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<SEC-DOCUMENT>0001144204-06-045166.txt : 20061103
<SEC-HEADER>0001144204-06-045166.hdr.sgml : 20061103
<ACCEPTANCE-DATETIME>20061103130320
ACCESSION NUMBER:		0001144204-06-045166
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20061101
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20061103
DATE AS OF CHANGE:		20061103

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DIODES INC /DEL/
		CENTRAL INDEX KEY:			0000029002
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				952039518
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	002-25577
		FILM NUMBER:		061185726

	BUSINESS ADDRESS:	
		STREET 1:		3050 E HILLCREST DR
		CITY:			WESTLAKE VILLAGE
		STATE:			CA
		ZIP:			91362
		BUSINESS PHONE:		8054464800

	MAIL ADDRESS:	
		STREET 1:		3050 E HILLCREST DR SUITE 200
		STREET 2:		3050 E HILLCREST DR SUITE 200
		CITY:			WESTLAKE VILLAGE
		STATE:			CA
		ZIP:			913623154
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v056381_8k.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                                November 1, 2006
                Date of Report (Date of earliest event reported)

                               DIODES INCORPORATED
             (Exact name of registrant as specified in its charter)

   Delaware                       1-5740                        95-2039518
(State or other          (Commission File Number)            (I.R.S. Employer
jurisdiction of                                           Identification Number)
 incorporation)

       3050 East Hillcrest Drive
      Westlake Village, California                      91362
(Address of principal executive offices)             (Zip Code)

                                 (805) 446-4800
              (Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

Item 2.02 Results of Operations and Financial Condition

            On November 1, 2006, Diodes Incorporated issued a press release
announcing third quarter 2006 earnings. A copy of the press release is attached
as Exhibit 99.1.

            On November 1, 2006, Diodes Incorporated hosted a conference call to
discuss its third quarter 2006 results. A copy of the transcript is attached as
Exhibit 99.2.

            During the conference call on November 1, 2006, Dr. Keh-Shew Lu,
President and CEO of Diodes Incorporated, as well as Carl C. Wertz, Chief
Financial Officer, Rick White, Sr. Vice President of Finance, and Mark King, Sr.
Vice President of Sales and Marketing made additional comments during a question
and answer session. A copy of the transcript is attached as Exhibit 99.3.

            The information in this Form 8-K and the Exhibits attached hereto
shall not be deemed "filed" for purposes of Section 18 of the Securities Act of
1934, nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1984, except as shall
be expressly set forth by specific reference in such filing.

Item  9.01 Financial Statements and Exhibits.

(c) Exhibits

            Exhibit 99.1 - Press Release dated November 1, 2006
            Exhibit 99.2 - Conference call transcript dated November 1, 2006
            Exhibit 99.3 - Question and answer transcript dated November 1, 2006

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated: November 1, 2006                  DIODES INCORPORATED


                                         By /s/ Carl C. Wertz
                                         ---------------------------------------
                                         CARL C. WERTZ
                                         Chief Financial Officer

                                  EXHIBIT INDEX

Exhibit
Number    Description
- -------   -----------
99.1      Press Release dated November 1, 2006
99.2      Conference call transcript dated November 1, 2006
99.3      Question and answer transcript dated November 1, 2006
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>v056381_ex99-1.txt
<TEXT>

[DIODES(TM) LOGO]
INCORPORATED

FOR IMMEDIATE RELEASE

            Diodes Incorporated Reports Record Third Quarter Results

                   o Record revenues of $92.6 million, up 71%

              o Record pro forma earnings of $14.2 million, up 69%

Westlake Village, California, November 1, 2006 - Diodes Incorporated (NasdaqGS:
DIOD), a leading manufacturer and supplier of high-quality discrete and analog
semiconductors, today reported record financial results for the third quarter
ending September 30, 2006.

Third Quarter Highlights:

o     Revenues increased 70.8% YOY and 11.9% sequentially to a record $92.6
      million

o     Gross profit increased 62.6% YOY and 11.9% sequentially to $30.7 million

o     Pro forma net income increased 69.1% YOY to a record $14.2 million, or
      $0.49 per fully diluted share, up from $8.4 million, or $0.34 per share,
      in the third quarter of 2005, and $0.45 in the second quarter of 2006

o     Net income on a GAAP basis increased 12.2% sequentially to $12.8 million,
      or $0.45 per fully diluted share, up from $11.4 million or $0.41 per share
      in the second quarter of 2006

o     YTD cash flow from operations increased 23.2% to $46.0 million

Revenues for the third quarter of 2006 increased 70.8% year-over-year and 11.9%
sequentially to a record $92.6 million. Pro forma net income increased 69.1%
year-over-year to a record $14.2 million, or $0.49 per fully diluted share, up
from $8.4 million, or $0.34 per share, in the third quarter of 2005, and $0.45
in the second quarter of 2006. Pro forma results are included because under FAS
123(R), the Company began expensing stock options in the first quarter of 2006,
and therefore, equivalent stock option expense was not reflected in the 2005
periods. Pro forma net income and earnings per share exclude approximately $1.6
million in non-cash, net stock option expense (see table for a reconciliation of
the impact of pro forma net income to GAAP net income). Net income on a GAAP
basis increased 12.2% sequentially to $12.8 million, or $0.45 per fully diluted
share, compared to $11.4 million, or $0.41 per share, in the second quarter of
2006.

Commenting on the quarter, Dr. Keh-Shew Lu, President and CEO of Diodes
Incorporated, said: "During the third quarter Diodes' sales and net income
reached new highs, as we leveraged our innovative products, efficient
manufacturing, and intense customer focus to gain market share in the discrete
market and expand into adjacent segments. The planned acquisition of APD
Semiconductor announced last week will provide Diodes with access to advanced
technologies in the discrete semiconductor market and will allow us to offer
another superior product line in respect to both cost and performance. In
addition, our convertible bond issue is expected to be accretive to earnings and
provides us with tremendous flexibility to pursue corporate growth initiatives,
including acquisitions, to accelerate our profitable growth."

<PAGE>

On October 5, the Company issued $230 million in aggregate principal convertible
senior notes due on October 1, 2026. The notes will pay interest semiannually at
a rate of 2.25% per annum, with a 39.68% conversion premium, and with any
conversion premium redeemable into cash and/or shares of common stock at the
Company's preference. At current market rates, the pre-tax net investment
interest income on the proceeds of the bond offering is projected to be
approximately $5.0 to $5.5 million per year. The Company expects this
transaction to be accretive to earnings per share given the current short-term
interest environment and intends to use the net proceeds from this offering for
working capital and other general corporate purposes, including acquisitions.

For the first nine months of 2006, revenues increased 62.2% to $248.9 million,
compared to $153.4 million in the same period last year. Net income for the
first nine months of 2006 was $33.5 million, or $1.19 per fully diluted share.
Pro forma net income for the first nine months of 2006, which excludes $4.3
million of net stock option expense, increased 62.1% to $37.8 million, compared
to $23.3 million in the same period in 2005. Pro forma fully diluted earnings
per share grew to $1.32 for the first nine months of 2006, compared to $0.96,
for the same period last year.

End-Markets

"Our strong third quarter top-line growth was driven by better than expected
sales in the consumer electronics segment as well as customer acceptance of our
analog product line. We are extremely pleased with our progress on the Anachip
acquisition and the resulting attractive cross selling opportunities and new
product development initiatives combining analog and discrete circuits. Our
discrete market share rose to an all time high during the quarter, driven by a
broad range of end equipment categories, including digital audio players,
set-top boxes, LCD monitors, notebooks and wireless LAN. For the third quarter
of 2006, consumer electronics and computer made up 37% and 35% of total sales
respectively, with telecom contributing 13%," commented Mark King, Sr. Vice
President of Sales and Marketing.

"Asia contributed 73% of our third quarter sales, with the help of better than
expected sales in the computer and consumer segments as well as robust growth in
our analog product line. North American accounted for 24% of sales driven by
strong OEM demand, with distributor point of sale again reaching a record high.
Sales in Europe slowed sequentially as a result of the summer holiday,
contributing 3% of total sales, but were up 105% from the third quarter of 2005
as we continued to make progress with new design wins and expanded customer
relationships," said Mr. King. "We experienced market share gains in all regions
during the third quarter for our discrete products, and in Asia, we reached
another all-time high in market share."

Design Wins and New Products

"Design activity remained brisk in the third quarter with multiple wins at over
50 customers. There is strong interest in our analog designs from our
traditional accounts as well as important discrete wins at original Anachip
customers," Mr. King commented. "Demand for Diodes' switchers, LDO's and hall
sensors was robust with wins coming from a broad list of end equipment,
including digital audio players, mobile phones and set-top boxes. On the
discrete side we experienced strong interest on our DFN, PowerDI and array
platforms for portable media devices, power converters and LCD monitors."

<PAGE>

Diodes recently launched the AH180, a new generation of low-voltage Hall Sensor
switch designed to meet the two critical factors of today's demanding
requirements of device manufacturers: time to market and solution cost. Its
size, together with the exceptional power consumption performance, allow the
AH180 to easily fit a wide range of applications in the portable consumer
electronics and computer devices, such as razor-thin multimedia 3G wireless
handsets, and positions the Company in some of the fastest growing end-user
markets.

Sales of new products reached a record 29.7% of total sales, compared to 14.1% a
year ago, and 24.9% last quarter, and this growth includes the contribution of
the Anachip acquisition. New product revenue was driven by products in
sub-miniature array, QFN, PowerDI123, PowerDI5, and Schottky platforms on the
discrete side, as well as the analog product lines. Diodes released 35 products
covering nine product families in the third quarter.

Additional Financial Highlights

Gross profit for the third quarter of 2006 increased 62.6% to $30.7 million, or
33.2% of revenue, compared to the same period last year. This increase in gross
profit was helped by improved product mix and increased sales volume. Due to
strong product demand for discrete devices and high capacity utilization during
the quarter, our migration of analog production to our highly productive
in-house packaging facility was not as brisk as expected in the quarter.

For the quarter, SG&A expenses were $11.8 million or 12.8% of revenue, versus
$7.6 million, or 14.0% of revenue, in the comparable quarter last year. Included
in third quarter SG&A expenses were $1.6 million in non-cash, stock option
expense. For comparable purposes, excluding the stock option expense, SG&A for
the third quarter of 2006 would have been 11.3% of sales (see table for a
reconciliation of the impact of stock option expense to reported results).

Operating income for the third quarter increased 63.1% to a record $16.9
million, or 18.3% of sales, compared to $10.4 million for the third quarter of
2005. Sequentially, operating margins improved 180 basis points over the second
quarter 2006 driven by increased sales volume as well as operating synergies
from the Anachip combination.

In the quarter ended September 30, 2006, a one-time adjustment to correct prior
year accounting for share-grants and intercompany currency losses had a
tax-adjusted reduction to net income of approximately $0.6 million, equivalent
to $0.02 per share.

Investment in research and development grew to $1.9 million, or 2.1% of revenue,
compared to $0.94 million, or 1.7% of sales, in the third quarter of 2005.

Capital expenditures for the current quarter were $4.9 million and $32.4 million
year to date. Depreciation expense for the quarter was $4.4 million and $14.1
million year to date.

At quarter-end, Diodes had $109 million in total cash and short-term investments
(not including the $224 million proceeds from the bond offering), $159.3 million
in working capital, $5.7 million in long-term debt and unused and available
credit facilities of $50 million. For the first nine months of 2006, shareholder
equity increased 23% to $277.0 million.

<PAGE>

Business Outlook

"Coming off our 6th consecutive quarter of record revenue performance, including
our 11.9% sequential growth this quarter, and with a book-to-bill ratio at
parity, we currently expect to see sequential revenue growth in the 1 to 3%
range, with comparable gross margins, for the fourth quarter of 2006. Over the
next few quarters, as we continue to introduce new discrete and analog products
and internalize packaging of our analog products, we expect to see gradual
expansion in our gross margins," stated Dr. Lu. "We are very pleased with our
progress to-date in executing against our strategic objectives and we are
excited about the opportunities ahead for profitable growth through
customer-focused innovation".

Conference Call

Diodes Incorporated will hold its third quarter conference call for all
interested persons at 2 p.m. Pacific Time (5 p.m. Eastern Time) on November 1st,
2006 to discuss its results. This conference call will be broadcast live over
the Internet and can be accessed by all interested parties on the investor
section of Diodes' website at www.diodes.com. To listen to the live call, please
go to the Investor section of Diodes website and click on the Conference Call
link at least fifteen minutes prior to the start of the call to register,
download, and install any necessary audio software. For those unable to
participate during the live broadcast, a replay will be available shortly after
the call on Diodes website for 60 days.

About Diodes Incorporated

Diodes Incorporated (NasdaqGS: DIOD) is a leading manufacturer and supplier of
high-quality discrete and analog semiconductor products, primarily to the
communications, computing, industrial, consumer electronics and automotive
markets. The Company's corporate sales, marketing, engineering and logistics
headquarters is located in Southern California, with two manufacturing
facilities in Shanghai, China, a wafer fabrication plant in Kansas City,
Missouri, engineering, sales, warehouse and logistics offices in Taipei, Taiwan
and Hong Kong, and sales and support offices throughout the world. Diodes, Inc.
recently acquired Anachip Corporation, a fabless analog IC company in Hsinchu
Science Park, Taiwan.

Diodes, Inc.'s product focus is on subminiature surface-mount discrete devices,
analog power management ICs and Hall-effect sensors all of which are widely used
in end-user equipment such as TV/Satellite set top boxes, portable DVD players,
datacom devices, ADSL modems, power supplies, medical devices, wireless
notebooks, flat panel displays, digital cameras, mobile handsets, DC to DC
conversion, Wireless 802.11 LAN access points, brushless DC motor fans, and
automotive applications. For further information, including SEC filings, visit
the Company's website at http://www.diodes.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995: Any statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties include, but are not limited to,
such factors as the integration of ADP within Diodes existing operations, the
Company's ability to successfully make additional acquisitions, fluctuations in
product demand, the introduction of new products, the Company's ability to
maintain customer and vendor relationships, technological advancements, impact
of competitive products and pricing, growth in targeted markets, successful
integration of acquired companies and/or assets, risks of foreign operations,
availability of tax credits, and other information detailed from time to time in
the Company's filings with the United States Securities and Exchange Commission.

<PAGE>

Source:  Diodes Incorporated
CONTACT: Carl Wertz, Chief Financial Officer, Diodes Incorporated (805) 446-4800
e-mail:  carl_wertz@diodes.com
or
Crocker Coulson, President, CCG Investor Relations, (310) 231-8600, Ext. 103,
e-mail: crocker.coulson@ccgir.com
- --------------------------------------------------------------------------------

Recent news releases, annual reports, and SEC filings are available at the
Company's website: http://www.diodes.com. Written requests may be sent directly
to the Company, or they may be e-mailed to: diodes-fin@diodes.com.

        CONSOLIDATED CONDENSED INCOME STATEMENT and BALANCE SHEET FOLLOWS

<PAGE>

                      DIODES INCORPORATED AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Three Months Ended           Nine Months Ended
                                                         September 30,                September 30,
                                                   -------------------------   ---------------------------
                                                       2005          2006          2005           2006
                                                   -----------   -----------   ------------   ------------
<S>                                                <C>           <C>           <C>            <C>
Net sales                                          $54,200,000   $92,575,000   $153,398,000   $248,876,000
Cost of goods sold (1)                              35,323,000    61,879,000    100,428,000    166,532,000
                                                   -----------   -----------   ------------   ------------
  Gross profit                                      18,877,000    30,696,000     52,970,000     82,344,000
Selling and general administrative
  expenses (2)                                       7,581,000    11,825,000     21,469,000     34,824,000
Research and development expenses (3)                  938,000     1,941,000      2,688,000      5,985,000
Loss (gain) on disposal of fixed assets                     --        32,000       (105,000)       152,000
                                                   -----------   -----------   ------------   ------------
  Total operating expenses                           8,519,000    13,798,000     24,052,000     40,961,000
  Income from operations                            10,358,000    16,898,000     28,918,000     41,383,000
Other income (expense)
  Interest income                                       23,000     1,069,000         66,000      2,807,000
  Interest expense                                    (188,000)      (89,000)      (465,000)      (363,000)
  Other                                                116,000    (1,563,000)        95,000     (1,758,000)
                                                   -----------   -----------   ------------   ------------
                                                       (49,000)     (583,000)      (304,000)       686,000
Income before income taxes and minority interest    10,309,000    16,315,000     28,614,000     42,069,000
Income tax provision (4)                            (1,621,000)   (3,212,000)    (4,523,000)    (7,778,000)
                                                   -----------   -----------   ------------   ------------
Income before minority interest                      8,688,000    13,103,000     24,091,000     34,291,000
Minority interest in joint veture earnings            (305,000)     (333,000)      (802,000)      (824,000)
                                                   -----------   -----------   ------------   ------------
Net income                                         $ 8,383,000   $12,770,000   $ 23,289,000   $ 33,467,000
                                                   ===========   ===========   ============   ============
Earnings per share
  Basic                                            $      0.38   $      0.50   $       1.08   $       1.31
  Diluted                                          $      0.34   $      0.45   $       0.96   $       1.19
                                                   ===========   ===========   ============   ============
Number of shares used in computation
  Basic                                             22,010,235    25,686,913     21,658,863     25,520,156
  Diluted (5)                                       24,731,514    28,152,592     24,344,795     28,055,154
                                                   ===========   ===========   ============   ============
</TABLE>

<PAGE>

                      DIODES INCORPORATED AND SUBSIDIARIES
        CONSOLIDATED RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME

Pro forma consolidated statements of income are presented because we use it as
an additional measure of our operating performance. Pro forma net income and pro
forma net income per share should not be considered as alternatives to net
income, earnings per share or other measures of consolidated operations and cash
flow data prepared in accordance with accounting principles generally accepted
in the United States of America, as indicators of our operating performance, or
as alternatives to cash flow as a measure of liquidity. Pro forma consolidated
statements of income are intended to present our operating results, excluding
items described below, for the periods presented.

<TABLE>
<CAPTION>
Pro forma net income                                Three Months Ended          Nine Months Ended
and earnings per share reconciliation                 September 30,               September 30,
                                                -------------------------   -------------------------
                                                    2005          2006          2005          2006
                                                -----------   -----------   -----------   -----------
<S>                                             <C>           <C>           <C>           <C>
GAAP net income                                 $ 8,383,000   $12,770,000   $23,289,000   $33,467,000
                                                ===========   ===========   ===========   ===========
Pro forma adjustments:
  Stock option expense
    included in cost of goods sold:                      --       133,000            --       399,000
  Stock option expense
    included in selling and general
    administrative expenses:                             --     1,355,000            --     4,112,000
  Stock option expense
    included in research and
   development expenses:                                 --       146,000            --       439,000
    Total stock option expense                           --     1,634,000            --     4,950,000
  Income tax benefit related to
    stock option expense                                 --       228,000            --       661,000
Pro forma net income                            $ 8,383,000   $14,176,000   $23,289,000   $37,756,000
                                                ===========   ===========   ===========   ===========
    Diluted shares used in computing
      Pro forma earnings per share               24,731,514    28,152,592    24,344,795    28,055,154
    Incremental shares considered
      to be outstanding:                                 --       499,355            --       497,651
                                                -----------   -----------   -----------   -----------
    Adjusted diluted shares used in computing
       Pro forma earnings per share              24,731,514    28,651,947    24,344,795    28,552,805
                                                ===========   ===========   ===========   ===========
Pro forma earnings per share
    Basic                                       $      0.38   $      0.55   $      1.08   $      1.48
    Diluted                                     $      0.34   $      0.49   $      0.96   $      1.32
                                                ===========   ===========   ===========   ===========
</TABLE>

<PAGE>

1) For the quarter and nine months ended September 30, 2006, includes $133,000
and $399,000 of stock option expense, respectively.

2) For the quarter and nine months ended September 30, 2006, includes $1,355,000
and $4,112,000 of stock option expense, respectively.

3) For the quarter and nine months ended September 30, 2006, includes $146,000
and $439,000 of stock option expense, respectively.

4) For the quarter and nine months ended September 30, 2006, includes $228,000
and $661,000 of income tax benefit related to stock option expense,
respectively.

5) For the quarter and nine months ended September 30, 2006, 499,355 and 497,651
incremental shares are considered to be outstanding under FAS123R, respectively.

<PAGE>

                      DIODES INCORPORATED AND SUBSIDIARIES
               CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA

EBITDA represents earnings before net interest expense, income tax provision,
depreciation and amortization. Our management believes EBITDA is useful to
investors because it is frequently used by securities analysts, investors and
other interested parties in evaluating companies in our industry. In addition,
our management believes that EBITDA is useful in evaluating our operating
performance compared to that of other companies in our industry because the
calculation of EBITDA generally eliminates the effects of financing and income
taxes and the accounting effects of capital spending, which items may vary for
different companies for reasons unrelated to overall operating performance. As a
result, our management uses EBITDA as a measure to evaluate the performance of
our business. However, EBITDA is not a recognized measurement under generally
accepted accounting principles, or GAAP, and when analyzing our operating
performance, investors should use EBITDA in addition to, and not as an
alternative for, income from operations and net income, each as determined in
accordance with GAAP. Because not all companies use identical calculations, our
presentation of EBITDA may not be comparable to similarly titled measures of
other companies. Furthermore, EBITDA is not intended to be a measure of free
cash flow for our management's discretionary use, as it does not consider
certain cash requirements such as a tax and debt service payments.

The following table provides a reconciliation of Net Income to EBITDA:

                                  Three Months Ended
                                     September 30,
                                  ------------------
(in thousands)                       2005      2006
                                   -------   -------
Net Income                         $ 8,383   $12,770
Plus:
  Interest expense, net                165      (980)
  Income tax provision               1,508     3,212
  Depreciation and amortization      4,074     4,383
                                   -------   -------
  EBITDA                           $14,130   $19,385
                                   =======   =======

                                  Nine Months Ended
                                    September 30,
                                  -----------------
(in thousands)                      2005      2006
                                  -------   -------
Net Income                        $23,288   $33,467
Plus:
  Interest expense, net               399    (2,445)
  Income tax provision              4,523     7,778
  Depreciation and amortization    11,887    14,053
                                  -------   -------
  EBITDA                          $40,097   $52,853
                                  =======   =======

<PAGE>

                      DIODES INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                   (Unadited)

                                     ASSETS

                                                 December 31,   September 30,
                                                     2005           2006
                                                 ------------   -------------
CURRENT ASSETS                                                    (unaudited)
  Cash and cash equivalents                      $ 73,288,000    $ 53,157,000
  Short-term investments                           40,348,000      56,139,000
                                                 ------------    ------------
    Total cash and short-term investments         113,636,000     109,296,000
  Accounts receivable
    Customers                                      48,348,000      70,049,000
    Related parties                                 6,804,000       5,554,000
                                                 ------------    ------------
                                                   55,152,000      75,603,000
    Less: Allowance for doubtful receivables         (534,000)       (675,000)
                                                 ------------    ------------
                                                   54,618,000      74,928,000
  Inventories                                      24,611,000      45,767,000
  Deferred income taxes, current                    2,541,000       2,565,000
  Prepaid expenses and other current assets         5,326,000       6,663,000
  Prepaid income taxes                                     --         441,000
                                                 ------------    ------------
      Total current assets                        200,732,000     239,660,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net
  of accumulated depreciation and amortization     68,930,000      89,168,000
DEFERRED INCOME TAXES, non current                  8,466,000      11,043,000
OTHER ASSETS
  Equity investment                                 5,872,000              --
  Goodwill                                          5,090,000      24,093,000
  Other                                               425,000       2,906,000
                                                 ------------    ------------
TOTAL ASSETS                                     $289,515,000    $366,870,000
                                                 ============    ============

<PAGE>

                      DIODES INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                   (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                 December 31,   September 30,
                                                     2005           2006
                                                 ------------   -------------
<S>                                              <C>            <C>
CURRENT LIABILITIES
  Line of credit                                 $  3,000,000   $         --
  Accounts payable
    Trade                                          18,619,000     37,250,000
    Related parties                                 7,921,000     13,215,000
  Accrued liabilities                              19,782,000     27,756,000
  Long-term debt, current portion                   4,621,000      1,954,000
  Capital lease obligations, current portion          138,000        141,000
                                                 ------------   ------------
      Total current liabilities                    54,081,000     80,316,000

LONG-TERM DEBT, net of current portion              4,865,000      3,709,000

CAPITAL LEASE OBLIGATIONS, net of current
  portion                                           1,618,000      1,508,000

MINORITY INTEREST IN JOINT VENTURE                  3,477,000      4,321,000
                                                 ------------   ------------
      Total liabilities                            64,041,000     89,854,000

STOCKHOLDERS' EQUITY
  Preferred stock - par value $1.00 per share;
    1,000,000 shares authorized;
    no shares issued and outstanding
  Common stock - par value $0.66 2/3 per
    share;
    70,000,000 shares authorized; 25,258,119
    and 25,930,914 shares issued at December
    31, 2005 and September 30, 2006,
    respectively                                   16,839,000     17,355,000
  Additional paid-in capital                       94,664,000    111,357,000
  Retained earnings                               114,659,000    148,126,000
                                                 ------------   ------------
  Less:                                           226,162,000    276,838,000
    Accumulated other comprehensive gain (loss)      (688,000)       178,000
                                                 ------------   ------------
      Total stockholders' equity                  225,474,000    277,016,000
                                                 ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        289,515,000    366,870,000
                                                 ============   ============
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>v056381_ex99-2.txt
<TEXT>

Diodes Third Quarter 2006 Conference Call

Participants: Dr. Keh-Shew Lu, Carl Wertz, Mark King and Richard White

================================================================================

Introduction: Crocker Coulson, CCG

Good afternoon and welcome to Diodes' third quarter 2006 earnings conference
call.

With us today are Diodes' President and CEO, Dr. Keh-Shew Lu, and Chief
Financial Officer, Carl Wertz, Mark King, Sr. VP of Sales and Marketing, and Sr.
Vice President-Finance, Richard White.

Before I turn the call over to Dr. Lu, may I remind our listeners that in this
call, management's prepared remarks contain forward-looking statements, which
are subject to risks and uncertainties, and management may make additional
forward-looking statements in response to your questions.

Therefore, the Company claims the protection of the safe harbor for
forward-looking statements that is contained in the Private Securities
Litigation Reform Act of 1995. Actual results may differ from those discussed
today, and therefore we refer you to a more detailed discussion of the risks and
uncertainties in the Company's filings with the Securities & Exchange
Commission.


Page 1 of 22

<PAGE>

In addition, any projections as to the Company's future performance represent
management's estimates as of today November 1, 2006. Diodes assumes no
obligation to update these projections in the future as market conditions
change.

For those of you unable to listen to the entire call at this time, a recording
will be available via webcast for 60 days at the investor relations section of
Diodes' website at www.diodes.com.

And now it's my pleasure to turn the call over Diodes' CEO, Dr. Keh-Shew Lu.


Page 2 of 22

<PAGE>

Dr. Keh-Shew Lu, CEO of Diodes

Thank you, Crocker.

Welcome everyone, and thank you for joining us today.

I am very pleased to report another quarter of solid performance. In the third
quarter of 2006 Diodes achieved record top- and bottom-line results, as we
continued to outperform the semiconductor industry.

Our strategy, announced last year, to expand our discrete business into adjacent
technologies has exceeded our expectations, and our new linear products are
already making a strong contribution to the organic growth of Diodes revenues
and profits.

Here are Q3 earnings highlights:

o     Revenues increased 71% year-over-year and almost 12% sequentially to a
      record $93 million.

o     Gross profit increased 63% year-over-year and nearly 12% sequentially.

o     GAAP net income also increased almost 12% sequentially to $12.7 million,
      or $0.45 per share, compared to $0.41 in 2Q06

o     Pro forma net income increased 69% year-over-year to a record $14.2
      million, or $0.49 per share.


Page 3 of 22

<PAGE>

These outstanding numbers are the result of strong demand for our next
generation discrete products and excellent customer acceptance of our standard
linear products. We are very pleased with the results from the Anachip
acquisition, and we continue to see excellent cross-selling opportunities across
our combined customer base. We also expect to increase our analog margins as we
internalize more of Anachip's products into our world-class packaging
facilities.

We continue to make solid progress in the execution of our business strategy of
pursuing profitable growth through customer driven innovation;

We are accomplishing this by:

First, our focus on R&D for next-generation technologies: For example, recently,
we launched the AH180 product platform, a new generation of low-voltage Hall
Sensor switches. The AH180 size and power consumption performance make it a
perfect fit to a wide range of applications in the fast growing portable
consumer electronics market.

Second, we launched 35 products from 9 product families in the third quarter and
sales from new products approached 30% of total revenues, as we continued to
capitalize on our strengths in next-generation multi-chip solutions.


Page 4 of 22

<PAGE>

Third, we further strengthened our technology footprint with the acquisition of
APD Semiconductors. The announced APD acquisition provides Diodes with access to
advanced technologies in the discrete semiconductor market that will allow us to
offer a superior product in respect to both cost and performance.

Finally, our $230 million convertible bond provides us with tremendous financial
flexibility to pursue additional corporate growth opportunities, including
acquisitions, to accelerate our profitable growth.

Our balance sheet continued to be very strong in Q3. At quarter-end, Diodes had
$109 million in cash, $159 million in working capital, and $3.7 million in long
term debt. As of October 5th, our convertible bond issue added to an already
strong balance sheet to enable us to continue on our growth path, both through
organic growth and through acquisitions.

We see a range of opportunities that fit within our strategic product focus and
could leverage our strengths in manufacturing and distribution.


Page 5 of 22

<PAGE>

Recognition by leading business publications re-affirmed our strategic direction
as well as solid execution. For the third consecutive year, Diodes was selected
for Forbes' "The 200 Best Small Companies".

Thus, as we head into the fourth quarter with strong financials and recently
strengthened management team, we are confident Diodes will continue to execute
well on its strategy of innovation and profitable growth.

With that, I'm going to turn the call over to Carl to discuss our financial
results in more detail.


Page 6 of 22

<PAGE>

Q3 2006 Financials: Carl Wertz

Thanks, Dr. Lu, and good afternoon everyone.

As Dr. Lu mentioned, Diodes again achieved record financial results in the third
quarter of 2006.

As Diodes built on our leadership position in the discrete semiconductor
industry and continued our successful expansion into the analog market, our
third quarter revenue and profits increased considerably, both on a sequential
and year-over-year basis, setting new records for Diodes.

      o     Revenues for the third quarter were $92.6 million, an increase of
            70.8% from the third quarter of 2005. On a sequential basis our
            revenues grew 11.9%. New product sales advanced to a record 29.7% of
            revenue, compared to 24.9% in the previous quarter.

      o     Gross profit for the third quarter increased 62.6% to $30.7 million,
            compared to the same period last year. This increase in gross profit
            was primarily due to increased sales volume. Gross margin at 33.2%
            was comparable sequentially, as we slowed the migration of our
            analog production to our in-house packaging facilities due to strong
            product demand and high capacity utilization during the quarter,
            which had been at full capacity all quarter. We expect to increase
            the process of migration over the course of 2007, balancing
            potential margin improvement with capacity utilization.


Page 7 of 22

<PAGE>

      o     Selling, General & Administrative expenses for the quarter were
            $11.8 million at 12.8% of revenue, versus $7.6 million and 14.0% of
            revenue in the comparable quarter last year. Included in third
            quarter SG&A was $1.4 million in non-cash, stock option compensation
            as per FAS-123R.

      For comparable purposes, excluding the stock option compensation, SG&A for
      the third quarter of 2006 would have improved further to 11.3% of sales
      compared to 14.0% last year. In the press release we have included a table
      to reconcile the impact of stock option compensation expense to reported
      results.

      o     Research and development was $1.9 million, or 2.1% of revenue,
            compared to $940,000, or 1.7% of revenue, in the third quarter of
            2005. We continue to put the resources in place to drive new product
            development across discrete and analog devices and to bolster our
            new product pipeline as evidenced by the APD acquisition.


Page 8 of 22

<PAGE>

      o     Depreciation was $4.4 million for the quarter and $14.1 million
            year-to-date.

      o     EBITDA for the quarter was $19.4 million and $52.9 million YTD.

      o     Our effective income tax rate in the third quarter was 19.7%,
            comparable to the 19.8% for the previous quarter, and 15.7% for the
            same period last year. Our higher effective tax rate was the result
            of greater income in the U.S. at higher tax rates. Going forward, we
            anticipate our tax rate to be comparable to the third quarter.

      o     Pro forma net income, which excludes $1.4 million net stock option
            expense, for the third quarter increased 68.7% year-over-year to
            $14.2 million, or 49 1/2 cents per share, compared to $8.4 million,
            or $0.34 per share, last year, a 44% improvement. Sequentially, pro
            forma net income increased 10.1% from 2Q06.


Page 9 of 22

<PAGE>

      o     GAAP net income increased 11.4% sequentially to $12.8 million, or
            $0.45 per share, up from $11.4 million, or $0.41, in the second
            quarter this year. Year-over-year, GAAP net income increased 52.3%.

      o     In the quarter, we made a one-time adjustment to correct for prior
            year accounting treatment related to an overstatement of operating
            expense for restricted stock awards, and an understatement of other
            expense for intercompany currency losses. The combined one-time
            tax-adjusted decrease to net income for the quarter was
            approximately $650,000, equivalent to $0.02 per share.

      o     Cash flow from operations for the year was $46.0 million, a 23%
            increase compared to $37.3 million for the same period last year.

      o     Turning to the balance sheet, as of September 30, 2006 we had $109
            million in total cash and short-term investments and $150 million in
            working capital, with only $3.7 million in long-term term debt.


Page 10 of 22

<PAGE>

      o     On October 5, we issued $230 million in aggregate principal
            convertible senior notes due on October 1, 2026. The notes will pay
            interest semiannually at a rate of 2.25% per year. The notes have an
            approximately 40% conversion premium, and with any future conversion
            redeemable into cash and/or shares of common stock at the Company's
            preference.

At current market rates, the pre-tax net investment interest income on the
proceeds of the bond offering is projected to be approximately 5 to 5.5 million
dollars per year. We expect this transaction to be accretive to EPS given the
current short-term interest rate environment and we intend to use the net
proceeds from this offering primarily for acquisitions.

o     Our total debt to equity ratio prior to the convertible transaction was
      32% for the third quarter, while our total debt to assets was 24%.

o     Inventories ended the third quarter at $46 million, with inventory turns
      slightly improved at 67 days compared to 70 the previous quarter.

o     Accounts receivable days were 73 in the third quarter compared to 68 days
      in the prior quarter. We continue to experience some pressure to extend
      terms, especially in Asia and Europe.


Page 11 of 22

<PAGE>

o     Capital expenditures for the current quarter were $4.9 million and $32.4
      million year to date, slightly ahead of our 10-12% full-year estimate, but
      at the mid-point of our range when excluding the $6 million building
      purchase in Taiwan.

o     Recently we announced the planned acquisition of APD Semiconductors for $8
      million, plus a potential earn-out. The purchase price includes patents,
      technology, trademarks and working capital. This acquisition is aligned
      with our strategy of strengthening Diodes' technology leadership in the
      discrete semiconductor market and expanding our product capabilities
      across important segments of our end-markets.

APD is in its infancy stage and is expected to reach annual revenues of
approximately $2 million in 2006, and the transaction is expected to be
accretive to Diodes' 2007 profits. We project APD 2007 revenues to exceed the
purchase price. We expect APD product to be a significant growth driver going
forward.


Page 12 of 22

<PAGE>

As to our Outlook...

Coming off our 6th consecutive quarter of record revenue performance, including
our 11.9% sequential growth this quarter, and based on our book-to-bill ratio at
parity, we currently expect to see market share gains with sequential revenue
growth in the 1 to 3% range in Q4.

We expect gross margin percentage for the fourth quarter to be comparable with
Q3. Over time, as we continue to introduce new products, and internalize
packaging of our analog products, we expect to see gradual expansion in our
gross margins.

We feel confident that 2006 continues to be another year of exceptional growth
for Diodes as we continue to focus on innovation and profitable growth, while
fully leveraging the synergies created by the Anachip and APD acquisitions.


Page 13 of 22

<PAGE>

With that said, I'm now going to turn the discussion over to Mark King, our Sr.
VP of Sales and Marketing. Mark will discuss our new products, market
opportunities, and give you a view of the direction of the general marketplace.


Page 14 of 22

<PAGE>

Markets and Growth Strategies - Mark King

Thanks, Carl and good afternoon everyone.

In the third quarter, Diodes marketing and sales activity included record sales,
multiple design wins, an aggressive new product launch schedule, and strong new
product revenues generated by both internal development and the Anachip
acquisition. Our expanded product offering, broader customer base and deeper
relationships have resulted into cross-selling opportunities that exceeded our
positive expectations so far.

We made great progress during Q3 in executing our new product road map,
including new products in the discrete, analog and power management categories.
Sales of new products reached a record 29.7% of total sales.

During the quarter, we launched 35 new products from 9 product families. More
recently, we launched the AH180, a Micro-Power Omnipolar Hall-Effect Sensor
switch product family. This Hall Sensor is designed to fill the growing demand
for lower power, and higher sensitivity required in today's portable
contact-less applications.


Page 15 of 22

<PAGE>

Currently, three packages are offered for the AH180 with our sub- miniature DFN
package as one of the smallest omnipolar switches in the market today.

To meet application and specific customer requirements, Diodes' superior
packaging capability allows for design and production of new DFN package options
under fast turnaround. Such flexibility, together with the exceptional power
consumption performance, makes the AH180 a perfect fit for a wide range of
end-user applications.

Ideally suited for lid-position sensing in mobile flip-phones, including the
latest razor-thin multimedia 3G mobile handsets, this sensor is also optimized
for use in portable media players, handheld gaming devices, notebook PCs, and
industrial metering, and positions us in some of the fastest growing end-user
markets.

In addition, through the APD acquisition, we have added to our product portfolio
patented and trademarked Super Barrier RectifierTM technology. The Super Barrier
RectifierTM allows for growth into new high performance market opportunities,
and is a natural fit with Diodes' product technology platform. This acquisition
strengthens our leadership in high-efficiency rectifiers and we are very excited
about the ways we can capitalize on these technologies to deliver next
generation discrete devices across a number of high-volume applications.


Page 16 of 22

<PAGE>

Geographic Breakout

Market share for Diodes' discrete products reached all time highs in the third
quarter, driven by gains in all regions.

Asia had very strong revenue growth during the quarter, up 16% sequentially and
represented 73% of total revenues. Sales were better then expected across all
market segments, with emphasis on digital audio player, notebook computers,
motherboard, LCD TV and monitors, DC Fan and wireless LAN.

During the quarter, we experienced strong growth in both our discrete and analog
product lines, as we took advantage of cross selling opportunities from the
Anachip combination. Even though Anachip had relationships with many key Asian
accounts prior to the acquisition, both product lines have captured additional
market share subsequent to the acquisition.


Page 17 of 22

<PAGE>

North America

North America contributed 24% of sales in the quarter driven by strong OEM
demand. Distributor POP was down sequentially while distributor point of sales
again reached record highs. Set-top box demand for Q3 increased with the
introduction of new designs. The newer platforms contained increased Diodes
product-content including new Analog designs.

Sales for accounts designed in North America and built in Asia remained strong.

Design activity remained brisk with 91 new parts at 26 customers, including 5
power IC's. There is strong interest in our performance packages such as
PowerDI-123, PowerDI-323, and an increased design activity on our DFN line as
well as our array lines.

Distributor inventory has remained in line with the increase in sales.

Wafer sales increased 24% sequentially, and our wafer average selling price was
up 2.5%. ASP for discrete components was down slightly this quarter.


Page 18 of 22

<PAGE>

In Europe...

We continued to make progress, and despite a summer holiday induced 12%
sequential decline, revenues were up 103% from last year. This region
contributed 3% of sales. We were pleased with our progress building customer
relationships during the quarter, as we had design wins and initial orders at
more than 10 accounts. We continue to make in-roads into our expanded
distributor network and expect this region to continue to be a growth driver
going forward.

Moving to Market Segments...

For the third quarter, our segment breakout was: 38% consumer, 35% computer and
peripherals, 13% telecom, 12% industrial, and 2% automotive.

Now I'll go into Design Wins...

Design activity remained strong through Q3. We had multiple design wins at over
50 accounts world-wide, and from a broad list of end-equipments. We are winning
analog and hall sensor designs in our traditional accounts, and winning discrete
designs at original Anachip customers. The synergies between the product lines
have resulted in attractive cross selling opportunities, as we have more to
offer our customers.


Page 19 of 22

<PAGE>

Most notable wins include:

o     DFN win in recent digital audio player and new mobile handset

o     PowerDI(TM)-323 win in a smart phone.

o     PowerDI(TM)-123 wins in LCD module, DC to DC converters, white goods and
      portable POS.

o     Array wins in satellite radio, digital audio player, DC to DC converters,
      and a stun gun application.

Notable wins on the Analog side include:

o     Switcher wins in multiple LCD-TV and power supply, as well as wireless
      router.

o     USB Switch wins in 2 different set-top-box applications

o     Low drop-out regulator wins in Combo-DVD, ADSL and Cable modem, LCD-TV,
      Voice-Over-IP, and satellite set-top box.

And finally:

o     Hall Effect IC wins in 2 DC fan, and 2 different DC motor applications.


Page 20 of 22

<PAGE>

The bottom line is that we now have a broader product offering which helps us
build deeper relationships with our customers. Our discrete product lines
complement the power management product lines at Anachip, and the result is
synergistic growth that should persist well into the future.

In Summary...

We are very pleased with our record third quarter results. Overall, Diodes made
excellent progress in implementing its strategy of innovation and profitable
growth, as evidenced by record financial results, multiple design wins, and
best-in-class product launches, and recognition by top business publications. We
are confident of continued success going forward.

In the discrete market, we believe that we are well positioned with innovative
products that satisfy the increasing demand for portability and miniaturization,
from the computing and consumer electronics markets.

The acquisition of APD further strengthens our product portfolio and we continue
to actively look for additional acquisition opportunities that will enhance our
product portfolio, manufacturing strengths, and customer base.


Page 21 of 22

<PAGE>

We see dynamic growth and innovation for Diodes going forward, that will
continue to add to shareholder value.

With that, let's open the floor to questions. Operator?


Page 22 of 22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>v056381_ex99-3.txt
<TEXT>

QUESTION AND ANSWER

- --------------------------------------------------------------------------------
Operator

(OPERATOR INSTRUCTIONS). Alex Gauna, UBS.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Yes, thank you. I want to start by saying congratulations on the powerful
results.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Thank you, Alex.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

I wanted to go into how you view progress on the gross margin line, particularly
given the efforts in bringing in Anachip in-house, and I believe you mentioned
the increasing content of new products coming out there -- what is it, 29.7% of
revenues now? What should we expect on the gross margin line? I know you have
given us a near-term projection here. But what really is the update on progress
there?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Well, Alex, we know by bringing Anachip product to our own facilities, packaging
facilities, that gross margin should be improved quite a bit. And fortunately,
or unfortunately, our growth is faster than we expected. For example, you know,
we continue almost two quarters at consistently 12% growth. Therefore, we cannot
really bring in our product internally, because we just do not have enough
capacity to support those unfocused or unexpected upside.

Number two is our Anachip product grows much faster than our discrete product
growth. Therefore, the average actually affects the gross margin percent. You
know what I mean? Because energy products by doing outsourcing and packaging
actually have lower profit margin than our internal discrete -- are discrete
products through our internal packaging. And because energy's growth is less
than our discrete, that pulls the average down.

So looking into the future, I still see a lot of room for improved gross margin
by moving our product gradually through our own facilities. And I [understand]
the synergy we didn't really [utilize] yet is selling energy product to U.S. and
Europe customers. We know -- I think I talked to everybody before -- U.S. Europe
and U.S. customers typically, we can get a bigger ASP, and therefore, in turn,
upgrade their profit margins.

We just finished (indiscernible) our product -- all the energy products we want
to [port] through our (indiscernible) site, and the release to the U.S. and
Europe customer base. The design-in is very strong, but the ramp-up is not in
there yet. So I think through the next year, from the fourth quarter and the
more in the next year, we should see an improvement from the gross margin
percent due to bringing in to our own facility and number two, by getting the
customer from U.S. and Europe for our energy product.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

To be clear, I think I have discussed with you in the past that one of the
targets was for Q1 ramp in a number of areas. And am I hearing you correctly on
the Anachip front that you still expect Europe and U.S. to begin ramping in Q1
of next year?

<PAGE>

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, correct. Like I said, we just finished the [porting] and I think I
mentioned to you, we don't want to just take the Anachip product, which is built
by our subcontract to the U.S. and Europe customers. We want to make sure all
those products are built by our own facilities in Shanghai. And therefore, we
take time to qualify all the products which can be built by ourselves. And we
just finished that qualification now. And we start to announce the [build-up] to
qualify our customer in the U.S. and Europe. And so it will take time. In any
quarter, it takes time for people to ramp it up. So yes, I think you are right
(indiscernible) from next quarter, from the first quarter next year, you will
start to see gradually design -- a gradual ramp-up from our energy product.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

And one more follow-up, if I could -- does this include increased penetration of
the cellular handset market at this juncture?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Well, one of the products that we just announced, AH180 -- that is from our
energy product. And you can see the applications. So the answer is yes. And our
AH180 product turned out to be quite a good product. In fact, we just announced
it a couple of weeks, right? And we already have a couple of design wins.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Congratulations on that front.

- --------------------------------------------------------------------------------
Operator

Ramesh Misra, C.E. Unterberg, Towbin.

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

Congratulations on the numbers. A first question, Carl, is for you. I wanted
clarification on that onetime expense you said for about $650,000 that is
related to tax. So basically -- which resulted in -- is that an understatement
in your pro forma EPS by $0.02, did I get that right?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Yes. It was a onetime adjustment, related to two areas. One was in '05, we had
an overstatement of our operating expense, about $800,000 related to the stock
option expensing. And the other component was an understatement of our other
expense, okay? And the net effect of both of those were a $650,000 decrease in
EPS of $0.02.

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

So basically, if we had not included that charge, your EPS would have been
$0.51.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, you are right. It is a $0.02 onetime deal effect.

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

We tried to make that pretty clear with the onetime or (MULTIPLE SPEAKERS)
percent effect so you can model that outgoing for.

<PAGE>

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

Okay, and then my next question is for Dr. Lu. Dr. Lu, what is the size of your
overall Hall-effect sensor business at this current time?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

You know, our Hall sensor business is coming from Anachip the acquisition. And
you remember, Anachip acquisition, at that time when we buy -- we only look at
power management application. So if you remember, when I make that announcement,
I say we spent $31 million for the $35 million of power management business. And
so the total (indiscernible) other -- like a [PLD] PowerDI and the Hall sensor
(indiscernible) together -- last year is about $15 million. And so you can
figure out from that number -- PLD is the small number, so the rest is the Hall
sensor (indiscernible). Then, after we took over building this year, we spent
about (indiscernible) engineering effort tried to -- we look at this Hall sensor
business, and it turned out to be a surprise to us. It's a good business. And we
believe by putting our -- number one, our design resource to fix all the problem
and to [channel] the next-generation new order, and to spend time with our sales
channel, our distribution channel, we found out this is a pretty good product
line. And therefore, we announced the first new product which goes through our
new [engineering] resource, to come out this new product line -- AH180. And we
are very happy with the performance of this product and market acceptance of
this product. And we open up a big door for us to get into the cell phone
application too.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Yes, the Hall sensor remains a really nice lead-in product. Anybody that uses a
Hall sensor wants to talk to us, guaranteed. So it's a very exciting entry point
with some key customers after.

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

I see. So you are clearly keeping this serendipitous discovery of the business
at Anachip. So is it safe to assume that it's about 10% or so of sales
currently? Very roughly, again.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

More than 10%. (MULTIPLE SPEAKERS). No, no, no -- you are talking about Anachip
- -- it's about (MULTIPLE SPEAKERS).

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

No, just the Hall sensor.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, --

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

We don't --

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

We don't get into detail, but you can see (indiscernible). The total Anachip
business last year is about 50, and the power management is 35. The rest of it
is -- the rest is the Hall sensor, PLD, everything else.

<PAGE>

- --------------------------------------------------------------------------------
Ramesh Misra - C.E. Unterberg, Towbin - Analyst

Got it. And then one final question -- this may be for Mark or for Dr. Lu. I
just wanted a little more clarification in terms of APD's product portfolio. One
way of looking at it is that potentially you are paying about 4 times trailing
sales, or you are paying about onetime forward sales, depending upon how
successful APD's unreleased products are. So can you just kind of briefly go
into that product portfolio and what holes did it fill for you and where does it
help you going forward?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Ramesh, this is -- the APD acquisition is a little bit different from the
Anachip acquisition. Anachip acquisition for us is a jump start for us to get
into the analog business. So it's more on the product, more on the business,
more on the analog -- you know in that area.

But for APD acquisition, it's a pure technology acquisition. We agree -- I think
from our announcement, you can see they have a lot of patents, a lot of
trademarks, a lot of [tech knowledge] is within this APD Company. Their product
is in its infancy stage. I think Carl was talking about that. So you cannot
really to look at it's a 4-X of the revenue, because the money really pay for is
the technology. You know, you can see, we want to spend our R&D money. But our
revenue growth (indiscernible) we've just cannot spend enough R&D money to get
to our business model. But by doing this kind of acquisition is a supplemental
of our technology improvement. And if you look at APD technology, it provides us
a better performance, a lower-cost chip. Now, if you wanted -- if you keep --
the dies sets are the same, the performance is much better. And it's scalable.
So you can keep the same performance but reduce the die size, reduce the cost.
And it's leading us to a new generation, a new variable of technology. So I want
to say APD acquisition is really a technology acquisition and it's a growth
driver for us next year or even year after. And I think APD recognized that, and
we recognize that. And that is why they don't want to just take the money and
walk away. The really want (indiscernible) and now. And that (indiscernible)
tied to the revenue, because we all understand it will be a growth provider, a
growth driver for us in the future.

- --------------------------------------------------------------------------------
Operator

Steve Smigie, Raymond James.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

I was curious if you could tell me if the guidance that you gave for Q4 includes
any revenue from APD?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

We ought to mention -- APD is only $2 million, and very minor. So yes, it's
included, but it's a very, very small amount. The [power] (indiscernible) is $2
million, and we only two months left. And if we cross (indiscernible) you
probably only have a half-quarter left. So it's very small amount. It's not
significant.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay, great. As Dr. Lu was mentioning, your percentage of R&D as a percentage of
revenues was still pretty low just because it looks like your revenue grew so
fast. Can you give us some guidance in terms of what R&D, and as long as you are
at it, SG&A will look like sequentially and if any sort of plans to ramp those
more quickly as we enter '07?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Well, I think our business model, I have been saying when we spent
(indiscernible) technology, we are not talking about R&D 10% or 15% like a lot
of people thinking going to (indiscernible). But I think I mentioned before our
(indiscernible) for our R&D is 2.5% plus/minus 0.5%. So you can see probably
somewhere around 2% to 3% of the revenue. And that is our business model, and
that is about what we are doing. And we are -- if you look at our R&D this
quarter, third quarter, it's a bit lower than our business plan. And it's
because -- but we are straight (indiscernible) the design center in
(indiscernible), the design center (indiscernible) and so we probably will catch
up to -- but our business model is about 2.5%, plus or minus 0.5%

<PAGE>

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Right. And you think you will catch up to that in Q4, or more Q1?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No, it probably won't be in Q4. Q4 is only two months left. So you might
consider Q1.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay. And you did a good job there controlling SG&A as well. Does that increased
dollar-wise sequentially, and what sort of target do you have for that as a
percentage of revenue?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

I think that's the way we control SG&A is quite good. And what we really do is
we (indiscernible) that SG&A growth (indiscernible), but we get our revenue
growth. So what we do is we allow SG&A increase at the best percentage of our
revenue growth. So eventually -- so we were hoping every quarter our SG&A is
either flat or down as a percentage. So I am very careful to make sure our SG&A
as a percent of the revenue won't increase. And we will keep it that way. That
is our business model anyway.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay, great. Your [interest common] assumption, the 5 to I think 5.5 you gave --
it seems like the interest rate you would be getting there was similar or a
little over 2%. Are you just being conservative with that, or could you get a
little bit more?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No, don't forget -- we have to 2.25% cost, too.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay, so that's netted out.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, that is net. The one we report is net, and we have 2.25% payout twice a
year.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay, fair enough. And just in terms of looking at Q1, would you expect that to
be a pretty weak quarter sequentially just given your mix of consumer and
computing business, and could that potentially be down sequentially?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Well, number one, we don't really give the guidance that far away. Okay? So we
give the guidance on 4Q, but the 1Q for us, it's quite far away. And just that
- -- market seasonality, Christmas sales can affect. I can tell you so far, we
don't know what will be the Christmas sale. But if Christmas sales is good, at
the next quarter, then 1Q will be good. But if Christmas sale is bad, then 1Q
won't be as good. And so I really don't know. Just like everybody -- we don't
really know what will be the Christmas sales. I hope we have a good Christmas
sale. If we can encourage everybody go to do the Christmas shopping, I will be
pickled to death.

<PAGE>

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

And I apologize, just one more, if I could. The other income -- or I guess it's
actually other expense of $1.6 million -- seems up quite a bit sequentially. I
don't know if that was part of the reversal there or not. But even so, that
would only be $600,000 [as to -- so it would be] another $1 million. Just
curious what that increase was there?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Steve, it was actually a $1.1 million adjustment in the fourth quarter for the
other expense column. And so you need to make sure you add that back into your
model. You know, we stated the net effect after taxes was 650, but it was really
about $800,000 effect in the SG&A line. So if you were to add that back, our
percent of SG&A would have been closer to I think 14% range. Okay? And maybe I
should've added that when you asked me that question, but I was trying to get
some research on it. And then, the other income had a $1.1 million affect.

There's full disclosure in that convertible, if you want to see that in advance,
it's all spelled out there with the numbers in fact.

- --------------------------------------------------------------------------------
Steve Smigie - Raymond James - Analyst

Okay, very nice quarter.

- --------------------------------------------------------------------------------
Operator

Gary Mobley, A.G. Edwards.

- --------------------------------------------------------------------------------
Gary Mobley - A.G. Edwards - Analyst

I was hoping that we could jump back on the topic of APD briefly and maybe you
could talk about the potential for gross margin there, perhaps well beyond the
2007 sales projection, once the products hit their full stride?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Yes, Gary, I think that we have good opportunity to expand gross margin, at our
discrete level or above. Again, we look at this product line as an extension to
our previous rectifier line and at the performance level. And where we use it in
a different where we scale it for cost, we think that that will provide cost
advantages. So we really look at the technology as an opportunity to both grow
revenues, add sockets in performance spots, but as well, save money. So we think
it has a play in both areas, both for growth into new markets, new product
segments, as well as expand our margins.

- --------------------------------------------------------------------------------
Gary Mobley - A.G. Edwards - Analyst

Okay. And back on the topic of bringing Anachip packaging in-house, it seems as
though you may have -- your capital spending trends in the quarter sort
contradict that, that you're running 100% utilization, and wanted to bring
packaging in-house. Could you give us some direction on what impacted the
quarter, and what the CapEx spend plan might be on a forward 12-month or '07
basis?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

I think the capital expenditures -- I think in the past, I have already
mentioned -- we put that the biggest model is a 12% of revenue. We will put in
the capital expenditure. But if you look at our revenue growth -- so we can
spend more money. But when we spend that money, then the capacity won't be in
(indiscernible) quarter later or six months later. So we do expand the capacity.
Right now, I think our capacity now is like 1 billion units a month type of
capacity. And we are going to now -- later on, probably, go up to about 1.1
billion -- probably at year-end.

<PAGE>

So we spend the money for the capacity. But the time to get to the variable, it
takes about three months to six months, okay? And that is why it (indiscernible)
us to bring in that product into our facility, because our growth is just better
than what we expected. If you remember, every quarter, we are talking about 5%,
6%, or 6%, 7% growth, and end up to be 12%. It's just -- much better than our
expectations.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Some of the packages that we kept outsourcers -- some of the higher ASP devices
that are in fewer packages for our facility. So again, we don't have as much
flexibility in this first stage to ramp as quickly. In some of the other
devices, more than our (indiscernible) 23 in there, SD59, we consumed that stuff
a while ago. But those are the lower ASPs, so the percentage of revenue, high
ASP versus low ASP, may throw that mix off a little, Gary.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

And Gary, like I mentioned, we actually started to move our product into our
facility and improve the gross margin. It's just because the lower gross margin
type of energy product would grow faster than discrete products. So it forced
the average chip (indiscernible) -- the average gross margin percent the same.
But if you look at -- we actually started a product of him through moving --
(indiscernible) product moving to our facility and then give us the better
margin. It just -- the percentage makes the equal.

- --------------------------------------------------------------------------------
Gary Mobley - A.G. Edwards - Analyst

With respect to the sale synergies from the Anachip acquisition, how far along
are we in seeing the benefits of that? You mentioned that you start see the
North American and European sales --?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

I think -- I'll answer that question -- and I think we are talking about new
power we are starting to see a ramp in 1Q because we finished this [cording],
and start to announce the product to our customer base in Europe and U.S. Then
you give them six months, you know, three to six months design-in, we see a lot
of other design wins. By the way, we always see a lot of design wins in the U.S.
and Europe from our energy product. It's just the time for them to ramp, it
takes probably three to six months. So Mark can answer it, but I would say
probably 1Q or 2Q.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Right. And in Asia, we pretty much have complete synergy. The customer overlaps,
the sales channel is rolling, and the customers are familiar with both lines, so
they would accept both logos.

In North America, we have done a lot of design wins at our key accounts. Those
would be our multinational accounts or design here and ship to Asia, or some of
our top OEMs that we said it was simple to pull an Anachip brand product into
those accounts right away.

It's where we are lacking and where we have taken our time is on introduction to
the channel, which would be distributors. And in North America and Europe,
roughly 70% of the business that we track as a revenue point in those areas is
through that channel. So that is where we have a lot of opportunity, is as we
move into our distributors -- Arrow, Avnet, Future Electronics, DigiKey and so
forth. But in order to do that, since there is inventory returns and stock
rotations and all that type of stuff, we wanted to make sure that it was all
centralized under one logo so that there was no confusion, and it wasn't clean.
So that is what we are talking about.

But we have been introducing into our key customers and working with our key
OEMs to establish a position for quite a while in that area. So we've had good
success at the key OEMs. It's now getting it into the channel. And the channel
drives the margin.

- --------------------------------------------------------------------------------
Operator

Kevin Rottinghaus, Cleveland Research.

<PAGE>

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Just on a similar question -- CapEx looks like it dropped off fairly
significantly. With the move to bring Anachip in-house plus the growth you're
seeing, any comments on why that would have dropped off, keeping in mind that it
is a 12% target, but just would have thought that I would have continued to ramp
with the growth that you are seeing?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Are you talking about the CapEx would drop?

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

If fell quarter over quarter fairly significantly.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes. Well, quarter to quarter, we don't track it quarter to quarter. And we see
the capacity need -- we expand it when we do. I think I have been saying is 12%
our annual revenue. So quarter to quarter, it's difficult, because any time you
added, it's a chunk. And if you don't add it, you don't put that chunk in there.

So I don't look at quarter to quarter. I am more tracking is year to year. And
if you look at today, our year-to-year, year-to-date is about -- we are talking
about 10 to 12% at (indiscernible) at that point. It's quoting that 6 million
for building -- we take those away.

So I think we are about at the middle of, I would say, 10 to 12% year-to-date.
And so we probably will finish this year at about 12% of our revenue.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Okay. Carl, was there any adjustments R&D due to the onetime?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

No.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Is the R&D in absolute dollars -- were actually down a little bit on the
quarter. Was there anything happening, either in second quarter or third quarter
that might have caused that to go down a little bit this quarter?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No, typically, the R&D percent is you cut in mask. If you cut another mask in
that quarter, then the R&D will be up. The course of R&D is (indiscernible)
percent -- one is the people, the core of the (indiscernible). Those are very
constant. As a matter of fact, we are [hiding] the people, so it will be
probably included.

<PAGE>

But the other big chunk is the mask and all the new product we have built now --
costs associated with the new products. And so when some quarter you cut a lot
of mask, your cost will be way up. Some quarter, they will be down.

Now, I am not saying this because our real growth (indiscernible) so you look at
the percent, you are going to say -- oh, the percent went down. But the
dollar-wise -- yes, our third quarter versus second quarter, it went down, what
200 -- ?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

About 150,000.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

150,000. So it's not up -- a couple of (indiscernible) of mask will offset that
amount --

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

I think you're right. I think the mask, a lot of the variable cost in place.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes. But the reason percent went down so much is because -- don't forget, we
grow to almost 12% this quarter. And we just did not hire that many R&D to keep
up with it.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Okay, I understand. Then I guess two other quick ones. Mark, if you could please
repeat what you said earlier on channel inventories, and then any kind of
commentary you might have on inventory at your customers.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

No, I think our inventory at our customers is fine. You know, I don't think we
ever have really any issue there. Customers pretty much depend on us to deliver,
so we don't think there's any double-ordering.

We do see the channel -- I don't think our inventory is out of whack, but the
distributor inventory in general may be a little out of whack. So we expect some
- -- we have seen -- as I mentioned that our POP was down quarter over quarter,
but we had record POS sales.

So I think that we are going to see a trend from the distributors across the
board to be a little bit careful with inventory over the balance of the fourth
quarter. But I don't think that there is anything to be concerned about there.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Okay. And then last, if you could just give any kind of commentary on the PC
market that you see out there -- maybe trying to net out your share gains, just
what the PC market looks like this time if year versus what it normally does.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

I think the PC market looks pretty much like it always does this time of year.
You know, there has been some indication of a little bit of more softening in
the motherboard going into the end of this year. But it's really not clear yet
to us, okay? We are still tracking. Our numbers are still tracking and so we
don't see any big adjustments.

<PAGE>

- --------------------------------------------------------------------------------
Operator

[Tom Grayless], Longbow Research.

- --------------------------------------------------------------------------------
Tom Grayless - Longbow Research - Analyst

Hi, this is [Tom Grayless] for Sean Harrison. I was just wondering if you could
give us a little more color here on product inventory at distribution, Anachip
versus the legacy lines, and if you are seeing any change in order
cancellations? I know you want to do that a little bit, but maybe just a little
more detail?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Actually, you know, I think in Asia, this is a very busy time of year, so
there's certainly no inventory buildup in Asia. And so, basically, we have no
inventory -- Anachip inventory in the channel yet, because -- again, no
significant inventory in the channel yet, because we are in the process -- we
just completed all of our qualifications and are porting into the logo
transformation. So there is certainly no issue with inventory of Anachip in the
channel. And as I said before, I think we are pretty -- we're in a pretty
reasonable position. Our inventories are higher than they were last year, but we
are also seeing record POS. So I think we are in pretty good shape in the
channel industry, and on the (Inaudible question - background noise) side.

- --------------------------------------------------------------------------------
Tom Grayless - Longbow Research - Analyst

All right. And could you comment a little bit about the rise in lead frame
molding costs in 3Q and 4Q -- any thoughts you have on that?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

What was the question?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

The change in lead frame cost and molding cost and -- you know, when you are
running a billion units a month of very small material content devices, it may
take us several quarters to see the impact of those changes. And as we have
increased our volume and so on, we have kind of offset some of these with
synergies and overhead cost reductions and so forth. So yes, we just don't have
the data on that.

- --------------------------------------------------------------------------------
Operator

[Christopher Mongaru], Sidoti.

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

Congratulations on a good quarter. I just wanted to know a little bit more about
what you see going forward with the ADP acquisition -- how it's going to enhance
your business going forward, and some things that you are looking at
product-wise and basically just to give us a better idea of maybe where you are
going with this?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Okay, number one, it's APD. That is a (multiple speakers)

<PAGE>

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

I apologize -- APD. (multiple speakers)

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Okay, the Company is called APD. They provide really technology. We need it, and
complement to our product line. That is number one. And that is why we are very
interested, because we look at their technology. It's really a very good
differentiator, and it provides a [load] (indiscernible) and -- and yes, they
provide the [low] we have and -- let me see -- low leakage at high temperature.
So those was the very good performance in our mind. You know, our product -- we
- -- leakage is one important phase, especially for portable product, high
temperature. So they provide us a technology at high temperature, low leakage,
and the [law] we have. And those are related technology can lead into a
dealership product. Okay?

And number two is the die size is scalable to the performance. That is our other
key thing. In the Schottky product, it's very difficult to control the die size.
And so you have fixed die size, you have performance come out. Now you say, I
don't need this kind of performance. Can you give me a lower cost at a lower
performance? In Schottky, it's very difficult to do.

This technology for provide us the scalable effect. So if you show me a
high-performance, like I mentioned, low [VF] and a low leakage and temperature
- -- if you don't need this kind of performance, then you can shrink the die and
provide a low-cost product. And that is the second thing.

So we all -- we could say, is the cost effective, or performance type of
technology? And that gives us the leadership product. And that is why we believe
It's the gross driver for us in the future.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

As well as you, can actually design the efficiency, which is a combination of
the VF and leakage towards the application, and very specifically, towards what
the customer needs, is very simply by just modeling the difference. So we see it
to offer improved performance in someone's circuit very simply in high-volume
applications. So this goes very well with our PowerDI performance packaging
platform, which is very small devices with very high thermal capability. And we
just see a lot of opportunity, not only to enhance or Schottky offering, but
also to attack different rectifier technologies that might not be our strengths,
which would be ultrafast marketplace and so forth. So we see a great opportunity
in performance and power supplies. And most importantly, long-term, we see this
as a nice automotive opportunity.

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

Great, that helped a lot. And also, after -- you just had a fantastic quarter,
something like 12% top-line growth. Do you think any of that might have been
attributable to this quarter, and maybe that's part of the reason for the 1 to
3% growth guidance, as opposed to -- if you guys have been giving maybe 3% to 7%
the last couple of quarters?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Christopher, so if I could take -- I think that is it difficult question. When
you, off of it, --

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

I know, it's hard -- I am just wondering --.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Chris, what is the question? What are you saying?

<PAGE>

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

Well, the question is -- do you think any of the -- with the extreme growth seen
in the third quarter might have been attributable to some sales from the fourth
quarter?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

I don't think so.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No.

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Chris, what I was going to start to say is, we had our first $50 million quarter
in the second quarter of 2005. We had our first $60 million quarter in the
fourth quarter of '05. We had our first $70 million quarter in the first quarter
of '06. We had our first $80 million in the second quarter, and we had our first
$90 million in the third quarter. That is a lot of compounded growth. (multiple
speakers) a short period of time.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Let me answer -- your first question -- is it because we proved -- [pull] in the
fourth quarter to make the third quarter 12%? The answer is definitely not. We
don't do that.

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

No, I understand.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Okay. Number two, if you look at most guidance today, our competitors' -- most
of them tell you it's negative. And so we believe for us -- our strategy always
- -- we are going to be outperforming our market. And we are going to outperform
probably 3-X of our market growth. So if you go to look at everybody's
announcements, you would say our continued growth will be very positive. So
maybe, we are now able to repeat 12%. But when people grow 7, 8%, or 6, 7%, we
grow 12%. But when people go to negative, 4, 5%, for us to say 1 to 3% -- I
think we still outperform the whole market.

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

No, I agree. I was just --

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

(multiple speakers) so it's definitely not because we pull in fourth quarter to
make a third quarter number. That is definitely not the answer.

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

We still expect to take share gain in the fourth quarter, Chris.

- --------------------------------------------------------------------------------
Christopher Mongaru - Sidoti - Analyst

Yes, that is exactly what I was asking.

<PAGE>

- --------------------------------------------------------------------------------
Operator

Chris Chaney, Stanford Group.

- --------------------------------------------------------------------------------
Chris Chaney - Stanford Group - Analyst

Thank you, and gentlemen, I wanted to add my congratulations for a very nice Q3
also. Now I had two questions. The first relates to the tax rate for '07. And
Carl, I am thinking that with what's being said about the expected ramp at
Anachip, especially in the U.S. and Europe, that we should see the tax rate
begin to increase somewhat in 2007? Can you give us any guidance on that?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Well, we gave the guidance for the end of the fourth quarter basically being in
line with the last one -- pretty close to the high end of the 19, 20%. Again, I
think for modeling '07, we don't give the guidance that far out. But you guys
still need to do some modeling -- I would suggest keeping it that [rate]. We are
doing a lot of tax planning globally. It's a very complex environment. Tax, as
we know, changes almost daily with the government and such. So I would say stay
in that high-end range for your model.

- --------------------------------------------------------------------------------
Chris Chaney - Stanford Group - Analyst

All right, very nice. And then the second question relates to really your -- I
guess your unit output, or unit capacity as we were hearing earlier that by the
end of the year, we might see around 1.1 billion units per month as the run
rate. Do you guys have a target specifically for -- by the end of 2007, or where
do you think you might be? And what sort of CapEx could get you there? Would it
still be the 12% number of sales you were talking about earlier?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Number one, yes -- our CapEx model for next year is going to be still at 12%.
Number two, how much we're going to do it, we don't know, because it depends on
how the market is doing. In fact, I mentioned, we always put in the capacity
when we need it. We do not put in a lot of capacity and expect the market is
going to be growing, then turn out to be wrong, and then have a lot of excess
capacity sitting there. Therefore, we now still look at in our assumption of the
revenue and plan on 12% of that revenue to be the capital expenditure. When we
get there, then we spend it. And if our revenue is not there, we don't spend it.
But we do put in a new capability. For example, this year, we put up the [18 SO]
packets. We did not have that 18 SO before. And due to the Anachip acquisition,
we have put in 18 SO capacity -- capability into our assembly. Now, by buying
APD, we need to look at a lot of the product they can use in our internal
capabilities. But they have I think one package we don't produce. So we are
looking at -- we might want to put in that capacity into our capability -- our
assembly site, too.

So we did not -- we are still not our model, and we will spend the money. But I
cannot give you the -- what will be the run rate we expect by the end of next
year.

- --------------------------------------------------------------------------------
Chris Chaney - Stanford Group - Analyst

Okay, I understand. And just one last question, and that is that earlier this
quarter, when it appeared to you that the market was going to be better and that
sales were going to be really ramping, I'm wondering if at that time, were you
trying to order equipment and having trouble getting the deliveries and getting
them into production, or do you see any tightness in the back of equipment going
into next year?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No, like I said, we do not see by gauging the needs and then putting in
capacity. We put in the capacity when we really have the need. And that is why
did not bring in porting energy products faster than what we expand it. When we
grow faster than we -- when the business grows faster than we expect it, we just
throw down the porting Anachip products into our facilities. And we're using
that capacity originally for the energy products. We used this for additional
(indiscernible).

<PAGE>

Now, we have put in the capacity because our run rate reached there, and we put
in the capacity there. So we didn't -- like the beginning of the quarter that
you say (indiscernible) had good business then put in the capacity. We don't do
that.

- --------------------------------------------------------------------------------
Chris Chaney - Stanford Group - Analyst

I understand. Thank you very much.

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Chris, if I can add to that a little bit, there was a question asked earlier
about the seemingly slowdown in our CapEx in the third quarter. We also have to
go back to where we were in the second quarter where we had stated we were
actually ahead of the schedule. At the end of the second quarter, we were at $29
million in CapEx, including the $6 million building. So that was still $24
million for production expansion. So the $5 million is balancing out. Like we
said, we are still in the mid range of that 10 to 12%.

And I think year in and year out, we have proven that we are pretty efficient in
our expansion, and we know what it's like to run facilities at less than full
capacity, and we like to keep it at full. So we have been very cautious on our
expansion, and I think we're in a pretty good position to continue to go
forward.

- --------------------------------------------------------------------------------
Chris Chaney - Stanford Group - Analyst

Do you plan much spending at the wafer fab?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

As of this moment? No. Because for the Anachip, we're using outsourcing. Anachip
products, they don't use our internal plant because they're using an outsourcing
plant. And for our discrete, we still -- we are running about 85% through. And
we (indiscernible) improved the productivity, and we still can support our wafer
needs.

- --------------------------------------------------------------------------------
Operator

Kevin Rottinghaus.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

So I just had a quick follow-up for you. I guess two follow-ups. When does the
holiday build typically start to slow down for you?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

December seems to be a little slower generally than -- October and November
seemed to be the peak for us.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Okay, they start to slow down in December. And then last -- the announcement
today between International Rectifier and Vishay -- any commentary you can have
on what that does to competitive dynamics, or any impact that might have on the
market would be very helpful. Thank you.

<PAGE>

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

I'll let Mark answer this question.

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

I think that that's a perfect acquisition for Vishay. Those are not the right
things for us. It seems to be an older technology and so forth.

We always like any consolidation in the industry. It always seems to confuse the
competitors a little bit, and give us a little bit of a head start. I don't see
- -- this one is kind of a more non-mainstream transaction. So I don't see it
having a real significant effect on us.

- --------------------------------------------------------------------------------
Kevin Rottinghaus - Cleveland Research - Analyst

Or on the overall market?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Or on the overall market. I think it's just transferring from one big guy to
another big guy. So it's not -- if they were coming altogether, that would be
wonderful for us, because we always believe that all consolidation opens up huge
opportunities for us.

- --------------------------------------------------------------------------------
Operator

Alex Gauna, UBS.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

I wanted to confirm -- I believe you mentioned that both core and the Anachip
business lines grew in the current quarter -- or the past quarter, I'm sorry. Is
that correct?

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Yes.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes -- both grew.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

And then going forward in the neutral gross margin guidance, is that assuming
then that both core and the Anachip are expected to grow at the same rate right
now?

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Probably.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

And then I guess I am wondering, as the quarter progressed, where did you see --
you did upwardly revise guidance twice. Where were those revisions coming from?
Were they coming on the Anachip side or on the core side or both?

<PAGE>

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Both. You're talking about the third quarter, right?

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Yes.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes. It's actually from both.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Okay. And then, Mark, I believe you mentioned that you some people maybe getting
or distribution getting maybe a little bit more cautious in Q4. And Dr. Lu, you
had also mentioned that peers have showing quite a bit of underperformance here
lately. Isn't it safe to assume that somewhere in your end market, you actually
- -- there was actually slowing in Q3 as well? You managed to outperform it,
obviously. But hasn't there already been slowing in the market?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

You know, we've spent a lot of time studying our business. So it's really hard
to understand the dynamics of everyone else's business. I think that we have
been on a pretty strong growth path all year long. And we don't really see that
our segments have been on a strong a growth path as we are. But it does appear
that our peers definitely had a much slower growth rate in Q3 than we did.

We do believe we continue to gain share. We do believe we continue to add valued
at our customers that is winning us stronger position. So really, we are pretty
focused on running our business.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, but we know one thing -- our third quarter really didn't see the slowdown.
From our business, our third quarter didn't see the slowdown, because you can
see from our guidance, every time we up our guidance, it's essentially higher
than what we previously said. And you remember from our convertible bond
offering, at that time, we thought we had 11.5. But we ended up to be 11.9. So
we really didn't see any slowdown in third quarter. (multiple speakers)

- --------------------------------------------------------------------------------
Carl Wertz - Diodes Inc. - CFO

Okay, to some degree, it seemed like you viewed the not pulling the Anachip in
as a weakness. Actually, I view that as a strength. I view that as our ability
to recognize and be flexible and able to maximize our assets in order to
maximize our overall top-line growth. And so that is a regular part of our plan.
And that has been a part of our utilization plan before Anachip and so forth, is
maintaining utilization to maximize revenue.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Yes, I think -- Alex, you know I have been talking about -- when we're talking
about profitable growth, what we really want to do is make the revenue, okay?
And we don't pay that much attention to the gross margin percent. As long as we
consider which one -- by growth or by improve the gross margin percent, whatever
can give us the best gross margin dollar improvement is what we go after. So at
this time, and I do mean the third quarter, when we look at it, we definitely
want to go to growth instead of just trying to improve that gross margin
percent. And it turned out to be, our decision is right. If you look at -- our
bottom line number, it still continually improved. And so it's unfortunate we
have these two adjustments when also, it cost us $0.02, or we will be even $0.02
better than what we tell you today. So I think our strategy is correct, and we
continue to concentrate on gross margin dollars. And whenever -- from a matter
from growth or from percent improvement, whichever can give us the best of the
gross margin dollar, is what we go after.

<PAGE>

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Yes, I don't mean to imply that I view what happened as a weakness. Again, it
was obviously a very powerful quarter. What I am getting at here is, it seems to
meet that the industry has slowed down. And anecdotally, there are some signs
that maybe we are coming out of a trough at some point. So I'm wondering if
perhaps this 1 to 3 could turn into something stronger if the industry does in
fact have a good holiday sales cycle and come out of it, given you do do quite a
bit of turns in the quarter. So I was wondering if maybe, had the industry not
slowed, we might even be talking about you having just posted a 16 or 17%
number.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

(laughter). (multiple speakers) I like your number. But unfortunately, the
[bucket] actually slowed down. Now, we are still much better from a performance
point of view relative to our competitors, because every day, I see all these
announcements, negative, 7%, negative 7%, and I feel very nervous. But when I
look at our number, our focus, I think, 1 to 3% is pretty good for me. And I
feel comfortable we should be able to do 1 to 3%.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Last one, if I could. You gave some helpful color on the PC market. You are
seeing more now on the LCD exposure side. What do you think is happening with
that market right now? There seem to be some mixed indications on whether it's
ahead of itself or yet to commence a nice seasonal run here. What you think on
the LCD front?

- --------------------------------------------------------------------------------
Mark King - Diodes Inc. - SVP, Sales and Marketing

Every month, my Asian sales manager comes to me and says the LCD (indiscernible)
the thing is slowing down. At the end of every month, he tells me I'm wrong --
said he was wrong. So there is a lot of talk about it slowing down. But we
haven't seen a significant slowdown. But again, that's a seasonal business --
actually, the seasonal business for that though goes into first quarter because
of Super Bowl and so forth. I think it's still very hard to judge.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

I think, Alex, it's really kind of Christmas sale. I think I mentioned that
earlier. If economic improve and then people really go out for the Christmas
sales, then I feel much better, even this quarter. And I think our customer,
which is the LCD monitor builder, or the PC builder -- they are all trying to --
one foot on the gas pedal, the other foot on the brake pedal. And the same
thing, they watch, everybody watch the Christmas sale, start from Thanksgiving
holiday. And I do the same thing. And really, very hard for us -- I don't think
people are now -- even the Wall Street, anybody can tell you what will be this
year's Christmas sales. I really don't know.

- --------------------------------------------------------------------------------
Alex Gauna - UBS - Analyst

Very good, and congratulations again -- powerful quarter. Thank you.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Thank you, Alex.

- --------------------------------------------------------------------------------
Operator

So there are no further questions at this time.

<PAGE>

- --------------------------------------------------------------------------------
Crocker Coulson - Diodes Inc. - IR

I think we would like to thank everybody for their time this afternoon and this
evening. The questions have certainly run longer than ever in my memory. And we
look forward to coming back to you after we close the fourth quarter to give you
an update on our further progress. In addition, Diodes will be presenting at the
AEA Conference next week up in Monterey. So any of you who are going to be at
the conference, we hope you will come by and meet with C.H. and Mark in person.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

No, no C.H. (laughter)

- --------------------------------------------------------------------------------
Crocker Coulson - Diodes Inc. - IR

Sorry, (MULTIPLE SPEAKERS) with Dr. Lu and Carl in person. And the company will
also be at the UBS Conference the following week.

- --------------------------------------------------------------------------------
Dr. Keh-Shew Lu - Diodes Inc. - President & CEO

Okay, thank you very much. Thank you, everyone.

- --------------------------------------------------------------------------------
Operator

This concludes today's 2006 results conference call. You may now disconnect.
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