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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Components of Income Tax Expense

The components of income tax expense are as follows:

		Year Ended December 31
		2012				2013				2014
		US$				US$				US$
Current			5,534				8,591				15,630
Deferred			1,582				1,181				471
Income tax expense			7,116				9,772				16,101

Income (Loss) Before Income Taxes for Domestic and Foreign Entities

The income (loss) before income taxes for domestic and foreign entities is as follows:

		Year Ended December 31
		2012				2013				2014
		US$				US$				US$
Domestic			(11,039	)			(8,080	)			(12,761	)
Foreign			65,373				45,228				73,329
			54,334				37,148				60,568

Reconciliation of Income Tax Expense on Pretax Income at Statutory Rate and Income Tax Expense

The Company and its subsidiaries file separate income tax returns. A reconciliation of income tax expense on pretax income at statutory rate and income tax expense is shown below:

		Year Ended December 31
		2012				2013				2014
		US$				US$				US$
Cayman statutory rate			—				—				—
Tax on pretax income at statutory rate			8,142				6,788				15,727
Tax-exempt income			(5,149	)			(4,325	)			(2,573	)
Permanent differences			861				1,730				(396	)
Temporary differences			(2,290	)			1,732				(344	)
Alternative minimum tax			4,340				2,203				1,170
Income tax (10%) on undistributed earnings			2,631				3,396				2,491
Net changes in income tax credit			5,518				708				(899	)
Net changes in valuation allowance of deferred income tax assets			(3,879	)			(2,364	)			733
Net operating loss carryforwards			604				(189	)			(1,298	)
Liabilities related to unrealized tax benefits			832				(39	)			91
Adjustment of prior years’ taxes and others			(4,494	)			132				1,399
Income tax expense			7,116				9,772				16,101

Deferred Income Tax Assets (Liabilities)

Deferred income tax assets (liabilities) are as follows:

		December 31
		2013				2014
		US$				US$
Current:
Notes and accounts receivable			142				141
Stock-based compensation			679				615
Allowance for sales return			123				105
Inventory reserve			544				48
Foreign currency translation			312				(1,273	)
Others			561				504
Valuation allowance			(1,083	)			(528	)
			1,278				(388	)
Non-current:
Inventory reserve			590				766
Property and equipment			651				452
Investment tax credits			7,011				7,823
Net operating loss carryforwards			8,540				9,621
Others			(885	)			(490	)
Valuation allowance			(15,193	)			(16,263	)
			714				1,909

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

		Year Ended December 31
		2012				2013				2014
		US $				US $				US$
Balance, beginning of year			2,657				3,520				5,815
Increases in tax positions taken in current year			917				2,947				446
Decrease in tax position taken in prior year primarily related to the resolution of tax audit			(54	)			(652	)			(1,606	)
Balance, end of year			3,520				5,815				4,655

Summary of Major Jurisdictions and Tax Year Subject to Examination by Tax Authorities

The following table summarizes the Company’s major jurisdictions and tax year that remain subject to examination by tax authorities as of December 31, 2014:

Tax Jurisdiction		Tax Years
SMI Taiwan		2009 and onward
FCI		2009 and onward
SMI USA		2007 onward

X

- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of the change in unrecognized tax benefits.

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Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

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