERN SING

Advocate & Solicitor

c/o Allen & Gledhill

Advocates & Solicitors

36 Robinson Road

#18-01 City House

Singapore 068877

-40-

EX-4.4

Exhibit 4.4

Final Novation Agreement VIMN 130702

Date: September 24, 2013

between

MEGABIZ LIMITED

and

BLUEARK GLOBAL CO., LTD

and

NICKELODEON ASIA HOLDINGS PTE LTD

NOVATION AGREEMENT

1

Final Novation Agreement VIMN 130702

This Novation Agreement (“Agreement”) is made on September 24, 2013, by and between:

(1) MEGABIZ LIMITED (Company Registration No: 1574641), a company incorporated in British Virgin Islands and having its principal business office at 8F. No. 22, Lane 407, Sec. 2, Tiding Boulevard, Taipei, Taiwan, R.O.C. (“Gigamedia”);

(2) BLUEARK GLOBAL CO., LTD (Company Registration No:[    220-87-88498    ]), a company incorporated in Korea and having its registered office at 11 fl. Central Tower, 235-11 Nonhyun – dong, Gangnam-gu, Seoul, Korea (“Blueark”); and

(3) NICKELODEON ASIA HOLDINGS PTE LTD (Company Registration No:    199803669D), a company incorporated in Singapore and having its registered office at 151 Lorong Chuan #03-08, New Tech Park, Singapore 556741 (“Nickelodeon”),

(collectively the “Parties” and individually a “Party”).

WHEREAS:

(A) This Agreement is supplemental to a Game Development, Publishing and Distribution Agreement made between Nickelodeon and Gigamedia on 18 March 2010, as supplemented and amended by way of an amendment dated 21 September 2011 (collectively, the “Contract”). A copy of the agreements are enclosed herewith as Appendix A and Appendix B.

(B) Pursuant to Section 12 (Assignment) of the Contract and with such consent as given by Nickelodeon, Gigamedia intends to assign all of its duties, rights, obligations and liabilities under the Contract to Blueark.

(C) To give effect to (B) above, Gigamedia wishes to be released and discharged from the Contract and Nickelodeon has agreed to release and discharge Gigamedia on the terms of Blueark’s undertaking to perform the Contract and to be bound by its terms in place of Gigamedia, in accordance with the terms and conditions of this Agreement.

IT IS AGREED:

1. With effect from September 24, 2013 (“Transfer Date”) and in consideration of the mutual undertakings herein:

(a) Blueark hereby agrees and undertakes that it shall perform all of Gigamedia’s obligations under the Contract which arise on or after the Transfer Date as if Blueark were and had at all times been a party to the Contract in place of Gigamedia;

(b) Nickelodeon releases and discharges Gigamedia from further performance of the Contract and from all obligations, liabilities, claims, damages, loss, costs and demands thereunder which arise or are incurred on or after the Transfer Date without prejudice to the rights of Nickelodeon in respect of the same up to immediately prior to the Transfer Date;

(c) Nickelodeon agrees that it will not assert against Blueark any claim or defense that it may have or have had against Gigamedia under the Contract, prior to the Transfer Date; and

(d) Nickelodeon agrees with Blueark and undertakes that from the Transfer Date, it shall be bound by and perform its obligations under the Contract as if Blueark were and had at all times been a party to the Contract in place of Gigamedia.

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Final Novation Agreement VIMN 130702

2. If any other acts and/or documents are required to give effect to this Agreement, the Parties agree to perform and/or execute them.

3. Each Party shall bear its own costs and expenses incurred in the preparation and completion of this Agreement and Blueark shall bear stamp duty (if any) payable on this Agreement.

4. A person who is not a party to this Agreement or the Contract shall have no right under the Contracts (Rights of Third Parties) Act (Cap. 53B) to enforce or to enjoy the benefit of any of their terms. Notwithstanding any provision to the contrary in this Agreement and the Contract, no consent of any third party is required for any variation (including any release or compromise of any liability under) or termination of this Agreement and/or the Contract.

5. The Parties may execute this Agreement in separate counterparts. Each will be an original and together they will form one document.

6. This Agreement and the relationship between the Parties shall be governed by and interpreted in accordance with the laws of Singapore. The Parties agree to submit any disputes to the exclusive jurisdiction of the courts of Singapore.

AGREED TO AND ACCEPTED BY the duly authorized representative of the Parties on the day and dated stated above:

/s/ Collin Hwang

Name: Collin Hwang

Title: Director

for and on behalf of

MEGABIZ LIMITED

/s/ Andrew Ku

Name: Andrew Ku

Title: Founding M.D.

for and on behalf of

BLUEARK GLOBAL CO., LTD

/s/ Loh Wei Hao

Name: Loh Wei Hao

Title: Head, Business & Legal Affairs

for and on behalf of

NICKELODEON ASIA HOLDINGS PTE LTD

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Final Novation Agreement VIMN 130702

APPENDIX A

Copy of

“Game Development, Publishing & Distribution Agreement

between Megabiz Limited and Nickelodeon Asia Holdings Pte Ltd”

dated March 18, 2010

4

Final Novation Agreement VIMN 130702

APPENDIX B

Copy of

“Amendment to Development, Publishing & Distribution Agreement”

dated September 21, 2011

5

EX-4.5

Exhibit 4.5

[TRANSLATION]

Angel Fund (Asia) Investments Limited

and

Hoshin GigaMedia Center Inc.

Share Purchase Agreement

1

This agreement is entered into on October 30, 2013 by and between:

1. Angel Fund (Asia) Investments Limited, a Cayman Islands limited liability company having its registered address at Floor 4, Willow House, Cricket Square, PO Box 2804, Grand Cayman KY1-1112, Cayman Islands (the “Buyer”); and

2. Hoshin GigaMedia Center Inc., a Republic of China corporation with registered address at 8th Floor, No. 22, Lane 407, Tiding Boulevard Section 2, Neihu District, Taipei (the “Seller”).

Whereas:

(A) SoftStar Entertainment Inc., a company-limited-by-shares incorporated under the laws of the Republic of China (the “Target Company”), is publicly listed on the Gre Tai Securities Market. As of the date hereof, its authorized capital is NT$1,000,000,000, divided into 100,000,000 common shares, each of par value NT$10. Its paid-in capital is NT$368,918,300, divided into 36,891,830 common shares, each of par value NT$10.

(B) As of the date hereof, the Seller holds 4,978,562 common shares of the Target Company, each of par value NT$10 and representing approximately 13.50% of the outstanding shares of the Target Company.

(C) The Buyer desires to purchase 4,978,562 common shares of the Target Company, each of par value NT$10 and representing approximately 13.50% of outstanding shares of the Target Company, from the Seller. The purchase price of each share is NT$15, for a total purchase price of NT$74,678,430 in total (the “Purchase Price”). The Seller desires to sell such shares to the Buyer.

It is hereby agreed:

1. Definitions

1.1 In this Agreement:

“Encumbrance” includes any buy-back right, option right, right of preemptive, or right of transfer; any security interests such as mortgage, charge, pledge, and lien, restriction on transfer, or warranty; and any arrangement of lease-term, installment sale, credit-sale, conditional sale, or deferred payment sale

2. Contemplated Transaction

Subject to the terms and conditions of this agreement, the Buyer will subscribe for and purchase from the Seller, and the Seller will issue and sell to the Buyer, four million nine hundred seventy-eight thousand five hundred and sixty-two (4,978,562) shares of the Target Company (the “Target Shares”), and all the attached rights to the Target Shares, including rights to unpaid dividends and the right of asset distribution declared after the Closing Date; nevertheless, the rights to unpaid dividends and the right of asset distribution declared prior to the Closing Date belong to the Seller, and the Buyer shall transfer all the dividends and assets received under such rights to the Seller within seven (7) days of receiving them.

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3. Closing

3.1 Upon the fulfillment of all the conditions under Article 4, or where the protected party waives any and all unfulfilled conditions, the contemplated transaction will take place on             , 2013 or at such other time, within three (3) business days after the consummation of closing (“Closing Date”).

3.2 At closing:

(a) After the Buyer shows the remittance that the Purchase Price has been paid pursuant to (c) of this Article, the Seller shall deliver the completed, signed and sealed share transfer form with the number of shares purchased by the Buyer to the Buyer. The Buyer shall deliver proof of the payment of the securities transaction tax to the Seller.

(b) The Seller shall bring stock certificates representing the Target Shares, proof of the payment of the securities transaction tax, its seal and corporate registration and the Buyer shall bring the share transfer form, its seal and corporate registration to the stock service agency of the Target Company to effect the transfer the Target Shares, change the shareholders’ registrar and other relevant matters.

(c) The Buyer shall remit the Purchase Price after deducting the securities transaction tax to the following bank account:

Bank Name:	CTBC Bank Co., Ltd., Dunhua North Road Branch
	(Bank Code: 822)
Account Holder:	Hoshin GigaMedia Center Inc.
Account Number:	015118816207

3.3 For the consummation of the contemplated transaction, after the Closing Date, each party shall accommodate the other party’s reasonable request and take proper actions, including but not limited to providing the other party the necessary documents and information regarding the consummation of the transfer of Target Shares.

4. Closing Conditions

4.1 The closing of the contemplated transaction is conditioned upon the satisfaction of the following conditions. If any of the conditions is not satisfied and not waived by the protected party, the parties have no obligation to close the contemplated transaction.

(a) Both party have obtained all corporate approvals and permits necessary for the execution and performance of this Agreement, and the approvals and permits remain in full force and effect as of the Closing Date.

(b) All consents, approvals, orders or authorizations of, or registrations, declarations or filings (governmental, regulatory and corporate) necessary for the entry into and performance of this Agreement have been obtained and remain in full force and effect as of the Closing Date.

(c) The parties have signed and executed all the related documents in accordance with terms of this Agreement.

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(d) There are no events of material breach or likely to lead to material breach of this Agreement.

(e) There are no governmental or court orders which prohibit the contemplated transaction.

4.2 Either party shall promptly notify the other party by writing the occurrence of any of the above-listed events.

5. Representations and Warranties

5.1 The Seller hereby represents and warrants to the Buyer that the following statements are true as of the date of this Agreement:

(a) The Seller owns the Target Shares and there is no Encumbrance hereof;

(b) The Seller is a corporation duly organized and validly existing, and has all requisite corporate power to sign and execute this Agreement. As of signing and executing this Agreement, the Seller has obtained or will obtain necessary internal permissions or authorizations, and all required consents, permissions or approvals from third parties have been or will be obtained;

(c) The signing and execution of this Agreement do not violate: (1) The Articles of Incorporation of the Seller; (2) contracts that are binding on the Seller; (3) governmental orders of court judgments that are binding the Seller; and

(d) All information regarding the Seller provided by the Seller to the Buyer are true and correct in all material respects, and there are no untrue statements or requested documents or information omitted.

5.2 The Buyer hereby represents and warrants to the Seller that the following statements are true as of the date of this Agreement:

(a) The Buyer is a corporation duly organized and validly existing, and has all requisite corporate power to sign and execute this Agreement. As of signing and executing this Agreement, the Seller has obtained or will obtain necessary internal permissions or authorizations, and all required consents, permissions or approvals from third parties have been or will be obtained;

(b) The signing and execution of this Agreement do not violate: (1) The Articles of Incorporation of the Buyer; (2) contracts that are binding on the Buyer; (3) governmental orders of court judgments that are binding the Buyer;

(c) The Buyer is aware that the Target Shares are private equity that have not been publicly issued and are not permitted to be sold to the public in stock market. The purpose of the Buyer purchasing the Target Shares from the Seller is to hold such shares personally; and

(d) All information provided by the Buyer to the Seller, including but not limited to the transferee qualifications for the Target Shares, are true and correct in all material respects, and there are no untrue statements or requested documents or information omitted.

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6. Covenants

6.1 The Buyer hereby makes following covenants to the Seller:

(a) After Closing, in the first instance the Target Company issues new shares (not including events of private placement, issuance of stock dividends and capital increase out of capital reserves), the Buyer shall transfer pre-emptive subscription rights, to the extent of 15% of the shares to be issued by the Target Company, to the Seller, and the Buyer shall do its utmost to assist the Seller with subscribing to such shares. The Seller has the discretion to decide to subscribe all or part of the shares within that extent and shall inform the Buyer to facilitate follow-up processes.

(b) After Closing, in the first instance the Target Company issues convertible bonds, the Buyer shall assist the Seller with obtaining subscription rights to the extent of 15% of the overall amount of the bonds to be issued by the Target Company.

(c) After the Buyer has performed either of (a) or (b) above, the other covenant no longer binds the Buyer.

(d) Before the Buyer intends to transfer or dispose all or part of the Target Shares to any third party, the Buyer shall first obtain written consent from the Seller, and ensure such third party sign an agreement with the Seller to undertake above covenants; otherwise the transaction between the Buyer and the third party shall be deemed null.

7. Breach and Indemnification

7.1 Any party who is in breach of any article of this Agreement, including the representations, warranties or undertakings, shall indemnify the other party from such breach. However, the total indemnification shall not exceed the Purchase Price.

7.2 The indemnification in the previous paragraph shall constitute the whole liability of the parties with respect to the contemplated transaction. The parties shall not make any other claims except for claims based on the previous paragraph.

8. Termination

8.1 This Agreement may be terminated at any time prior to the Closing Date pursuant to the following:

(a) The contemplated transaction does not close prior to November     , 2013.

(b) Either party petitions or is petitioned for declaration of bankruptcy, reorganization, dissolution, liquidation, or involved in other similar situations.

(c) Either party materially breaches this Agreement, and which breach have not been cured, within thirty (30) days following receipt by the breaching party of written notice of such breach by the other party.

5

8.2 Articles 7 through 11 and Article 15 of this Agreement remains effective in the event of termination of this Agreement.

8.3 Unless otherwise agreed in this Agreement, neither party or its respective board of directors shall be held liable to the other party or the other party’s affiliates in the event of termination of this Agreement pursuant to Article 8.1; provided, however, that nothing herein shall relieve any party from any breach of its obligations under this Agreement prior to such termination.

9. Assignment

Neither any of the rights nor obligations under this Agreement shall be assigned by either party without the prior written consent of the other party. This Agreement will be binding upon either party and either party’s respective successors and assignees.

10. Entire Agreement

10.1 This Agreement (including all transaction documents referred to herein) constitute the entire agreement and supersedes all prior written and oral lists, drafts, agreements and memoranda among the parties with respect to the subject matter hereof.

10.2 The attachments to this Agreement constitute a part of this Agreement and have the effect as this Agreement.

10.3 The headings of the Articles and Sections in this Agreement are provided for convenience of reference only and shall not be deemed to constitute a part hereof.

10.4 This Agreement may only be amended by an instrument in writing.

11. Notices

11.1 All notices and other communications hereunder shall be in writing.

11.2 All notices and other communications hereunder shall be delivered, facsimiled or emailed to the parties at the following addresses. If any of the following addresses changes, such party must promptly notify the other party. Otherwise all notices and other communications delivered, facsimiled or emailed to the original address shall be deemed given.

Buyer	Angel Fund (Asia) Investments Limited
Registered Address:	Floor 4, Willow House, Cricket Square PO Box 2804, Grand Cayman KY1-1112 Cayman Islands
Contact Address:	27/F, Taipei 101 7 Xinyi Road Section 5 Xinyi District Taipei
Facsimile:	02-81016327
Email:	sandy@angel-fund.net
Seller	Hoshin GigaMedia Center Inc.
Address:	8th Floor No. 22, Lane 407, Tiding Boulevard Section 2 Neihu District Taipei
Facsimile:	26568001
Email:	dirk.chen@gigamedia.com

6

12. Confidentiality

Both parties agree to keep any information obtained from the other party and the existence and contents of this Agreement strictly confidential. Each party shall use reasonable protective and preventive measures to keep the other party’s information confidential, as if that information was their own. Unless written consent is obtained from the other party, confidential information shall only be used for specific purposes and shall not be disclosed to third parties. In pursuing the specific purposes mentioned above, confidential information can be disclosed to shareholders, employees and legal and financial advisors; however, party shall be jointly and severally liable along with its employees. The confidentiality obligations of the parties under this Agreement shall not apply to information:

1. obtained from a public source or the public domain;

2. obtained or used by a third party when neither party has violated its confidentiality obligations;

3. independently developed without access to confidential information of the other party or known prior to access of the other party’s confidential information;

4. disclosed to a third party for the necessary implementation of this Agreement where such third party is bound by a similar obligation to keep the information confidential; or

5. disclosed by a party in response to an order or request by a court or other governmental body, as otherwise required by law. In such a situation, the disclosing party shall promptly notify the other party and assist the other party with obtaining necessary injunctive or protective measures under current law.

13. Costs, Expenses and Tax

13.1 Except as otherwise set forth in this Agreement, notwithstanding the closing of the contemplated transaction, each party shall bear its own costs and expenses in connection with the contemplated transaction, including the cost, expenses and disbursements of financial advisors, accountants, lawyers and other professionals.

13.2 Each party shall bear its own taxes in connection with the contemplated transaction in accordance with law.

14. Severability

If any provision or part thereof in this Agreement is held to be illegal, invalid or unenforceable, the remainder of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or part thereof.

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15. Governing Law and Jurisdiction

15.1 This Agreement shall be governed and construed in accordance with the laws of the Republic of China. Matters not mentioned herein shall be supplemented by the laws of the Republic of China.

15.2 The Taiwan Shihlin District Court shall be the court with first instance jurisdiction over any dispute, controversy or claim arising out of or relating to this Agreement.

16. Counterparts

This agreement is executed in duplicate, one for each party, with each deemed an original.

IN WITNESS WHEREOF, the parties have caused their authorized representatives to sign this Agreement on the Effective Date

Buyer	Angel Fund (Asia) Investments Limited
Representative	Jun-Guang Yu
/s/ Jun-Guang Yu
Seller	Hoshin GigaMedia Center Inc.
Representative	Guo-lun Huang
/s/ Guo-lun Huang

8

EX-8.1

Exhibit 8.1

List of Subsidiaries

Subsidiary*	Year of Incorporation	Jurisdiction of Incorporation
Hoshin GigaMedia Center Inc.	1998	Taiwan
GigaMedia (HK) Limited	2004	Hong Kong
GigaMedia International Holdings Limited	2004	British Virgin Islands
Cambridge Entertainment Software Limited	2004	British Virgin Islands
FunTown World Limited	2005	British Virgin Islands
GigaMedia Online Entertainment Corp.	2009	Cayman Islands
FunTown Hong Kong Limited	1999	Hong Kong
Cambridge Interactive Development Corporation	1997	U.S.A.
Internet Media Licensing Limited	2005	British Virgin Islands
GigaMedia Freestyle Holdings Limited	2009	British Virgin Islands
GigaMedia Capital Limited	2007	British Virgin Islands
GigaMedia (Labuan) Limited	2005	Labuan
Leisure Alliance Sdn. Bhd.	2009	Malaysia
GigaMedia Cloud Services Co. Ltd.	2011	Taiwan
GigaMedia Development Corporation	2013	Taiwan
FingerRockz Co. Ltd.	2012	Taiwan
Gaminfinity Publishing Co. Ltd.	2013	Taiwan
Play2gether Digital Technology Co. Ltd.	2013	Taiwan
PerfectPairs Gaming Co. Ltd.	2013	Taiwan

* Includes significant subsidiaries of GigaMedia Limited only.

1

EX-11.1

Exhibit 11.1

GIGAMEDIA LIMITED

CODE OF BUSINESS CONDUCT AND ETHICS

Third Amendment on March 18, 2013

Second Amendment on April 30, 2010

First Amendment on December 19, 2005

Adopted as of April 21, 2004

1

Dear Colleagues:

The good name and reputation of GigaMedia Limited (the “Company”) are a result of the dedication and hard work of all of us. Together, we are responsible for preserving and enhancing this reputation, a task that is fundamental to our continued well-being. Our goal is not just to comply with the laws and regulations that apply to our business; we also strive to abide by the highest principles of business conduct and ethics.

We set forth in the succeeding pages the Company’s Code of Business Conduct and Ethics (the “Code”). The purpose of the Code is to reinforce and enhance the Company’s commitment to an ethical way of doing business. The contents of the Code are not new, however. The policies set forth here are part of the Company’s long-standing tradition of high ethical standards.

All employees, consultants, officers and directors are expected to comply with the policies set forth in this Code. As a Singapore company, it goes without saying that we must comply with Singapore law. In addition, you must abide by applicable law in the country where you are located. In some instances, there may be a conflict between the applicable laws of two or more countries. If you encounter such a conflict, or if a local law conflicts with a policy set forth in this Code, you should consult with the General Counsel to determine the appropriate course of action.

Read the Code carefully and make sure that you understand it and the consequences of non-compliance. If you have any questions, speak to your supervisor, supervisor of the Legal Division or any of the other resources identified in this booklet. The Code cannot and is not intended to cover every applicable law or provide answers to all questions that might arise; for that we must ultimately rely on each person’s good sense of what is right, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct.

We at the Company are committed to providing the best and most competitive products and services to our customers and clients. Adherence to the policies set forth in the Code will help us achieve this goal.

Sincerely,

Chairman

Table of Contents

	Page
PUTTING THE CODE OF BUSINESS CONDUCT AND ETHICS TO WORK		1
About the Code of Business Conduct and Ethics		1
Meeting Our Shared Obligations		1
RESPONSIBILITY TO OUR ORGANIZATION		1
Conflicts of Interest		1
Improper Personal Benefits from the Company		2
Financial Interests in Other Businesses		2
Business Arrangements with the Company		2
Outside Employment or Activities with a Competitor		2
Outside Employment with a Customer or Supplier		2
Non-Competition		3
Non-Solicitation		3
Corporate Opportunities		3
Charitable, Government and Other Outside Activities		3
Family Members Working in the Industry		3
Protection and Proper Use of Company Assets		3
Company Books and Records		4
Record Retention		4
Confidential Information		5
Insider Trading		6
Trademarks, Copyrights and Other Intellectual Property		6
Trademarks		6
Copyright Compliance		7
Intellectual Property Rights of Others		7
Computer and Communication Resources		7
Responding to Inquiries from the Press and Others		8
FAIR DEALING		8
Antitrust Laws		8
Conspiracies and Collaborations Among Competitors		8
Distribution Issues		9
Penalties		10
Gathering Information About the Company’s Competitors		10
RESPONSIBILITY TO OUR PEOPLE		10
Respecting One Another		10
Privacy		11
Equal Employment Opportunity and Nondiscrimination		11
Sexual and Other Forms of Harassment		11
Other Forms of Harassment		12
Reporting Responsibilities and Procedures		12
Safety in the Workplace		13
Weapons and Workplace Violence		13
Drugs and Alcohol		13
INTERACTING WITH GOVERNMENT		13
Prohibition on Gifts to Government Officials and Employees		13
Political Contributions and Activities		13
Lobbying Activities		14
Bribery of Foreign Officials		14

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IMPLEMENTATION OF THE CODE	14
Seeking Guidance	14
Reporting Violations	15
Investigations of Suspected Violations	15
Reports Regarding Accounting Issues	15
Treatment of Complaints and Retention of Records Regarding Accounting Issues	15
Discipline for Violations	16
A Framework for Approaching Questions and Problems	16
Waivers of the Code	16
No Rights Created	16

ii

PUTTING THE CODE OF BUSINESS CONDUCT AND ETHICS TO WORK

About the Code of Business Conduct and Ethics

We at the Company are committed to the highest standards of business conduct in our relationships with each other and with our customers and clients, suppliers, shareholders and others. This requires that we conduct our business in accordance with all applicable laws and regulations and in accordance with the highest standards of business ethics. The Company’s Code of Business Conduct and Ethics helps each of us in this endeavor by providing a statement of the fundamental principles and key policies and procedures that govern the conduct of our business.

Our business depends on the reputation of the Company and its employees for integrity and principled business conduct. Thus, in many instances, the policies referenced in this Code go beyond the requirements of the law.

The Code is a statement of policies for individual and business conduct and does not, in any way, constitute an employment contract or an assurance of continued employment. As employees of the Company, we are employed at-will except when we are covered by an express, written employment agreement. This means that you may choose to resign your employment at any time, for any reason or for no reason at all. The Company may choose to terminate your employment at any time, for any reason permitted under the laws in the country where you are employed.

Meeting Our Shared Obligations

Each of us is responsible for knowing and understanding the policies and guidelines contained in the following pages. If you have questions, ask them; if you have ethical concerns, raise them. Supervisor of the Legal Division, who is responsible for overseeing and monitoring compliance with this Code, and the other company resources set forth in this Code are available to answer your questions and provide guidance and for you to report suspected misconduct. Our conduct should reflect the Company’s values, demonstrate ethical leadership, and promote a work environment that upholds the Company’s reputation for integrity, ethical conduct and trust.

RESPONSIBILITY TO OUR ORGANIZATION

We are all expected to dedicate our best efforts to advancing the Company’s interests and to make decisions that affect the Company using objective and independent standards.

Conflicts of Interest

A conflict of interest occurs when your private interests interfere in any way, or even appear to interfere, with the interests of the Company as a whole. A conflict situation can arise when you take actions or have interests that make it difficult for you to perform your company work objectively and effectively. Your obligation to conduct the Company’s business in an honest and ethical manner includes the ethical handling of actual or apparent conflicts of interest between personal and business relationships, including full disclosure of such conflicts. Although we cannot list every conceivable conflict, following are some common examples that illustrate actual or apparent conflicts of interest that should be avoided:

1

Improper Personal Benefits from the Company

Conflicts of interest arise when an employee, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. You may not accept any benefits from the Company that have not been authorized and approved pursuant to Company policy and procedure, including any Company loans or guarantees of your personal obligations. The Company will not make any personal loans to, nor guarantee the personal obligations of, directors and executive officers.

Financial Interests in Other Businesses

You may not own an interest in a company that competes with the Company. You may not own an interest in a company that does business with the Company (such as a Company customer or supplier) without the prior written approval of the supervisor of the Legal Division. Executive officers and members of the Board must obtain the written approval of the Audit Committee of the Board of Directors before making any such investment. However, it is not typically considered a conflict of interest (and therefore, prior approval is not required) to make investments of no more than one percent (1%) of the outstanding equity securities of competitors, customers or suppliers that are public companies (in other words, companies with stock listed on a national or international securities exchange), so long as the interest is not so significant that it would affect your decisions on behalf of the Company.

Business Arrangements with the Company

Without prior written approval from the supervisor of the Legal Division you may not participate in a joint venture, partnership or other business arrangement with the Company. Executive officers and members of the Board must obtain the prior written approval of the chairman of the Audit Committee of the Board of Directors and otherwise be in compliance with the Company’s memorandum and articles of association before participating in such an arrangement.

Outside Employment or Activities with a Competitor

Simultaneous employment with or serving as a director of a competitor of the Company is strictly prohibited, as is any activity that is intended to or that you should reasonably expect to advance a competitor’s interests. You may not market products or services in competition with the Company’s current or potential business activities. It is your responsibility to consult with the supervisor of the Legal Division to determine whether a planned activity will compete with any of the Company’s business activities before you pursue the activity in question.

Outside Employment with a Customer or Supplier

Without prior written approval from the supervisor of the Legal Division, you may not be a customer or client or be employed by, serve as a director of, or represent a customer of the Company. Similarly, without prior written approval from the supervisor of the Legal Division, you may not be a supplier or be employed by, serve as a director of, or represent a supplier to the Company. Executive officers and members of the Board must obtain the prior written approval of the Chairman of the Audit Committee of the Board of Directors and otherwise be in compliance with the Company’s memorandum and articles of association before participating in such an arrangement.

2

Non-Competition

You may not participate, invest, license, employ or being employed, or corporate with any company or entity engaged in a line of business which may be competitive with the business of the Company within three months after termination of your employment of the Company, except the local law or the contract stated otherwise. The Company may take legal actions against you in the event of the mentioned is being violated.

Non-Solicitation

You may not, during your employment or within twelve months after termination of the employment, directly or indirectly, solicit, entice, or attempt to approach, solicit or entice any of the other employees of the Company or its affiliates to terminate the employment.

Corporate Opportunities

We each owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. If you learn of a business or investment opportunity through the use of corporate property or information or your position at the Company, such as from a competitor or actual or potential customer, supplier or business associate of the Company, you may not participate in the opportunity or make the investment without the prior written approval of the supervisor of the Legal Division. Such an opportunity should be considered an investment opportunity for the Company in the first instance. You may not use corporate property or information or your position at the Company for improper personal gain, and you may not compete with the Company.

Charitable, Government and Other Outside Activities

The Company encourages all employees to participate in projects and causes that further the welfare of our local communities. However, you must obtain the prior written approval of the supervisor of the Legal Division before serving as a director or trustee of any charitable, not-for-profit, for-profit, or other entity or before running for election or seeking appointment to any government-related position. Executive officers and members of the Board must obtain the prior written approval of the Audit Committee of the Board of Directors.

Family Members Working in the Industry

You may find yourself in a situation where your spouse or significant other, your children, parents, or in-laws, or someone else with whom you have a familial relationship is a competitor, supplier or customer of the Company or is employed by one. Such situations are not prohibited, but they call for extra sensitivity to security, confidentiality and conflicts of interest. You must disclose any such situation to the supervisor of the Legal Division to assess the nature and extent of any concern and how it can be resolved. In some instances, any risk to the Company’s interests is sufficiently remote that the supervisor of the Legal Division may only remind you to guard against inadvertently disclosing the Company’s confidential information and not to be involved in decisions on behalf of the Company that involve the other company.

Protection and Proper Use of Company Assets

We each have a duty to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. We should take measures to prevent damage to and theft or misuse of Company property. Any suspected incidents of fraud or theft should be immediately reported to our Administration Department for investigation.

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When you leave the Company, all Company property must be returned to the Company. Except as specifically authorized by the Company, Company assets, including Company time, equipment, materials, resources and proprietary information, must be used for legitimate business purposes only, though incidental personal use (such as, for example, of Company electronic mail and telephones) may be permitted. However, you should be aware that even personal messages on the Company’s computer and telephone systems are Company property, and you should therefore have no expectation of personal privacy in connection with your use of these resources.

Company Books and Records

It is Company policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that the Company files with, or submits to, the U.S. Securities and Exchange Commission, any regulatory authority in Singapore, including but not limited to the Singapore Registry of Companies and Businesses and in all other public communications made by the Company. You must complete all Company documents accurately, truthfully, and in a timely manner, including all travel and expense reports. When using business expense accounts, you must document and record all information accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or the appropriate financial officer.

When applicable, documents must be properly authorized. You must record the Company’s financial activities in compliance with all applicable laws and accounting practices and the Company’s system of internal controls. The making of false or misleading entries, records or documentation is strictly prohibited. You must never create a false or misleading report or make a payment or establish an account on behalf of the Company with the understanding that any part of the payment or account is to be used for a purpose other than as described by the supporting documents.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies to e-mail, internal memos, formal reports and all other business communications.

Record Retention

In the course of its business, the Company produces and receives large numbers of records. Numerous laws require the retention of certain Company records for various periods of time. The Company is committed to compliance with all applicable laws and regulations relating to the preservation of records. Under no circumstances are Company records to be destroyed selectively or to be maintained outside Company premises or designated storage facilities.

If you learn of a subpoena or a pending or contemplated litigation or government investigation, you should immediately contact the supervisor of the Legal Division. You must retain and preserve ALL records that may be responsive to the subpoena or relevant to the litigation or that may pertain to the investigation until you are advised by the supervisor of the Legal Division as to how to proceed. You must not destroy any such records in your possession or control. You must also affirmatively preserve from destruction all relevant records that without intervention would automatically be destroyed or erased (such as e-mails and voicemail messages). Destruction of such records, even if inadvertent, could seriously prejudice the Company. If you have any questions regarding whether a particular record pertains to a pending or contemplated investigation or litigation or may be responsive to a subpoena or regarding how to preserve particular types of records, you should preserve the records in question and ask the supervisor of the Legal Division for advice.

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Confidential Information

All employees may learn, to a greater or lesser degree, facts about the Company’s business, plans, operations or “secrets of success” that are not known to the general public or to competitors. The advantages we derive from information we consider proprietary or sensitive is critical to the success of the Company. Sensitive information such as customer data, the terms offered or prices charged to particular customers, marketing or strategic plans or design, product specifications and production processes and techniques are examples of the Company’s confidential information or trade secrets. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. During the course of performing your responsibilities, you may obtain information concerning possible transactions with other companies or receive confidential information concerning other companies, such as our customers, which the Company may be under an obligation to maintain as confidential.

You must maintain the confidentiality of information entrusted to you by the Company or its customers, except when disclosure is authorized or legally mandated. Employees who possess or have access to confidential information or trade secrets must:

• Not use the information for their own benefit or the benefit of persons inside or outside the Company.

• Carefully guard against disclosure of that information to people outside the Company. For example, you should not discuss such matters with family members or business or social acquaintances or in places where the information may be overheard, such as taxis, public transportation, elevators or restaurants.

• Not disclose confidential information to another Company employee unless the employee needs the information to carry out business responsibilities.

Confidentiality Agreements are commonly used when the Company needs to disclose confidential information to suppliers, consultants, joint venture participants, or others. A Confidentiality Agreement puts the person receiving confidential information on notice that he or she must maintain the secrecy of such information. If, in doing business with persons not employed by the Company, you foresee that you may need to disclose confidential information, you should call the supervisor of the Legal Division and discuss the utility of entering into a Confidentiality Agreement.

Your obligation to treat information as confidential does not end when you leave the Company. Upon the termination of your employment, you must return everything that belongs to the Company, including all documents and other materials containing Company and customer confidential information. You must not disclose confidential information to a new employer or to others after ceasing to be a Company employee.

You may not disclose your previous employer’s confidential information to the Company. Of course, you may use general skills and knowledge acquired during your previous employment.

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Insider Trading

You are prohibited by Company policy and the law from buying or selling securities of the Company at a time when in possession of “material non-public information.” This conduct is known as “insider trading.” Passing such information on to someone who may buy or sell securities – known as “tipping” – is also illegal. The prohibition applies to Company securities and to securities of other companies if you learn material non-public information about other companies, such as the Company’s customers, in the course of your duties for the Company.

Information is “material” if (a) there is a substantial likelihood that a reasonable investor would find the information “important” in determining whether to trade in a security; (b) the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell securities; or (c) the information, if made public, likely would affect the market price of a company’s securities. Examples of types of material information include unannounced dividends, earnings, financial results, new or lost contracts or products, sales results, important personnel changes, business plans, possible mergers, acquisitions, divestitures or joint ventures, important litigation developments, and important regulatory, judicial or legislative actions. Information may be material even if it relates to future, speculative or contingent events and even if it is significant only when considered in combination with publicly available information.

Information is considered to be non-public unless it has been adequately disclosed to the public, which means that the information must be publicly disclosed, and adequate time must have passed for the securities markets to digest the information. Examples of adequate disclosure include public filings with securities regulatory authorities and the issuance of press releases, and may also include meetings with members of the press and the public. A delay of one or two business days is generally considered a sufficient period for routine information to be absorbed by the market. Nevertheless, a longer period of delay might be considered appropriate in more complex disclosures.

Do not disclose material non-public information to anyone, including co-workers, unless the person receiving the information has a legitimate need to know the information for purposes of carrying out the Company’s business. If you leave the Company, you must maintain the confidentiality of such information until it has been adequately disclosed to the public by the Company.

For additional information on trading in the Company’s securities you should contact the supervisor of the Legal Division.

Trademarks, Copyrights and Other Intellectual Property

Trademarks

Our logos and the name GigaMedia Limited are examples of Company trademarks. You must always properly use our trademarks and advise your supervisor or the supervisor of the Legal Division of infringements by others. Similarly, the trademarks of third parties must be used properly.

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Copyright Compliance

Works of authorship such as books, articles, drawings, computer software and other such materials may be covered by copyright laws. It is a violation of those laws and of the Company’s policies to make unauthorized copies of or derivative works based upon copyrighted materials. The absence of a copyright notice does not necessarily mean that the materials are not copyrighted.

The Company licenses the use of much of its computer software from outside companies. In most instances, this computer software is protected by copyright. You may not make, acquire or use unauthorized copies of computer software. Any questions concerning copyright laws should be directed to the supervisor of the Legal Division.

Intellectual Property Rights of Others

It is Company policy not to infringe upon the intellectual property rights of others. When using the name, trademarks, logos or printed materials of another company, including any such uses on the Company’s websites, you must do so properly and in accordance with applicable law.

Computer and Communication Resources

The Company’s computer and communication resources, including computers, voicemail and e-mail, provide substantial benefits, but they also present significant security and liability risks to you and the Company. It is extremely important that you take all necessary measures to secure your computer and any computer or voicemail passwords. All sensitive, confidential or restricted electronic information must be password protected, and, if sent across the Internet, must be protected by Company-approved encryption software. If you have any reason to believe that your password or the security of a Company computer or communication resource has in any manner been compromised, you must change your password immediately and report the incident to the Information System Department or the Administration Department.

When you are using Company resources to send e-mail, voicemail or to access Internet services, you are acting as a representative of the Company. Any improper use of these resources may reflect poorly on the Company, damage its reputation, and expose you and the Company to legal liability.

All the computing resources used to provide computing and network connections throughout the organization are the property of the Company and are intended for use by the Company employees to conduct the Company’s business. To the extent permitted by applicable law, all e-mail, voicemail and personal files stored on Company computers are Company property. You should therefore have no expectation of personal privacy in connection with these resources. The Company may, from time to time and at its sole discretion, review any files stored or transmitted on its computer and communication resources, including e-mail messages, for compliance with Company policy. Incidental and occasional personal use of electronic mail and telephones is permitted, but such use should be minimized and the length of the messages should be kept as short as possible, as these messages cost the Company in both productive time and money. As stated previously, even personal messages on the Company’s e-mail and voicemail systems are Company property.

You should not use Company resources in a way that may be disruptive or offensive to others or unlawful. At all times when sending e-mail or transmitting any other message or file, you should not transmit comments, language, images or other files that you would be embarrassed to have read by any person. Remember that your “private” e-mail messages are easily forwarded to a wide audience. In addition, do not use these resources in a wasteful manner. Unnecessarily transmitting messages and other files wastes not only computer resources, but also the time and effort of each employee having to sort and read through his or her own e-mail.

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Use of computer and communication resources must be consistent with all other Company policies, including those relating to harassment, privacy, copyright, trademark, trade secret and other intellectual property considerations.

Responding to Inquiries from the Press and Others

Company employees who are not official Company spokespersons may not speak with the press, securities analysts, other members of the financial community, shareholders or groups or organizations as a Company representative or about Company business unless specifically authorized to do so. Requests for financial or other information about the Company from the media, the press, the financial community, shareholders or the public should be referred to the Investor Relations Department. Requests for information from regulators or the government should also be referred to the supervisor of the Legal Division. You should then report any such contact to one of them.

FAIR DEALING

The Company depends on its reputation for quality, service and integrity. The way we deal with our customers, competitors and suppliers molds our reputation, builds long-term trust and ultimately determines our success. We must never take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.

Antitrust Laws

While the Company competes vigorously in all of its business activities, its efforts in the marketplace must be conducted in accordance with the letter and spirit of applicable antitrust and competition laws. While it is impossible to describe antitrust and competition laws fully in any code of business conduct, this Code will give you an overview of the types of conduct that are particularly likely to raise antitrust concerns.

Conspiracies and Collaborations Among Competitors

One of the primary goals of the antitrust laws is to promote and preserve each competitor’s independence when making decisions on price, output, and other competitively sensitive factors. Some of the most serious antitrust offenses are agreements between competitors that limit independent judgment and restrain trade, such as agreements to fix prices, restrict output or control the quality of products, or to divide a market for customers, territories, products or purchases. You should not agree with any competitor on any of these topics, as these agreements are virtually always unlawful.

Unlawful agreements need not take the form of a written contract or even express commitments or mutual assurances. Courts can — and do — infer agreements based on “loose talk,” informal discussions, or the mere exchange between competitors of information from which pricing or other collusion could result. Any communication with a competitor’s representative, no matter how innocuous it may seem at the time, may later be subject to legal scrutiny and form the basis for accusations of improper or illegal conduct. You should take care to avoid involving yourself in situations from which an unlawful agreement could be inferred.

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By bringing competitors together, trade associations and standard-setting organizations can raise antitrust concerns, even though such groups serve many legitimate goals. The exchange of sensitive information with competitors regarding topics such as prices, profit margins, output levels, or billing or advertising practices can potentially violate antitrust and competition laws, as can creating a standard with the purpose and effect of harming competition. You must notify the Legal Department before joining any trade associations or standard-setting organizations. Further, if you are attending a meeting at which potentially competitively sensitive topics are discussed without oversight by an antitrust lawyer, you should object, leave the meeting, and notify the Legal Department immediately.

Joint ventures with competitors are not illegal under applicable antitrust and competition laws. However, like trade associations, joint ventures present potential antitrust concerns. The Legal Department should therefore be consulted before negotiating or entering into such a venture.

Distribution Issues

Relationships with customers and suppliers can also be subject to a number of antitrust prohibitions if these relationships harm competition. For example, it can be illegal for a company to affect competition by agreeing with a supplier to limit that supplier’s sales to any of the company’s competitors. Collective refusals to deal with a competitor, supplier or customer may be unlawful as well. While a company generally is allowed to decide independently that it does not wish to buy from or sell to a particular person, when such a decision is reached jointly with others, it may be unlawful, regardless of whether it seems commercially reasonable. Finally, it is always unlawful to restrict a customer’s re-selling activity through minimum resale price maintenance (for example, by prohibiting discounts).

Other activities that can raise antitrust concerns are:

• discriminating in terms and services offered to customers where a company treats one customer or group of customers differently than another;

• exclusive dealing agreements where a company requires a customer to buy from or a supplier to sell to only that company;

• tying arrangements where a customer or supplier is required, as a condition of purchasing one product, to also purchase a second, distinct product;

• “bundled discounts,” in which discount or rebate programs link the level of discounts available on one product to purchases of separate but related products (for example, pencils linked to other office supplies); and

• “predatory pricing,” where a company offers a discount that results in the sales price of a product being below the product’s cost (the definition of cost varies depending on the court), with the intention of sustaining that price long enough to drive competitors out of the market.

Because these activities are prohibited under many circumstances, you should consult the supervisor of the Legal Division before implementing any of them.

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Penalties

Failure to comply with antitrust laws in the relevant jurisdictions could result in jail terms for individuals and large criminal fines and other monetary penalties for both the Company and individuals. In addition, private parties may bring civil suits in the relevant jurisdictions to recover three times their actual damages, plus attorney’s fees and court costs.

The antitrust laws are extremely complex. Because antitrust lawsuits can be very costly, even when a company has not violated the antitrust laws and is cleared in the end, it is important to consult with the Legal Department before engaging in any conduct that even appears to create the basis for an allegation of wrongdoing. It is far easier to structure your conduct to avoid erroneous impressions than to have to explain your conduct in the future when an antitrust investigation or action is in progress. For that reason, when in doubt, consult the Legal Department with your concerns.

Gathering Information About the Company’s Competitors

It is entirely proper for us to gather information about our marketplace, including information about our competitors and their products and services. However, there are limits to the ways that information should be acquired and used, especially information about competitors. In gathering competitive information, you should abide by the following guidelines:

• We may gather information about our competitors from sources such as published articles, advertisements, brochures, other non-proprietary materials, surveys by consultants and conversations with our customers, as long as those conversations are not likely to suggest that we are attempting to (a) conspire with our competitors, using the customer as a messenger, or (b) gather information in breach of a customer’s nondisclosure agreement with a competitor or through other wrongful means. You should be able to identify the source of any information about competitors.

• We must never attempt to acquire a competitor’s trade secrets or other proprietary information through unlawful means, such as theft, spying, bribery or breach of a competitor’s nondisclosure agreement.

• If there is any indication that information that you obtain was not lawfully received by the party in possession, you should refuse to accept it. If you receive any competitive information anonymously or that is marked confidential, you should not review it and should contact the supervisor of the Legal Division immediately.

The improper gathering or use of competitive information could subject you and the Company to criminal and civil liability. When in doubt as to whether a source of information is proper, you should contact the supervisor of the Legal Division.

RESPONSIBILITY TO OUR PEOPLE

Respecting One Another

The way we treat each other and our work environment affects the way we do our jobs. All employees want and deserve a work place where they are respected and appreciated. Everyone who works for the Company must contribute to the creation and maintenance of such an environment, and supervisors and managers have a special responsibility to foster a workplace that supports honesty, integrity, respect and trust.

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Privacy

We respect the privacy and dignity of all individuals. The Company collects and maintains personal information that relates to your employment, including medical and benefit information. Special care is taken to limit access to personal information to Company personnel with a need to know such information for a legitimate purpose. Employees and officers who are responsible for maintaining personal information and those who are provided access to such information must not disclose private information in violation of any applicable law or in violation of the Company’s policies.

Employees should not search for or retrieve items from another employee’s workspace without prior approval of that employee or management. Similarly, you should not use communication or information systems to obtain access to information directed to or created by others without the prior approval of management, unless such access is part of your job function and responsibilities at the Company.

Personal items, messages, or information that you consider to be private should not be placed or kept in telephone systems, computer or electronic mail systems, office systems, offices, work spaces, desks, credenzas, or file cabinets. The Company reserves all rights, to the fullest extent permitted by law, to inspect such systems and areas and to retrieve information or property from them when deemed appropriate in the judgment of management.

Equal Employment Opportunity and Non-discrimination

The diversity of the Company’s employees is a tremendous asset. The Company is an equal opportunity employer in hiring and promoting practices, benefits and wages. We will not tolerate discrimination against any person on the basis of race, religion, color, gender, age, marital status, national origin, sexual orientation, citizenship, disabled veteran status or disability (where the applicant or employee is qualified to perform the essential functions of the job with or without reasonable accommodation), or any other basis prohibited by law in recruiting, hiring, placement, promotion, or any other condition of employment.

You must treat all Company people, customers and clients, suppliers and others with respect and dignity.

Sexual and Other Forms of Harassment

Company policy strictly prohibits any form of harassment in the workplace, including sexual harassment. The Company will take prompt and appropriate action to prevent and, where necessary, discipline behavior that violates this policy.

Sexual harassment consists of unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature when:

• submission to such conduct is made a term or condition of employment;

• submission to or rejection of such conduct is used as a basis for employment decisions; or

• such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, offensive or hostile work environment.

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Forms of sexual harassment include, but are not limited to, the following:

• verbal harassment, such as unwelcome comments, jokes, or slurs of a sexual nature;

• physical harassment, such as unnecessary or offensive touching, or impeding or blocking movement; and

• visual harassment, such as derogatory or offensive posters, cards, cartoons, graffiti, drawings or gestures.

Other Forms of Harassment

Harassment on the basis of other characteristics is also strictly prohibited. Under this policy, harassment is verbal or physical conduct that degrades or shows hostility or hatred toward an individual because of his or her race, color, national origin, citizenship, religion, sexual orientation, marital status, age, mental or physical handicap or disability, veteran status or any other characteristic protected by law, which

• has the purpose or effect of creating an intimidating, hostile, or offensive work environment;

• has the purpose or effect of unreasonably interfering with an individual’s work performance; or

• otherwise adversely affects an individual’s employment.

Harassing conduct includes, but is not limited to, the following: epithets; slurs; negative stereotyping; threatening, intimidating or hostile acts; and written or graphic material that ridicules or shows hostility or aversion to an individual or group and that is posted on Company premises or circulated in the workplace.

Reporting Responsibilities and Procedures

If you believe that you have been subjected to harassment of any kind, you should promptly report the incident to your supervisor, the harasser’s supervisor, or the supervisor of Human Resources Department. If you feel comfortable doing so, you may also wish to confront the offender and state that the conduct is unacceptable and must stop. Complaints of harassment, abuse or discrimination will be investigated promptly and thoroughly and will be kept confidential to the extent possible. The Company will not in any way retaliate against any employee for making a good faith complaint or report of harassment or participating in the investigation of such a complaint or report.

The Company encourages the prompt reporting of all incidents of harassment, regardless of who the offender may be, or the offender’s relationship to the Company. This procedure should also be followed if you believe that a non-employee with whom you are required or expected to work has engaged in prohibited conduct. Supervisors must promptly report all complaints of harassment to the supervisor of Human Resources Department.

Any employee who is found to be responsible for harassment, or for retaliating against any individual for reporting a claim of harassment or cooperating in an investigation, will be subject to disciplinary action, up to and including discharge.

Remember that, regardless of legal definitions, the Company expects employees to interact with each other in a professional and respectful manner.

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Safety in the Workplace

Safety and security are of primary importance. You are responsible for maintaining our facilities free from recognized hazards and obeying all Company safety rules. Working conditions should be maintained in a clean and orderly state to encourage efficient operations and promote good safety practices.

Weapons and Workplace Violence

No employee may bring firearms, explosives, incendiary devices or any other weapons into the workplace or any work-related setting, regardless of whether or not employees are licensed to carry such weapons. Similarly, the Company will not tolerate any level of violence in the workplace or in any work-related setting. Violations of this policy must be referred to your supervisor and the Director of the Administration Department immediately. Threats or assaults that require immediate attention should be reported to the police.

Drugs and Alcohol

The Company intends to maintain a drug-free work environment. Except at approved Company functions, you may not use, possess or be under the influence of alcohol on Company premises.

You cannot use, sell, attempt to use or sell, purchase, possess or be under the influence of any illegal drug on Company premises or while performing Company business on or off the premises.

INTERACTING WITH GOVERNMENT

Prohibition on Gifts to Government Officials and Employees

The various branches and levels of government in all countries have different laws restricting gifts, including meals, entertainment, transportation and lodging, that may be provided to government officials and government employees. You are prohibited from providing gifts, meals or anything of value to government officials or employees or members of their families without prior written approval from the supervisor of the Legal Division.

Political Contributions and Activities

Laws of certain jurisdictions prohibit the use of Company funds, assets, services, or facilities on behalf of a political party or candidate. Payments of corporate funds to any political party, candidate or campaign may be made only if permitted under applicable law and approved in writing and in advance by the supervisor of the Legal Division.

Your work time may be considered the equivalent of a contribution by the Company. Therefore, unless required by applicable law, you will not be paid by the Company for any time spent running for public office, serving as an elected official, or campaigning for a political candidate. Nor will the Company compensate or reimburse you, in any form, for a political contribution that you intend to make or have made.

You must notify the supervisor of the Legal Division before running for election or seeking appointment to any government-related position. Executive officers and members of the Board of Directors must notify the Chairman of the Audit Committee of the Board before running for election or seeking appointment to any government-related position.

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Lobbying Activities

Laws of some jurisdictions require registration and reporting by anyone who engages in a lobbying activity. Generally, lobbying includes: (1) communicating with any member or employee of a legislative branch of government for the purpose of influencing legislation; (2) communicating with certain government officials for the purpose of influencing government action; or (3) engaging in research or other activities to support or prepare for such communication.

So that the Company may comply with lobbying laws, you must notify the supervisor of the Legal Division before engaging in any activity on behalf of the Company that might be considered “lobbying” as described above.

Bribery of Foreign Officials

Company policy, the U.S. Foreign Corrupt Practices Act (the “FCPA”), and the laws of many other countries (including but not limited to the Prevention of Corruption Act, Chapter 24 of Singapore) prohibit the Company and its officers, employees and agents from giving or offering to give money or anything of value to a foreign official, a foreign political party, a party official or a candidate for political office in order to influence official acts or decisions of that person or entity, to obtain or retain business, or to secure any improper advantage. A foreign official is an officer or employee of a government or any department, agency, or instrumentality thereof, or of certain international agencies, such as the World Bank or the United Nations, or any person acting in an official capacity on behalf of one of those entities. Officials of government-owned corporations are considered to be foreign officials.

Payments need not be in cash to be illegal. The FCPA prohibits giving or offering to give “anything of value.” Over the years, many non-cash items have been the basis of bribery prosecutions, including travel expenses, golf outings, automobiles, and loans with favorable interest rates or repayment terms. Indirect payments made through agents, contractors, or other third parties are also prohibited. Employees may not avoid liability by “turning a blind eye” when circumstances indicate a potential violation of the FCPA.

The FCPA does allow for certain permissible payments to foreign officials. Specifically, the law permits “facilitating” payments, which are payments of small value to effect routine government actions such as obtaining permits, licenses, visas, mail, utilities hook-ups and the like. However, determining what is a permissible “facilitating” payment involves difficult legal judgments. Therefore, employees must obtain permission from the supervisor of the Legal Division before making any payment or gift thought to be exempt from the FCPA.

IMPLEMENTATION OF THE CODE

Copies of this Code are available from the supervisor of Human Resources Department or the supervisor of the Legal Division. The Code is available in print to any shareholder who requests it. The Code can also be found on the Company website at http://www.gigamedia.com/code.htm. A statement of compliance with the Code must be signed by all employees, officers, directors and consultants.

Seeking Guidance

This Code cannot provide definitive answers to all questions. If you have questions regarding any of the policies discussed in this Code or if you are in doubt about the best course of action in a particular situation, you should seek guidance from your supervisor, the supervisor of the Legal Division or the other resources identified in this Code.

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Reporting Violations

If you know of or suspect a violation of applicable laws or regulations, the Code, or the Company’s related policies, you must immediately report that information to your supervisor, the supervisor of the Legal Division, the Taskforce¹, or, in the circumstances described below, the Audit Committee of the Board. No one will be subject to retaliation because of a good faith report of suspected misconduct. If any fraud is involved in the reported violation, supervisors should report to the Taskforce in accordance with the Antifraud Policy².

Investigations of Suspected Violations

All reported violations will be promptly investigated and treated confidentially to the greatest extent reasonably possible, given the need to conduct an investigation. It is imperative that reporting persons not conduct their own preliminary investigations. Investigations of alleged violations may involve complex legal issues, and acting on your own may compromise the integrity of an investigation and adversely affect both you and the Company. You are expected to cooperate in internal investigations of suspected misconduct.

Reports Regarding Accounting Issues

The Company is committed to compliance with applicable securities and other laws, rules, and regulations, accounting standards and internal accounting controls. You are expected to report any complaints or concerns regarding accounting, internal accounting controls and auditing matters (“Accounting Issues”) promptly. Reports may be made in writing to either the Taskforce at antifraud@gigamedia.com.tw, or to the Audit Committee of the Board at audit_committee@gigamedia.com.tw. Reports may be made anonymously. Reports will be treated confidentially to the extent reasonably possible given the need to conduct an investigation. No one will be subject to retaliation because of a good faith report of a complaint or concern regarding Accounting Issues.

Treatment of Complaints and Retention of Records Regarding Accounting Issues

Reports of concerns or complaints regarding Accounting Issues will be investigated in accordance with Antifraud Policy. The Taskforce will forward, as appropriate, complaints and concerns regarding Accounting Issues to the Audit Committee, and if appropriate, to the Chief Financial Officer. The Taskforce will retain copies of all reports, investigative reports, summaries of reports and other documents relating to complaints and concerns regarding Accounting Issues in accordance with the Company’s records retention policy.

¹  The Taskforce hereinafter referred to shall mean the Taskforce organized under the Antifraud Policy of the Company.

²  The Antifraud Policy was adopted by the Board of Directors on December 19, 2005. Copies of the Antifraud Policy are available from the Legal Department.

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Discipline for Violations

The Company intends to use every reasonable effort to prevent the occurrence of conduct not in compliance with its Code and to halt any such conduct that may occur as soon as reasonably possible after its discovery. Subject to applicable laws and agreements, Company personnel who violate this Code and other Company policies and procedures may be subject to disciplinary actions, up to and including discharge. In addition, disciplinary measures, up to and including discharge, may be taken against anyone who directs or approves infractions or has knowledge of them and does not promptly report and correct them in accordance with Company policies.

A Framework for Approaching Questions and Problems

Everyone must work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know right from wrong. Since it is impossible to anticipate every situation that will arise, it is important to have a way to approach a new question or problem. These are the steps to keep in mind:

• Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your independent good judgment and common sense; if something seems unethical or improper, it probably is.

• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.

Seek help from Company resources. In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, contact the supervisor of the Legal Division or the Audit Committee by email at audit_committee@gigamedia.com.tw.

Waivers of the Code

Waivers of the Code for directors and executive officers may be made only by the Board of Directors or the Audit Committee of the Board. The Company is required to disclose any such waivers in its U.S. securities filings and interim report on Form 6-K or its next annual report on Form 20-F.

No Rights Created

This Code is a statement of the fundamental principles and key policies and procedures that govern the conduct of the Company’s business. It is not intended to and does not create any rights in any employee, officer, customer, supplier, competitor, shareholder or any other person or entity.

16

ACKNOWLEDGMENT FORM

I have received and read the Company’s Code of Business Conduct and Ethics (“Code”), and I understand its contents. I agree to comply fully with the standards, policies and procedures contained in the Code and the Company’s related policies and procedures. I understand that I have an obligation to report to the supervisor of the Legal Division any suspected violations of the Code that I am aware of. I acknowledge that the Code is a statement of policies for business conduct and does not, in any way, constitute an employment contract or an assurance of continued employment.

Printed Name

Signature

Date

17

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS

ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Collin Hwang, Chief Executive Officer of GigaMedia Limited, certify that:

1. I have reviewed this annual report on Form 20-F of GigaMedia Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 30, 2014

By:	/s/ Collin Hwang
	Name:	Collin Hwang
	Title:	Chief Executive Officer

1

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OR 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS

ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Dirk Chen, Chief Financial Officer of GigaMedia Limited, certify that:

1. I have reviewed this annual report on Form 20-F of GigaMedia Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 30, 2014

By:	/s/ Dirk Chen
	Name:	Dirk Chen
	Title:	Chief Financial Officer

1

EX-13.1

Exhibit 13.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of GigaMedia Limited (the “Company”) on Form 20-F for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Collin Hwang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 30, 2014

By:	/s/ Collin Hwang
	Collin Hwang
	Chief Executive Officer

1

EX-13.2

Exhibit 13.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of GigaMedia Limited (the “Company”) on Form 20-F for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dirk Chen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 30, 2014

By:	/s/ Dirk Chen
	Dirk Chen
	Chief Financial Officer

1

EX-15.1

Exhibit 15.1

  GHP Horwath, P.C. Member Crowe Horwath International   1670 Broadway, Suite 3000 Denver, CO 80202 +1.303.831.5000 Tel +1.303.831.5032 Fax www.ghphorwath.com

April 30, 2014

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re: GigaMedia Limited

We have read the statements made by GigaMedia Limited in Item 16F of this Form 20-F regarding the change in auditors. We agree with such statements made regarding our firm. We have no basis to agree or disagree with other statements made in Item 16F of this Form 20-F.

Very truly yours,

/s/ GHP Horwath, P.C.

Denver, Colorado

cc:    Office of the Chief Accountant

Mail Stop 6561

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Fax: 202-772-9252

GHP Horwath, P.C. is a member firm of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity. GHP Horwath, P.C. and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member.

EX-15.2

Exhibit 15.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors

GigaMedia Limited:

We consent to the incorporation by reference in the registration statements (No. 333-148663, No. 333-142963, No. 333-119616, No. 333-160535 and No. 333-168123) on Form S-8 of GigaMedia Limited of our report dated April 30, 2014, with respect to the consolidated financial statements of GigaMedia Limited as of and for the year ended December 31, 2013, which appears in the December 31, 2013 annual report on Form 20-F of GigaMedia Limited.

/s/ KPMG

Taipei, Taiwan (the Republic of China)

April 30, 2014

EX-15.3

Exhibit 15.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-148663, Form S-8 No. 333-142963, Form S-8 No. 333-119616, Form S-8 No. 333-160535 and Form S-8 No. 333-168123) of GigaMedia Limited of our report dated April 30, 2013, on the consolidated financial statements as of December 31, 2012, and for each of the years in the two-year period ended December 31, 2012, which appears on page F-2 of this annual report on Form 20-F of GigaMedia Limited for the year ended December 31, 2013.

/s/ GHP Horwath, P.C.

Denver, Colorado

April 30, 2014

XML

VARIABLE-INTEREST ENTITIES (Tables) (Shanghai JIDI Network Technology Co., Ltd., Variable Interest Entity, Primary Beneficiary)

12 Months Ended

Dec. 31, 2013

Shanghai JIDI Network Technology Co., Ltd. | Variable Interest Entity, Primary Beneficiary

Total Revenues and Net Income Loss

For the years ended December 31, 2011 and 2012, and the period from January to May 2013, total revenues and net loss of Shanghai JIDI (which are included within discontinued operations) were as follows:

(in US$ thousands)	2011			2012			2013
Total revenues	$	29		$	100		$	—
Net loss	$	(2,110	)	$	(888	)	$	—

XML

Summary of Assumptions Used in Black-Scholes Option-Pricing Model to Estimate Fair Value of Stock Options Granted (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option term (years)	5 years 9 months 18 days	5 years 8 months 23 days
Volatility, minimum	59.46%	59.76%
Volatility, maximum	61.84%	67.02%
Weighted-average volatility	61.00%	62.00%
Risk-free interest rate, minimum	0.93%	0.885%
Risk-free interest rate, maximum	1.61%	1.152%
Dividend yield	0.00%	0.00%
Weighted-average fair value of option granted	$ 0.60	$ 0.54

XML

OTHER LIABILITIES - OTHER (Tables)

12 Months Ended

Dec. 31, 2013

Other Liabilities

Other liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Deferred tax liabilities (Note 25)	$	561	$	—
Other		12		11
	$	573	$	11

XML

ACCOUNTS RECEIVABLE - NET (Tables)

12 Months Ended

Dec. 31, 2013

Accounts Receivable Net

Accounts receivable consist of the following:

	December 31
(in US$ thousands)	2012			2013
Accounts receivable	$	2,959		$	2,082
Less: Allowance for doubtful accounts		(130	)		(55	)
	$	2,829		$	2,027

Summary of Changes in Allowance for Doubtful Accounts

The following is a summary of the changes in our Company’s allowance for doubtful accounts during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	842		$	2,594		$	130
Additions: Provision for bad debt expense		1,820			169			37
Less: Write-offs		(61	)		(269	)		(109	)
Deconsolidation - IAHGames		—			(2,370	)		—
Translation adjustment		(7	)		6			(3	)
Balance at end of year	$	2,594		$	130		$	55

XML

Significant Components of Deferred Tax Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Deferred Tax Assets and Liabilities [Line Items]
Depreciation and amortization		$ 255
Investment in affiliated companies, principally due to undistributed income	1,987	2,207
Capitalized software development costs	56	306
Deferred tax liabilities	$ 2,043	$ 2,768

XML

Deconsolidation of and Retained Noncontrolling Investment in IAHGames at Fair Value and Recognized Gain (Detail) (USD $) In Thousands, unless otherwise specified					1 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Aug. 15, 2012 Infocomm Asia Holdings Pte Ltd	Dec. 31, 2012 Infocomm Asia Holdings Pte Ltd
Divestitures [Line Items]
The fair value of consideration received and receivable, net of any transaction costs, plus					$ 3,000
The fair value of the 20% retained noncontrolling investment in IAH at the date of deconsolidation
Aggregate of Consideration Receivable and Retained Noncontrolling Investment					3,000
The carrying amount (credit balance) of IAHGames at the date of deconsolidation					(14,536)
Net receivables due to GigaMedia from IAHGames waived upon the closing of the sale					17,542
Other comprehensive income component of equity related to IAHGames at the date of the deconsolidation	3,603	8,379	(14,351)	72	(217)
Total					2,789
Deferred gain on deconsolidation of IAH					$ 211	$ 211

XML

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits Excluding Effects of Accrued Interest (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Contingency [Line Items]
Balance at beginning of year	$ 4,202	$ 4,714	$ 3,887
Increase related to prior year tax positions	706	573	965
Exchange differences	63	(13)	(138)
Balance at end of year	4,971	4,202	4,714
Infocomm Asia Holdings Pte Ltd
Income Tax Contingency [Line Items]
Deconsolidation of non controlling interest		$ (1,072)

XML

COMPREHENSIVE INCOME (Tables)

12 Months Ended

Dec. 31, 2013

Accumulated Balances of Other Comprehensive Income

The accumulated balances for each classification of other comprehensive income are as follows:

(in US$ thousands)	Foreign currency items			Unrealized gain on securities			Pension and post retirement benefit plans			Accumulated other comprehensive income
Balance at January 1, 2011	$	(22,554	)	$	22,243		$	239		$	(72	)
Net current period change		(1,813	)		22,466			69			20,722
Reclassification adjustments for gains reclassified into income		—			(6,299	)		—			(6,299	)
Balance at December 31, 2011		(24,367	)		38,410			308			14,351
Net current period change		1,814			(18,339	)		(323	)		(16,848	)
Reclassification adjustments for gains reclassified into income		—			(5,665	)		—			(5,665	)
Deconsolidation of subsidiaries		(217	)		—			—			(217	)
Balance at December 31, 2012		(22,770	)		14,406			(15	)		(8,379	)
Net current period change		(801	)		6,437			15			5,651
Reclassification adjustments for gains reclassified into income		864			(1,739	)		—			(875	)
Balance at December 31, 2013	$	(22,707	)	$	19,104		$	—		$	(3,603	)

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Carrying Amounts and Estimated Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financial assets
Cash and cash equivalents	$ 58,801	$ 62,731	$ 63,997	$ 70,989
Marketable securities - current	21,460	17,773
Accounts receivable	2,027	2,829
Marketable securities - noncurrent	6,048	4,292
Refundable deposits	306	392
Financial liabilities
Accounts payable	1,178	324
Accrued compensation	380	1,233
Accrued expenses	2,617	5,182
Short-term borrowings	4,361	7,748
Carrying Amount
Financial assets
Cash and cash equivalents	58,801	62,731
Marketable securities - current	21,460	17,773
Accounts receivable	2,027	2,829
Marketable securities - noncurrent	6,048	4,292
Refundable deposits	306	392
Other receivable - noncurrent		2,039
Financial liabilities
Accounts payable	1,178	324
Accrued compensation	380	1,233
Accrued expenses	2,617	5,182
Short-term borrowings	4,361	7,748
Fair Value
Financial assets
Cash and cash equivalents	58,801	62,731
Marketable securities - current	21,460	17,773
Accounts receivable	2,027	2,829
Marketable securities - noncurrent	6,048	4,292
Refundable deposits	306	392
Other receivable - noncurrent		2,039
Financial liabilities
Accounts payable	1,178	324
Accrued compensation	380	1,233
Accrued expenses	2,617	5,182
Short-term borrowings	$ 4,361	$ 7,748

XML

Other Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule Of Other Liabilities Noncurrent [Line Items]
Deferred tax liabilities (Note 25)		$ 561
Other	11	12
Other (Notes 20 and 25)	$ 11	$ 573

XML

CASH AND CASH EQUIVALENTS (Tables)

12 Months Ended

Dec. 31, 2013

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	December 31
(in US$ thousands)	2012		2013
Cash and savings accounts	$	61,217	$	44,163
Time deposits		1,514		14,638
	$	62,731	$	58,801

We maintain cash and cash equivalents in bank accounts with major financial institutions with high credit ratings located in the following jurisdictions:

	December 31
(in US$ thousands)	2012		2013
Taiwan	$	59,195	$	55,661
Hong Kong		2,809		2,956
Malaysia		100		133
PRC		626		—
Others		1		51
	$	62,731	$	58,801

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

COMMITMENTS AND CONTINGENCIES

NOTE 27. COMMITMENTS AND CONTINGENCIES

Commitments

(a) Operating Leases

We rent certain properties which are used as office premises under lease agreements that expire at various dates through 2016. The following table sets forth our future aggregate minimum lease payments required under these operating leases, as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	941
2015		754
2016		138
	$	1,833

Rental expense for operating leases amounted to $2.5 million, $1.8 million and $1.0 million for the years ended December 31, 2011, 2012 and 2013, respectively.

(b) Service agreement

We entered in to certain maintenance and out-sourcing service agreement in 2013 regarding our cloud business operations. The following table sets forth our future aggregate minimum payments required under this agreement as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	214
2015		251
2016		42
	$	507

The service fee under this agreement amounted to $111 thousand for the year ended December 31, 2013.

(c) License Agreements

We have contractual obligations under various license agreements to pay the licensors license fees and minimum guarantees against future royalties. The following table summarizes the committed license fees and minimum guarantees against future royalties set forth in our significant license agreements as of December 31, 2013.

(in US$ thousands)	License fees		Minimum guarantees against future royalties		Total
Minimum required payments:
In 2014	$	100	$	100	$	200
After 2014		5,300		1,500		6,800
	$	5,400	$	1,600	$	7,000

The initial minimum guarantees against future royalties and license fees are not required to be paid until the licensed games are commercially released or until certain milestones are achieved, as stipulated in the individual license agreements. The remaining minimum guarantees are generally required to be paid within three years subsequent to the commercial release dates of the licensed games.

(d) Guaranty

In 2008, Cambridge Interactive Development Corp. (“CIDC”), a then wholly owned subsidiary of GigaMedia, entered into a lease agreement (the “CIDC Lease”) for an office in Delaware. The term of the CIDC Lease is for the period from October 1, 2008 through September 30, 2014. Pursuant to the CIDC Lease, CIDC deposited approximately $690 thousand with a bank in exchange for a letter of credit issued by the bank (the “CIDC L/C”) and GigaMedia’s guaranty of all of CIDC’s obligations under the CIDC Lease.

In July 2012, we entered into an agreement with BEG to sell and assign our remaining ownership interest in and all rights and interests related to the shareholders loans to Mangas Everest (including the CIDC lease) (the “Mangas Agreement”). Pursuant to the Mangas Agreement, BEG was to use all its reasonable efforts to procure the cancellation and return of the CIDC L/C to GigaMedia and the landlord’s release of GigaMedia’s lease guaranty by September 30, 2012; and unless and until BEG procures the cancellation and return of the CIDC L/C and landlord’s release of GigaMedia’s lease guaranty, BEG is obligated to indemnify and hold GigaMedia (and any Affiliate thereof) harmless from any and all losses, costs and expenses that may be borne by GigaMedia (and any Affiliate thereof) arising under or in connection with the CIDC L/C and/or GigaMedia’s lease guaranty.

In accordance with the Mangas Agreement, BEG procured that the bank cancel the CIDC L/C and issue to BEG a new letter of credit under the same terms and conditions as the CIDC L/C. BEG, however, did not obtain the landlord’s consent to release us from our lease guaranty within the allotted time. BEG’s major shareholders, therefore, issued a separate guaranty to us wherein they are obligated to indemnify and hold GigaMedia (and any Affiliate thereof) harmless from any and all losses, costs and expenses arising under or in connection with the CIDC Lease. GigaMedia’s commitment amount under this lease guaranty has been constantly reduced as Mangas Everest’s subsidiary who assumed the CIDC Lease makes its monthly rental payments. The leasee is current on its monthly payments through March 2014.

Contingencies

We are subject to legal proceedings and claims that arise in the normal course of business. Currently there are no outstanding claims or litigations against us.

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Ranges of Significant Unobservable Inputs Used to Value Level Three Financial Instruments (Detail) In Millions, unless otherwise specified	12 Months Ended						12 Months Ended			12 Months Ended
	Dec. 31, 2012 Debt Securities	Dec. 31, 2013 Fair Value Measurements Using Level 3 Debt Securities	Dec. 31, 2012 Fair Value Measurements Using Level 3 Debt Securities	Dec. 31, 2013 Fair Value Measurements Using Level 3 Debt Securities Minimum	Dec. 31, 2012 Fair Value Measurements Using Level 3 Debt Securities Minimum USD ($)	Dec. 31, 2012 Fair Value Measurements Using Level 3 Debt Securities Minimum KRW	Dec. 31, 2013 Fair Value Measurements Using Level 3 Debt Securities Maximum	Dec. 31, 2012 Fair Value Measurements Using Level 3 Debt Securities Maximum USD ($)	Dec. 31, 2012 Fair Value Measurements Using Level 3 Debt Securities Maximum KRW	Dec. 31, 2012 Fair Value Measurements Using Level 3 Equity Securities
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Undiscounted cash flow forecast					$ (7.7)	(8,200.0)		$ 20.8	22,100.0
Long-term growth rate			3.00%
Discount rate			17.80%
Volatility			44.70%
Restriction discount										34.81%
Price/Sales per share ratio				250.00%			590.00%
Discount for lack of marketability		25.00%
Redemption date	1 year later
Significant unobservable inputs, valuation technique		Discount for lack of marketability	Undiscounted cash flow forecast							Restriction discount

XML

Reconciliation of Effective Tax Rate Related to Continuing Operations to Statutory United States Federal Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule Of Effective Tax Rates Line Items
Taiwan statutory rate, including taxes on income and retained earnings	23.85%	23.85%	23.85%
Foreign tax differential	(3.71%)	(0.17%)	1.02%
Non-deductible items - impairment charges on goodwill	(10.39%)	(16.43%)	(1.82%)
Changes in unrecognized tax benefits	(4.12%)	0.00%	0.00%
Tax-exempted income in foreign jurisdictions	3.12%	0.00%	0.00%
Adjustment for prior year payable	0.55%	0.00%	0.00%
Change in valuation allowance	(10.17%)	(4.00%)	(21.70%)
Tax effect of earnings for equity method investees and certain subsidiaries	0.00%	(4.38%)	(0.02%)
Other	0.69%	(4.06%)	(0.99%)
Effective rate	(0.18%)	(5.19%)	0.34%

XML

Commitment and Contingencies - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	May 31, 2008
Operating Leased Assets [Line Items]
Operating leases, Rental expenses	$ 1,000,000	$ 1,800,000	$ 2,500,000
Service agreement fee	111,000
Guarantee on operating lease of Cambridge Interactive Development Corp. ("CIDC"), expiration date				Sep. 30, 2014
Guarantee on operating lease of Cambridge Interactive Development Corp. ("CIDC"), deposit amount				$ 690,000

XML

Reconciliations of Segment Information to Consolidated Totals (Parenthetical) (Detail) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Accrued professional fees	$ 740,000	$ 1,319,000
Adjustment
Segment Reporting Information [Line Items]
Compensation expense	2,100,000	4,200,000	4,300,000
Accrued professional fees	$ 125,000	$ 911,000	$ 2,300,000

XML

Summary of Changes to Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Balance at beginning of year	$ 16,934	$ 28,437	$ 39,493
Impairment charge	(17,054)	(12,489)	(5,097)
Reversal of contingent payment of minimum guarantee under licensing agreement			(5,885)
Translation adjustment	(376)	986	(1,123)
Balance at end of year		16,934	28,437
OneNet and FingerRockz
Goodwill [Line Items]
Acquisition - OneNet and FingerRockz (Note 4)	496		1,049
IAHGames, OneNet, FunTown and FingerRockz
Goodwill [Line Items]
Impairment charge	$ (17,054)	$ (12,489)	$ (5,097)

XML

Marketable Securities - Current - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Realized gains from disposal of marketable securities	$ 1,739,000	$ 5,665,000	$ 6,299,000
Available for sale Securities Current
Schedule of Available-for-sale Securities [Line Items]
Unrealized gains for marketable securities	17,900,000	14,400,000
Realized gains from disposal of marketable securities	$ 754,000	$ 2,300,000	$ 535,000

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Loss From Continuing Operations Before Income Taxes by Geographic Location

Loss from continuing operations before income taxes by geographic location is as follows:

(in US$ thousands )	2011			2012			2013
Taiwan operations	$	(770	)	$	(14,871	)	$	(33,077	)
Non-Taiwan operations		(66,865	)		1,946			(1,605	)
	$	(67,635	)	$	(12,925	)	$	(34,682	)

Components of Income Tax Provision Benefit from Continuing Operations by Geographic Location and Taxing Jurisdiction

Income tax provision (benefit) from continuing operations by geographic location is as follows:

(in US$ thousands )	2011			2012		2013
Taiwan operations	$	33		$	456	$	248
Non-Taiwan operations		(278	)		215		(187	)
	$	(245	)	$	671	$	61

The components of income tax provision (benefit) from continuing operations by taxing jurisdiction are as follows:

( in US$ thousands )	2011			2012		2013
Taiwan:
Current	$	—		$	410	$	(131	)
Deferred		33			46		379
	$	33		$	456	$	248
Non-Taiwan:
Current	$	(539	)	$	215	$	(187	)
Deferred		261			—		—
	$	(278	)	$	215	$	(187	)
Total current income tax expense (benefit)	$	(539	)	$	625	$	(318	)
Total deferred income tax expense (benefit)	$	294		$	46	$	379
Total income tax provision (benefit)	$	(245	)	$	671	$	61

Reconciliation of Effective Tax Rate Related to Continuing Operations to Statutory Taiwan Federal Tax Rate

A reconciliation of our effective tax rate related to continuing operations to the statutory tax rate in Taiwan, where our major operations are based, is as follows:

	2011			2012			2013
Taiwan statutory rate, including taxes on income and retained earnings		23.85	%		23.85	%		23.85	%
Foreign tax differential		1.02	%		(0.17	%)		(3.71	%)
Non-deductible items - impairment charges on goodwill		(1.82	%)		(16.43	%)		(10.39	%)
Changes in unrecognized tax benefits		0.00	%		0.00	%		(4.12	%)
Tax-exempted income in foreign jurisdictions		0.00	%		0.00	%		3.12	%
Adjustment for prior year payable		0.00	%		0.00	%		0.55	%
Change in valuation allowance		(21.70	%)		(4.00	%)		(10.17	%)
Tax effect of earnings for equity method investees and certain subsidiaries		(0.02	%)		(4.38	%)		0.00	%
Other		(0.99	%)		(4.06	%)		0.69	%
Effective rate		0.34	%		(5.19	%)		(0.18	%)

Reconciliation of Beginning and Ending Amounts of Valuation Allowance on Deferred Tax Assets

A reconciliation of the beginning and ending amounts of our valuation allowance on deferred tax assets for the years ended December 31, 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	7,402		$	25,256		$	18,333
Subsequent utilization of valuation allowance		(270	)		(4	)		(7	)
Additions to valuation allowance		15,597			214			3,527
Divestitures		—			(7,026	)		(16,616	)
Acquisitions		2,491			—			—
Exchange differences		36			(107	)		(21	)
Balance at end of year	$	25,256		$	18,333		$	5,216

Breakdown of Expiration of Net Operating Loss Carryforwards in Major Jurisdictions

Below is the breakdown of the expiration of the net operating loss carryforwards in major jurisdictions:

Jurisdiction	Amount		Expiring year
Hong Kong		9,975	indefinite
Taiwan		10,170	2020~2023
		20,145

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits Excluding Effects of Accrued Interest

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding the effects of accrued interest) for the years 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	3,887		$	4,714		$	4,202
Increase related to prior year tax positions		965			573			706
Deconsolidation of IAHGames		—			(1,072	)		—
Exchange differences		(138	)		(13	)		63
Balance at end of year	$	4,714		$	4,202		$	4,971

Deferred Tax Assets

Significant Components of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets consist of the following:

(in US$ thousands)	December 31
	2012			2013
Net operating loss carryforwards	$	3,248		$	4,072
Loss on equity method investment		15,621			—
Share-based compensation		234			267
Intangible assets		354			738
Property, plant and equipment		100			86
Other		(275	)		109
		19,282			5,272
Less: valuation allowance		(18,333	)		(5,216	)
Deferred tax assets - net	$	949		$	56

Deferred Tax Liability

Significant Components of Deferred Tax Assets and Liabilities

Significant components of our deferred tax liabilities consist of the following:

(in US$ thousands)	December 31
	2012		2013
Depreciation and amortization	$	255	$	—
Investment in affiliated companies, principally due to undistributed income		2,207		1,987
Capitalized software development costs		306		56
Deferred tax liabilities	$	2,768	$	2,043

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Share-Based Compensation - Additional Information (Detail) (USD $) Share data in Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 219,000	$ 179,000	$ 1,165,000
Stock-based compensation tax benefit recognized	267,000	234,000
Share-based compensation, number of shares reserved for issuance, contractual terms	5 years 9 months 18 days	5 years 8 months 23 days
Share-based compensation, number of options exercised	3	0	0
Share-based compensation, cash received from exercise of stock options	2,000	0	0
Total intrinsic value of options exercised	600,000	0	0
Unrecognized compensation cost related to nonvested options	348,000
Unrecognized compensation cost related to nonvested options, expected recognition period	2 years 1 month 28 days
Capitalized stock-based compensation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	0	0
Stock-based compensation tax benefit recognized	0	0
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of RSUs granted	0	0	1,000,000
Fair value of RSUs vested	0	0	200,000
Unrecognized compensation cost related to nonvested RSUs	0	0
Cash received from employee stock award vesting and the forfeiture of RSUs	$ 0	$ 0	$ 0
2002 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	3,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
2004 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	7,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
2006 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	1,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
2007 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	2,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
2008 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	1,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
2008 Employee Share Purchase Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	200
2009 Equity Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	1,500
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
Employee Stock Purchase Plan, 2009 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	200
Equity Incentive Plan 2010 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	1,000
Share-based compensation, number of shares reserved for issuance, contractual terms	10 years
Employee Stock Purchase Plan, 2010 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, number of shares reserved for issuance	200

XML

Revenue from Unaffiliated Customers by Geographic Region (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue	$ 15,032	$ 27,470	$ 34,367
Taiwan
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue	11,793	18,744	21,214
Hong Kong
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue	3,239	4,703	5,061
Singapore
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue		2,004	4,150
Malaysia
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue		1,550	2,228
Thailand
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue		204	1,447
Others
Entity Wide Disclosure On Geographic Areas Revenue From External Customers Attributed To Individual Foreign And Domestic Countries [Line Items]
Revenue		$ 265	$ 267

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Estimated Amortization Expense of Intangibles (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
2014	$ 1,104
2015	202
2016	147
2017	8
Net	$ 1,461

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Cash and Cash Equivalents (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash and Cash Equivalents [Line Items]
Cash and savings accounts	$ 44,163	$ 61,217
Time deposits	14,638	1,514
Cash and cash equivalents	$ 58,801	$ 62,731	$ 63,997	$ 70,989

XML

Fair Value Measurements - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Fair Value Measurements [Line Items]
Unrealized gains (losses) on marketable securities	$ 4,700,000	$ (24,000,000)	$ 16,200,000
Other-than-temporary impairment of related to marketable securities	$ 0	$ 493,000	$ 0

XML

Cash and Cash Equivalents in Bank Accounts Jurisdictions of Major Financial Institutions (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 58,801	$ 62,731	$ 63,997	$ 70,989
Taiwan
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	55,661	59,195
Hong Kong
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	2,956	2,809
Malaysia
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	133	100
PRC
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents		626
Other Countries
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 51	$ 1

XML

Summary of Changes to Prepaid Licensing and Royalty Fees (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Prepaid Expenses [Line Items]
Balance at beginning of year	$ 8,644
Net operating additions	1,026	(2,397)	(3,007)
Impairment charges (Note 9)	(2,752)	(702)	(247)
Balance at end of year	4,666	8,644
Prepaid Licensing and Royalty Fees
Prepaid Expenses [Line Items]
Balance at beginning of year	8,644	7,103	4,214
Net operating additions	(908)	2,395	3,379
Impairment charges (Note 9)	(3,070)	(702)	(247)
Impairment charges (Note 9) recorded in loss from discontinued operations			(372)
Balance at end of year	4,666	8,644	7,103
Prepaid Licensing and Royalty Fees | OneNet
Prepaid Expenses [Line Items]
Acquisition - OneNet			129
Prepaid Licensing and Royalty Fees | Retained Investment in Subsidiary | Infocomm Asia Holdings Pte Ltd
Prepaid Expenses [Line Items]
Deconsolidation - IAHGames		$ (152)

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Deconsolidation of and Retained Noncontrolling Investment in IAHGames at Fair Value and Recognized Gain (Parenthetical) (Detail) (Infocomm Asia Holdings Pte Ltd)	1 Months Ended
	Aug. 15, 2012
Infocomm Asia Holdings Pte Ltd
Divestitures [Line Items]
Percentage of retained noncontrolling interest	20.00%

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PENSION BENEFITS

12 Months Ended

Dec. 31, 2013

PENSION BENEFITS

NOTE 19. PENSION BENEFITS

Our Company and our subsidiaries have defined benefit and defined contribution pension plans that cover substantially all of our employees.

Defined Benefit Pension Plan

We have a defined benefit pension plan in accordance with the Labor Standards Law of the Republic of China (R.O.C.) for our employees located in Taiwan, covering substantially all full-time employees for services provided prior to July 1, 2005, and employees who have elected to remain in the defined benefit pension plan subsequent to the enactment of the Labor Pension Act on July 1, 2005. Under the defined benefit pension plan, employees are entitled to a lump sum retirement benefit upon retirement equivalent to the aggregate of 2 months’ pensionable salary for each of the first 15 years of service and 1 month’s pensionable salary for each year of service thereafter subject to a maximum of 45 months’ pensionable salary. The pensionable salary is the monthly average salary or wage of the final six months prior to approved retirement.

We use a December 31 measurement date for our defined benefit pension plan. As of December 31, 2012 and 2013, the accumulated benefit obligation amounted to $429 thousand and $360 thousand, respectively, and the funded status of accrued pension liability amounted to $281 thousand and $170 thousand, respectively. The fair value of plan assets amounted to $291 thousand and $300 thousand as of December 31, 2012 and 2013, respectively. The accumulated other comprehensive income amounted to $2 thousand and $0 as of December 31, 2012 and 2013, respectively. The net periodic benefit cost (income) for 2011, 2012 and 2013 amounted to $(18) thousand, $30 thousand and ($77) thousand, respectively.

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2013 and 2012:

	December 31
(in US$ thousands)	2012		2013
Benefit Obligation	$	572	$	470
Fair value of plan assets		291		300
	$	281	$	170
Amounts recognized in the balance sheet consist of:
Noncurrent liabilities	$	281	$	170
Accumulated other comprehensive income		2		—
Net amount recognized	$	279	$	170
Amounts recognized in accumulated comprehensive income consist of:
Unrecognized net gain	$	2	$	—

Weighted average assumptions used to determine benefit obligations for 2013 and 2012 were as follows:

	December 31
	2012			2013
Discount rate		1.75	%		2.00	%
Rate of compensation increase		1.50	%		1.50	%
Rate of return on plan assets		1.75	%		2.00	%

Management determines the discount rate and rate of return on plan assets based on the yields of twenty year ROC central government bonds which is in line with the respective employees remaining service period and the historical rate of return on the above mentioned Fund mandated by the ROC Labor Standard Law.

We have contributed an amount equal to 2 percent of the salaries and wages paid to all qualified employees located in Taiwan to a pension fund (the “Fund”). The Fund is administered by a pension fund monitoring committee (the “Committee”) and deposited in the Committee’s name in the Bank of Taiwan. Our Company makes pension payments from our account in the Fund unless the Fund is insufficient, in which case we make payments from internal funds as payments become due. We seek to maintain a normal, highly liquid working capital balance to ensure payments are made timely.

We expect to make a contribution of $17 thousand to the Fund in 2014. We do not expect to make any benefit payments through 2020.

Defined Contribution Pension Plans

We have provided defined contribution plans for employees located in Taiwan and Hong Kong. Contributions to the plans are expensed as incurred.

Taiwan

Pursuant to the new “Labor Pension Act” enacted on July 1, 2005, our Company has a defined contribution pension plan for our employees located in Taiwan. For eligible employees who elect to participate in the defined contribution pension plan, we contribute no less than 6 percent of an employee’s monthly salary and wage and up to the maximum amount of NT$9 thousand (approximately $302), to each of the eligible employees’ individual pension accounts at the Bureau of Labor Insurance each month. Pension payments to employees are made either by monthly installments or in a lump sum from the accumulated contributions and earnings in employees’ individual accounts.

Hong Kong

According to the relevant Hong Kong regulations, we provide a contribution plan for the eligible employees in Hong Kong. We must contribute at least 5 percent of the employees’ total salaries. For this purpose, the monthly relevant contribution to their individual contribution accounts is subject to a cap of HK$1.25 thousand (approximately $161). After the termination of employment, the benefits still belong to the employees in any circumstances.

The total amount of defined contribution pension expenses pursuant to our defined contribution plans for the years ended December 31, 2011, 2012, and 2013 were $896 thousand, $585 thousand, and $357 thousand, respectively.

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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Investments

Investments consist of the following:

	December 31
(in US$ thousands)	2012		2013
Investments accounted for under the equity method	$	5,223	$	5,822

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GOODWILL (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Changes to Goodwill

The following table summarizes the changes to our Company’s goodwill:

(In US$ thousands)	2011			2012			2013
Balance at beginning of year	$	39,493		$	28,437		$	16,934
Acquisition - OneNet and FingerRockz (Note 4)		1,049			—			496
Impairment charge - IAHGames, OneNet, FunTown and FingerRockz (Note 9)		(5,097	)		(12,489	)		(17,054	)
Reversal of contingent payment of minimum guarantee under licensing agreement		(5,885	)		—			—
Translation adjustment		(1,123	)		986			(376	)
Balance at end of year	$	28,437		$	16,934		$	—

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Intangible Assets Net - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Intangible Assets [Line Items]
weighted-average life of identifiable intangible assets	5 years 7 months 6 days
Amortization expense of intangible assets	$ 1,907	$ 2,204	$ 2,314
Finite-lived Intangible Assets | Capitalized software development cost
Intangible Assets [Line Items]
Amortization expense of intangible assets	$ 1,200	$ 1,100	$ 962
Minimum
Intangible Assets [Line Items]
Finite lived intangible assets, useful life	6 months
Minimum | Capitalized software development cost
Intangible Assets [Line Items]
Finite lived intangible assets, useful life	6 months
Maximum
Intangible Assets [Line Items]
Finite lived intangible assets, useful life	9 years
Maximum | Capitalized software development cost
Intangible Assets [Line Items]
Finite lived intangible assets, useful life	5 years

XML

Investments - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended	12 Months Ended					12 Months Ended			1 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jul. 31, 2012 Mangas Everest Societe Par Actions Simplifiee	Dec. 31, 2012 Mangas Everest Societe Par Actions Simplifiee	Dec. 31, 2011 Mangas Everest Societe Par Actions Simplifiee	Dec. 31, 2011 BetClic Everest Group	Dec. 31, 2013 East Gate Media Contents and Technology Fund	Aug. 15, 2012 Game First International Corporation	Dec. 31, 2011 Monsoon Online Private Limited	Aug. 31, 2011 Monsoon Online Private Limited	Jul. 01, 2010 Monsoon Online Private Limited	May 31, 2013 Infocomm Asia Holdings Pte Ltd	Jul. 31, 2012 Infocomm Asia Holdings Pte Ltd
Schedule of Investments [Line Items]
Investments percentages accounted under equity method accounting				33.66%		40.00%		18.00%	30.00%	100.00%	100.00%	100.00%	20.00%
Equity method of investment	$ 5,822,000	$ 5,223,000
Underlying net assets exceeded the carrying value of investment						9,300,000
Ownership interest percentage of Everest Gaming owned by third party							60.00%
Percentage of ownership interest sold				33.66%									20.00%	60.00%
Gains (losses) under the equity method of accounting	$ 526,000	$ 234,000	$ (47,869,000)		$ 0	$ (49,700,000)				$ 230,000

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Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Useful Lives of Property Plant and Equipment

Depreciation is recorded on a straight-line basis over useful lives that correspond to categories as follows:

Categories	Years
Buildings	50
Information and communication equipment	2 to 5
Office furniture and equipment	3 to 5
Leasehold improvements	1 to 5

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OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2013

Other Current Liabilities

Other current liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Income taxes payable	$	1,381	$	1,560
Deferred tax liabilities (Note 25)		2,207		1,987
Other		398		315
	$	3,986	$	3,862

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Summary of Consideration Paid For Acquisition and Amounts of Estimated Fair Value of Assets Acquired and Liabilities Assumed (Detail) (USD $) In Thousands, unless otherwise specified				1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Oct. 18, 2013 FingerRockz
Consideration and noncontrolling interest:
The consideration transferred				$ 510
The fair value of noncontrolling interest in FingerRockz				478
Business Combination Consideration Transferred Including Noncontrolling Interest				988
Identifiable assets acquired and liabilities assumed:
Cash, receivables and other current assets				585
Intangible assets				67
Payables and other current liabilities				(160)
Net				492
Goodwill	16,934	28,437	39,493	496
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net, Total				$ 988

XML

Summary of General Terms of Stock-Based Compensation Plans for Awards Granted (Parenthetical) (Detail) (Maximum) In Thousands, unless otherwise specified	Dec. 31, 2013
2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, common stock shares reserved	7,000
2006 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, common stock shares reserved	1,000
2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, common stock shares reserved	2,000
2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, common stock shares reserved	1,500
2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, common stock shares reserved	1,000

XML

Useful Lives of Property Plant and Equipment (Detail)	12 Months Ended
	Dec. 31, 2013
Building
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	50 years
Information and communication equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	2 years
Information and communication equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Office Furniture And Equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years
Office Furniture And Equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Leasehold Improvements | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	1 year
Leasehold Improvements | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years

XML

MARKETABLE SECURITIES (Tables)

12 Months Ended

Dec. 31, 2013

Current Assets

Marketable Securities

Marketable securities – current consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities:
Equity securities	$	17,773	$	21,124
Open-end fund		—		336
	$	17,773	$	21,460

Noncurrent Assets

Marketable Securities

Marketable securities – noncurrent consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities
Debt securities	$	2,727	$	6,048
Equity securities		1,565		—
	$	4,292	$	6,048

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LOSS PER SHARE

12 Months Ended

Dec. 31, 2013

LOSS PER SHARE

NOTE 2. LOSS PER SHARE

The following table provides a reconciliation of the denominators of the basic and diluted per share computations:

(in thousand shares)	2011		2012		2013
Weighted average number of outstanding shares
Basic		54,268		50,720		50,720
Effect of dilutive securities
Employee share-based compensation		—		—		—
Diluted		54,268		50,720		50,720

Options to purchase 1,432 thousand, 1,444 thousand and 1,149 thousand shares of common stock were not included in dilutive securities for the years ended December 31, 2011, 2012 and 2013, respectively, as the effect would be anti-dilutive.

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Income Tax Provision Benefit from Continuing Operations by Geographic Location (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Components Of Income Tax Expense Benefit [Line Items]
Total income tax provision (benefit)	$ 61	$ 671	$ (245)
Taiwan
Components Of Income Tax Expense Benefit [Line Items]
Total income tax provision (benefit)	248	456	33
Foreign Tax Authority
Components Of Income Tax Expense Benefit [Line Items]
Total income tax provision (benefit)	$ (187)	$ 215	$ (278)

XML

Reconciliation of Denominators of Basic and Diluted Per Share Computations (Detail) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Weighted average number of outstanding shares
Basic	50,720	50,720	54,268
Effect of dilutive securities
Employee share-based compensation
Diluted	50,720	50,720	54,268

XML

Future Aggregate Minimum Payments For Service Agreements (Detail) (Service Agreement, USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Service Agreement
Other Commitments [Line Items]
2014	$ 214
2015	251
2016	42
Other Commitment, Total	$ 507

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Subsequent Event - Additional Information (Detail) (Subsequent Event, USD $) In Millions, unless otherwise specified	Apr. 10, 2014
Subsequent Event
Subsequent Event [Line Items]
Number of shares pledged as collateral	15
Loan receivable	$ 18.8
Loan receivable, maturity date	May 10, 2014
Loan receivable stated interest rate	5.00%

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INTANGIBLE ASSETS - NET (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Intangible Assets by Major Asset Class

The following table summarizes our Company’s intangible assets, by major asset class:

	December 31, 2012
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,603	$	2,603	$	—
Capitalized software development cost		3,480		1,414		2,066
Customer relationships		6,274		4,880		1,394
Other		137		133		4
		12,494		9,030		3,464
With indefinite-life intangible assets
Trade name and trademark		12,211		—		12,211
	$	24,705	$	9,030	$	15,675

	December 31, 2013
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,536	$	2,536	$	—
Capitalized software development cost		3,130		2,471		659
Customer relationships		6,112		5,433		679
Other		141		18		123
		11,919		10,458		1,461
With indefinite-life intangible assets
Trade name and trademark		—		—		—
	$	11,919	$	10,458	$	1,461

Estimated Amortization Expense of Intangibles

As of December 31, 2013, based on the current amount of intangibles subject to amortization, the estimated amortization expense for each of the following years is as follows:

(In US$ thousands)	Amount
2014	$	1,104
2015		202
2016		147
2017		8
	$	1,461

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COMPREHENSIVE INCOME

12 Months Ended

Dec. 31, 2013

COMPREHENSIVE INCOME

NOTE 23. COMPREHENSIVE INCOME

The accumulated balances for each classification of other comprehensive income are as follows:

(in US$ thousands)	Foreign currency items			Unrealized gain on securities			Pension and post retirement benefit plans			Accumulated other comprehensive income
Balance at January 1, 2011	$	(22,554	)	$	22,243		$	239		$	(72	)
Net current period change		(1,813	)		22,466			69			20,722
Reclassification adjustments for gains reclassified into income		—			(6,299	)		—			(6,299	)
Balance at December 31, 2011		(24,367	)		38,410			308			14,351
Net current period change		1,814			(18,339	)		(323	)		(16,848	)
Reclassification adjustments for gains reclassified into income		—			(5,665	)		—			(5,665	)
Deconsolidation of subsidiaries		(217	)		—			—			(217	)
Balance at December 31, 2012		(22,770	)		14,406			(15	)		(8,379	)
Net current period change		(801	)		6,437			15			5,651
Reclassification adjustments for gains reclassified into income		864			(1,739	)		—			(875	)
Balance at December 31, 2013	$	(22,707	)	$	19,104		$	—		$	(3,603	)

There were no significant tax effects allocated to each component of other comprehensive income for the years ended December 31, 2011, 2012 and 2013.

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EQUITY

12 Months Ended

Dec. 31, 2013

EQUITY

NOTE 22. EQUITY

In accordance with Singapore law, the holders of ordinary shares that do not have par value, are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the general meeting of our company. All shares rank equally with regard to our company’s residual assets. In addition, we are not required to have a number of authorized common shares to be issued.

In accordance with R.O.C. law, an appropriation for legal reserve amounting to 10 percent of a company’s net profit is required until the reserve equals the aggregate par value of such Taiwan company’s issued capital stock. As of December 31, 2012 and 2013, the legal reserves of Hoshin GigaMedia Center Inc. (“Hoshin GigaMedia”) were $3.0 million for each period. The reserve can only be used to offset a deficit or be distributed as a stock dividend of up to 50 percent of the reserve balance when the reserve balance has reached 50 percent of the aggregate paid-in capital of Hoshin GigaMedia.

Under PRC laws and regulations, there were certain foreign exchange restrictions on our Company’s PRC subsidiaries and VIE subsidiaries with respect to transferring certain of their net assets to our Company either in the form of dividends, loans or advances. As of December 31, 2012 and 2013, our Company’s total restricted net assets, which included paid up capital of PRC subsidiaries and the net assets of VIE subsidiaries in which our Company had no legal ownership, were approximately $1.5 million and $0, respectively.

On May 20, 2011, our board of directors approved an $11 million share repurchase program of GigaMedia’s common stock. Under the terms of the share repurchase program, GigaMedia could repurchase up to $11 million worth of its issued and outstanding shares during the period starting from June 1, 2011 to November 30, 2011. The repurchases could be made from time to time on the open market at prevailing market prices pursuant to a Rule 10b5-1 plan, subject to restrictions relating to volume, pricing and timing. The timing and extent of any repurchases depended upon market conditions, the trading price of GigaMedia’s shares and other factors. This share repurchase program was implemented in a manner consistent with market conditions, in the interests of our shareholders, and in compliance with GigaMedia’s securities trading policy and relevant Singapore and U.S. laws and regulations. During 2011, repurchases under this program amounted to approximately 5.6 million shares at a cost of $6.0 million. All of the treasury shares under this program were cancelled by the end of 2011.

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Other Current Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Current Liabilities [Line Items]
Income taxes payable	$ 1,560	$ 1,381
Deferred tax liabilities (Note 25)	1,987	2,207
Other	315	398
Other current liabilities	$ 3,862	$ 3,986

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SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Total Stock-Based Compensation Expense Recognized in Consolidated Statements of Operations

The following table summarizes the total stock-based compensation expense recognized in our consolidated statements of operations:

(in US$ thousands)	2011			2012			2013
Cost of online game and service revenues	$	—		$	—		$	—
Product development & engineering expenses		—			—			—
Selling and marketing expenses		62			20			—
General and administrative expenses		1,103			159			219
Pre-tax stock-based compensation expense		1,165			179			219
Income tax (benefit) expense		(109	)		(41	)		27
Total stock-based compensation expense reported in continuing operations	$	1,056		$	138		$	246
Total stock-based compensation expense reported in discontinued operations, net of tax	$	—		$	—		$	—

Summary of General Terms of Stock-Based Compensation Plans for Awards Granted

Summarized below are the general terms of our stock-based compensation plans, for which awards have been granted as of December 31, 2013.

Stock-Based compensation plan	Granted awards			Vesting schedule	Options’ exercise price	RSUs’ grant date fair value
2002 Plan		3,000,000		immediately upon granting	$0.79	—
2004 Plan		7,703,185	(1)	immediately upon granting to four years	$0.79~$2.55	—
2006 Plan		1,217,333	(2)	immediately upon granting to four years	$0.8101~$16.60	$2.91~$16.01
2007 Plan		3,205,217	(3)	immediately upon granting to four years	$1.20~$18.17	$2.47~$15.35
2008 Plan		1,000,000		immediately upon granting to six years	$2.47~$4.24	—
2009 Plan		2,500,000	(4)	immediately upon granting to four years	$0.955~$2.47	—
2010 Plan		2,200,000	(5)	three years	$0.8101~$1.14	—

(1) The granted awards, net of forfeited or canceled shares, were within reserved shares of seven million common shares.

(2) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

(3) The granted awards, net of forfeited or canceled shares, were within reserved shares of two million common shares.

(4) The granted awards, net of forfeited or canceled shares, were within reserved shares of one and a half million common shares.

(5) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

Summary of Assumptions Used in Black-Scholes Option-Pricing Model to Estimate Fair Value of Stock Options Granted

The following table summarizes the assumptions used in the model for options granted during 2012 and 2013:

	2012	2013
Option term (years)	5.73	5.8
Volatility	59.76%~67.02%	59.46%~61.84%
Weighted-average volatility	62%	61%
Risk-free interest rate	0.885%~1.152%	0.930%~1.610%
Dividend yield	0%	0%
Weighted-average fair value of option granted	$0.54	$0.60

Summary of Option Transactions

Option transactions during the last three years are summarized as follows:

	2011					2012					2013
	Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Balance at January 31	$	2.33		9,780		$	2.13		9,493		$	1.97		9,210
Options granted		1.06		1,060			0.96		2,070			1.09		620
Options exercised		—		—			—		—			0.79		(3	)
Options Forfeited / canceled / expired		2.72		(1,347	)		1.74		(2,353	)		1.28		(604	)
Balance at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055
Exercisable at December 31	$	2.19		7,754		$	2.15		7,584		$	2.13		7,770			1.87	$	1,021
Vested and expected to vest at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055

Information about Stock Options Outstanding

The following table sets forth information about stock options outstanding at December 31, 2013:

Options outstanding				Option currently exercisable
Exercise price	No. of Shares (in thousands)		Weighted average remaining contractual life	Exercise price	No. of Shares (in thousands)
Under $1		6,188	1.88 years	Under $1		5,175
$  1~$10		2,419	5.72 years	$  1~$10		1,979
$10~$20		616	3.65 years	$10~$20		616
		9,223				7,770

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PREPAID LICENSING AND ROYALTY FEES (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Changes to Prepaid Licensing and Royalty Fees

The following table summarizes changes to our Company’s prepaid licensing and royalty fees:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	4,214		$	7,103		$	8,644
Net operating additions		3,379			2,395			(908	)
Acquisition - OneNet		129			—			—
Deconsolidation - IAHGames		—			(152	)		—
Impairment charges (Note 9)		(247	)		(702	)		(3,070	)
Impairment charges (Note 9) recorded in loss from discontinued operations		(372	)		—			—
Balance at end of year	$	7,103		$	8,644		$	4,666

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SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2013

SHARE-BASED COMPENSATION

NOTE 24. SHARE-BASED COMPENSATION

The following table summarizes the total stock-based compensation expense recognized in our consolidated statements of operations:

(in US$ thousands)	2011			2012			2013
Cost of online game and service revenues	$	—		$	—		$	—
Product development & engineering expenses		—			—			—
Selling and marketing expenses		62			20			—
General and administrative expenses		1,103			159			219
Pre-tax stock-based compensation expense		1,165			179			219
Income tax (benefit) expense		(109	)		(41	)		27
Total stock-based compensation expense reported in continuing operations	$	1,056		$	138		$	246
Total stock-based compensation expense reported in discontinued operations, net of tax	$	—		$	—		$	—

There were no significant capitalized stock-based compensation costs at December 31, 2012 and 2013. There was no recognized stock-based compensation tax benefit for the years ended December 31, 2013 and 2012, as our Company recorded a full allowance on net deferred tax assets as of December 31, 2013 and 2012.

(a) Overview of Stock-Based Compensation Plans

2002 Employee Share Option Plan

At the June 2002 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2002 Employee Share Option Plan (the “2002 Plan”) under which up to three million common shares of our Company have been reserved for issuance. All employees, officers, directors, supervisors, advisors, and consultants of our Company are eligible to participate in the 2002 Plan. The 2002 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, the eligible individuals who are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and the vesting schedule. The maximum contractual term for the options under the 2002 Plan is 10 years.

2004 Employee Share Option Plan

At the June 2004 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2004 Employee Share Option Plan (the “2004 Plan”) under which up to seven million common shares of our Company have been reserved for issuance. All employees, officers, directors, supervisors, advisors, and consultants of our Company are eligible to participate in the 2004 Plan. The 2004 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the exercise price for the option grants, the eligible individuals who are to receive option grants, the time or times when options grants are to be made, the number of shares subject to grant and the vesting schedule. The maximum contractual term for the options under the 2004 Plan is 10 years.

2006 Equity Incentive Plan

At the June 2006 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2006 Equity Incentive Plan (the “2006 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2006 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2006 Plan. The maximum contractual term for the options under the 2006 Plan is 10 years.

2007 Equity Incentive Plan

At the June 2007 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2007 Equity Incentive Plan (the “2007 Plan”) under which up to two million common shares of our Company have been reserved for issuance. The 2007 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2007 Plan. The maximum contractual term for the options under the 2007 Plan is 10 years.

2008 Equity Incentive Plan

At the June 2008 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2008 Equity Incentive Plan (the “2008 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2008 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2008 Plan. The maximum contractual term for the options under the 2008 Plan is 10 years.

2008 Employee Share Purchase Plan

At the June 2008 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2008 Employee Share Purchase Plan (the “2008 ESPP”) under which up to two hundred thousand common shares of our Company were reserved for issuance. Any person who is regularly employed by our Company or our designated subsidiaries shall be eligible to participate in the 2008 ESPP. Pursuant to the 2008 ESPP, our Company would offer the shares to qualified employees on favorable terms. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2008 ESPP. The 2008 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been subscribed by qualified employees under the 2008 ESPP.

2009 Equity Incentive Plan

At the June 2009 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2009 Equity Incentive Plan (the “2009 Plan”) under which up to one and a half million common shares of our Company have been reserved for issuance. The 2009 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2009 Plan. The maximum contractual term for the options under the 2009 Plan is 10 years.

2009 Employee Share Purchase Plan

At the June 2009 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2009 Employee Share Purchase Plan (the “2009 ESPP”) under which up to two hundred thousand common shares of our Company have been reserved for issuance. To be eligible, employees must be regularly employed by us or our designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2009 ESPP. The 2009 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been issued to employees under the 2009 ESPP.

2010 Equity Incentive Plan

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Equity Incentive Plan (the “2010 Plan”) under which up to one million common shares of our Company have been reserved for issuance. The 2010 Plan is administered by a committee designated by the board of directors. The committee as plan administrator has complete discretion to determine the grant of awards under the 2010 Plan. The maximum contractual term for the options under the 2010 Plan is 10 years.

2010 Employee Share Purchase Plan

At the June 2010 annual general meeting of shareholders, the shareholders of our Company approved the GigaMedia Limited 2010 Employee Share Purchase Plan (the “2010 ESPP”) under which up to two hundred thousand common shares of our Company have been reserved for issuance. To be eligible, employees must be regularly employed by us or our designated subsidiaries. Employees are also subject to certain restrictions on the amount that may be invested to purchase the shares and to other terms and conditions of the 2010 ESPP. The 2010 ESPP is administered by a committee designated by the board of directors. As of December 31, 2013, no shares have been issued to employees under the 2010 ESPP.

Summarized below are the general terms of our stock-based compensation plans, for which awards have been granted as of December 31, 2013.

Stock-Based compensation plan	Granted awards			Vesting schedule	Options’ exercise price	RSUs’ grant date fair value
2002 Plan		3,000,000		immediately upon granting	$0.79	—
2004 Plan		7,703,185	(1)	immediately upon granting to four years	$0.79~$2.55	—
2006 Plan		1,217,333	(2)	immediately upon granting to four years	$0.8101~$16.60	$2.91~$16.01
2007 Plan		3,205,217	(3)	immediately upon granting to four years	$1.20~$18.17	$2.47~$15.35
2008 Plan		1,000,000		immediately upon granting to six years	$2.47~$4.24	—
2009 Plan		2,500,000	(4)	immediately upon granting to four years	$0.955~$2.47	—
2010 Plan		2,200,000	(5)	three years	$0.8101~$1.14	—

(1) The granted awards, net of forfeited or canceled shares, were within reserved shares of seven million common shares.

(2) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

(3) The granted awards, net of forfeited or canceled shares, were within reserved shares of two million common shares.

(4) The granted awards, net of forfeited or canceled shares, were within reserved shares of one and a half million common shares.

(5) The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

Options and Restricted Stock Units (“RSUs”) generally vest over the schedule described above. Certain RSUs provide for accelerated vesting if there is a change in control. All options and RSUs are expected to be settled by issuing new shares.

(b) Options

In 2011, 2012 and 2013, 0, 0 and 3,000 options were exercised, and cash received from the exercise of stock options was $0, $0 and $2 thousand, respectively, which resulted in no significant tax benefit realized on a consolidated basis.

Our Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options granted to employees. The following table summarizes the assumptions used in the model for options granted during 2012 and 2013:

	2012	2013
Option term (years)	5.73	5.8
Volatility	59.76%~67.02%	59.46%~61.84%
Weighted-average volatility	62%	61%
Risk-free interest rate	0.885%~1.152%	0.930%~1.610%
Dividend yield	0%	0%
Weighted-average fair value of option granted	$0.54	$0.60

Option term. The expected term of the options granted represents the period of time that they are expected to be outstanding. Our Company estimates the expected term of options granted based on historical experience with grants and option exercises.

Expected volatility rate. An analysis of historical volatility was used to develop the estimate of expected volatility.

Risk-free interest rate. The risk-free interest rate is based on yields of U.S. Treasury bonds for the expected term of the options.

Expected dividend yield. The dividend yield is based on our Company’s current dividend yield.

Option transactions during the last three years are summarized as follows:

	2011					2012					2013
	Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted Avg. Exercise Price		No.of Shares (in thousands)			Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Balance at January 31	$	2.33		9,780		$	2.13		9,493		$	1.97		9,210
Options granted		1.06		1,060			0.96		2,070			1.09		620
Options exercised		—		—			—		—			0.79		(3	)
Options Forfeited / canceled / expired		2.72		(1,347	)		1.74		(2,353	)		1.28		(604	)
Balance at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055
Exercisable at December 31	$	2.19		7,754		$	2.15		7,584		$	2.13		7,770			1.87	$	1,021
Vested and expected to vest at December 31	$	2.13		9,493		$	1.97		9,210		$	1.95		9,223			3.00	$	1,055

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between GigaMedia’s closing stock price on the last trading day of 2013 and the fair value of the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on December 31, 2013. This amount changes based on the fair market value of GigaMedia’s stock. The total intrinsic value of options exercised for the years ended December 31, 2011, 2012, and 2013 were $0, $0, and $600 thousand, respectively.

As of December 31, 2013, there was approximately $348 thousand of unrecognized compensation cost related to nonvested options. That cost is expected to be recognized over a period of 2.16 years.

The following table sets forth information about stock options outstanding at December 31, 2013:

Options outstanding				Option currently exercisable
Exercise price	No. of Shares (in thousands)		Weighted average remaining contractual life	Exercise price	No. of Shares (in thousands)
Under $1		6,188	1.88 years	Under $1		5,175
$ 1~$10		2,419	5.72 years	$ 1~$10		1,979
$10~$20		616	3.65 years	$10~$20		616
		9,223				7,770

(c) RSUs

The fair value of RSUs is determined and fixed on the grant date based on our stock price. The fair value of RSUs granted during the years ended December 31, 2011, 2012 and 2013 was $1.0 million, $0 and $0, respectively. The total fair value of RSUs vested during the years ended December 31, 2011, 2012 and 2013 was $0.2 million, $0 and $0, respectively, which resulted in no significant tax benefit realized on a consolidated basis.

As of December 31 2012 and 2013, there was no unrecognized compensation cost related to nonvested RSUs. Our Company received no cash from employees as a result of employee stock award vesting and the forfeiture of RSUs during 2011, 2012 and 2013.

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INCOME TAXES

12 Months Ended

Dec. 31, 2013

INCOME TAXES

NOTE 25. INCOME TAXES

Loss from continuing operations before income taxes by geographic location is as follows:

(in US$ thousands )	2011			2012			2013
Taiwan operations	$	(770	)	$	(14,871	)	$	(33,077	)
Non-Taiwan operations		(66,865	)		1,946			(1,605	)
	$	(67,635	)	$	(12,925	)	$	(34,682	)

Income tax provision (benefit) from continuing operations by geographic location is as follows:

(in US$ thousands )	2011			2012		2013
Taiwan operations	$	33		$	456	$	248
Non-Taiwan operations		(278	)		215		(187	)
	$	(245	)	$	671	$	61

Our ultimate parent company is based in Singapore. It reported no pretax income or loss.

The components of income tax provision (benefit) from continuing operations by taxing jurisdiction are as follows:

( in US$ thousands )	2011			2012		2013
Taiwan:
Current	$	—		$	410	$	(131	)
Deferred		33			46		379
	$	33		$	456	$	248
Non-Taiwan:
Current	$	(539	)	$	215	$	(187	)
Deferred		261			—		—
	$	(278	)	$	215	$	(187	)
Total current income tax expense (benefit)	$	(539	)	$	625	$	(318	)
Total deferred income tax expense (benefit)	$	294		$	46	$	379
Total income tax provision (benefit)	$	(245	)	$	671	$	61

A reconciliation of our effective tax rate related to continuing operations to the statutory tax rate in Taiwan, where our major operations are based, is as follows:

	2011			2012			2013
Taiwan statutory rate, including taxes on income and retained earnings		23.85	%		23.85	%		23.85	%
Foreign tax differential		1.02	%		(0.17	%)		(3.71	%)
Non-deductible items - impairment charges on goodwill		(1.82	%)		(16.43	%)		(10.39	%)
Changes in unrecognized tax benefits		0.00	%		0.00	%		(4.12	%)
Tax-exempted income in foreign jurisdictions		0.00	%		0.00	%		3.12	%
Adjustment for prior year payable		0.00	%		0.00	%		0.55	%
Change in valuation allowance		(21.70	%)		(4.00	%)		(10.17	%)
Tax effect of earnings for equity method investees and certain subsidiaries		(0.02	%)		(4.38	%)		0.00	%
Other		(0.99	%)		(4.06	%)		0.69	%
Effective rate		0.34	%		(5.19	%)		(0.18	%)

The provision (benefit) for income taxes attributable to discontinued operations was $0 for each of the years ended December 31, 2011, 2012 and 2013, respectively.

Significant components of our deferred tax assets consist of the following:

(in US$ thousands)	December 31
	2012			2013
Net operating loss carryforwards	$	3,248		$	4,072
Loss on equity method investment		15,621			—
Share-based compensation		234			267
Intangible assets		354			738
Property, plant and equipment		100			86
Other		(275	)		109
		19,282			5,272
Less: valuation allowance		(18,333	)		(5,216	)
Deferred tax assets - net	$	949		$	56

As of December 31, 2012 and 2013, $840 thousand and $0, respectively, of the net deferred tax assets were reported as current and included in other current assets on the balance sheet.

Significant components of our deferred tax liabilities consist of the following:

(in US$ thousands)	December 31
	2012		2013
Depreciation and amortization	$	255	$	—
Investment in affiliated companies, principally due to undistributed income		2,207		1,987
Capitalized software development costs		306		56
Deferred tax liabilities	$	2,768	$	2,043

As of December 31, 2012 and 2013, $561 thousand and $0, respectively, of deferred tax liabilities were reported as non-current deferred tax liabilities and included in other liabilities.

A reconciliation of the beginning and ending amounts of our valuation allowance on deferred tax assets for the years ended December 31, 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	7,402		$	25,256		$	18,333
Subsequent utilization of valuation allowance		(270	)		(4	)		(7	)
Additions to valuation allowance		15,597			214			3,527
Divestitures		—			(7,026	)		(16,616	)
Acquisitions		2,491			—			—
Exchange differences		36			(107	)		(21	)
Balance at end of year	$	25,256		$	18,333		$	5,216

Under ROC Income Tax Acts, the tax loss carryforward in the preceding ten years would be deducted from income tax for Taiwan operations. The Statutory losses would be deducted from undistributed earnings tax and were not subject to expiration from Taiwan operations.

As of December 31, 2013, we had net operating loss carryforwards available to offset future income, amounting to $20.1 million. Below is the breakdown of the expiration of the net operating loss carryforwards in major jurisdictions:

Jurisdiction	Amount		Expiring year
Hong Kong		9,975	indefinite
Taiwan		10,170	2020~2023
		20,145

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding the effects of accrued interest) for the years 2011, 2012 and 2013 are as follows:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	3,887		$	4,714		$	4,202
Increase related to prior year tax positions		965			573			706
Deconsolidation of IAHGames		—			(1,072	)		—
Exchange differences		(138	)		(13	)		63
Balance at end of year	$	4,714		$	4,202		$	4,971

As of December 31, 2011, 2012 and 2013, there were approximately $4.7 million, $4.2 million and $5.0 million of unrecognized tax benefits that if recognized would affect the effective tax rate. As of December 31, 2011, 2012 and 2013, $2.3 million, $2.8 million and $2.9 million of the total unrecognized tax benefit were presented as a reduction of a deferred tax asset that, if recognized, would be offset by a valuation allowance.

There were no interest and penalties related to income tax liabilities recognized for the years ended December 31, 2011, 2012 and 2013.

Our major tax jurisdictions are located in Taiwan. As of December 31, 2013, the income tax filings under tax jurisdictions located in Taiwan have been examined for the years through 2008 and for 2011, but we have filed appeals for the 2008 and 2011 tax filings. Our Company also files income tax returns in the United States federal and state jurisdictions.

In 2011, 2012 and 2013, our unrecognized tax benefits were related to amortization of goodwill and intangible assets resulting from the acquisition of FunTown. The income tax authority has made decisions on the amortization for our 2006, 2007 and 2008 tax filings. We have filed appeals against the unfavorable parts of the decision regarding these amortization adjustments, appending further response from the tax authority.

In 2011, our unrecognized tax benefits increased due to IAHGames. These unrecognized tax benefits primarily related to certain related party transactions.

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons such as current year tax positions, expiration of statutes of limitations, litigation, legislative activity, or other changes in facts regarding realizability. Taiwanese entities are customarily examined by the tax authorities and it is possible that a future examination will result in positive or negative adjustment to our unrecognized tax benefit within the next 12 months; however management does not expect that the total amount of unrecognized tax benefit will change significantly within the next 12 months of December 31, 2013.

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Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies

NOTE 1. Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies

(a) Principal Activities

GigaMedia Limited (referred to hereinafter as GigaMedia, our Company, we, us, or our) is a diversified provider of online games and cloud computing services, with headquarters in Taipei, Taiwan.

Our Asian online game and service business operates a suite of play-for-fun online games and provides related services, mainly targeting online game players across Asia, including Greater China and Southeast Asia.

We began developing a new cloud computing business in the second half of 2012. The cloud business aims at providing an integrated platform of services and tools for small-to-medium enterprises in Greater China to increase flexibility, efficiency and competitiveness. We launched the business in April 2013.

In July 2012 we sold a non-controlling interest we held in an online gaming software and service business to BetClic Everest Group (“BEG”). (See Note 5, “Divestitures”, for additional information.) Prior to the disposal, through our equity investment, the gaming software and service business offered software solutions for online gaming, which was licensed under a software license and support service contract.

(b) Basis of Presentation

The accompanying consolidated financial statements of our Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Following the completion of the sale of 60 percent interest in our gaming software and service business in April 2010, we deconsolidated the results of the gaming software and service business and began accounting for the remaining interest under the equity method of accounting until the closing of the disposal transaction in July 2012 when we sold our remaining ownership. (See Note 5, “Divestitures”, for additional information.)

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI Network Technology (Shanghai) Co., Ltd. (“JIDI”), a wholly-owned subsidiary, and Shanghai JIDI Network Technology Co., Ltd. (“Shanghai JIDI”), a variable-interest entity controlled through a series of contractual arrangements. Therefore the results of these entities are reported as discontinued operations for all periods presented. (See Note 5, “Divestitures”, for additional information.)

(c) Summary of significant accounting policies

Principles of Consolidation

The consolidated financial statements include the accounts of GigaMedia and subsidiaries after elimination of all significant inter-company accounts and transactions. In addition, the accounts of our Company’s variable-interest entities are included in the consolidated financial statements. (See Note 3, “Variable-Interest Entities”, for additional information.) The accounting policies for other less than majority-owned investments are described in Note 1 below within the paragraphs headed “Marketable Securities” and “Investments”.

Foreign Currency Translation and Transactions

Assets and liabilities denominated in non-U.S. dollars are translated to U.S. dollars at year-end exchange rates. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. Cumulative translation adjustments resulting from this process are charged or credited to other comprehensive income. Gains and losses on foreign currency transactions are included in other income and expenses.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and also on assumptions that it believes are reasonable. Management assesses these estimates on a regular basis; however, actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment; allowances for doubtful accounts; the valuation of deferred tax assets, long-lived assets, inventory, investments and share-based compensation; and accrued pension liabilities, income tax uncertainties and other contingencies.

Revenue Recognition

General

Revenues are recognized when persuasive evidence of an arrangement exists, delivery occurs and the customer takes ownership and assumes risks or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured.

Sales taxes assessed by governmental authorities on our revenue transactions are presented on a net basis and therefore are excluded from revenues in our consolidated financial statements.

Multiple-Element Arrangements

Our Company enters into multiple-element revenue arrangements, which may include any combination of services, software, and/or products. To the extent that a deliverable in a multiple-element arrangement is subject to specific accounting guidance, whether and/or how to separate multiple deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation) for that deliverable is accounted for in accordance with such specific guidance.

In addition to the aforementioned general policies, the following are the specific revenue recognition policies for each major category of revenue.

Asian Online Game and Service Revenues

Online game revenues are earned through the sale of online game points, prepaid cards, game packs, through the sublicensing of certain games to distributors and through licensing fee revenues. Virtual online game points are sold to distributors or end-users who can make the payments through credit cards, Internet ATMs or telecommunication service operators. Physical prepaid cards and game packs are sold through distributors and convenience stores. Proceeds from sales of physical cards and game packs, net of sales discounts, and online game points are deferred when received and revenue is recognized upon the actual usage of the playing time or in-game virtual items by the end-users; over the estimated useful life of virtual items; or when the sold game points expire and can no longer be used to access the online games or products in accordance with our published game points expiration policy. Sublicensing revenues from the distributors are recognized based on end-users’ activation to the game system and when the performance obligations have been completed. Licensing fee revenues are recognized when the delivery of licensed products has occurred and the fee is fixed or determinable.

Sales of virtual online game points and licensing fee revenues are reported on a gross basis. In the sales of virtual online game points and game licenses, we act as principal and we have latitude in establishing price. Fixed percentage fees retained by service providers for payment processing related to our online game services are recognized as cost of online game revenues. We report sublicensing revenues on a net basis. In the sublicense agreements, we act as agent and the distributors are responsible for the operating and the marketing.

Online game and service revenues also include revenues derived from online advertising arrangements, sponsorship arrangements, or a combination of both. These service arrangements allow advertisers to place advertisements on particular areas of our Company’s websites and online game platforms over a stated period of time. Service revenues from online advertising arrangements are recognized ratably over the period of the contract when the collectability is reasonably assured.

Cloud Product and Service Revenues

Cloud service revenues are related to cloud computing services provided by our Company. Revenues are recorded net of discounts. Cloud service revenues are recognized for the period of time for which we provide services to the customer. Customers have a choice of paying either monthly or in advance for a certain period of time, for which they receive corresponding discounts. Our Company records any such advanced payment receipts as other current liabilities and amortizes such revenues over the subscription period.

Revenues from the sales of equipment and other related products are recognized upon acceptance.

Deferred Revenues

Deferred revenues consist mainly of the prepaid income related to our Asian online game and service business. Deferred revenue represents proceeds received relating to the sale of game points and in-game items which are activated or charged to the respective player game account by players, but which have not been consumed by the players or expired. Deferred revenue is credited to profit or loss when the game points and in-game items are consumed or expired.

Prepaid Licensing and Royalty Fees

Our Company, through our subsidiaries, routinely enters into agreements with licensors to acquire licenses for using, marketing, distributing, selling and publishing multi-player online games.

Prepaid licensing fees paid to licensors are amortized on a straight-line basis over the shorter of the estimated useful economic life of the relevant online game or license period, which is usually within two to five years. The annual amortization is modified if the amount computed on the ratio of current gross revenues for a game license over the total of current and anticipated future gross revenues for that game license is greater than the amount computed using the straight-line method.

Prepaid royalty fees and related costs are initially deferred when paid to licensors and amortized as operating costs based on certain percentage of revenues generated by the licensee from operating the related online game in the specific country or region over the contract period.

Fair Value Measurements

Our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

• Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Our Company generally determines or calculates the fair value of financial instruments using quoted market prices in active markets when such information is available; otherwise we apply appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating adjusted available market discount rate information and our Company’s estimates for non-performance and liquidity risk. These techniques rely extensively on the use of a number of assumptions, including the discount rate, credit spreads, and estimates of future cash flows. (See Note 9, “Fair Value Measurements”, for additional information.)

Cash Equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so near to their maturity that they present relatively insignificant risk from changes in interest rates. Commercial paper, negotiable certificates of deposit, time deposits and bank acceptances with original maturities of three months or less are considered to be cash equivalents. Pledged time deposits are excluded from cash and cash equivalents for purposes of the consolidated statements of cash flows.

Marketable Securities

All of our Company’s investments in marketable securities are classified as available-for-sale. These marketable securities are stated at fair value with any unrealized gains or losses recorded in accumulated other comprehensive income (loss) within equity until realized.

Other-than-temporary impairments, if any, are charged to non-operating expense in the period in which the loss occurs. In determining whether an other-than-temporary impairment has occurred, our Company primarily considers, among other factors, the length of the time and the extent to which the fair value of an investment has been at a value less than cost. When an other-than-temporary loss is recorded, the fair value of the investment becomes the new cost basis of the investment and is not adjusted for subsequent recoveries in fair value. Realized gains and losses also are included in non-operating income and expense in the consolidated statements of operations. (See Note 9, “Fair Value Measurements”, for additional information.)

Investments

Equity investments in non-publicly traded securities of companies over which our Company has no ability to exercise significant influence are accounted for under the cost method.

For equity investment accounted for as available-for-sale, cash dividends are recognized as investment income upon a resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares.

For equity investments accounted under equity method, stock dividends received from investees as a result of appropriation of net earnings and additional paid-in capital are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the weighted-average method. Cash dividends are accounted for as a reduction to the original cost of investment.

Equity investments in companies over which our Company has the ability to exercise significant influence but does not hold a controlling financial interest are accounted for under the equity method and our Company’s income or loss on equity method investments is recorded in non-operating income or expenses. The difference between the cost of the acquisition and our Company’s share of the fair value of the net identifiable assets is recognized as goodwill and is included in the carrying amount of the investment. When our Company’s carrying value in an equity method investee is reduced to zero, no further losses are recorded in our Consolidated Financial Statements unless our Company guaranteed obligations of the investee or has committed to additional funding. When the investee subsequently reports income, our Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Unrealized losses that are considered other-than-temporary, if any, are charged to non-operating expenses. Realized gains and losses, measured against carrying amount, are also included in non-operating income and expenses. (See Note 9, “Fair Value Measurements”, for additional information.)

Receivables

Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. Our Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and our customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is recorded on a straight-line basis over useful lives that correspond to categories as follows:

Categories	Years
Buildings	50
Information and communication equipment	2 to 5
Office furniture and equipment	3 to 5
Leasehold improvements	1 to 5

Leasehold improvements are amortized over the shorter of the term of the lease or the economic useful life of the assets. Improvements and replacements are capitalized and depreciated over their estimated useful lives, while ordinary repairs and maintenance are expensed as incurred.

We have entered into agreements to lease certain of our Company’s land and buildings to a third party under operating leases, which were renewed in September and October 2013, and which expire no later than September 2016. As of December 31, 2012 and 2013, the carrying amount of the land and buildings under lease was approximately $1.2 million and $1.2 million, respectively. The rental income under the operating lease amounted to $72 thousand, $74 thousand and $74 thousand for 2011, 2012 and 2013, respectively. The minimum rental income to be received under this operating lease is $209 thousand through September 2016.

Business Acquisitions

Our Company accounts for its business acquisitions using the acquisition method. Under this method, our Company recognizes and measures the identifiable assets acquired, the liabilities assumed and any noncontrolling interest at their acquisition-date fair values, with limited exceptions. Acquisition-related costs are generally expensed as incurred.

Intangible Assets and Goodwill

Intangible assets with finite lives are amortized by the straight-line method over their estimated useful lives, ranging from half a year to nine years. Intangible assets with indefinite useful lives are not amortized. Goodwill is not amortized.

Impairment of Intangible Assets, Goodwill and Long-Lived Assets

Goodwill is reviewed for impairment annually or sooner when circumstances indicate an impairment may exist, using a fair-value approach at the reporting unit level. A reporting unit is the operating segment, or a business, which is one level below that operating segment (the “component” level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. In connection with our goodwill impairment test, we first assess qualitative factors as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

Intangible assets with indefinite useful lives are tested for impairment at the reporting unit level, at least annually, or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future discounted cash flows. Impairment is measured as the difference between the carrying amounts and the fair value of the assets, and is recognized as a loss from operations. In connection with our impairment test for the intangible assets with indefinite useful lives, we first assess qualitative factors as a basis for determining whether it is necessary to perform the quantitative impairment test.

Long-lived assets other than goodwill and intangible assets not being amortized are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future undiscounted cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured by the extent to which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value, and is recognized as a loss from operations.

(See Note 9, “Fair Value Measurements”, for additional information.)

Software Cost

Costs to develop our Asian online game products are capitalized after technological feasibility has been established, and when the product is available for general release to customers, costs are expensed. Costs incurred prior to the establishment of technological feasibility are expensed when incurred and are included in product development and engineering expenses. Capitalized amounts are amortized using the straight-line method, which is applied over the estimated useful economic life of the software, ranging from half a year to five years. The annual amortization is modified if the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product is greater than the amount computed using the straight-line method.

We capitalize certain costs incurred to purchase or to internally create and implement internal-use computer software, which includes software coding, installation, testing and certain data conversion. These capitalized costs are amortized on a straight-line basis over the shorter of the useful economic life of the software or its contractual license period, which is typically three years.

Product Development and Engineering

Product development and engineering expenses primarily consist of research compensation, depreciation and amortization, and are expensed as incurred.

Advertising

Direct-response advertising costs incurred in relation to the acquisition or origination of a customer relationship are capitalized and deferred. The deferred costs are recognized as expense in the Consolidated Statements of Operations over the estimated lives of customer relationships. Costs of broadcast advertising are recorded as expenses as advertising airtime is used. Other advertising expenditures are expensed as incurred.

Advertising expenses incurred in 2011, 2012 and 2013 totaled $3.5 million, $3.2 million and $676 thousand, respectively. As of December 31, 2012 and 2013, prepaid advertising amounted to $1 thousand and $1 thousand, respectively.

Leases

Leases for which substantially all of the risks and rewards of ownership remain with the leasing company are accounted for as operating leases. Payments made under operating leases, net of any incentives received by our Company from the leasing company, are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Leases are classified as capital leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under capital leases are recognized as assets of our Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a lease obligation. Lease payments are apportioned between finance charges and a reduction of the lease obligation in order to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss.

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to employees. We measure share-based compensation cost at the grant date, based on the estimated fair value of the award. Share-based compensation is recognized for the portion of the award that is ultimately expected to vest, and the cost is amortized on a straight-line basis (net of estimated forfeitures) over the vesting period. Our Company estimates the fair value of stock options using the Black-Scholes valuation model. The cost is recorded in operating costs and operating expenses in the consolidated statements of operations based on the employees’ respective function.

For shares and stock options granted to non-employees, we measure the fair value of the equity instruments granted at the earlier of the performance commitment date or when the performance is completed.

Retirement Plan and Net Periodic Pension Cost

Under our defined benefit pension plan, net periodic pension cost, which includes service cost, interest cost, expected return on plan assets, amortization of unrecognized net transition obligation and gains or losses on plan assets, is recognized based on an actuarial valuation report. We recognize the funded status of pension plans and non-pension post-retirement benefit plans (retirement-related benefit plans) as an asset or a liability in the consolidated balance sheets.

Under our defined contribution pension plans, net periodic pension cost is recognized as incurred.

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities. We recognize the investment tax credit associated with the purchase of intangible assets and technology, research and development expenditures, employee compensation and certain equity investments using the flow-through method. Deferred tax assets and liabilities are measured using the enacted tax rate and laws that will be in effect when the related temporary differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that will more-likely-than-not be realized. In assessing the likelihood of realization, management considers estimates of future taxable income.

In addition, we recognize the financial statement impact of a tax position when it is more-likely-than-not that the position will be sustained upon examination. If the tax position meets the more-likely-than-not recognition threshold, the tax effect is measured at the largest amount that is greater than a 50 percent likely of being realized upon settlement. Interest and penalties on an underpayment of income taxes are reflected as income tax expense in the consolidated financial statements.

Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income for the period by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares, composed of incremental common shares issuable upon the exercise of warrants and options in all periods, are included in the computation of diluted earnings per share to the extent such shares are dilutive. Diluted EPS also takes into consideration the effect of dilutive securities issued by subsidiaries. In a period in which a loss is incurred, only the weighted average number of common shares issued and outstanding is used to compute the diluted loss per share, as the inclusion of potential common shares would be anti-dilutive. Therefore, for the years ended December 31, 2011, 2012 and 2013, basic and diluted loss per share are the same.

Noncontrolling Interest

Noncontrolling interest in the equity of a subsidiary is accounted for and reported as equity. Changes in our Company’s ownership interest in a subsidiary that do not result in deconsolidation are accounted for as equity transactions. Any retained noncontrolling equity investment upon the deconsolidation of a subsidiary is initially measured at fair value.

Reclassifications

Certain amounts in 2011 and 2012 have been reclassified to conform to the presentation in our consolidated financial statements as of and for the year ended December 31, 2013.

Segment Reporting

We use the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by our Company’s chief operating decision maker for making operating decisions, allocating resources and assessing performance as the source for determining our operating segments. Our Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer.

Segment profit and loss is determined on a basis that is consistent with how our Company reports operating income (loss) in its consolidated statements of operations. Our Company does not report segment asset information to the CODM. Consequently, no asset information by segment is presented. There are no intersegment transactions.

Discontinued Operations

Discontinued operations are reported when a component of an entity either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of business or geographical area of operations, (b) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale. Discontinued operations are presented separately in the accompanying consolidated statements of operations and prior period financial statements are revised to present discontinued operations retrospectively.

(d) Recent Accounting Pronouncements Not Yet Adopted

The FASB issued Accounting Standards Update (“ASU”) 2013-04, Liabilities (Topic 405); Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date, in February 2013. This update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed as the sum of the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the entity expects to pay on behalf of its co-obligors. The update is effective for our fiscal years beginning January 1, 2014, and is to be applied retrospectively to all prior years presented for those obligations resulting from joint and several liability arrangements within the Update’s scope that exist at the beginning of the fiscal year of adoption. We do not expect the initial adoption of the updated guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

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RELATED-PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2013

RELATED-PARTY TRANSACTIONS

NOTE 26. RELATED-PARTY TRANSACTIONS

In 2011, to support our current operations we had short-term indebtedness from Waterland Financial Holdings (“Waterland”), a key manager of which was one of our directors. The largest amounts of outstanding short-term indebtedness to Waterland during the year ended December 31, 2011 was $1.7 million. As of December 31, 2012 and 2013, we did not have any indebtedness owed to Waterland.

We, through IAHGames, made an equity investment in Monsoon in connection with our acquisition of IAHGames with effect from July 1, 2010. In 2010, prior to our acquisition, IAHGames loaned $5.0 million to Monsoon to support Monsoon’s current operations at interest of 7 percent per annum. In addition, from September to December 2010, IAHGames, then one of our subsidiaries, loaned an additional $5.1 million to Monsoon to support its operation at an interest rate of 7 percent per annum. The largest amount outstanding to Monsoon from July 1, 2010 through August 31, 2011, after which we began to consolidate Monsoon, was $10.3 million. As of August 31, 2011, the net book value of the loans receivable was $3.2 million, after being reduced in connection with absorbing additional losses of Monsoon as discussed in more detail in Note 15, “Investments”. Upon the deconsolidation of IAHGames’ operations of in August 2012, the loans receivable were deconsolidated as well. (See Note 5, “Divestitures”, for additional information.)

During 2011, our Company entered into loan agreements in the aggregate of $5.2 million with Mangas Everest, with interest rates of 3 percent per annum. As of December 31, 2011, the net book value of this loan receivable was nil after being reduced in connection with absorbing additional losses of Mangas Everest (as discussed in more detail in Note 15, “Investments”) and considering the financial status of Mangas Everest, from which we do not expect to collect all principal and interest. We also reversed the interest recognized previously on these loans and ceased to recognize interest income going forward. Upon the closing of the sale of our remaining ownership in the gaming software and service business in August 2012, the rights and interest in and to the loan agreements were also assigned to BEG. (See Note 5, “Divestitures”, for additional information.)

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Realized and Unrealized Gains (Or Losses) Included In Income for Assets and Liabilities Measured At Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Gain or Loss on Sale of Marketable Securities
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Unrealized Gains (Losses) [Line Items]
Total gains (losses) included in earnings	$ 985	$ 3,370
Change in unrealized gains (losses) relating to assets still held at the reporting date	1,212	352	(674)
Impairment Loss on Marketable Securities and Investments
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Unrealized Gains (Losses) [Line Items]
Total gains (losses) included in earnings		(493)
Change in unrealized gains (losses) relating to assets still held at the reporting date		(493)
Recovery of Loss on Termination of Third Party Contract
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Unrealized Gains (Losses) [Line Items]
Total gains (losses) included in earnings			$ 665

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Information about Stock Options Outstanding (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified					12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2013 Range One	Dec. 31, 2013 Range Two	Dec. 31, 2013 Range Three	Dec. 31, 2013 Minimum Range One	Dec. 31, 2013 Minimum Range Two	Dec. 31, 2013 Minimum Range Three	Dec. 31, 2013 Maximum Range One	Dec. 31, 2013 Maximum Range Two	Dec. 31, 2013 Maximum Range Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, Exercise price	$ 1.95	$ 1.97	$ 2.13	$ 2.33					$ 1	$ 10	$ 1	$ 10	$ 20
Options outstanding, No. of Shares	9,223				6,188	2,419	616
Options outstanding, Weighted average remaining contractual life					1 year 10 months 17 days	5 years 8 months 19 days	3 years 7 months 24 days
Option currently exercisable, Exercise price	$ 2.13	$ 2.15	$ 2.19						$ 1	$ 10	$ 1	$ 10	$ 20
Option currently exercisable, No. of Shares	7,770				5,175	1,979	616

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ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2013

Significant Financial Statement Impacts as Result of Execution and Closing of Management Agreement

The execution and closing of this agreement resulted in the following significant financial statement impacts in our consolidated statements of operations:

(in US$ thousands)	2011
Gain on cancellation of warrant liabilities	$	665
Gain on reversal of impairment of prepaid expenses		1,347
Recovery of loss on termination of third-party contract	$	2,012

Summary of Consideration Paid for Acquisition and Amounts of Estimated Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid for the acquisition and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

(In US$ thousands)	Amount
Consideration and noncontrolling interest:
The consideration transferred	$	510
The fair value of noncontrolling interest in FingerRockz		478
	$	988
Identifiable assets acquired and liabilities assumed:
Cash, receivables and other current assets	$	585
Customer contracts		67
Payables and other current liabilities		(160	)
Net		492
Goodwill		496
	$	988

Pro Forma Information of Results of Operations

The following unaudited pro forma results of operations for the years ended December 31, 2012 and 2013 are presented as if the acquisition had been consummated on January 20, 2012, the inception of FingerRockz:

	For the years ended December 31 (unaudited)
(in US$ thousands, except for loss per share)	2012			2013
Net revenues	$	27,477		$	15,040
Net loss attributable to GigaMedia shareholders	$	(15,334	)	$	(34,845	)
Basic and diluted loss per share	$	(0.30	)	$	(0.69	)

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PENSION BENEFITS (Tables)

12 Months Ended

Dec. 31, 2013

Benefit Obligations, Fair Value of Plan Assets, and Funded Status

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2013 and 2012:

	December 31
(in US$ thousands)	2012		2013
Benefit Obligation	$	572	$	470
Fair value of plan assets		291		300
	$	281	$	170
Amounts recognized in the balance sheet consist of:
Noncurrent liabilities	$	281	$	170
Accumulated other comprehensive income		2		—
Net amount recognized	$	279	$	170
Amounts recognized in accumulated comprehensive income consist of:
Unrecognized net gain	$	2	$	—

Weighted Average Assumptions Used to Determine Benefit Obligations

Weighted average assumptions used to determine benefit obligations for 2013 and 2012 were as follows:

	December 31
	2012			2013
Discount rate		1.75	%		2.00	%
Rate of compensation increase		1.50	%		1.50	%
Rate of return on plan assets		1.75	%		2.00	%

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Summarized Selected Financial Information for Discontinued Operations (Detail) (Shanghai JIDI Network Technology Co., Ltd., Variable Interest Entity, Primary Beneficiary, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Shanghai JIDI Network Technology Co., Ltd. | Variable Interest Entity, Primary Beneficiary
Discontinued Operations [Line Items]
Revenue		$ 100	$ 29
Loss from discontinued operations before tax	(318)	(2,521)	(4,240)
Income tax expense
Loss from discontinued operations	$ (318)	$ (2,521)	$ (4,240)

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
CURRENT ASSETS
Cash and cash equivalents (Note 10)	$ 58,801	$ 62,731
Marketable securities - current (Note 11)	21,460	17,773
Accounts receivable - net (Note 12)	2,027	2,829
Prepaid expenses	750	801
Other current assets (Notes 13 and 25)	293	1,001
Total Current Assets	83,331	85,135
Marketable securities - noncurrent (Note 14)	6,048	4,292
Equity method investments (Note 15)	5,822	5,223
PROPERTY, PLANT AND EQUIPMENT
Land and buildings	1,211	1,243
Information and communication equipment	4,082	3,986
Office furniture and fixtures	184	295
Leasehold improvements	122	455
Other		28
Property, Plant and Equipment, Gross, Total	5,599	6,007
Less: Accumulated depreciation and amortization	(3,922)	(4,058)
Net long-lived assets	1,677	1,949
GOODWILL (Note 6)		16,934
INTANGIBLE ASSETS - NET (Note 7)	1,461	15,675
OTHER ASSETS
Refundable deposits	306	392
Prepaid licensing and royalty fees (Note 8)	4,666	8,644
Other (Note 5)	10	2,150
Total Other Assets	4,982	11,186
TOTAL ASSETS	103,321	140,394
CURRENT LIABILITIES
Short-term borrowings (Note 16)	4,361	7,748
Accounts payable	1,178	324
Accrued compensation	380	1,233
Accrued expenses (Note 17)	2,617	5,182
Deferred revenue	2,441	3,174
Other current liabilities (Note 18)	3,862	3,986
Total Current Liabilities	14,839	21,647
OTHER LIABILITIES
Accrued pension liabilities (Note 19)	170	281
Other (Notes 20 and 25)	11	573
Total Other Liabilities	181	854
Total Liabilities	15,020	22,501
GigaMedia Shareholders' Equity:
Common shares, no par value, and additional paid-in capital; issued and outstanding 50,720 thousand shares in 2012 and 50,723 thousand shares in 2013	305,072	304,851
Accumulated deficit	(213,021)	(178,241)
Accumulated other comprehensive loss	(3,603)	(8,379)
Total GigaMedia shareholders' equity	88,448	118,231
Noncontrolling interest	(147)	(338)
Total Equity	88,301	117,893
COMMITMENTS AND CONTINGENCIES (Note 27)
TOTAL LIABILITIES AND EQUITY	$ 103,321	$ 140,394

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2013

Carrying Amounts and Estimated Fair Values of Financial Instruments

The following table presents the carrying amounts and estimated fair values of our Company’s financial instruments at December 31, 2012 and 2013.

(in US$ thousands)	2012				2013
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and cash equivalents	$	62,731	$	62,731	$	58,801	$	58,801
Marketable securities - current		17,773		17,773		21,460		21,460
Accounts receivable		2,829		2,829		2,027		2,027
Marketable securities - noncurrent		4,292		4,292		6,048		6,048
Refundable deposits		392		392		306		306
Other receivable - noncurrent		2,039		2,039		—		—
Financial liabilities
Accounts payable		324		324		1,178		1,178
Accrued compensation		1,233		1,233		380		380
Accrued expenses		5,182		5,182		2,617		2,617
Short-term borrowings		7,748		7,748		4,361		4,361

Fair Value, Valuation Technique and Unobservable Inputs for Level 3 Measurements

The table below presents the ranges of significant unobservable inputs used to value our Company’s level 3 financial instruments. These ranges represent the significant unobservable inputs that were used in the valuation of each type of financial instrument. These inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of our level 3 financial instruments.

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2012
Debt securities – Preferred shares with redemption rights	Recoverability considering: •       Undiscounted cash flow forecast •       Long-term growth rate •       Discount rate •       Volatility •       Redemption date	•       KRW -8.2 billion ~ 22.1 billion, (equivalent to -$7.7 million ~$20.8 million) •       3% •       17.8% •       44.7% •       1 year later
Equity securities – Listed securities under resale restriction	•       Restriction discount	•       34.81%

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2013
Debt securities – Preferred shares with redemption rights	•       Price/Sales per share ratio for selective comparable companies •       Discount for lack of marketability	•       2.5 times ~ 5.9 times •       25%

Reconciliation of Beginning and Ending Balances of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level Three

For assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2012 and 2013, a reconciliation of the beginning and ending balances are presented as follows:

(in US$ thousands)	Marketable Securities - Debt and Equity Securities
	2012			2013
Balance at beginning of year	$	5,454		$	4,292
Total gains or (losses) (realized/unrealized)
included in earnings		(493	)		985
included in other comprehensive income		—			1,212
Sale		(2,727	)		(2,550	)
Transfer into Level 3		2,058			—
Balance at end of year	$	4,292		$	3,939
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(493	)	$	—

Realized and Unrealized Gains (or Losses) Included in Income for Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs Level Three

Realized and unrealized gains (or losses) included in income for 2012 and 2013 for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in the consolidated statements of operations within the following line items:

(in US$ thousands)	Gain on sales of marketable securities			Impairment loss on marketable securities and investments			Recovery of loss on termination of third-party contract
Total gains (losses) included in earnings
for 2011	$	—		$	—		$	665
for 2012		3,370			(493	)		—
for 2013		985			—			—
Change in unrealized gains (losses) relating to assets still held at the reporting date
for 2011	$	(674	)	$	—		$	—
for 2012		352			(493	)		—
for 2013		1,212			—			—

Fair Value, Measurements, Recurring

Summary of Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a recurring basis are summarized as below:

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2012
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	1,514	$	—	$	1,514
Marketable securities - current
Equity securities		17,773		—		—		17,773
Marketable securities - noncurrent
Debt securities		—		—		2,727		2,727
Equity securities		—		—		1,565		1,565
	$	17,773	$	1,514	$	4,292	$	23,579

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2013
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	14,638	$	—	$	14,638
Marketable securities - current
Open-end fund		336		—		—		336
Equity securities		21,124		—		—		21,124
Marketable securities - noncurrent
Debt securities		—		2,109		3,939		6,048
	$	21,460	$	16,747	$	3,939	$	42,146

Fair Value, Measurements, Nonrecurring

Summary of Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a nonrecurring basis that were determined to be impaired as of December 31, 2012 and 2013 are summarized as below:

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2012
(a) Goodwill - Resulting from acquisition of FunTown	$	—	$	—	$	16,934	$	16,934	$	12,489
(b) Intangible assets - Capitalized software cost		—		—		—		—		15
(c) Prepaid licensing and royalty fees		—		—		—		—		702
(d) Investments - Cost-method		—		—		—		—		700
Total	$	—	$	—	$	16,934	$	16,934	$	13,906

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2013
(a) Goodwill - Resulting from acquisition of FunTown and FingerRockz	$	—	$	—	$	—	$	—	$	17,054
(b) Intangible assets - Trade name and Capitalized software cost		—		—		—		—		13,251
(c) Prepaid licensing and royalty fees		—		—		—		—		2,752
Total	$	—	$	—	$	—	$	—	$	33,057

(a) Impairment losses on goodwill which was determined to be impaired:

The fair value of the Asian online game reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. In the 2012 goodwill impairment assessment, we estimated future net cash flow using management’s internally developed estimates and included a terminal value calculated using a long-term future growth rate of 0% based on analysis of the current and expected future economic conditions. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 7% and a weighted average cost of capital to discount these expected future cash flows of 17%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $16.9 million. Consequently, a goodwill impairment charge of $12.5 million was recognized in 2012.

In 2013, due to a continued slowdown in demand for our casual online games and the unexpected loss of a key licensed game, we experienced a significant decline in revenues and a negative operating margin in Taiwan from our previous future cash flow expectations from this reporting unit. Further, in the Fall of 2013 we went through an internal restructuring of our operations and made a business decision to transition from PC-based games to browser/mobile games and social casino games. Also our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the revised fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, we developed our expected future net cash flows based on historical data and internally developed estimates as part of our updated long-term strategic plan and included a terminal value of $0. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 28% and a weighted average cost of capital to discount these expected future cash flows of 13%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $0. Consequently, a goodwill impairment charge of $17.1 million was recognized in 2013.

(b) Impairment losses on certain intangible assets which were determined to be impaired:

In 2012 and 2013, the trade name arising from the acquisition of FunTown and certain capitalized software development costs were fully written down, resulting in impairment charges of $15 thousand and $13.3 million, respectively, included in operating expenses within “impairment loss on intangible assets” in the consolidated statements of operations. The impairment charge for the Trade name of FunTown is a result of our repositioning of it as described above, while the impairment charges for the capitalized software costs were the result of certain projects within our Asian online game and service business that we ceased further development on, and as a result, we recorded a full impairment of the carrying value of the assets related to these projects.

(c) Impairment losses on certain prepaid licensing and royalty fees which were determined to be impaired:

In 2012 and 2013, certain prepaid licensing and royalty fees were fully written down, resulting in impairment charges of $702 thousand and $2.8 million, respectively. This impairment is included in operating expenses in the consolidated statements of operations. The impairment charges for the prepaid licensing and royalty fees related to certain licensed games within our Asian online game and service business that we stopped operating or for which the carrying amounts of the related assets were determined not to be recoverable from their expected future undiscounted cash flows. The licensing fee games and related royalties are re-valued on when impairment exists, using unobservable inputs such as discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk, along with other cash flow model related assumptions.

(d) Impairment losses on certain cost method investments which were determined to be impaired:

In 2012, certain cost method investments were fully written down, resulting in an impairment charge of $700 thousand. The impairment charges are included in non-operating expenses within “impairment loss on marketable securities and investments” in the consolidated statements of operations.

Cost method and equity method investments are measured at fair value on a nonrecurring basis when declines in fair value are determined to be other-than-temporary, using other observable inputs such as trading prices of similar classes of the stock or using discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk.

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Investments (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Investments [Line Items]
Investments accounted for under the equity method	$ 5,822	$ 5,223

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Net Long-Lived Assets by Geographic Region (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets	$ 1,677	$ 1,949	$ 4,288
Taiwan
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets	1,657	1,932	2,375
PRC
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets			763
Hong Kong
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets	20	17	107
Singapore
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets			551
Thailand
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets			380
Others
Long-Lived Assets by Geographical Areas [Line Items]
Net long-lived assets			$ 112

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Summary of Option Transactions (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Weighted Average Exercise Price
Beginning Balance	$ 1.97	$ 2.13	$ 2.33
Options granted	$ 1.09	$ 0.96	$ 1.06
Options exercised	$ 0.79
Options Forfeited /canceled /expired	$ 1.28	$ 1.74	$ 2.72
Ending Balance	$ 1.95	$ 1.97	$ 2.13
Exercisable at December 31	$ 2.13	$ 2.15	$ 2.19
Ending Balance	$ 1.95	$ 1.97	$ 2.13
No. of Shares
Beginning Balance	9,210	9,493	9,780
Options granted	620	2,070	1,060
Options exercised	(3)	0	0
Options Forfeited /canceled /expired	(604)	(2,353)	(1,347)
Ending Balance	9,223	9,210	9,493
Exercisable at December 31	7,770	7,584	7,754
Vested and expected to vest at December 31	9,223	9,210	9,493
Weighted- Average Remaining Contractual Term
Balance at December 31	3 years
Exercisable at December 31	1 year 10 months 13 days
Vested and expected to vest at December 31	3 years
Aggregate Intrinsic Value
Balance at December 31	$ 1,055
Exercisable at December 31	1,021
Vested and expected to vest at December 31	$ 1,055

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) In Thousands	Total	OneNet	FingerRockz	Common shares and additional paid-in capital	Accumulated deficit	Accumulated other comprehensive income (loss)	Noncontrolling interest	Noncontrolling interest OneNet	Noncontrolling interest FingerRockz
Balance at Dec. 31, 2010	$ 215,101			$ 309,332	$ (91,739)	$ (72)	$ (2,420)
Balance (in shares) at Dec. 31, 2010				56,263
Issuance of common shares from exercise of stock options and RSUs (in shares)				79
Stock-based compensation	1,165			1,165
Share repurchase and retirement of common shares (Note 22)(in shares)	(5,600)			(5,622)
Acquisition of business		111						111
Share repurchase and retirement of common shares (Note 22)	(5,825)			(5,825)
Cumulative dividend to subsidiary preferred shares (Note 21)	(321)						(321)
NET LOSS	(71,578)				(71,212)		(366)
Other comprehensive income (loss)	14,423					14,423
Balance at Dec. 31, 2011	153,076			304,672	(162,951)	14,351	(2,996)
Balance (in shares) at Dec. 31, 2011				50,720
Stock-based compensation	179			179
Cumulative dividend to subsidiary preferred shares (Note 21)	469						469
NET LOSS	(16,117)				(15,290)		(827)
Other comprehensive income (loss)	(19,714)					(22,730)	3,016
Balance at Dec. 31, 2012	117,893			304,851	(178,241)	(8,379)	(338)
Balance (in shares) at Dec. 31, 2012				50,720
Issuance of common shares from exercise of stock options and RSUs (in shares)				3
Issuance of common shares from exercise of stock options and RSUs	2			2
Stock-based compensation	219			219
Acquisition of business			478						478
NET LOSS	(35,061)				(34,780)		(281)
Other comprehensive income (loss)	4,770					4,776	(6)
Balance at Dec. 31, 2013	$ 88,301			$ 305,072	$ (213,021)	$ (3,603)	$ (147)
Balance (in shares) at Dec. 31, 2013				50,723

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Marketable Securities Noncurrent (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Debt securities	$ 6,048	$ 2,727
Equity securities		1,565
Marketable securities - noncurrent	$ 6,048	$ 4,292

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SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2013

Reconciliation of Segment Information to Consolidated Information

Financial information for each operating segment was as follows as of and for the years ended December 31, 2011, 2012, and 2013:

(in US$ thousands)	Asian online game and service
2011:
Segment profit or loss:
Net revenue from external customers	$	34,367
Loss from operations	$	(10,931	)
Share-based compensation	$	308
Impairment loss on intangible assets	$	2,583
Impairment loss on prepaid licensing and royalty fees	$	247
Impairment loss on goodwill	$	5,097
Interest income	$	492
Interest expense	$	(50	)
Gain on sales of marketable securities	$	6,299
Foreign exchange loss	$	(282	)
Gain on equity method investments - net	$	1,846
Impairment loss on marketable securities and investments	$	13,327
Depreciation	$	1,790
Amortization, including intangible assets	$	2,251
Income tax expense	$	859
2012:
Segment profit or loss:
Net revenue from external customers	$	27,470
Loss from operations	$	(12,271	)
Share-based compensation	$	199
Impairment loss on intangible assets	$	15
Impairment loss on prepaid licensing and royalty fees	$	702
Impairment loss on goodwill	$	12,489
Contract termination costs	$	49
Interest income	$	9
Interest expense	$	44
Gain on sales of marketable securities	$	5,665
Foreign exchange gain	$	55
Gain on equity method investments - net	$	234
Impairment loss on marketable securities and investments	$	1,193
Depreciation	$	1,059
Amortization, including intangible assets	$	2,181
Income tax expense	$	710

(in US$ thousands)	Asian online game and service			Cloud service business			Total
2013:
Segment profit or loss:
Net revenue from external customers	$	14,106		$	925		$	15,031
Loss from operations	$	(33,677	)	$	(1,218	)	$	(34,895	)
Share-based compensation	$	(225	)	$	69		$	(156	)
Impairment loss on intangible assets	$	13,251		$	—		$	13,251
Impairment loss on prepaid licensing and royalty fees	$	2,752		$	—		$	2,752
Impairment loss on goodwill	$	17,054		$	—		$	17,054
Interest income	$	9		$	—		$	9
Interest expense	$	8		$	—		$	8
Gain on sales of marketable securities	$	1,739		$	—		$	1,739
Foreign exchange gain	$	236		$	—		$	236
Gain on equity method investments - net	$	526		$	—		$	526
Depreciation	$	336		$	8		$	344
Amortization, including intangible assets	$	1,862		$	42		$	1,904
Income tax expense	$	150		$	78		$	228

The reconciliations of segment information to GigaMedia’s consolidated totals are as follows:

(in US$ thousands)	2011			2012			2013
Income (loss) from operations:
Total segments	$	(10,931	)	$	(12,271	)	$	(34,895	)
Other**		(204	)		7			—
Adjustment*		(8,794	)		(8,310	)		(3,592	)
Total GigaMedia consolidated	$	(19,929	)	$	(20,574	)	$	(38,487	)
Share-based compensation
Total segments	$	308		$	199		$	(156	)
Adjustment*		857			(20	)		375
Total GigaMedia consolidated	$	1,165		$	179		$	219
Impairment loss on intangible assets:
Total segments	$	2,583		$	15		$	13,251
Adjustment*		—			—			—
Total GigaMedia consolidated	$	2,583		$	15		$	13,251
Impairment loss on prepaid licensing and royalty fees:
Total segments	$	247		$	702		$	2,752
Adjustment*		—			—			—
Total GigaMedia consolidated	$	247		$	702		$	2,752
Interest income:
Total segments	$	492		$	9		$	9
Adjustment*		270			274			229
Total GigaMedia consolidated	$	762		$	283		$	238
Interest expense:
Total segments	$	(50	)	$	44		$	8
Adjustment*		476			203			41
Total GigaMedia consolidated	$	426		$	247		$	49
Gain on sales of marketable securities:
Total segments	$	6,299		$	5,665		$	1,739
Adjustments*		—			—			—
Total GigaMedia consolidated	$	6,299		$	5,665		$	1,739
Foreign exchange gain (loss):
Total segments	$	(282	)	$	55		$	236
Adjustments*		(83	)		379			(191	)
Total GigaMedia consolidated	$	(365	)	$	434		$	45
Gain (loss) on equity method investments - net:
Total segments	$	1,846		$	234		$	526
Other**		(49,715	)		—			—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	(47,869	)	$	234		$	526
Impairment loss on marketable securities and investments:
Total segments	$	13,327		$	1,193		$	—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	13,327		$	1,193		$	—
Depreciation:
Total segments	$	1,790		$	1,059		$	344
Adjustments*		290			165			64
Total GigaMedia consolidated	$	2,080		$	1,224		$	408
Amortization:
Total segments	$	2,251		$	2,181		$	1,904
Adjustments*		63			23			3
Total GigaMedia consolidated	$	2,314		$	2,204		$	1,907
Income tax expense (benefit):
Total segments	$	859		$	710		$	228
Other**		(934	)		37			—
Adjustments*		(170	)		(76	)		(167	)
Total GigaMedia consolidated	$	(245	)	$	671		$	61

* Adjustment items include corporate and certain back-office costs and expenses not attributable to any specific segment. As of December 31, 2011, 2012 and 2013, the compensation related was approximately $4.3 million, $4.2 million and $2.1 million, respectively; accrued professional fees was approximately $2.3 million, $911 thousand and $125 thousand, respectively.

** Other items relate to the results of operations arising from our non-controlling interest in the online gaming software and service business before we disposed of it in July 2012.

Revenue by Geographic Region

Revenue from by geographic region is as follows:

(in US$ thousands)
Geographic region / country	2011		2012		2013
Taiwan	$	21,214	$	18,744	$	11,793
Hong Kong		5,061		4,703		3,239
Singapore		4,150		2,004		—
Malaysia		2,228		1,550		—
Thailand		1,447		204		—
Others		267		265		—
	$	34,367	$	27,470	$	15,032

Net Tangible Long-Lived Assets by Geographic Region

Net tangible long-lived assets by geographic region are as follows:

(in US$ thousands)	December 31,
Geographic region / country	2011		2012		2013
Taiwan	$	2,375	$	1,932	$	1,657
PRC		763		—		—
Hong Kong		107		17		20
Singapore		551		—		—
Thailand		380		—		—
Other		112		—		—
	$	4,288	$	1,949	$	1,677

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Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Accrued Liabilities [Line Items]
Accrued professional fees	$ 740	$ 1,319
Accrued royalties	128	967
Accrued advertising expenses	421	696
Accrued incentive to distributors	137	172
Accrued director compensation and liability insurance	424	513
Other	767	1,515
Accrued expenses	$ 2,617	$ 5,182

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SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2013

SUBSEQUENT EVENT

NOTE 29. SUBSEQUENT EVENT

On April 10, 2014 (with supplemental modification on April 15, 2014), we entered into a short-term loan agreement on an arm’s-length basis with Wen He Investment Ltd. (“Wen He”) to finance its purchase from a third-party 15 million common shares of a company in Taiwan. The amount of the loan is approximately $18.8 million, maturing on May 10, 2014, and carries an interest rate of 5% per annum. The term of the loan also requires that all of the shares so purchased by Wen He be pledged to us as collateral together with the personal guarantee of another major shareholder of the Taiwan company. We entered into this loan agreement because we believe it will support the growth of our online games business.

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Reconciliation of Segment Information to Consolidated Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment profit or loss:
Loss from operations	$ (38,487)	$ (20,574)	$ (19,929)
Share-based compensation	219	179	1,165
Impairment loss on intangible assets	13,251	15	2,583
Impairment loss on prepaid licensing and royalty fees	2,752	702	247
Impairment loss on goodwill	17,054	12,489	5,097
Interest income	238	283	762
Interest expense	49	247	426
Gain on sales of marketable securities	1,739	5,665	6,299
Foreign exchange gain	45	434	(365)
Gain (loss) on equity method investments - net	526	234	(47,869)
Impairment loss on marketable securities and investments		1,193	13,327
Depreciation	408	1,224	2,080
Amortization, including intangible assets	1,907	2,204	2,314
Income tax (benefit) expense	61	671	(245)
Asian online game and service
Segment profit or loss:
Net revenue from external customers	14,106	27,470	34,367
Loss from operations	(33,677)	(12,271)	(10,931)
Share-based compensation	(225)	199	308
Impairment loss on intangible assets	13,251	15	2,583
Impairment loss on prepaid licensing and royalty fees	2,752	702	247
Impairment loss on goodwill	17,054	12,489	5,097
Contract termination costs		49
Interest income	9	9	492
Interest expense	8	44	(50)
Gain on sales of marketable securities	1,739	5,665	6,299
Foreign exchange gain	236	55	(282)
Gain (loss) on equity method investments - net	526	234	1,846
Impairment loss on marketable securities and investments		1,193	13,327
Depreciation	336	1,059	1,790
Amortization, including intangible assets	1,862	2,181	2,251
Income tax (benefit) expense	150	710	859
Cloud service
Segment profit or loss:
Net revenue from external customers	925
Loss from operations	(1,218)
Share-based compensation	69
Depreciation	8
Amortization, including intangible assets	42
Income tax (benefit) expense	78
Reportable Segment
Segment profit or loss:
Net revenue from external customers	15,031
Loss from operations	(34,895)	(12,271)	(10,931)
Share-based compensation	(156)	199	308
Impairment loss on intangible assets	13,251	15	2,583
Impairment loss on prepaid licensing and royalty fees	2,752	702	247
Impairment loss on goodwill	17,054
Interest income	9	9	492
Interest expense	8	44	(50)
Gain on sales of marketable securities	1,739	5,665	6,299
Foreign exchange gain	236	55	(282)
Gain (loss) on equity method investments - net	526	234	1,846
Impairment loss on marketable securities and investments		1,193	13,327
Depreciation	344	1,059	1,790
Amortization, including intangible assets	1,904	2,181	2,251
Income tax (benefit) expense	$ 228	$ 710	$ 859

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Acquisitions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified				1 Months Ended
	Dec. 31, 2011 Monsoon Online Private Limited	Aug. 31, 2011 Monsoon Online Private Limited	Jul. 01, 2010 Monsoon Online Private Limited	Oct. 18, 2013 FingerRockz
Business Acquisition [Line Items]
Percentage accounted under equity method investment	100.00%	100.00%	100.00%
Common stock shares owned				405
Percentage of ownership interest				51.60%
Goodwill expected to be deductible for tax purpose				$ 0

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SHORT-TERM BORROWINGS

12 Months Ended

Dec. 31, 2013

SHORT-TERM BORROWINGS

NOTE 16. SHORT-TERM BORROWINGS

As of December 31, 2012 and 2013, unsecured short-term borrowings totaled $7.7 million and $4.4 million, respectively. These amounts were borrowed from certain financial institutions. The annual interest rates on these borrowings was 1.42 percent for 2012, and ranged from 1.50 percent to 1.60 percent for 2013. The maturity dates fell in mid-January 2013 as of December 31, 2012 and in late January 2014 as of December 31, 2013. As of December 31, 2012 and 2013, the weighted-average interest rate on total short-term borrowings was 1.42 percent and 1.52 percent, respectively.

As of December 31, 2012 and 2013, the total amount of unused lines of credit available for borrowing under these agreements was approximately $6.9 million and $9.9 million, respectively.

During the period from January 2014 to March 2014, we repaid certain short-term borrowings totaling $11.9 million, and renewed short-term borrowing agreements totaling $11.9 million.

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Principal Activities, Basis of Presentation, and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

Assets and liabilities denominated in non-U.S. dollars are translated to U.S. dollars at year-end exchange rates. Income and expense items are translated at weighted-average rates of exchange prevailing during the year. Cumulative translation adjustments resulting from this process are charged or credited to other comprehensive income. Gains and losses on foreign currency transactions are included in other income and expenses.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and also on assumptions that it believes are reasonable. Management assesses these estimates on a regular basis; however, actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment; allowances for doubtful accounts; the valuation of deferred tax assets, long-lived assets, inventory, investments and share-based compensation; and accrued pension liabilities, income tax uncertainties and other contingencies.

Revenue Recognition

Revenue Recognition

General

Revenues are recognized when persuasive evidence of an arrangement exists, delivery occurs and the customer takes ownership and assumes risks or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured.

Sales taxes assessed by governmental authorities on our revenue transactions are presented on a net basis and therefore are excluded from revenues in our consolidated financial statements.

Multiple-Element Arrangements

Our Company enters into multiple-element revenue arrangements, which may include any combination of services, software, and/or products. To the extent that a deliverable in a multiple-element arrangement is subject to specific accounting guidance, whether and/or how to separate multiple deliverable arrangements into separate units of accounting (separability) and how to allocate the arrangement consideration among those separate units of accounting (allocation) for that deliverable is accounted for in accordance with such specific guidance.

In addition to the aforementioned general policies, the following are the specific revenue recognition policies for each major category of revenue.

Asian Online Game and Service Revenues

Online game revenues are earned through the sale of online game points, prepaid cards, game packs, through the sublicensing of certain games to distributors and through licensing fee revenues. Virtual online game points are sold to distributors or end-users who can make the payments through credit cards, Internet ATMs or telecommunication service operators. Physical prepaid cards and game packs are sold through distributors and convenience stores. Proceeds from sales of physical cards and game packs, net of sales discounts, and online game points are deferred when received and revenue is recognized upon the actual usage of the playing time or in-game virtual items by the end-users; over the estimated useful life of virtual items; or when the sold game points expire and can no longer be used to access the online games or products in accordance with our published game points expiration policy. Sublicensing revenues from the distributors are recognized based on end-users’ activation to the game system and when the performance obligations have been completed. Licensing fee revenues are recognized when the delivery of licensed products has occurred and the fee is fixed or determinable.

Sales of virtual online game points and licensing fee revenues are reported on a gross basis. In the sales of virtual online game points and game licenses, we act as principal and we have latitude in establishing price. Fixed percentage fees retained by service providers for payment processing related to our online game services are recognized as cost of online game revenues. We report sublicensing revenues on a net basis. In the sublicense agreements, we act as agent and the distributors are responsible for the operating and the marketing.

Online game and service revenues also include revenues derived from online advertising arrangements, sponsorship arrangements, or a combination of both. These service arrangements allow advertisers to place advertisements on particular areas of our Company’s websites and online game platforms over a stated period of time. Service revenues from online advertising arrangements are recognized ratably over the period of the contract when the collectability is reasonably assured.

Cloud Product and Service Revenues

Cloud service revenues are related to cloud computing services provided by our Company. Revenues are recorded net of discounts. Cloud service revenues are recognized for the period of time for which we provide services to the customer. Customers have a choice of paying either monthly or in advance for a certain period of time, for which they receive corresponding discounts. Our Company records any such advanced payment receipts as other current liabilities and amortizes such revenues over the subscription period.

Revenues from the sales of equipment and other related products are recognized upon acceptance.

Deferred Revenues

Deferred Revenues

Deferred revenues consist mainly of the prepaid income related to our Asian online game and service business. Deferred revenue represents proceeds received relating to the sale of game points and in-game items which are activated or charged to the respective player game account by players, but which have not been consumed by the players or expired. Deferred revenue is credited to profit or loss when the game points and in-game items are consumed or expired.

Prepaid Licensing and Royalty Fees

Prepaid Licensing and Royalty Fees

Our Company, through our subsidiaries, routinely enters into agreements with licensors to acquire licenses for using, marketing, distributing, selling and publishing multi-player online games.

Prepaid licensing fees paid to licensors are amortized on a straight-line basis over the shorter of the estimated useful economic life of the relevant online game or license period, which is usually within two to five years. The annual amortization is modified if the amount computed on the ratio of current gross revenues for a game license over the total of current and anticipated future gross revenues for that game license is greater than the amount computed using the straight-line method.

Prepaid royalty fees and related costs are initially deferred when paid to licensors and amortized as operating costs based on certain percentage of revenues generated by the licensee from operating the related online game in the specific country or region over the contract period.

Fair Value Measurements

Fair Value Measurements

Our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

• Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Our Company generally determines or calculates the fair value of financial instruments using quoted market prices in active markets when such information is available; otherwise we apply appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating adjusted available market discount rate information and our Company’s estimates for non-performance and liquidity risk. These techniques rely extensively on the use of a number of assumptions, including the discount rate, credit spreads, and estimates of future cash flows. (See Note 9, “Fair Value Measurements”, for additional information.)

Cash Equivalents

Cash Equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so near to their maturity that they present relatively insignificant risk from changes in interest rates. Commercial paper, negotiable certificates of deposit, time deposits and bank acceptances with original maturities of three months or less are considered to be cash equivalents. Pledged time deposits are excluded from cash and cash equivalents for purposes of the consolidated statements of cash flows.

Marketable Securities

Marketable Securities

All of our Company’s investments in marketable securities are classified as available-for-sale. These marketable securities are stated at fair value with any unrealized gains or losses recorded in accumulated other comprehensive income (loss) within equity until realized.

Other-than-temporary impairments, if any, are charged to non-operating expense in the period in which the loss occurs. In determining whether an other-than-temporary impairment has occurred, our Company primarily considers, among other factors, the length of the time and the extent to which the fair value of an investment has been at a value less than cost. When an other-than-temporary loss is recorded, the fair value of the investment becomes the new cost basis of the investment and is not adjusted for subsequent recoveries in fair value. Realized gains and losses also are included in non-operating income and expense in the consolidated statements of operations. (See Note 9, “Fair Value Measurements”, for additional information.)

Investments

Investments

Equity investments in non-publicly traded securities of companies over which our Company has no ability to exercise significant influence are accounted for under the cost method.

For equity investment accounted for as available-for-sale, cash dividends are recognized as investment income upon a resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares.

For equity investments accounted under equity method, stock dividends received from investees as a result of appropriation of net earnings and additional paid-in capital are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the weighted-average method. Cash dividends are accounted for as a reduction to the original cost of investment.

Equity investments in companies over which our Company has the ability to exercise significant influence but does not hold a controlling financial interest are accounted for under the equity method and our Company’s income or loss on equity method investments is recorded in non-operating income or expenses. The difference between the cost of the acquisition and our Company’s share of the fair value of the net identifiable assets is recognized as goodwill and is included in the carrying amount of the investment. When our Company’s carrying value in an equity method investee is reduced to zero, no further losses are recorded in our Consolidated Financial Statements unless our Company guaranteed obligations of the investee or has committed to additional funding. When the investee subsequently reports income, our Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Unrealized losses that are considered other-than-temporary, if any, are charged to non-operating expenses. Realized gains and losses, measured against carrying amount, are also included in non-operating income and expenses. (See Note 9, “Fair Value Measurements”, for additional information.)

Receivables

Receivables

Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. Our Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and our customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is recorded on a straight-line basis over useful lives that correspond to categories as follows:

Categories	Years
Buildings	50
Information and communication equipment	2 to 5
Office furniture and equipment	3 to 5
Leasehold improvements	1 to 5

Leasehold improvements are amortized over the shorter of the term of the lease or the economic useful life of the assets. Improvements and replacements are capitalized and depreciated over their estimated useful lives, while ordinary repairs and maintenance are expensed as incurred.

We have entered into agreements to lease certain of our Company’s land and buildings to a third party under operating leases, which were renewed in September and October 2013, and which expire no later than September 2016. As of December 31, 2012 and 2013, the carrying amount of the land and buildings under lease was approximately $1.2 million and $1.2 million, respectively. The rental income under the operating lease amounted to $72 thousand, $74 thousand and $74 thousand for 2011, 2012 and 2013, respectively. The minimum rental income to be received under this operating lease is $209 thousand through September 2016.

Business Acquisitions

Business Acquisitions

Our Company accounts for its business acquisitions using the acquisition method. Under this method, our Company recognizes and measures the identifiable assets acquired, the liabilities assumed and any noncontrolling interest at their acquisition-date fair values, with limited exceptions. Acquisition-related costs are generally expensed as incurred.

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Intangible assets with finite lives are amortized by the straight-line method over their estimated useful lives, ranging from half a year to nine years. Intangible assets with indefinite useful lives are not amortized. Goodwill is not amortized.

Impairment of Intangible Assets, Goodwill and Long-Lived Assets

Impairment of Intangible Assets, Goodwill and Long-Lived Assets

Goodwill is reviewed for impairment annually or sooner when circumstances indicate an impairment may exist, using a fair-value approach at the reporting unit level. A reporting unit is the operating segment, or a business, which is one level below that operating segment (the “component” level) if discrete financial information is prepared and regularly reviewed by management at the segment level. Components are aggregated as a single reporting unit if they have similar economic characteristics. In connection with our goodwill impairment test, we first assess qualitative factors as a basis for determining whether it is necessary to perform the two-step goodwill impairment test.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

Intangible assets with indefinite useful lives are tested for impairment at the reporting unit level, at least annually, or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future discounted cash flows. Impairment is measured as the difference between the carrying amounts and the fair value of the assets, and is recognized as a loss from operations. In connection with our impairment test for the intangible assets with indefinite useful lives, we first assess qualitative factors as a basis for determining whether it is necessary to perform the quantitative impairment test.

Long-lived assets other than goodwill and intangible assets not being amortized are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable from its related future undiscounted cash flows. If such assets are considered to be impaired, the impairment to be recognized is measured by the extent to which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value, and is recognized as a loss from operations.

(See Note 9, “Fair Value Measurements”, for additional information.)

Software Cost

Software Cost

Costs to develop our Asian online game products are capitalized after technological feasibility has been established, and when the product is available for general release to customers, costs are expensed. Costs incurred prior to the establishment of technological feasibility are expensed when incurred and are included in product development and engineering expenses. Capitalized amounts are amortized using the straight-line method, which is applied over the estimated useful economic life of the software, ranging from half a year to five years. The annual amortization is modified if the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product is greater than the amount computed using the straight-line method.

We capitalize certain costs incurred to purchase or to internally create and implement internal-use computer software, which includes software coding, installation, testing and certain data conversion. These capitalized costs are amortized on a straight-line basis over the shorter of the useful economic life of the software or its contractual license period, which is typically three years.

Product Development and Engineering

Product Development and Engineering

Product development and engineering expenses primarily consist of research compensation, depreciation and amortization, and are expensed as incurred.

Advertising

Advertising

Direct-response advertising costs incurred in relation to the acquisition or origination of a customer relationship are capitalized and deferred. The deferred costs are recognized as expense in the Consolidated Statements of Operations over the estimated lives of customer relationships. Costs of broadcast advertising are recorded as expenses as advertising airtime is used. Other advertising expenditures are expensed as incurred.

Advertising expenses incurred in 2011, 2012 and 2013 totaled $3.5 million, $3.2 million and $676 thousand, respectively. As of December 31, 2012 and 2013, prepaid advertising amounted to $1 thousand and $1 thousand, respectively.

Leases

Leases

Leases for which substantially all of the risks and rewards of ownership remain with the leasing company are accounted for as operating leases. Payments made under operating leases, net of any incentives received by our Company from the leasing company, are charged to the consolidated statements of operations on a straight-line basis over the lease periods.

Leases are classified as capital leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under capital leases are recognized as assets of our Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a lease obligation. Lease payments are apportioned between finance charges and a reduction of the lease obligation in order to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss.

Share-Based Compensation

Share-Based Compensation

Share-based compensation represents the cost related to share-based awards granted to employees. We measure share-based compensation cost at the grant date, based on the estimated fair value of the award. Share-based compensation is recognized for the portion of the award that is ultimately expected to vest, and the cost is amortized on a straight-line basis (net of estimated forfeitures) over the vesting period. Our Company estimates the fair value of stock options using the Black-Scholes valuation model. The cost is recorded in operating costs and operating expenses in the consolidated statements of operations based on the employees’ respective function.

For shares and stock options granted to non-employees, we measure the fair value of the equity instruments granted at the earlier of the performance commitment date or when the performance is completed.

Retirement Plan and Net Periodic Pension Cost

Retirement Plan and Net Periodic Pension Cost

Under our defined benefit pension plan, net periodic pension cost, which includes service cost, interest cost, expected return on plan assets, amortization of unrecognized net transition obligation and gains or losses on plan assets, is recognized based on an actuarial valuation report. We recognize the funded status of pension plans and non-pension post-retirement benefit plans (retirement-related benefit plans) as an asset or a liability in the consolidated balance sheets.

Under our defined contribution pension plans, net periodic pension cost is recognized as incurred.

Income Taxes

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities. We recognize the investment tax credit associated with the purchase of intangible assets and technology, research and development expenditures, employee compensation and certain equity investments using the flow-through method. Deferred tax assets and liabilities are measured using the enacted tax rate and laws that will be in effect when the related temporary differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that will more-likely-than-not be realized. In assessing the likelihood of realization, management considers estimates of future taxable income.

In addition, we recognize the financial statement impact of a tax position when it is more-likely-than-not that the position will be sustained upon examination. If the tax position meets the more-likely-than-not recognition threshold, the tax effect is measured at the largest amount that is greater than a 50 percent likely of being realized upon settlement. Interest and penalties on an underpayment of income taxes are reflected as income tax expense in the consolidated financial statements.

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income for the period by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares, composed of incremental common shares issuable upon the exercise of warrants and options in all periods, are included in the computation of diluted earnings per share to the extent such shares are dilutive. Diluted EPS also takes into consideration the effect of dilutive securities issued by subsidiaries. In a period in which a loss is incurred, only the weighted average number of common shares issued and outstanding is used to compute the diluted loss per share, as the inclusion of potential common shares would be anti-dilutive. Therefore, for the years ended December 31, 2011, 2012 and 2013, basic and diluted loss per share are the same.

Noncontrolling Interest

Noncontrolling Interest

Noncontrolling interest in the equity of a subsidiary is accounted for and reported as equity. Changes in our Company’s ownership interest in a subsidiary that do not result in deconsolidation are accounted for as equity transactions. Any retained noncontrolling equity investment upon the deconsolidation of a subsidiary is initially measured at fair value.

Reclassifications

Reclassifications

Certain amounts in 2011 and 2012 have been reclassified to conform to the presentation in our consolidated financial statements as of and for the year ended December 31, 2013.

Segment Reporting

Segment Reporting

We use the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by our Company’s chief operating decision maker for making operating decisions, allocating resources and assessing performance as the source for determining our operating segments. Our Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer.

Segment profit and loss is determined on a basis that is consistent with how our Company reports operating income (loss) in its consolidated statements of operations. Our Company does not report segment asset information to the CODM. Consequently, no asset information by segment is presented. There are no intersegment transactions.

Discontinued Operations

Discontinued Operations

Discontinued operations are reported when a component of an entity either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of business or geographical area of operations, (b) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale. Discontinued operations are presented separately in the accompanying consolidated statements of operations and prior period financial statements are revised to present discontinued operations retrospectively.

Recent Accounting Pronouncements Not Yet Adopted

(d) Recent Accounting Pronouncements Not Yet Adopted

The FASB issued Accounting Standards Update (“ASU”) 2013-04, Liabilities (Topic 405); Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date, in February 2013. This update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed as the sum of the amount the entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the entity expects to pay on behalf of its co-obligors. The update is effective for our fiscal years beginning January 1, 2014, and is to be applied retrospectively to all prior years presented for those obligations resulting from joint and several liability arrangements within the Update’s scope that exist at the beginning of the fiscal year of adoption. We do not expect the initial adoption of the updated guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

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Short-Term Borrowings - Additional Information (Detail) (USD $)	12 Months Ended		3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2014 Subsequent Event
Short-term Debt [Line Items]
Short-term borrowings	$ 4,361,000	$ 7,748,000
Short-term borrowings, interest rate		1.42%
Short-term borrowings, maximum annual interest rate	1.60%
Short-term borrowings, minimum annual interest rate	1.50%
Short-term borrowings, maturity date	2014-01	2013-01
Short-term borrowings, weighted-average interest rate	1.52%	1.42%
Unused lines of credit available for borrowing	9,900,000	6,900,000
Short-term borrowings repaid			11,900,000
Short-term borrowings renewed agreements			$ 11,900,000

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Breakdown of Expiration of Net Operating Loss Carryforwards in Major Jurisdictions (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Operating Loss Carryforwards [Line Items]
Amount	$ 20,145
Hong Kong
Operating Loss Carryforwards [Line Items]
Amount	9,975
Expiring year	Indefinite
Taiwan
Operating Loss Carryforwards [Line Items]
Amount	$ 10,170
Taiwan | Minimum
Operating Loss Carryforwards [Line Items]
Expiring year	2020
Taiwan | Maximum
Operating Loss Carryforwards [Line Items]
Expiring year	2023

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OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2013

OTHER CURRENT LIABILITIES

NOTE 18. OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Income taxes payable	$	1,381	$	1,560
Deferred tax liabilities (Note 25)		2,207		1,987
Other		398		315
	$	3,986	$	3,862

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Pro Forma Information of Results of Operations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Business Acquisition [Line Items]
Net revenues	$ 15,040	$ 27,477
Net loss attributable to GigaMedia shareholders	$ (34,845)	$ (15,334)
Basic and diluted loss per share	$ (0.69)	$ (0.30)

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Summary of Total Stock-Based Compensation Expense Recognized in Consolidated Statements of Operations (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 219	$ 179	$ 1,165
Income tax (benefit) expense	27	(41)	(109)
Selling and Marketing Expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense		20	62
General and Administrative Expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	219	159	1,103
Segment, Continuing Operations
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense, net of tax	$ 246	$ 138	$ 1,056

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS	$ (35,061)	$ (16,117)	$ (71,578)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	408	1,224	2,080
Amortization	1,907	2,204	2,314
Stock-based compensation	219	179	1,165
Gain on sale of equity method investments	(1,220)	(2,480)
Impairment loss on goodwill	17,054	12,489	5,097
Impairment loss on intangible assets	13,251	15	2,583
Impairment loss on prepaid licensing and royalty fees	2,752	702	247
Provision for bad debt expenses	37	169	1,820
Loss on disposal of property, plant and equipment	4	208	49
Gain on sales of marketable securities	(1,739)	(5,665)	(6,299)
Loss (gain) on equity method investments	(526)	(234)	47,869
Impairment loss on marketable securities and investments		1,193	13,327
Gain on cancellation of warrant liabilities			(665)
Other	(141)	377	200
Net changes in operating assets and liabilities, net of business acquisitions and divestitures:
Accounts receivable	767	1,537	(153)
Prepaid expenses	52	755	871
Other current assets	708	(174)	865
Accounts payable	854	(515)	(336)
Accrued expenses	(2,223)	(59)	(452)
Accrued compensation	(853)	(831)	(2,139)
Other current liabilities	(1,017)	(467)	(1,334)
Accrued pension liabilities	(111)	110	128
Prepaid licensing and royalty fees	1,026	(2,397)	(3,007)
Other	(453)	454	(361)
Net cash used in operating activities	(4,305)	(7,323)	(12,448)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash		3,694	2,000
Cash dividends received from equity method investees			1,907
Proceeds from disposal of marketable securities	3,419	8,610	9,899
Divestiture of business, net of cash transferred		(1,308)	4,739
Purchase of property, plant and equipment	(225)	(429)	(768)
Proceeds from disposal of property, plant and equipment	35	76	117
Proceeds from disposal of businesses, net of transaction costs	3,258	1,735
Purchase of marketable securities	(2,460)
Purchase of intangible assets	(1,227)	(1,679)	(1,274)
Acquisitions, net of cash acquired	73		11
Advances to equity investees			(5,243)
Decrease (increase) in refundable deposits	86	428	185
Other	(5)	(10)	(22)
Net cash provided by investing activities	2,954	11,117	11,551
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment of short-term borrowings	(3,146)	(4,348)	(400)
Repurchase and retirement of common shares			(5,825)
Cash received from the exercise of stock options	2	0	0
Net cash used in financing activities	(3,144)	(4,348)	(6,225)
Exchange difference	565	(712)	130
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,930)	(1,266)	(6,992)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	62,731	63,997	70,989
CASH AND CASH EQUIVALENTS AT END OF YEAR	58,801	62,731	63,997
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the year	53	248	436
Income tax paid (refunded) during the year	(285)	121	783
T2CN
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on deconsolidation			$ (4,739)

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Common shares, no par value
Common shares, issued	50,723	50,720
Common shares, outstanding	50,723	50,720

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CASH AND CASH EQUIVALENTS

12 Months Ended

Dec. 31, 2013

CASH AND CASH EQUIVALENTS

NOTE 10. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

	December 31
(in US$ thousands)	2012		2013
Cash and savings accounts	$	61,217	$	44,163
Time deposits		1,514		14,638
	$	62,731	$	58,801

We maintain cash and cash equivalents in bank accounts with major financial institutions with high credit ratings located in the following jurisdictions:

	December 31
(in US$ thousands)	2012		2013
Taiwan	$	59,195	$	55,661
Hong Kong		2,809		2,956
Malaysia		100		133
PRC		626		—
Others		1		51
	$	62,731	$	58,801

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Weighted Average Assumptions Used to Determine Benefit Obligations (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Discount rate	2.00%	1.75%
Rate of compensation increase	1.50%	1.50%
Rate of return on plan assets	2.00%	1.75%

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Reconciliation of Changes in Allowance for Loans Receivable Current (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of year	$ 3,437	$ 5,057	$ 5,057
Additions: Provision for bad debt expenses	37	169	1,820
Less: Writes-offs		(1,620)
Less: Reversal for collection of bad debt	(54)
Translation adjustment	11
Balance at end of year	3,394	3,437	5,057
Allowance for Loan and Lease Losses
Accounts, Notes, Loans and Financing Receivable [Line Items]
Additions: Provision for bad debt expenses

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Summary of the Changes in Allowance for Doubtful Accounts (Detail) (Allowance for Doubtful Accounts, Current, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Allowance for Doubtful Accounts, Current
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of year	$ 130	$ 2,594	$ 842
Additions: Provision for bad debt expense	37	169	1,820
Less: Write-offs	(109)	(269)	(61)
Deconsolidation - IAHGames		(2,370)
Translation adjustment	(3)	6	(7)
Balance at end of year	$ 55	$ 130	$ 2,594

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Reconciliation of Beginning and Ending Amounts of Valuation Allowance on Deferred Tax Assets (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Valuation Allowance [Line Items]
Balance at beginning of year	$ 18,333	$ 25,256	$ 7,402
Subsequent utilization of valuation allowance	(7)	(4)	(270)
Additions to valuation allowance	3,527	214	15,597
Exchange differences	(21)	(107)	36
Balance at end of year	5,216	18,333	25,256
Divestiture
Valuation Allowance [Line Items]
Divestitures	(16,616)	(7,026)
Acquisition 1
Valuation Allowance [Line Items]
Acquisitions			$ 2,491

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Reconciliations of Segment Information to Consolidated Totals (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Segment Reporting Information [Line Items]
Loss from operations	$ (38,487)		$ (20,574)		$ (19,929)
Share-based compensation	219		179		1,165
Impairment loss on intangible assets	13,251		15		2,583
Impairment loss on prepaid licensing and royalty fees	2,752		702		247
Interest income	238		283		762
Interest expense	49		247		426
Gain on sales of marketable securities	1,739		5,665		6,299
Foreign exchange gain (loss)	45		434		(365)
Gain (loss) on equity method investments - net	526		234		(47,869)
Impairment loss on marketable securities and investments			1,193		13,327
Depreciation	408		1,224		2,080
Amortization	1,907		2,204		2,314
Income tax expense (benefit)	61		671		(245)
Reportable Segment
Segment Reporting Information [Line Items]
Loss from operations	(34,895)		(12,271)		(10,931)
Share-based compensation	(156)		199		308
Impairment loss on intangible assets	13,251		15		2,583
Impairment loss on prepaid licensing and royalty fees	2,752		702		247
Interest income	9		9		492
Interest expense	8		44		(50)
Gain on sales of marketable securities	1,739		5,665		6,299
Foreign exchange gain (loss)	236		55		(282)
Gain (loss) on equity method investments - net	526		234		1,846
Impairment loss on marketable securities and investments			1,193		13,327
Depreciation	344		1,059		1,790
Amortization	1,904		2,181		2,251
Income tax expense (benefit)	228		710		859
Other Items
Segment Reporting Information [Line Items]
Loss from operations			7	[1]	(204)	[1]
Gain (loss) on equity method investments - net					(49,715)	[1]
Income tax expense (benefit)			37	[1]	(934)	[1]
Adjustment
Segment Reporting Information [Line Items]
Loss from operations	(3,592)	[2]	(8,310)	[2]	(8,794)	[2]
Share-based compensation	375	[2]	(20)	[2]	857	[2]
Impairment loss on intangible assets		[2]		[2]		[2]
Impairment loss on prepaid licensing and royalty fees		[2]		[2]		[2]
Interest income	229	[2]	274	[2]	270	[2]
Interest expense	41	[2]	203	[2]	476	[2]
Gain on sales of marketable securities		[2]		[2]		[2]
Foreign exchange gain (loss)	(191)	[2]	379	[2]	(83)	[2]
Impairment loss on marketable securities and investments		[2]		[2]		[2]
Depreciation	64	[2]	165	[2]	290	[2]
Amortization	3	[2]	23	[2]	63	[2]
Income tax expense (benefit)	$ (167)	[2]	$ (76)	[2]	$ (170)	[2]

[1] Other items relate to the results of operations arising from our non-controlling interest in the online gaming software and service business before we disposed of it in July 2012.

[2] Adjustment items include corporate and certain back-office costs and expenses not attributable to any specific segment. As of December 31, 2011, 2012 and 2013, the compensation related was approximately $4.3 million, $4.2 million and $2.1 million, respectively; accrued professional fees was approximately $2.3 million, $911 thousand and $125 thousand, respectively.

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Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Contingency [Line Items]
Provision (benefit) for income taxes attributable to discontinued operation	$ 0	$ 0	$ 0
Deferred tax assets, current	0	840,000
Deferred tax liabilities		561,000
Net operating loss carryforwards	20,145,000
Unrecognized tax benefits that if recognized would affect the effective tax rate	5,000,000	4,200,000	4,700,000
Unrecognized tax benefits that if recognized would be offset by a valuation allowance	2,900,000	2,800,000	2,300,000
Taiwan
Income Tax Contingency [Line Items]
Tax loss carryforward period	10 years
Other Liabilities
Income Tax Contingency [Line Items]
Deferred tax liabilities	$ 0	$ 561,000

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Document and Entity Information	12 Months Ended
	Dec. 31, 2013
Document Information [Line Items]
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	GIGM
Entity Registrant Name	GIGAMEDIA Ltd
Entity Central Index Key	0001105101
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	50,722,976

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Related-Party Transactions - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended			3 Months Ended	4 Months Ended			5 Months Ended
	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2010 Monsoon	Dec. 31, 2010 Monsoon	Aug. 31, 2011 Monsoon	Jul. 01, 2010 Monsoon	Dec. 31, 2011 Everest Gaming
Related Party Transaction [Line Items]
Related party transactions, outstanding short-term indebtedness	$ 1.7	$ 0	$ 0
Equity investment effective date	2010-07-01
Loan to related party				$ 5.0	$ 5.1	$ 3.2	$ 10.3	$ 5.2
Loan to related party, interest rate				7.00%	7.00%			3.00%

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MARKETABLE SECURITIES

12 Months Ended

Dec. 31, 2013

MARKETABLE SECURITIES

NOTE 11. MARKETABLE SECURITIES – CURRENT

Marketable securities – current consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities:
Equity securities	$	17,773	$	21,124
Open-end fund		—		336
	$	17,773	$	21,460

All of our Company’s marketable securities – current are classified as available-for-sale. As of December 31, 2012 and 2013, the balances of unrealized gains for marketable securities - current were $14.4 million and $17.9 million, respectively. During 2011, 2012 and 2013, realized gains from the disposal of marketable securities - current amounted to $535 thousand, $2.3 million, and $754 thousand, respectively. The costs for calculating gains on disposal were based on each security’s average cost.

Noncurrent Assets

MARKETABLE SECURITIES

NOTE 14. MARKETABLE SECURITIES – NONCURRENT

Marketable securities – noncurrent consist of the following:

	December 31
(in US$ thousands)	2012		2013
Available-for-sale securities
Debt securities	$	2,727	$	6,048
Equity securities		1,565		—
	$	4,292	$	6,048

Our Company’s marketable securities - noncurrent are invested in convertible preferred shares, corporate bonds and publicly-traded common shares and are classified as available-for-sale securities.

The preferred shares are convertible into common shares on 1:1 basis, subject to certain adjustments, and shall be automatically converted upon certain conditions outlined in the agreements. The convertible preferred shares are all redeemable based upon certain agreed-upon conditions.

The embedded conversion options of the convertible preferred shares do not meet the definition of derivative instruments and therefore are not bifurcated from the preferred share investment.

We have also considered and determined whether our investments in preferred shares are in-substance common shares which should be accounted for under the equity method. Given that our convertible preferred shares have substantive redemption rights and thus do not meet the criteria of in-substance common shares, we have accounted for them as debt securities.

As of December 31, 2012 and 2013, the balances of unrealized gains for marketable securities - noncurrent were $0 and $1.2 million, respectively. During 2011, 2012 and 2013, realized gains from the disposal of marketable securities — non-current amounted to $5.8 million, $3.4 million and $985 thousand, respectively. Gains on disposal were based on the security’s average cost.

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Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 42,146	$ 23,579
Bank Time Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - time deposits	14,638	1,514
Equity Securities | Current Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	21,124	17,773
Equity Securities | Noncurrent Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		1,565
Debt Securities | Noncurrent Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	6,048	2,727
Open-end fund | Current Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	336
Fair Value Measurements Using Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	21,460	17,773
Fair Value Measurements Using Level 1 | Equity Securities | Current Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	21,124	17,773
Fair Value Measurements Using Level 1 | Open-end fund | Current Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	336
Fair Value Measurements Using Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	16,747	1,514
Fair Value Measurements Using Level 2 | Bank Time Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - time deposits	14,638	1,514
Fair Value Measurements Using Level 2 | Debt Securities | Noncurrent Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	2,109
Fair Value Measurements Using Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	3,939	4,292
Fair Value Measurements Using Level 3 | Equity Securities | Noncurrent Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities		1,565
Fair Value Measurements Using Level 3 | Debt Securities | Noncurrent Assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 3,939	$ 2,727

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Accounts Receivable (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 2,082	$ 2,959
Less: Allowance for doubtful accounts	(55)	(130)
Accounts receivable - net	$ 2,027	$ 2,829

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
OPERATING REVENUES
Sales Revenue Net	$ 15,032	$ 27,470	$ 34,367
COSTS OF REVENUES
Cost of goods and services sold	(7,584)	(11,388)	(14,413)
GROSS PROFIT	7,448	16,082	19,954
OPERATING EXPENSES
Product development and engineering expenses	(1,698)	(1,471)	(1,956)
Selling and marketing expenses	(4,815)	(8,377)	(10,079)
General and administrative expenses	(6,324)	(13,384)	(18,101)
Bad debt expense (Note 12)	(37)	(169)	(1,820)
Impairment loss on goodwill (Notes 6 and 9)	(17,054)	(12,489)	(5,097)
Impairment loss on intangible assets (Note 9)	(13,251)	(15)	(2,583)
Impairment loss on prepaid licensing and royalty fees (Notes 8 and 9)	(2,752)	(702)	(247)
Other	(4)	(49)
Operating Expenses	(45,935)	(36,656)	(39,883)
LOSS FROM OPERATIONS	(38,487)	(20,574)	(19,929)
NON-OPERATING INCOME (EXPENSES)
Interest income	238	283	762
Gain on sales of marketable securities (Notes 11 and 14)	1,739	5,665	6,299
Interest expense	(49)	(247)	(426)
Foreign exchange gain (loss), net	45	434	(365)
Gain (loss) on equity method investments - net (Note 15)	526	234	(47,869)
Impairment loss on marketable securities and investments (Note 9)		(1,193)	(13,327)
Gain on sale of equity method investments (Note 5)	1,220	2,480
Recovery of loss on termination of third-party contract (Note 4)			2,012
Other	86	(7)	469
Nonoperating Income (Expense)	3,805	7,649	(47,706)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(34,682)	(12,925)	(67,635)
INCOME TAX (EXPENSE) BENEFIT (Note 25)	(61)	(671)	245
LOSS FROM CONTINUING OPERATIONS	(34,743)	(13,596)	(67,390)
LOSS FROM DISCONTINUED OPERATIONS - NET OF TAX (Note 5)	(318)	(2,521)	(4,188)
NET LOSS	(35,061)	(16,117)	(71,578)
LESS: NET LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTERESTS	281	827	366
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA	(34,780)	(15,290)	(71,212)
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA
Loss from continuing operations - net of tax	(34,462)	(12,769)	(67,024)
Loss from discontinued operations - net of tax	(318)	(2,521)	(4,188)
NET LOSS ATTRIBUTABLE TO SHAREHOLDERS OF GIGAMEDIA	(34,780)	(15,290)	(71,212)
Basic:
Loss from continuing operations	$ (0.68)	$ (0.25)	$ (1.23)
Loss from discontinued operations	$ (0.01)	$ (0.05)	$ (0.08)
Net loss	$ (0.69)	$ (0.30)	$ (1.31)
Diluted:
Loss from continuing operations	$ (0.68)	$ (0.25)	$ (1.23)
Loss from discontinued operations	$ (0.01)	$ (0.05)	$ (0.08)
Net loss	$ (0.69)	$ (0.30)	$ (1.31)
WEIGHTED AVERAGE SHARES USED TO COMPUTE LOSS PER SHARE ATTRIBUTABLE TO GIGAMEDIA SHAREHOLDERS (Note 2)
Basic	50,720	50,720	54,268
Diluted	50,720	50,720	54,268
Asian online game and service
OPERATING REVENUES
Sales Revenue Net	14,106	27,470	34,367
COSTS OF REVENUES
Cost of goods and services sold	(6,425)	(11,388)	(14,413)
Other Revenues
OPERATING REVENUES
Sales Revenue Net	926
COSTS OF REVENUES
Cost of goods and services sold	(1,159)
T2CN
NON-OPERATING INCOME (EXPENSES)
Gain on deconsolidation			$ 4,739

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DIVESTITURES

12 Months Ended

Dec. 31, 2013

DIVESTITURES

NOTE 5. DIVESTITURES

T2CN

On December 14, 2011, we completed the sale of our equity method investee T2CN. Pursuant to the agreement, we sold all of our ownership interest in T2CN to Hornfull Limited in exchange for a cash payment of $4.7 million, resulting in a gain of $4.7 million being recognized in 2011. Hornfull Limited also reimbursed us $790 thousand in cash for legal fees incurred by us in connection with the T2CN dispute.

IAHGames

In July 2012, we entered into agreements to sell a 60 percent ownership in IAHGames, together with the sale of a 100 percent ownership in Spring Asia Limited (“Spring Asia”), which has a 30 percent interest in Game First International Corporation (“GFI”), to IAHGames’ management and Management Capital International Limited (“MCIL”), a British Virgin Islands company owned by IAHGames’ management. We retained a 20 percent ownership in IAHGames. Upon the closing of the agreements, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method.

Our Company accounted for the deconsolidation of and the retained noncontrolling investment in IAHGames in August 2012 at fair value.

In consideration for the sale of IAHGames and Spring Asia, we were to receive $3 million in cash. The consideration was to be collected in four equal installments, with the first due upon closing, the second due in October 2012, the third due in January 2013 and the fourth due in April 2013. The payments were collateralized by the shares of Spring Asia and were only released from the escrow in proportion to the payment made upon each installment. The first installment of $750 thousand was received upon the closing on August 15, 2012. However, the buyer had defaulted on the remaining three installments. Considering the uncertainty as to the collectability of the remaining three installments, we had deferred the disposal gain of $211 thousand against the consideration installments receivable of $2,250 thousand as of December 31, 2012. The deferred gain was determined as follows:

(In US$ thousand)	Amount
The fair value of consideration received and receivable, net of any transaction costs, plus	$	3,000
The fair value of the 20% retained noncontrolling investment in IAH at the date of deconsolidation		—
		3,000
The carrying amount (credit balance) of IAHGames at the date of deconsolidation		(14,536	)
Net receivables due to GigaMedia from IAHGames waived upon the closing of the sale		17,542
Other comprehensive income component of equity related to IAHGames at the date of the deconsolidation		(217	)
		2,789
Deferred gain on deconsolidation of IAH	$	211

On April 17, 2013, we entered into a settlement agreement with IAHGames, IAHGames’ management, and MCIL. Pursuant to the settlement agreement, either IAHGames or IAHGames’ management was to pay us $2,258 thousand, which included interest, to fulfill IAHGames’ obligation under the aforementioned sale of ownership in Spring Asia. In addition, MCIL was to purchase all of our remaining shares in IAHGames for a consideration of $1,000 thousand. The payments were received in May 2013. Upon the receipt of these payments, the above deferred gain and disposal gain for the remaining shares were recognized in the non-operating income accordingly.

JIDI Network Technology (Shanghai) Co., Ltd. (“JIDI”)

In June 2012, our board of directors approved a plan to liquidate and dissolve JIDI, a wholly-owned subsidiary, and Shanghai JIDI, a VIE controlled through a series of contractual arrangements.

Results for JIDI and Shanghai JIDI operations are reported as discontinued operations for all periods presented. The carrying amounts of the remaining assets and liabilities, if any, of JIDI and Shanghai JIDI were not significant to our consolidated financial statements as of December 31, 2012 and 2013, and we recorded a loss of approximately $588 thousand in connection with the disposal of property, plant and equipment, which was included within discontinued operations in 2012. The process of liquidation and dissolution was completed by the end of 2013. Summarized financial information for discontinued operations of JIDI and Shanghai JIDI are as follows:

(in US$ thousands)	2011			2012			2013
Revenue	$	29		$	100		$	—
Loss from discontinued operations before tax	$	(4,240	)	$	(2,521	)	$	(318	)
Income tax expense		—			—			—
Loss from discontinued operations	$	(4,240	)	$	(2,521	)	$	(318	)

Non-controlling Interest in Gaming software and service business

We held a non-controlling equity interest in a gaming software and service business to July 2012, when we entered into another agreement with BEG to sell our non-controlling ownership interest, along with the shareholders loan (discussed in more detail in Note 26, “Related-Party Transactions”), for a consideration of $1.7 million. Of this consideration, $985 thousand was paid to us in cash, while the remainder related to the extinguishment of a 2009 tax liability. The closing of the sale occurred in August 2012. The sale resulted in the recognition of a gain of $2.5 million, net of transaction costs.

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ACQUISITIONS

12 Months Ended

Dec. 31, 2013

ACQUISITIONS

NOTE 4. ACQUISITIONS

Monsoon

Through Infocomm Asia Holdings Pte Ltd. (“IAHGames”), our then subsidiary in Southeast Asia, we made an equity investment in Monsoon Online Pte Ltd. (“Monsoon”), an operator and distributor of online games in Southeast Asia, in connection with our acquisition of a controlling financial interest in IAHGames with effect from July 1, 2010. In connection with a strategic alliance, Monsoon entered into various agreements with a game licensor to distribute selected games in Southeast Asia (collectively referred to as the “Distribution Partnership”). Although IAHGames owned 100 percent of the common stock of Monsoon, we could not consolidate Monsoon at the time of the acquisition as the game licensor had substantive participating rights in Monsoon’s business operations pursuant to Monsoon’s management agreement. In September 2011, IAHGames, Monsoon and the game licensor entered into an agreement whereby all parties agreed to terminate early Monsoon’s management agreement and other agreements with the game licensor which had granted the licensor the abovementioned substantive participating rights in connection with Monsoon. The agreement was effective from August 31, 2011. Starting from September 1, 2011, IAHGames had effective control over Monsoon and had consolidated Monsoon thereon.

The agreement was effective from the third quarter of 2011. In January 2012, IAHGames’ and Monsoon’s commitments under the Distribution Partnership with the game licensor were fully terminated. The execution and closing of this agreement resulted in the following significant financial statement impacts in our consolidated statements of operations:

(in US$ thousands)	2011
Gain on cancellation of warrant liabilities	$	665
Gain on reversal of impairment of prepaid expenses		1,347
Recovery of loss on termination of third-party contract	$	2,012

FingerRockz

On October 18, 2013, we subscribed in cash to 405 thousand new common shares of FingerRockz Co., Ltd. (“FingerRockz”), which represents a controlling financial interest of 51.6 percent of the ownership; thereupon we began consolidating FingerRockz. FingerRockz is a mobile game developer and publisher in Taiwan, and we acquired it purposely to enhance our research and development capabilities for mobile games. This primary factor among others, contributed to a purchase price in excess of the fair value of the net identifiable assets acquired and liabilities assumed, and intangible assets. In the acquisition, the most appealing asset to our Company was FingerRockz’s creative team. Because the assembled workforce was not an identifiable asset to be recognized separately from goodwill, the value attributed to it was subsumed into goodwill. The goodwill related to this acquisition is not expected to be deductible for tax purpose.

The following table summarizes the consideration paid for the acquisition and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

(In US$ thousands)	Amount
Consideration and noncontrolling interest:
The consideration transferred	$	510
The fair value of noncontrolling interest in FingerRockz		478
	$	988
Identifiable assets acquired and liabilities assumed:
Cash, receivables and other current assets	$	585
Customer contracts		67
Payables and other current liabilities		(160	)
Net		492
Goodwill		496
	$	988

The following unaudited pro forma results of operations for the years ended December 31, 2012 and 2013 are presented as if the acquisition had been consummated on January 20, 2012, the inception of FingerRockz:

	For the years ended December 31 (unaudited)
(in US$ thousands, except for loss per share)	2012			2013
Net revenues	$	27,477		$	15,040
Net loss attributable to GigaMedia shareholders	$	(15,334	)	$	(34,845	)
Basic and diluted loss per share	$	(0.30	)	$	(0.69	)

The above unaudited pro forma information does not reflect any incremental direct costs, including any restructuring charges to be recorded in connection with the acquisition, or any potential cost savings that may result from the consolidation of certain operations of our Company or FingerRockz. Accordingly, the unaudited pro forma financial information above not necessarily indicative the actual results that would have occurred had the acquisition of FingerRockz been combined during the periods presented, nor it necessarily indicative of future consolidated results of operations.

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ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2013

ACCRUED EXPENSES

NOTE 17. ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31
(in US$ thousands)	2012		2013
Accrued professional fees	$	1,319	$	740
Accrued royalties		967		128
Accrued advertising expenses		696		421
Accrued incentive to distributors		172		137
Accrued director compensation and liability insurance		513		424
Other		1,515		767
	$	5,182	$	2,617

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ACCOUNTS RECEIVABLE - NET

12 Months Ended

Dec. 31, 2013

ACCOUNTS RECEIVABLE - NET

NOTE 12. ACCOUNTS RECEIVABLE – NET

Accounts receivable consist of the following:

	December 31
(in US$ thousands)	2012			2013
Accounts receivable	$	2,959		$	2,082
Less: Allowance for doubtful accounts		(130	)		(55	)
	$	2,829		$	2,027

The following is a summary of the changes in our Company’s allowance for doubtful accounts during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	842		$	2,594		$	130
Additions: Provision for bad debt expense		1,820			169			37
Less: Write-offs		(61	)		(269	)		(109	)
Deconsolidation - IAHGames		—			(2,370	)		—
Translation adjustment		(7	)		6			(3	)
Balance at end of year	$	2,594		$	130		$	55

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Summary of Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Goodwill impairment	$ 17,054		$ 12,489		$ 5,097
Intangible assets - total impairment losses	13,251		15		2,583
Prepaid licensing and royalty fees	2,752		702		247
Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty fees	3,070		702		247
Fair Value, Measurements, Nonrecurring
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments - Cost-method, fair value				[1]
Total			16,934
Intangible assets - total impairment losses	13,251	[2]	15	[2]
Prepaid licensing and royalty fees	2,752	[3]	702	[3]
Investments - Cost-method, total impairment losses			700	[1]
Total	33,057		13,906
Fair Value, Measurements, Nonrecurring | Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty fees		[3]		[3]
Fair Value, Measurements, Nonrecurring | Capitalized software development cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets				[2]
Intangible assets - total impairment losses	13,251		15
Fair Value, Measurements, Nonrecurring | Trade Name and Capitalized Software Cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets		[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments - Cost-method, fair value				[1]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 1 | Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty fees		[3]		[3]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 1 | Capitalized software development cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets				[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 1 | Trade Name and Capitalized Software Cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets		[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments - Cost-method, fair value				[1]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 2 | Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty fees		[3]		[3]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 2 | Capitalized software development cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets				[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 2 | Trade Name and Capitalized Software Cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets		[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments - Cost-method, fair value				[1]
Total			16,934
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 3 | Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty fees		[3]		[3]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 3 | Capitalized software development cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets				[2]
Fair Value, Measurements, Nonrecurring | Fair Value Measurements Using Level 3 | Trade Name and Capitalized Software Cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets		[2]
Fair Value, Measurements, Nonrecurring | Fun Town
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Goodwill	0		16,934	[4]
Goodwill impairment	17,054	[4]	12,489	[4]
Fair Value, Measurements, Nonrecurring | Fun Town | Fair Value Measurements Using Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Goodwill			$ 16,934	[4]

[1] Impairment losses on certain cost method investments which were determined to be impaired: In 2012, certain cost method investments were fully written down, resulting in an impairment charge of $700 thousand. The impairment charges are included in non-operating expenses within "impairment loss on marketable securities and investments" in the consolidated statements of operations. Cost method and equity method investments are measured at fair value on a nonrecurring basis when declines in fair value are determined to be other-than-temporary, using other observable inputs such as trading prices of similar classes of the stock or using discounted cash flows, incorporating adjusted available market discount rate information and our Company's estimates for liquidity risk.

[2] Impairment losses on certain intangible assets which were determined to be impaired: In 2012 and 2013, the trade name arising from the acquisition of FunTown and certain capitalized software development costs were fully written down, resulting in impairment charges of $15 thousand and $13.3 million, respectively, included in operating expenses within "impairment loss on intangible assets" in the consolidated statements of operations. The impairment charge for the Trade name of FunTown is a result of our repositioning of it as described above, while the impairment charges for the capitalized software costs were the result of certain projects within our Asian online game and service business that we ceased further development on, and as a result, we recorded a full impairment of the carrying value of the assets related to these projects.

[3] Impairment losses on certain prepaid licensing and royalty fees which were determined to be impaired: In 2012 and 2013, certain prepaid licensing and royalty fees were fully written down, resulting in impairment charges of $702 thousand and $2.8 million, respectively. This impairment is included in operating expenses in the consolidated statements of operations. The impairment charges for the prepaid licensing and royalty fees related to certain licensed games within our Asian online game and service business that we stopped operating or for which the carrying amounts of the related assets were determined not to be recoverable from their expected future undiscounted cash flows. The licensing fee games and related royalties are re-valued on when impairment exists, using unobservable inputs such as discounted cash flows, incorporating adjusted available market discount rate information and our Company's estimates for liquidity risk, along with other cash flow model related assumptions.

[4] Impairment losses on goodwill which was determined to be impaired: The fair value of the Asian online game reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. In the 2012 goodwill impairment assessment, we estimated future net cash flow using management's internally developed estimates and included a terminal value calculated using a long-term future growth rate of 0% based on analysis of the current and expected future economic conditions. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 7% and a weighted average cost of capital to discount these expected future cash flows of 17%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $16.9 million. Consequently, a goodwill impairment charge of $12.5 million was recognized in 2012. In 2013, due to a continued slowdown in demand for our casual online games and the unexpected loss of a key licensed game, we experienced a significant decline in revenues and a negative operating margin in Taiwan from our previous future cash flow expectations from this reporting unit. Further, in the Fall of 2013 we went through an internal restructuring of our operations and made a business decision to transition from PC-based games to browser/mobile games and social casino games. Also our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the revised fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, we developed our expected future net cash flows based on historical data and internally developed estimates as part of our updated long-term strategic plan and included a terminal value of $0. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 28% and a weighted average cost of capital to discount these expected future cash flows of 13%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $0. Consequently, a goodwill impairment charge of $17.1 million was recognized in 2013.

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PREPAID LICENSING AND ROYALTY FEES

12 Months Ended

Dec. 31, 2013

PREPAID LICENSING AND ROYALTY FEES

NOTE 8. PREPAID LICENSING AND ROYALTY FEES

The following table summarizes changes to our Company’s prepaid licensing and royalty fees:

(in US$ thousands)	2011			2012			2013
Balance at beginning of year	$	4,214		$	7,103		$	8,644
Net operating additions		3,379			2,395			(908	)
Acquisition - OneNet		129			—			—
Deconsolidation - IAHGames		—			(152	)		—
Impairment charges (Note 9)		(247	)		(702	)		(3,070	)
Impairment charges (Note 9) recorded in loss from discontinued operations		(372	)		—			—
Balance at end of year	$	7,103		$	8,644		$	4,666

XML

Principal Activities Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Cash equivalents original maturity period to be considered as highly liquid	3 months
Operating lease, carrying amount of land and buildings	$ 1,677	$ 1,949	$ 4,288
Operating lease, rental income	74	74	72
Operating lease, minimum rental income to be received through September 2016	209
Advertising expenses	676	3,200	3,500
Prepaid advertising	1	1
Property Available for Operating Lease
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Operating lease, carrying amount of land and buildings	$ 1,200	$ 1,200
Minimum
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	6 months
Minimum | Capitalized software development cost
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	6 months
Maximum
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	9 years
Maximum | Capitalized software development cost
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	5 years
Prepaid Licensing and Royalty Fees | Minimum
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	2 years
Prepaid Licensing and Royalty Fees | Maximum
Description Of Business Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Finite lived intangible assets, useful life	5 years

XML

Summary of General Terms of Stock-Based Compensation Plans for Awards Granted (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	620,000		2,070,000	1,060,000
Options' exercise price	$ 1.09		$ 0.96	$ 1.06
2002 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	3,000,000
Vesting schedule	immediately upon granting
Options' exercise price	$ 0.79
2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	7,703,185	[1]
Vesting schedule	immediately upon granting to four years
2004 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 0.79
2004 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 2.55
2006 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	1,217,333	[2]
Vesting schedule	immediately upon granting to four years
2006 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 0.8101
2006 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 16.60
2006 Plan | Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs' grant date fair value	$ 2.91
2006 Plan | Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs' grant date fair value	$ 16.01
2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	3,205,217	[3]
Vesting schedule	immediately upon granting to four years
2007 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 1.20
2007 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 18.17
2007 Plan | Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs' grant date fair value	$ 2.47
2007 Plan | Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs' grant date fair value	$ 15.35
2008 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	1,000,000
Vesting schedule	immediately upon granting to six years
2008 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 2.47
2008 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 4.24
2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	2,500,000	[4]
Vesting schedule	immediately upon granting to four years
2009 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 0.955
2009 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 2.47
2010 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted awards	2,200,000	[2]
Vesting schedule	three years
2010 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 0.8101
2010 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options' exercise price	$ 1.14

[1] The granted awards, net of forfeited or canceled shares, were within reserved shares of seven million common shares.

[2] The granted awards, net of forfeited or canceled shares, were within reserved shares of one million common shares.

[3] The granted awards, net of forfeited or canceled shares, were within reserved shares of two million common shares.

[4] The granted awards, net of forfeited or canceled shares, were within reserved shares of one and a half million common shares.

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GOODWILL

12 Months Ended

Dec. 31, 2013

GOODWILL

NOTE 6. GOODWILL

The following table summarizes the changes to our Company’s goodwill:

(In US$ thousands)	2011			2012			2013
Balance at beginning of year	$	39,493		$	28,437		$	16,934
Acquisition - OneNet and FingerRockz (Note 4)		1,049			—			496
Impairment charge - IAHGames, OneNet, FunTown and FingerRockz (Note 9)		(5,097	)		(12,489	)		(17,054	)
Reversal of contingent payment of minimum guarantee under licensing agreement		(5,885	)		—			—
Translation adjustment		(1,123	)		986			(376	)
Balance at end of year	$	28,437		$	16,934		$	—

By the acquisition of FingerRockz in 2013, we obtained its mobile platform development experience which now constitutes an important complement to FunTown’s R&D capacity in mobile games. We reassigned its role and developed our estimates of future cash flows from mobile games accordingly. Therefore, for the purpose of testing goodwill for impairment, we determined FingerRockz to be an integral part of FunTown with respect to determining reporting unit, and goodwill arising from the acquisition of FingerRockz was reassigned to FunTown.

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INTANGIBLE ASSETS - NET

12 Months Ended

Dec. 31, 2013

INTANGIBLE ASSETS - NET

NOTE 7. INTANGIBLE ASSETS - NET

The following table summarizes our Company’s intangible assets, by major asset class:

	December 31, 2012
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,603	$	2,603	$	—
Capitalized software development cost		3,480		1,414		2,066
Customer relationships		6,274		4,880		1,394
Other		137		133		4
		12,494		9,030		3,464
With indefinite-life intangible assets
Trade name and trademark		12,211		—		12,211
	$	24,705	$	9,030	$	15,675

	December 31, 2013
(In US$ thousands)	Gross carrying     amount		Accumulated     amortization		Net
With finite-life intangible assets
Completed technology	$	2,536	$	2,536	$	—
Capitalized software development cost		3,130		2,471		659
Customer relationships		6,112		5,433		679
Other		141		18		123
		11,919		10,458		1,461
With indefinite-life intangible assets
Trade name and trademark		—		—		—
	$	11,919	$	10,458	$	1,461

Intangible assets with finite lives are amortized over their estimated useful lives ranging from 0.5 to 9 years, with the overall weighted-average life of 5.6 years.

For the years ended December 31, 2011, 2012 and 2013, total amortization expense of intangible assets were $2.3 million, $2.2 million and $1.9 million, respectively, which includes amortization of capitalized software development costs of $962 thousand, $1.1 million and $1.2 million. As of December 31, 2013, based on the current amount of intangibles subject to amortization, the estimated amortization expense for each of the following years is as follows:

(In US$ thousands)	Amount
2014	$	1,104
2015		202
2016		147
2017		8
	$	1,461

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2013

FAIR VALUE MEASUREMENTS

NOTE 9. FAIR VALUE MEASUREMENTS

The following table presents the carrying amounts and estimated fair values of our Company’s financial instruments at December 31, 2012 and 2013.

(in US$ thousands)	2012				2013
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Cash and cash equivalents	$	62,731	$	62,731	$	58,801	$	58,801
Marketable securities - current		17,773		17,773		21,460		21,460
Accounts receivable		2,829		2,829		2,027		2,027
Marketable securities - noncurrent		4,292		4,292		6,048		6,048
Refundable deposits		392		392		306		306
Other receivable - noncurrent		2,039		2,039		—		—
Financial liabilities
Accounts payable		324		324		1,178		1,178
Accrued compensation		1,233		1,233		380		380
Accrued expenses		5,182		5,182		2,617		2,617
Short-term borrowings		7,748		7,748		4,361		4,361

The carrying amounts shown in the table are included in the consolidated balance sheets under the indicated captions, except for Other receivable - noncurrent, which is included in Other assets - other.

The fair values of the financial instruments shown in the above table as of December 31, 2012 and 2013 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an arm’s length transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. In situations where there is little market activity for the asset or liability at the measurement date, the fair value measurement reflects our Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by us based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

• Cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and expenses, and short-term borrowings: The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments.

• Marketable securities: Open-end fund, debt and equity securities classified as available for sale are measured using quoted market prices at the reporting date multiplied by the quantity held. Equity securities under resale restriction are measured with estimated restriction discount. Redeemable preferred shares are measured using valuation techniques.

• Refundable deposits: Measurement of refundable deposits with no fixed maturities is based on carrying amounts.

• Other receivable – noncurrent: Considering the uncertainty of collectability being mitigated by the short maturity and the equity securities pledged as collateral, we determined that its carrying amount approximated the fair value.

Significant Unobservable Inputs

The table below presents the ranges of significant unobservable inputs used to value our Company’s level 3 financial instruments. These ranges represent the significant unobservable inputs that were used in the valuation of each type of financial instrument. These inputs are not representative of the inputs that could have been used in the valuation of any one financial instrument. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of our level 3 financial instruments.

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2012
Debt securities – Preferred shares with redemption rights	Recoverability considering: •       Undiscounted cash flow forecast •       Long-term growth rate •       Discount rate •       Volatility •       Redemption date	•       KRW -8.2 billion ~ 22.1 billion, (equivalent to -$7.7 million ~$20.8 million) •       3% •       17.8% •       44.7% •       1 year later
Equity securities – Listed securities under resale restriction	•       Restriction discount	•       34.81%

Level 3 Financial Instruments	Significant Unobservable Inputs by Valuation Technique	Range of Significant Unobservable Inputs as of December 2013
Debt securities – Preferred shares with redemption rights	•       Price/Sales per share ratio for selective comparable companies •       Discount for lack of marketability	•       2.5 times ~ 5.9 times •       25%

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

Our Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below.

Assets and liabilities measured at fair value on a recurring basis are summarized as below:

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2012
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	1,514	$	—	$	1,514
Marketable securities - current
Equity securities		17,773		—		—		17,773
Marketable securities - noncurrent
Debt securities		—		—		2,727		2,727
Equity securities		—		—		1,565		1,565
	$	17,773	$	1,514	$	4,292	$	23,579

(in US$ thousands)	Fair Value Measurement Using						Year Ended     December 31,     2013
	Level 1		Level 2		Level 3
Assets
Cash equivalents - time deposits	$	—	$	14,638	$	—	$	14,638
Marketable securities - current
Open-end fund		336		—		—		336
Equity securities		21,124		—		—		21,124
Marketable securities - noncurrent
Debt securities		—		2,109		3,939		6,048
	$	21,460	$	16,747	$	3,939	$	42,146

Our Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1 for the years ended December 31, 2012 and 2013.

Level 1 and 2 measurements:

Cash equivalents – time deposits are convertible into a known amount of cash and are subject to an insignificant risk of change in value. Certain marketable securities are valued using a market approach based on the quoted market prices of identical instruments when available, or other observable inputs such as trading prices of identical instruments in inactive markets. The fair values of the marketable equity securities that have publicly quoted trading prices are valued using those observable prices, unless adjustments are required to available observable inputs.

In 2011, 2012 and 2013, we recorded unrealized gains (losses) of $16.2 million, $(24.0) million and $4.7 million, respectively, on marketable securities, which are included in other comprehensive income.

Level 3 measurements:

For assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2012 and 2013, a reconciliation of the beginning and ending balances are presented as follows:

(in US$ thousands)	Marketable Securities - Debt and Equity Securities
	2012			2013
Balance at beginning of year	$	5,454		$	4,292
Total gains or (losses) (realized/unrealized)
included in earnings		(493	)		985
included in other comprehensive income		—			1,212
Sale		(2,727	)		(2,550	)
Transfer into Level 3		2,058			—
Balance at end of year	$	4,292		$	3,939
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(493	)	$	—

Realized and unrealized gains (or losses) included in income for 2012 and 2013 for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in the consolidated statements of operations within the following line items:

(in US$ thousands)	Gain on sales of marketable securities			Impairment loss on marketable securities and investments			Recovery of loss on termination of third-party contract
Total gains (losses) included in earnings
for 2011	$	—		$	—		$	665
for 2012		3,370			(493	)		—
for 2013		985			—			—
Change in unrealized gains (losses) relating to assets still held at the reporting date
for 2011	$	(674	)	$	—		$	—
for 2012		352			(493	)		—
for 2013		1,212			—			—

The marketable equity securities were transferred from Level 2 to Level 3 in 2012 to reflect the fact of dwindled market transaction volume of the investee’s shares, and the auditors’ report on its interim financial statements including an explanatory paragraph about uncertainties regarding the investee’s ability to continue as a going-concern.

The fair values of the marketable debt and equity securities are derived using a discounted cash flow method with unobservable inputs or adopting a market approach using observable inputs of guideline public companies that market participants would use in pricing the securities. The discounted cash flow method incorporates adjusted available market discount rate information and our Company’s estimates of liquidity risk, and other cash flow model related assumptions.

In 2011, 2012 and 2013, we recognized other-than-temporary impairments of $0, $493 thousand and $0, respectively, related to marketable debt and equity securities, which is included in non-operating expenses within “impairment loss on marketable securities and investments” in the consolidated statements of operations.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis include measuring impairment when required for long-lived assets. For GigaMedia, long-lived assets measured at fair value on a nonrecurring basis include investments accounted for under the equity method and cost method, property, plant, and equipment, intangible assets, prepaid licensing and royalty fees, and goodwill.

Assets and liabilities measured at fair value on a nonrecurring basis that were determined to be impaired as of December 31, 2012 and 2013 are summarized as below:

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2012
(a) Goodwill - Resulting from acquisition of FunTown	$	—	$	—	$	16,934	$	16,934	$	12,489
(b) Intangible assets - Capitalized software cost		—		—		—		—		15
(c) Prepaid licensing and royalty fees		—		—		—		—		702
(d) Investments - Cost-method		—		—		—		—		700
Total	$	—	$	—	$	16,934	$	16,934	$	13,906

(in US$ thousands)	Fair Value measurement Using								Total     Impairment     Losses
Assets	Level 1		Level 2		Level 3		Year Ended     December 31,     2013
(a) Goodwill - Resulting from acquisition of FunTown and FingerRockz	$	—	$	—	$	—	$	—	$	17,054
(b) Intangible assets - Trade name and Capitalized software cost		—		—		—		—		13,251
(c) Prepaid licensing and royalty fees		—		—		—		—		2,752
Total	$	—	$	—	$	—	$	—	$	33,057

(a) Impairment losses on goodwill which was determined to be impaired:

The fair value of the Asian online game reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. In the 2012 goodwill impairment assessment, we estimated future net cash flow using management’s internally developed estimates and included a terminal value calculated using a long-term future growth rate of 0% based on analysis of the current and expected future economic conditions. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 7% and a weighted average cost of capital to discount these expected future cash flows of 17%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $16.9 million. Consequently, a goodwill impairment charge of $12.5 million was recognized in 2012.

In 2013, due to a continued slowdown in demand for our casual online games and the unexpected loss of a key licensed game, we experienced a significant decline in revenues and a negative operating margin in Taiwan from our previous future cash flow expectations from this reporting unit. Further, in the Fall of 2013 we went through an internal restructuring of our operations and made a business decision to transition from PC-based games to browser/mobile games and social casino games. Also our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the revised fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, we developed our expected future net cash flows based on historical data and internally developed estimates as part of our updated long-term strategic plan and included a terminal value of $0. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 28% and a weighted average cost of capital to discount these expected future cash flows of 13%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $0. Consequently, a goodwill impairment charge of $17.1 million was recognized in 2013.

(b) Impairment losses on certain intangible assets which were determined to be impaired:

In 2012 and 2013, the trade name arising from the acquisition of FunTown and certain capitalized software development costs were fully written down, resulting in impairment charges of $15 thousand and $13.3 million, respectively, included in operating expenses within “impairment loss on intangible assets” in the consolidated statements of operations. The impairment charge for the Trade name of FunTown is a result of our repositioning of it as described above, while the impairment charges for the capitalized software costs were the result of certain projects within our Asian online game and service business that we ceased further development on, and as a result, we recorded a full impairment of the carrying value of the assets related to these projects.

(c) Impairment losses on certain prepaid licensing and royalty fees which were determined to be impaired:

In 2012 and 2013, certain prepaid licensing and royalty fees were fully written down, resulting in impairment charges of $702 thousand and $2.8 million, respectively. This impairment is included in operating expenses in the consolidated statements of operations. The impairment charges for the prepaid licensing and royalty fees related to certain licensed games within our Asian online game and service business that we stopped operating or for which the carrying amounts of the related assets were determined not to be recoverable from their expected future undiscounted cash flows. The licensing fee games and related royalties are re-valued on when impairment exists, using unobservable inputs such as discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk, along with other cash flow model related assumptions.

(d) Impairment losses on certain cost method investments which were determined to be impaired:

In 2012, certain cost method investments were fully written down, resulting in an impairment charge of $700 thousand. The impairment charges are included in non-operating expenses within “impairment loss on marketable securities and investments” in the consolidated statements of operations.

Cost method and equity method investments are measured at fair value on a nonrecurring basis when declines in fair value are determined to be other-than-temporary, using other observable inputs such as trading prices of similar classes of the stock or using discounted cash flows, incorporating adjusted available market discount rate information and our Company’s estimates for liquidity risk.

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Total Revenues and Net Income Loss (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Variable Interest Entity [Line Items]
Total revenues	$ 15,032	$ 27,470	$ 34,367
Net loss	(34,780)	(15,290)	(71,212)
Shanghai JIDI Network Technology Co., Ltd. | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Total revenues		100	29
Net loss		$ (888)	$ (2,110)

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Significant Components of Deferred Tax Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Deferred Tax Assets and Liabilities [Line Items]
Net operating loss carryforwards	$ 4,072	$ 3,248
Loss on equity method investment		15,621
Share-based compensation	267	234
Intangible assets	738	354
Property, plant and equipment	86	100
Other	109	(275)
Deferred Tax Assets, Gross, Total	5,272	19,282
Less: valuation allowance	(5,216)	(18,333)	(25,256)	(7,402)
Deferred tax assets - net	$ 56	$ 949

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Summary of Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Goodwill impairment	$ 17,054		$ 12,489		$ 5,097
Intangible assets, total impairment losses	13,251		15		2,583
Fair Value, Measurements, Nonrecurring
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets, total impairment losses	13,251	[1]	15	[1]
Investments - cost method, total impairment losses			700	[2]
Fair Value, Measurements, Nonrecurring | Investment written down
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments - cost method, total impairment losses			700
Fair Value, Measurements, Nonrecurring | Capitalized software development cost
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Intangible assets, total impairment losses	13,251		15
Fair Value, Measurements, Nonrecurring | Prepaid Licensing and Royalty Fees
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Prepaid licensing and royalty, total impairment losses	2,752		702
Fun Town | Fair Value, Measurements, Nonrecurring
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Goodwill	0		16,934	[3]
Goodwill impairment	17,054	[3]	12,489	[3]
Long-term future growth rate			0.00%
Terminal value used to calculate expected future cash flows	$ 0
Fun Town | Fair Value, Measurements, Nonrecurring | Assumed average revenue decline
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Decline revenue rate	28.00%		7.00%
Fun Town | Fair Value, Measurements, Nonrecurring | Weighted average cost of capital to discount
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	13.00%		17.00%

[1] Impairment losses on certain intangible assets which were determined to be impaired: In 2012 and 2013, the trade name arising from the acquisition of FunTown and certain capitalized software development costs were fully written down, resulting in impairment charges of $15 thousand and $13.3 million, respectively, included in operating expenses within "impairment loss on intangible assets" in the consolidated statements of operations. The impairment charge for the Trade name of FunTown is a result of our repositioning of it as described above, while the impairment charges for the capitalized software costs were the result of certain projects within our Asian online game and service business that we ceased further development on, and as a result, we recorded a full impairment of the carrying value of the assets related to these projects.

[2] Impairment losses on certain cost method investments which were determined to be impaired: In 2012, certain cost method investments were fully written down, resulting in an impairment charge of $700 thousand. The impairment charges are included in non-operating expenses within "impairment loss on marketable securities and investments" in the consolidated statements of operations. Cost method and equity method investments are measured at fair value on a nonrecurring basis when declines in fair value are determined to be other-than-temporary, using other observable inputs such as trading prices of similar classes of the stock or using discounted cash flows, incorporating adjusted available market discount rate information and our Company's estimates for liquidity risk.

[3] Impairment losses on goodwill which was determined to be impaired: The fair value of the Asian online game reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. In the 2012 goodwill impairment assessment, we estimated future net cash flow using management's internally developed estimates and included a terminal value calculated using a long-term future growth rate of 0% based on analysis of the current and expected future economic conditions. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 7% and a weighted average cost of capital to discount these expected future cash flows of 17%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $16.9 million. Consequently, a goodwill impairment charge of $12.5 million was recognized in 2012. In 2013, due to a continued slowdown in demand for our casual online games and the unexpected loss of a key licensed game, we experienced a significant decline in revenues and a negative operating margin in Taiwan from our previous future cash flow expectations from this reporting unit. Further, in the Fall of 2013 we went through an internal restructuring of our operations and made a business decision to transition from PC-based games to browser/mobile games and social casino games. Also our market capitalization had also fallen below our net book value based on the quoted market price of our common stock for a sustained period of time. Based on these qualitative factors, we determined it was more likely than not the revised fair value of this reporting unit may be less than its carrying value, and the related recovery of the remaining goodwill could be impaired. Using the same methodology as in the past to determine the estimated fair value of this reporting unit, we developed our expected future net cash flows based on historical data and internally developed estimates as part of our updated long-term strategic plan and included a terminal value of $0. Other significant estimates and assumptions used in developing the future net cash flows included an assumed average revenue decline of 28% and a weighted average cost of capital to discount these expected future cash flows of 13%. As a result, the carrying value of this reporting unit exceeded its fair value, and the implied fair value of the goodwill was determined to be $0. Consequently, a goodwill impairment charge of $17.1 million was recognized in 2013.

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Significant Financial Statement Impacts as Result of Execution and Closing of Management Agreement (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Business Acquisition [Line Items]
Gain on cancellation of warrant liabilities	$ 665
Gain on reversal of impairment of prepaid expenses	1,347
Recovery of loss on termination of third-party contract	$ 2,012

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Plan's Benefit Obligations, Fair Value of Plan Assets, and Funded Status (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Benefit Obligation	$ 470	$ 572
Fair value of plan assets	300	291
Defined Benefit Plan, Funded Status of Plan	170	281
Noncurrent liabilities	170	281
Accumulated other comprehensive income		2
Net amount recognized	170	279
Amounts recognized in accumulated comprehensive income consist of:
Unrecognized net gain	$ 0	$ 2

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Loss Per Share - Additional Information (Detail) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share Disclosure [Line Items]
Options excluded from computation of earnings per-share	1,149	1,444	1,432

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Other Current Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Other Assets, Current [Line Items]
Loans receivable - current	$ 3,394	$ 3,437
Less: Allowance for loans receivable - current	(3,394)	(3,437)	(5,057)	(5,057)
Deferred income tax assets - current, net (Note 25)	0	840
Other	293	161
Other current assets	$ 293	$ 1,001

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Committed License Fees and Minimum Guarantees Against Future Royalties Set Forth in Significant License Agreements (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Guarantor Obligations [Line Items]
In 2014	$ 200
After 2014	6,800
Contractual Obligation, Total	7,000
License Fees
Guarantor Obligations [Line Items]
In 2014	100
After 2014	5,300
Contractual Obligation, Total	5,400
Royalty Payments
Guarantor Obligations [Line Items]
In 2014	100
After 2014	1,500
Contractual Obligation, Total	$ 1,600

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SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2013

SEGMENT INFORMATION

NOTE 28. SEGMENT INFORMATION

We currently have two operating segments: an Asian online game and service business segment, and a cloud service business segment (began in 2013). The Asian online game and service business segment mainly derives its revenues from recognizing the usage of game playing time or in-game items by the end-users. The cloud service business segment mainly derives its revenues from providing cloud products and services to small-to-medium and larger enterprises.

Financial information for each operating segment was as follows as of and for the years ended December 31, 2011, 2012, and 2013:

(in US$ thousands)	Asian online game and service
2011:
Segment profit or loss:
Net revenue from external customers	$	34,367
Loss from operations	$	(10,931	)
Share-based compensation	$	308
Impairment loss on intangible assets	$	2,583
Impairment loss on prepaid licensing and royalty fees	$	247
Impairment loss on goodwill	$	5,097
Interest income	$	492
Interest expense	$	(50	)
Gain on sales of marketable securities	$	6,299
Foreign exchange loss	$	(282	)
Gain on equity method investments - net	$	1,846
Impairment loss on marketable securities and investments	$	13,327
Depreciation	$	1,790
Amortization, including intangible assets	$	2,251
Income tax expense	$	859
2012:
Segment profit or loss:
Net revenue from external customers	$	27,470
Loss from operations	$	(12,271	)
Share-based compensation	$	199
Impairment loss on intangible assets	$	15
Impairment loss on prepaid licensing and royalty fees	$	702
Impairment loss on goodwill	$	12,489
Contract termination costs	$	49
Interest income	$	9
Interest expense	$	44
Gain on sales of marketable securities	$	5,665
Foreign exchange gain	$	55
Gain on equity method investments - net	$	234
Impairment loss on marketable securities and investments	$	1,193
Depreciation	$	1,059
Amortization, including intangible assets	$	2,181
Income tax expense	$	710

(in US$ thousands)	Asian online game and service			Cloud service business			Total
2013:
Segment profit or loss:
Net revenue from external customers	$	14,106		$	925		$	15,031
Loss from operations	$	(33,677	)	$	(1,218	)	$	(34,895	)
Share-based compensation	$	(225	)	$	69		$	(156	)
Impairment loss on intangible assets	$	13,251		$	—		$	13,251
Impairment loss on prepaid licensing and royalty fees	$	2,752		$	—		$	2,752
Impairment loss on goodwill	$	17,054		$	—		$	17,054
Interest income	$	9		$	—		$	9
Interest expense	$	8		$	—		$	8
Gain on sales of marketable securities	$	1,739		$	—		$	1,739
Foreign exchange gain	$	236		$	—		$	236
Gain on equity method investments - net	$	526		$	—		$	526
Depreciation	$	336		$	8		$	344
Amortization, including intangible assets	$	1,862		$	42		$	1,904
Income tax expense	$	150		$	78		$	228

The reconciliations of segment information to GigaMedia’s consolidated totals are as follows:

(in US$ thousands)	2011			2012			2013
Income (loss) from operations:
Total segments	$	(10,931	)	$	(12,271	)	$	(34,895	)
Other**		(204	)		7			—
Adjustment*		(8,794	)		(8,310	)		(3,592	)
Total GigaMedia consolidated	$	(19,929	)	$	(20,574	)	$	(38,487	)
Share-based compensation
Total segments	$	308		$	199		$	(156	)
Adjustment*		857			(20	)		375
Total GigaMedia consolidated	$	1,165		$	179		$	219
Impairment loss on intangible assets:
Total segments	$	2,583		$	15		$	13,251
Adjustment*		—			—			—
Total GigaMedia consolidated	$	2,583		$	15		$	13,251
Impairment loss on prepaid licensing and royalty fees:
Total segments	$	247		$	702		$	2,752
Adjustment*		—			—			—
Total GigaMedia consolidated	$	247		$	702		$	2,752
Interest income:
Total segments	$	492		$	9		$	9
Adjustment*		270			274			229
Total GigaMedia consolidated	$	762		$	283		$	238
Interest expense:
Total segments	$	(50	)	$	44		$	8
Adjustment*		476			203			41
Total GigaMedia consolidated	$	426		$	247		$	49
Gain on sales of marketable securities:
Total segments	$	6,299		$	5,665		$	1,739
Adjustments*		—			—			—
Total GigaMedia consolidated	$	6,299		$	5,665		$	1,739
Foreign exchange gain (loss):
Total segments	$	(282	)	$	55		$	236
Adjustments*		(83	)		379			(191	)
Total GigaMedia consolidated	$	(365	)	$	434		$	45
Gain (loss) on equity method investments - net:
Total segments	$	1,846		$	234		$	526
Other**		(49,715	)		—			—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	(47,869	)	$	234		$	526
Impairment loss on marketable securities and investments:
Total segments	$	13,327		$	1,193		$	—
Adjustment*		—			—			—
Total GigaMedia consolidated	$	13,327		$	1,193		$	—
Depreciation:
Total segments	$	1,790		$	1,059		$	344
Adjustments*		290			165			64
Total GigaMedia consolidated	$	2,080		$	1,224		$	408
Amortization:
Total segments	$	2,251		$	2,181		$	1,904
Adjustments*		63			23			3
Total GigaMedia consolidated	$	2,314		$	2,204		$	1,907
Income tax expense (benefit):
Total segments	$	859		$	710		$	228
Other**		(934	)		37			—
Adjustments*		(170	)		(76	)		(167	)
Total GigaMedia consolidated	$	(245	)	$	671		$	61

* Adjustment items include corporate and certain back-office costs and expenses not attributable to any specific segment. As of December 31, 2011, 2012 and 2013, the compensation related was approximately $4.3 million, $4.2 million and $2.1 million, respectively; accrued professional fees was approximately $2.3 million, $911 thousand and $125 thousand, respectively.

** Other items relate to the results of operations arising from our non-controlling interest in the online gaming software and service business before we disposed of it in July 2012.

Major Customers

No single customer represented 10 percent or more of GigaMedia’s total net revenues in any period presented.

Geographic Information

Revenues by geographic area are attributed by country of the server location. Revenue from by geographic region is as follows:

(in US$ thousands)
Geographic region / country	2011		2012		2013
Taiwan	$	21,214	$	18,744	$	11,793
Hong Kong		5,061		4,703		3,239
Singapore		4,150		2,004		—
Malaysia		2,228		1,550		—
Thailand		1,447		204		—
Others		267		265		—
	$	34,367	$	27,470	$	15,032

Net tangible long-lived assets by geographic region are as follows:

(in US$ thousands)	December 31,
Geographic region / country	2011		2012		2013
Taiwan	$	2,375	$	1,932	$	1,657
PRC		763		—		—
Hong Kong		107		17		20
Singapore		551		—		—
Thailand		380		—		—
Other		112		—		—
	$	4,288	$	1,949	$	1,677

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ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2013

Accrued Expenses

Accrued expenses consist of the following:

	December 31
(in US$ thousands)	2012		2013
Accrued professional fees	$	1,319	$	740
Accrued royalties		967		128
Accrued advertising expenses		696		421
Accrued incentive to distributors		172		137
Accrued director compensation and liability insurance		513		424
Other		1,515		767
	$	5,182	$	2,617

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INVESTMENTS

12 Months Ended

Dec. 31, 2013

INVESTMENTS

NOTE 15. INVESTMENTS

Investments consist of the following:

	December 31
(in US$ thousands)	2012		2013
Investments accounted for under the equity method	$	5,223	$	5,822

Our Company’s investments accounted for under the equity method primarily consist of the following: (a) through July 31, 2012, a 40 percent equity interest investment, later diluted to 33.66 percent interest in Mangas Everest S.A.S. (“Mangas Everest”), which is engaged in the gaming software and service business (See Note 5 “Divestitures” for additional information); (b) through August 15, 2012, a 30 percent equity interest investment in Game First International Corporation (“GFI”), an operator and distributor of online games in Taiwan (See Note 5 “Divestitures”, for additional information); (c) through August 31, 2011, a 100 percent equity interest investment in Monsoon Online Pte Ltd. (“Monsoon”), an operator and distributor of online games in Southeast Asia (See Note 4 “Acquisitions” for additional information); (d) from July 2012 to May 2013, a 20 percent equity interest investment in Infocomm Asia Holdings Pte Ltd. (“IAHGames”), an online game operator, publisher and distributor in Southeast Asia (See Note 5 “Divestitures”, for additional information); and (e) an 18 percent equity interest investment in East Gate Media Contents & Technology Fund (“East Gate”), a Korean Fund Limited Partnership that invests in online game businesses and films. The investments in these companies amounted to $5.2 million and $5.8 million as of December 31, 2012 and 2013, respectively.

As of December 31, 2011, our share of the underlying net assets of Mangas Everest exceeded the carrying value of our investment by $9.3 million. The excess results from the difference between the fair value we assigned to the 40 percent retained interest in Mangas Everest at the date the business was deconsolidated, compared to 40 percent of the total fair value of Mangas Everest as determined by BEG, the purchaser of the 60 percent interest.

In 2011 and 2012 (through July 31, 2012 when we sold the remaining 33.66 percent interest to BEG), we recognized our share of losses in Mangas Everest under the equity method of accounting which totaled $49.7 million, and $0, respectively, which resulted in a negative investment balance as of July 31, 2012. We charged this negative investment balance against the loan receivable that Mangas Everest had outstanding to us as of July 31, 2012. (See Note 26, “Related Party Transactions”, for additional information.)

We, through IAHGames, made an equity investment in Monsoon in connection with our acquisition of a controlling financial interest in IAHGames. Although IAHGames owned 100 percent of the common stock of Monsoon, prior to September 2011 we determined that Monsoon could not be consolidated by IAHGames due to the substantive participating rights that the game licensor had in Monsoon pursuant to Monsoon’s management agreement. In 2011 (through August 31, 2011), we recognized our share of gains under the equity method of accounting which totaled $230 thousand. (See Note 26, “Related Party Transactions”, for additional information.)

In September 2011, IAHGames, Monsoon and the game licensor entered a transition agreement to early terminate the previous agreement in which the abovementioned substantive participating rights were granted, effective August 31, 2011, and thus restored IAHGames’ full control in Monsoon. Therefore, starting September 1, 2011, we had consolidated Monsoon until July 2012 when we deconsolidated IAHGames. (See Note 4, “Acquisition”, for additional information.)

In July 2012, we entered into agreements to sell a 60 percent ownership in IAHGames to IAHGames’ management and Management Capital International Limited (“MCIL”), a British Virgin Islands company owned by IAHGames’ management. As we only retained a 20 percent ownership in IAHGames, upon the closing of the agreements, we deconsolidated the results of IAHGames’ operations and began accounting for our remaining 20 percent interest under the equity method up to May 2013 when we sold the remaining interest in IAHGames to IAHGames’ management and MCIL. (See Note 5, “Divestitures” for additional information.)

Our Company has an 18 percent interest in East Gate, a Korean Limited Partnership. We account for this limited partnership investment under the equity method accounting since we have the ability to exercise significant influence over partnership operating and financial policies based on the terms of the partnership agreement.

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Loss From Continuing Operations Before Income Taxes by Geographic Location (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Geographic Reporting Disclosure [Line Items]
Income (loss) from continuing operations before income taxes	$ (34,682)	$ (12,925)	$ (67,635)
Taiwan
Geographic Reporting Disclosure [Line Items]
Income (loss) from continuing operations before income taxes	(33,077)	(14,871)	(770)
Foreign Tax Authority
Geographic Reporting Disclosure [Line Items]
Income (loss) from continuing operations before income taxes	$ (1,605)	$ 1,946	$ (66,865)

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OTHER LIABILITIES - OTHER

12 Months Ended

Dec. 31, 2013

OTHER LIABILITIES - OTHER

NOTE 20. OTHER LIABILITIES - OTHER

Other liabilities consist of the following:

	December 31
(in US$ thousands)	2012		2013
Deferred tax liabilities (Note 25)	$	561	$	—
Other		12		11
	$	573	$	11

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Marketable Securities - Noncurrent - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Preferred shares conversion ratio	1
Realized gains from disposal of marketable securities	$ 1,739,000	$ 5,665,000	$ 6,299,000
Available for sale Securities Non Current
Schedule of Available-for-sale Securities [Line Items]
Unrealized gains for marketable securities	1,200,000	0
Realized gains from disposal of marketable securities	$ 985,000	$ 3,400,000	$ 5,800,000

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2013

Other Current Assets

Other current assets consist of the following:

	December 31
(in US$ thousands)	2012			2013
Loans receivable - current	$	3,437		$	3,394
Less: Allowance for loans receivable - current		(3,437	)		(3,394	)
Deferred income tax assets - current, net (Note 25)		840			—
Other		161			293
	$	1,001		$	293

Changes in Allowance for Loans Receivable

The following is a reconciliation of changes in our Company’s allowance for loans receivable - current during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011		2012			2013
Balance at beginning of year	$	5,057	$	5,057		$	3,437
Additions: Provision for bad debt expenses		—		—			—
Less: Writes-offs		—		(1,620	)		—
Less: Reversal for collection of bad debt		—		—			(54	)
Translation adjustment		—		—			11
Balance at end of year	$	5,057	$	3,437		$	3,394

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Subsidiary Preferred Shares - Additional Information (Detail) (Preferred Class A, USD $)	7 Months Ended	12 Months Ended
	Jul. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Aug. 15, 2012
Preferred Class A
Subsidiary or Equity Method Investee [Line Items]
Preferred stock shares value				$ 1,300,000
Preferred stock shares, accumulated voting interest				8.90%
Class A preferred shares, entitled to cumulative dividends percentage		10.00%	10.00%
Class A preferred shares, cumulative dividends	$ (469,000)		$ 321,000

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DIVESTITURES (Tables)

12 Months Ended

Dec. 31, 2013

Shanghai JIDI Network Technology Co., Ltd.

Summarized Selected Financial Information for Divested Business

Summarized financial information for discontinued operations of JIDI and Shanghai JIDI are as follows:

(in US$ thousands)	2011			2012			2013
Revenue	$	29		$	100		$	—
Loss from discontinued operations before tax	$	(4,240	)	$	(2,521	)	$	(318	)
Income tax expense		—			—			—
Loss from discontinued operations	$	(4,240	)	$	(2,521	)	$	(318	)

Infocomm Asia Holdings Pte Ltd

Summarized Selected Financial Information for Divested Business

Considering the uncertainty as to the collectability of the remaining three installments, we had deferred the disposal gain of $211 thousand against the consideration installments receivable of $2,250 thousand as of December 31, 2012. The deferred gain was determined as follows:

(In US$ thousand)	Amount
The fair value of consideration received and receivable, net of any transaction costs, plus	$	3,000
The fair value of the 20% retained noncontrolling investment in IAH at the date of deconsolidation		—
		3,000
The carrying amount (credit balance) of IAHGames at the date of deconsolidation		(14,536	)
Net receivables due to GigaMedia from IAHGames waived upon the closing of the sale		17,542
Other comprehensive income component of equity related to IAHGames at the date of the deconsolidation		(217	)
		2,789
Deferred gain on deconsolidation of IAH	$	211

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Accumulated Balances of Other Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (8,379)	$ 14,351	$ (72)
Net current period change	5,651	(16,848)	20,722
Reclassification adjustments for gains reclassified into income	(875)	(5,665)	(6,299)
Deconsolidation of subsidiaries		(217)
Ending balance	(3,603)	(8,379)	14,351
Foreign currency items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(22,770)	(24,367)	(22,554)
Net current period change	(801)	1,814	(1,813)
Reclassification adjustments for gains reclassified into income	864
Deconsolidation of subsidiaries		(217)
Ending balance	(22,707)	(22,770)	(24,367)
Unrealized gain on securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	14,406	38,410	22,243
Net current period change	6,437	(18,339)	22,466
Reclassification adjustments for gains reclassified into income	(1,739)	(5,665)	(6,299)
Ending balance	19,104	14,406	38,410
Pension and post retirement benefit plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(15)	308	239
Net current period change	15	(323)	69
Ending balance		$ (15)	$ 308

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
NET LOSS	$ (35,061)	$ (16,117)	$ (71,578)
OTHER COMPREHENSIVE INCOME (LOSS) - NET OF TAX:
Unrealized gain (loss) on marketable securities	4,698	(24,004)	16,167
Defined benefit pension plan adjustment	15	(323)	69
Foreign currency translation adjustments	57	1,814	(1,813)
Deconsolidation of subsidiaries		2,799
Other comprehensive income (loss)	4,770	(19,714)	14,423
COMPREHENSIVE LOSS	(30,291)	(35,831)	(57,155)
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO THE NONCONTROLLING INTERESTS	287	(2,189)	366
COMPREHENSIVE LOSS ATTRIBUTABLE TO GIGAMEDIA SHAREHOLDERS	$ (30,004)	$ (38,020)	$ (56,789)

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Marketable Securities Current (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Equity securities	$ 21,124	$ 17,773
Available for sale securities, current	21,460	17,773
Open-end fund
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, current	$ 336

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VARIABLE-INTEREST ENTITIES

12 Months Ended

Dec. 31, 2013

VARIABLE-INTEREST ENTITIES

NOTE 3. VARIABLE-INTEREST ENTITIES

Shanghai JIDI

In order to comply with foreign ownership restrictions and to hold the necessary licenses required, through June 2012 we had operated our Asian online game and service business in the People’s Republic of China (“PRC”) through our VIE, Shanghai JIDI. We had no ownership interest in Shanghai JIDI and relied on a series of contractual arrangements that were intended to give us effective control over Shanghai JIDI. Those contractual arrangements were duly executed and the share pledge agreements were registered with local government authority in compliance with PRC legal requirements. Therefore, we effectively controlled Shanghai JIDI, and were the primary beneficiary of Shanghai JIDI. Shanghai JIDI held an Internet Content Provider (“ICP”) license, an Internet cultural operation license and an Internet publishing license. The financial results of Shanghai JIDI had been included in our consolidated financial statements since January 2011. In June 2012, our board of directors approved a plan to dispose of Shanghai JIDI. As a result, Shanghai JIDI’s operations had been accounted for as discontinued operations. (See Note 5, “Divestitures”, for additional information.) In May 2013, we were notified by the competent authority that Shanghai JIDI had completed the dissolution procedures and was duly deregistered.

For the years ended December 31, 2011 and 2012, and the period from January to May 2013, total revenues and net loss of Shanghai JIDI (which are included within discontinued operations) were as follows:

(in US$ thousands)	2011			2012			2013
Total revenues	$	29		$	100		$	—
Net loss	$	(2,110	)	$	(888	)	$	—

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2013

Future Aggregate Minimum Lease Payments Required Under Operating Lease

The following table sets forth our future aggregate minimum lease payments required under these operating leases, as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	941
2015		754
2016		138
	$	1,833

Committed License Fees and Minimum Guarantees Against Future Royalties Set Forth in Significant License Agreements

The following table summarizes the committed license fees and minimum guarantees against future royalties set forth in our significant license agreements as of December 31, 2013.

(in US$ thousands)	License fees		Minimum guarantees against future royalties		Total
Minimum required payments:
In 2014	$	100	$	100	$	200
After 2014		5,300		1,500		6,800
	$	5,400	$	1,600	$	7,000

Service Agreement

Future Aggregate Minimum Payments For Service Agreements

The following table sets forth our future aggregate minimum payments required under this agreement as of December 31, 2013:

(in US$ thousands)	Amount
2014	$	214
2015		251
2016		42
	$	507

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Reconciliation of Beginning and Ending Balances of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level Three (Detail) (Available-for-sale Securities, Debt Securities, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Available-for-sale Securities | Debt Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of year	$ 4,292	$ 5,454
Total gains or (losses) (realized/unrealized) included in earnings	985	(493)
Total gains or (losses) (realized/unrealized)included in other comprehensive income	1,212
Sale	(2,550)	(2,727)
Transfer into Level 3		2,058
Balance at end of year	3,939	4,292
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.		$ (493)

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Equity - Additional Information (Detail) (USD $) Share data in Thousands, unless otherwise specified	12 Months Ended			1 Months Ended	12 Months Ended		12 Months Ended
	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2012	May 31, 2011 Maximum	Dec. 31, 2013 Hoshin GigaMedia Center Inc.	Dec. 31, 2012 Hoshin GigaMedia Center Inc.	Dec. 31, 2013 Hoshin GigaMedia Center Inc. Maximum	Dec. 31, 2013 Hoshin GigaMedia Center Inc. when the reserve balance has reached 50 percent of the aggregate paid-in capital of Hoshin GigaMedia Maximum
Class of Stock [Line Items]
Appropriation percentage of net profit for statutory surplus reserve					10.00%
Legal reserves					$ 3,000,000	$ 3,000,000
Percentage of statutory surplus reserve available to offset a deficit or be distributed as a stock dividend								50.00%
Statutory Surplus Reserve Fund percentage of aggregate paid-in capital							50.00%
Total restricted net assets		0	1,500,000
Share repurchase program, number of shares approved for repurchase				11,000,000
Share repurchase program, number of shares repurchased	5,600
Share repurchase program, cost of shares repurchased	$ 5,825,000

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Divestitures - Additional Information (Detail) (USD $)	12 Months Ended				1 Months Ended				1 Months Ended		12 Months Ended		1 Months Ended		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Apr. 17, 2013 Settlement Agreement	May 31, 2013 Infocomm Asia Holdings Pte Ltd	Jul. 31, 2012 Infocomm Asia Holdings Pte Ltd	Dec. 31, 2012 Infocomm Asia Holdings Pte Ltd	Aug. 15, 2012 Infocomm Asia Holdings Pte Ltd	Aug. 15, 2012 Game First International Corporation	Jul. 31, 2012 Game First International Corporation	Dec. 31, 2013 Shanghai JIDI Network Technology Co., Ltd.	Dec. 31, 2012 Shanghai JIDI Network Technology Co., Ltd.	Jul. 31, 2012 Spring Asia Limited	Jul. 31, 2012 Mangas Everest Societe Par Actions Simplifiee	Dec. 31, 2012 Mangas Everest Societe Par Actions Simplifiee Gaming software and service business	Dec. 31, 2011 T2CN Holding Limited Variable Interest Entity, Primary Beneficiary
Divestitures [Line Items]
Divestiture of business, net of cash transferred		$ (1,308,000)	$ 4,739,000													$ 4,739,000
Gain on deconsolidation															2,500,000	4,739,000
Cash reimbursement for legal fees incurred																790,000
Sale of ownership under agreement					20.00%	60.00%							100.00%	33.66%
Ownership retained						20.00%
Consideration for sale								3,000,000		3,000,000
Consideration received									750,000
Deferred gain on deconsolidation of IAH							211,000	211,000
Consideration installments receivable							2,250,000
Amount receivable from IAHGames or IAHGames' management				2,258,000
Remaining shares in IAHGames to be purchased by MCIL				1,000,000
Loss on disposal of property, plant and equipment	4,000	208,000	49,000								588,000	588,000
Total Consideration receivable in deconsolidation														1,700,000
Consideration received in de- consolidation, cash														$ 985,000

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SUBSIDIARY PREFERRED SHARES

12 Months Ended

Dec. 31, 2013

SUBSIDIARY PREFERRED SHARES

NOTE 21. SUBSIDIARY PREFERRED SHARES

In connection with our acquisition of a controlling financial interest in IAHGames, that subsidiary had Class A preferred shares, which were owned by the noncontrolling shareholders. As August 15, 2012 when we deconsolidated IAHGames, these Class A preferred shares were valued at $1.3 million, and represented 8.9 percent of IAHGames’ accumulated voting interest. The holder of the Class A preferred shares was entitled to cumulative dividends at 10 percent per annum. The preferred shares were redeemable at the holder’s option at any time after the expiration of certain licensed games, and were convertible into ordinary shares at any time. Pursuant to agreements entered into in connection with our acquisition of IAHGames in July 2010, all Class A preferred shares were to be converted to ordinary shares of IAHGames at the acquisition date. The preferred shares were fully converted into ordinary shares by the closing date when we sold 60 percent of IAHGames. (See Note 5, “Divestitures”, for additional information.)

Since the Class A preferred shares were never currently redeemable and it was not probable that they would become redeemable as a result of our acquisition of IAHGames, the subsequent adjustment for accretion was not required. However, the cumulative dividends and the reversal of dividends upon the conversion described above for these Class A preferred shares of $321 thousand and $(469) thousand for the years ended December 31, 2011 and the period from January 1, 2012 to July 31, 2012, respectively, are included as a component of “net income (loss) attributable to the noncontrolling interest” in the consolidated statement of operations.

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Components of Income Tax Provision Benefit from Continuing Operations by Taxing Jurisdiction (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Components Of Income Tax Expense Benefit [Line Items]
Current	$ (318)	$ 625	$ (539)
Deferred	379	46	294
Total income tax provision (benefit)	61	671	(245)
Taiwan
Components Of Income Tax Expense Benefit [Line Items]
Current	(131)	410
Deferred	379	46	33
Total income tax provision (benefit)	248	456	33
Foreign Tax Authority
Components Of Income Tax Expense Benefit [Line Items]
Current	(187)	215	(539)
Deferred			261
Total income tax provision (benefit)	$ (187)	$ 215	$ (278)

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Segment Information - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2013 Segment
Segment Reporting Information [Line Items]
Number of operating segments	2

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Future Aggregate Minimum Lease Payments Required Under Operating Lease (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Operating Leased Assets [Line Items]
2014	$ 941
2015	754
2016	138
Operating Leases, Future Minimum Payments Due, Total	$ 1,833

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Summary of Intangible Assets by Major Asset Class (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Intangible Assets [Line Items]
Gross carrying amount	$ 11,919	$ 24,705
Accumulated amortization	10,458	9,030
Net	1,461	15,675
Net	1,461
Indefinite-lived Intangible Assets | Trade name and trademark
Intangible Assets [Line Items]
Gross carrying amount		12,211
Accumulated amortization
Net		12,211
Finite-lived Intangible Assets
Intangible Assets [Line Items]
Gross carrying amount	11,919	12,494
Accumulated amortization	10,458	9,030
Net	1,461	3,464
Finite-lived Intangible Assets | Completed technology
Intangible Assets [Line Items]
Gross carrying amount	2,536	2,603
Accumulated amortization	2,536	2,603
Finite-lived Intangible Assets | Capitalized software development cost
Intangible Assets [Line Items]
Gross carrying amount	3,130	3,480
Accumulated amortization	2,471	1,414
Net	659	2,066
Finite-lived Intangible Assets | Customer Relationships
Intangible Assets [Line Items]
Gross carrying amount	6,112	6,274
Accumulated amortization	5,433	4,880
Net	679	1,394
Finite-lived Intangible Assets | Other Intangible Assets
Intangible Assets [Line Items]
Gross carrying amount	141	137
Accumulated amortization	18	133
Net	$ 123	$ 4

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LOSS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2013

Reconciliation of Denominators of Basic and Diluted Per Share Computations

The following table provides a reconciliation of the denominators of the basic and diluted per share computations:

(in thousand shares)	2011		2012		2013
Weighted average number of outstanding shares
Basic		54,268		50,720		50,720
Effect of dilutive securities
Employee share-based compensation		—		—		—
Diluted		54,268		50,720		50,720

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OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2013

OTHER CURRENT ASSETS

NOTE 13. OTHER CURRENT ASSETS

Other current assets consist of the following:

	December 31
(in US$ thousands)	2012			2013
Loans receivable - current	$	3,437		$	3,394
Less: Allowance for loans receivable - current		(3,437	)		(3,394	)
Deferred income tax assets - current, net (Note 25)		840			—
Other		161			293
	$	1,001		$	293

The following is a reconciliation of changes in our Company’s allowance for loans receivable - current during the years ended December 31, 2011, 2012 and 2013:

(in US$ thousands)	2011		2012			2013
Balance at beginning of year	$	5,057	$	5,057		$	3,437
Additions: Provision for bad debt expenses		—		—			—
Less: Writes-offs		—		(1,620	)		—
Less: Reversal for collection of bad debt		—		—			(54	)
Translation adjustment		—		—			11
Balance at end of year	$	5,057	$	3,437		$	3,394

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Pension Benefits - Additional Information (Detail)	12 Months Ended				12 Months Ended
	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2013 Maximum	Dec. 31, 2013 Defined Contribution Pension USD ($)	Dec. 31, 2012 Defined Contribution Pension USD ($)	Dec. 31, 2011 Defined Contribution Pension USD ($)	Dec. 31, 2013 Taiwan Monthly Payment USD ($)	Dec. 31, 2013 Taiwan Monthly Payment TWD	Dec. 31, 2013 Taiwan Pension Plans, Defined Benefit	Dec. 31, 2013 Taiwan Defined Contribution Pension Minimum	Dec. 31, 2013 Hong Kong	Dec. 31, 2013 Hong Kong Monthly Payment USD ($)	Dec. 31, 2013 Hong Kong Monthly Payment HKD	Dec. 31, 2013 For each of first 15 years of service	Dec. 31, 2013 For each year of service thereafter
Defined Benefit Plan Disclosure [Line Items]
Lump sum retirement benefit, equivalent months of pensionable salary				45 months											2 months	1 month
Accumulated benefit obligation	$ 360,000	$ 429,000
Prepaid pension	170,000	281,000
Fair value of plan assets	300,000	291,000
Accumulated other comprehensive income	0	2,000
Net periodic benefit cost (income)	(77,000)	30,000	(18,000)
Percentage of salaries and wages contributed										2.00%	6.00%	5.00%
Defined benefit plan, expected contribution in 2014	17,000
Maximum monthly contribution for each employee								302	9,000				161	1,250
Total amount of defined contribution pension expenses					$ 357,000	$ 585,000	$ 896,000