SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

Diodes Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

---------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

---------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

---------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

---------------------------------------------------------------------
(5) Total fee paid:

---------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

---------------------------------------------------------------------
(3) Filing Party:

---------------------------------------------------------------------
(4) Date Filed:

---------------------------------------------------------------------
2

DIODES INCORPORATED

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 6, 1997

NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING ("THE MEETING")
OF THE STOCKHOLDERS ("STOCKHOLDERS") OF DIODES INCORPORATED (THE "COMPANY") WILL
BE HELD AT THE RADISSON HOTEL, 30100 AGOURA ROAD, AGOURA HILLS, CALIFORNIA
91301, ON FRIDAY, JUNE 6, 1997 AT THE HOUR OF 10:00 A.M. FOR THE FOLLOWING
PURPOSES:

TO RECEIVE AND CONSIDER:

The report of the Board of Directors on the business of the
Company and the Company's audited financial statements for the fiscal year ended
December 31, 1996, together with the report of Moss Adams LLP, the Company's
independent accountants for such period, on those audited financial statements.

TO ACT ON:

1. ELECTION OF DIRECTORS. To elect seven persons to the Board
of Directors of the Company, each to serve until the next annual meeting of
stockholders and until their successors have been elected and qualified. The
Board of Directors' nominees are: Michael R. Giordano, David Lin, M.K. Lu, Shing
Mao, Michael A. Rosenberg, Leonard M. Silverman, and Raymond Soong.

2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To
ratify the appointment of Moss Adams LLP as the Company's independent certified
public accountants for the year ending December 31, 1997.

3. OTHER BUSINESS. To transact such other business as
properly may come before the Meeting or any adjournment thereof.

ONLY PERSONS WHO ARE STOCKHOLDERS OF RECORD (THE
"STOCKHOLDERS") AT THE CLOSE OF BUSINESS ON APRIL 30, 1997 ARE ENTITLED TO
NOTICE OF AND TO VOTE IN PERSON OR BY PROXY AT THE MEETING OR ANY ADJOURNMENT
THEREOF.

The Proxy Statement which accompanies this Notice contains
additional information regarding the proposals to be considered at the Meeting,
and Stockholders are encouraged to read it in its entirety.

As set forth in the enclosed Proxy Statement, proxies are
being solicited by and on behalf of the Board of Directors of the Company. All
proposals set forth above are proposals of the Company. It is expected that
these materials will be first mailed to Stockholders on or about May 9, 1997.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
TO BE SURE THAT YOUR STOCK IS VOTED. YOUR VOTE IS IMPORTANT, WHETHER YOU OWN A
FEW SHARES OR MANY.

Dated at Westlake Village, California, this second day of
May, 1997,

By Order of the Board of Directors,

/s/ Joseph Liu
Joseph Liu,
Secretary

DIODES INCORPORATED
PROXY STATEMENT

TABLE OF CONTENTS

Page
----

GENERAL INFORMATION FOR STOCKHOLDERS ............................................................................... 1

MATTERS TO BE CONSIDERED AT ANNUAL MEETING ......................................................................... 1
Costs of Solicitations of Proxies ......................................................................... 1
Outstanding Securities and Voting Rights; Revocability of Proxies ......................................... 1

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ..................................................... 3

PROPOSAL ONE - ELECTION OF DIRECTORS ............................................................................... 4
Directors and Executive Officers .......................................................................... 4
Committees of the Board of Directors ...................................................................... 7
Compensation of Directors ................................................................................. 8

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 ............................................... 8

EXECUTIVE COMPENSATION AND RELATED INFORMATION ..................................................................... 9
Summary of Cash and Certain Other Compensation ............................................................ 9
Stock Options ............................................................................................. 11
Option Exercises and Holdings ............................................................................. 11
Employment Contracts and Termination of Employment and Change in Control Arrangements ..................... 12
Report of the Compensation Committee of the Board of Directors to Stockholders ............................ 12
Compensation Committee Interlocks and Insider Participation ............................................... 13
Performance Graph ......................................................................................... 14
Certain Relationships and Related Transactions ............................................................ 15

PROPOSALS OF STOCKHOLDERS .......................................................................................... 16

ANNUAL REPORT AND FORM 10-K ........................................................................................ 16

OTHER MATTERS ...................................................................................................... 16

i
4
DIODES INCORPORATED
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(805) 446-4800

PROXY STATEMENT

ANNUAL MEETING: JUNE 6, 1997

GENERAL INFORMATION FOR STOCKHOLDERS

This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors ("the Board of Directors") of
Diodes Incorporated (the "Company") for use at the annual meeting ("the
Meeting") of the stockholders of the Company to be held on Friday, June 6, 1997,
at the Radisson Hotel, 30100 Agoura Road, Agoura Hills, California 91301, at
10:00 a.m. and at any adjournment thereof. Joseph Liu and Carl Wertz, the
designated proxyholders ("the Proxyholders"), are members of the Company's
management. Only stockholders of record (the "Stockholders") on April 30, 1997
("Record Date") are entitled to notice of and to vote in person or by proxy at
the Meeting or any adjournment thereof. This Proxy Statement and the enclosed
proxy card ("Proxy") and other enclosures will be first mailed to Stockholders
on or about May 9, 1997.

MATTERS TO BE CONSIDERED AT ANNUAL MEETING

The matters to be considered and voted upon at the Meeting
will be:

2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To
ratify the appointment of Moss Adams LLP as the Company's independent certified
public accountants for the year ending December 31, 1997.

3. OTHER BUSINESS. To transact such other business as properly
may come before the Meeting or any adjournment thereof.

COST OF SOLICITATION OF PROXIES

This Proxy solicitation is made by the Board of Directors of
the Company and the Company will bear the costs of this solicitation, including
the expense of preparing, assembling, printing and mailing this Proxy Statement
and any other material used in this solicitation of Proxies. This solicitation
of Proxies will be made by mail and may be supplemented by telephone or other
personal contact to be made without special compensation by regular officers and
employees of the Company. If it should appear desirable to do so to ensure
adequate representation at the Meeting, officers and regular employees may
communicate with Stockholders, banks, brokerage houses, custodians, nominees and
others, by telephone, facsimile transmissions, telegraph, or in person to
request that Proxies be furnished. The Company will reimburse banks, brokerage
houses, and other custodians, nominees and fiduciaries, for their reasonable
expenses in forwarding proxy materials to their principals. The total estimated
cost for the solicitation of proxies is $9,000.

OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES

The authorized capital of the Company consists of 9,000,000
shares of common stock ("Common Stock"), $0.66-2/3 par value, of which 4,958,679
shares were issued and outstanding on the Record Date with an additional 717,115
shares held as Treasury Stock. In addition, 1,000,000 shares of Class A
Preferred Stock, $1.00 par value ("Class A Preferred Stock"), are authorized, of
which no shares were issued and outstanding on the Record Date. The Common Stock
and the Class A Preferred Stock are collectively referred to as the "Stock". A
majority of the outstanding shares of the Common Stock constitutes a quorum for
the conduct of business at the Meeting. Abstentions will be treated as shares
present and entitled to vote for purposes of determining the presence of a
quorum.

1
5
Each stockholder is entitled to one vote, in person or by
proxy, for each share of Common Stock standing in is or her name on the books of
the Company as of the Record Date on any matter submitted to the stockholders,
except that in connection with the election of directors, each Stockholder has
the right to cumulate votes, provided that the candidates' names have been
properly placed in nomination prior to commencement of voting and a Stockholder
has given notice prior to commencement of voting of his or her intention to
cumulate votes. Cumulative voting entitles a Stockholder to give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of shares of Common Stock owned by such Shareholder; or to distribute
such Stockholder's votes on the same principle among as many candidates as the
Stockholder shall think fit. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
Discretionary authority to cumulate is hereby solicited by the Board of
Directors and the return of the Proxy shall grant such authority.

Of the shares of Common Stock outstanding on the Record Date,
1,995,093 (or approximately 40.2%) (the "Shares") were held in name by Lite-On
Power Semiconductor Corporation ("LPSC"), a wholly-owned subsidiary of Silitek
Corporation ("Silitek"). Silitek has disclaimed beneficial ownership of the
Shares. See "Security Ownership of Certain Beneficial Owners and Management" and
"Certain Relationships and Related Transactions" for a discussion of the
relationship among Silitek, LPSC and the Company. LPSC has informed the Company
that it will vote "FOR" the election of the nominees to the Board of Directors
identified herein and "FOR" the ratification of the appointment of Moss Adams
LLP as the Company's independent auditors.

Each proposal described herein, other than the election of
directors, requires the affirmative vote of a majority of the outstanding shares
of Common Stock present in person or represented by proxy and entitled to vote
at the Meeting. Accordingly, broker non-votes and abstentions from voting on any
matter, other than the election of directors, will have the effect of a vote
"AGAINST" such matter.

A Proxy for use at the Meeting is enclosed. The Proxy must be
signed and dated by you or your authorized representative or agent. Telegraphed
or cabled Proxies are also valid. You may revoke a Proxy at any time before it
is exercised at the Meeting by submitting a written revocation to the Secretary
of the Company or a duly executed Proxy bearing a later date or by voting in
person at the Meeting.

Brokers and nominees holding Common Stock in "street name"
which are members of a stock exchange are required by the rules of the exchange
to transmit this Proxy Statement to the beneficial owner of the Common Stock and
to solicit voting instructions with respect to the matters submitted to the
Stockholders. In the event any such broker or nominee has not received
instructions from the beneficial owner by the date specified in the statement
accompanying such material, the broker or nominee may give or authorize the
giving of a Proxy to vote such Common Stock on the matters to be considered at
the Meeting; provided, however, that the broker or nominee may not give or
authorize the giving of a Proxy for any matter if it has notice of any contest
with respect to any matter, and, provided further, that the broker or nominee
may not vote the Common Stock "FOR" any matter which substantially affects the
rights or privileges of the Common Stock without specific instructions from the
beneficial owner. If you hold Stock in "street name" and you fail to instruct
your broker or nominee as to how to vote such Common Stock, your broker or
nominee may, in its discretion, vote such Common Stock "FOR" the election of the
Board of Director's nominees and "FOR" the other proposals described herein.

Unless revoked, the shares of Common Stock represented by
Proxies will be voted in accordance with the instructions given thereon. In the
absence of any instruction in the Proxy, your shares of Common Stock will be
voted "FOR" the election of the nominees for director set forth herein and "FOR"
the other proposals described herein.

The enclosed Proxy confers discretionary authority with
respect to any other proposals which properly may be brought before the Meeting.
As of the date hereof, management is not aware of any other matters to be
presented for action at the Meeting. However, if any other matters properly come
before the Meeting, the Proxies solicited hereby will be voted by the
Proxyholders in accordance with the recommendations of the Board of Directors.
Such authorization includes authority to appoint a substitute nominee or
nominees to the Board of Directors' nominees identified herein where death,
illness or other circumstances arise which prevent any such nominee or nominees
for directors from serving in such positions and to vote such proxy for such
substitute nominee or nominees.

2
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of
Common Stock as of the Record Date by (i) each person known to the Company to be
the beneficial owner of more than five percent of the outstanding shares of
Common Stock (other than depositories), (ii) each executive officer, director
and nominee for director of the Company, and (iii) all directors and executive
officers as a group:

AMOUNT AND
NAME AND ADDRESS NATURE OF
OF BENEFICIAL BENEFICIAL
OWNER(1) OWNERSHIP(2) PERCENT OF CLASS(3)
----------------------------- ------------ -------------------

SILITEK CORPORATION 1,995,093(4) 40.2%
RAYMOND SOONG, 100,000(5) 2.0%
Chairman of the Board
David Lin, 47,000(6) *
President, Chief
Executive Officer,
Director
MICHAEL R. GIORDANO, 31,000(7) *
Director
M.K. LU, 20,000(8) *
Director
SHING MAO, 80,000(9) 1.6%
Director
MICHAEL A. ROSENBERG, 25,000(10) *
Director
LEONARD M. SILVERMAN, 20,000(11) *
Director
PEDRO MORILLAS, 16,667(12) *
Executive Vice President
JOSEPH LIU, 70,000(13) 1.4%
Vice President -
Operations, Chief Financial
Officer and Secretary
All directors and executive 409,667(14) 8.3%
officers as a group (nine
persons)

* Less than 1%.

(1) The address of Silitek is 10 FL. NO. 25, Sec. 1, Tung Hua S. Rd.,
Taipei, Taiwan, Republic of China. The address of the directors and
executive officers of the Company is 3050 East Hillcrest Drive,
Westlake Village, California 91362.

(2) The named shareholder has sole voting power and investment power with
respect to the shares listed, except as indicated and subject to
community property laws where applicable.

(Footnotes continued on following page)

3
7
(Footnotes continued from previous page)

(3) Shares which the person (or group) has the right to acquire within 60
days after April 30, 1997 are deemed to be outstanding in calculating
the percentage ownership of the person (or group) but are not deemed to
be outstanding as to any other person or group. Percent of class total
does not take into account 717,115 shares held as treasury stock.

(4) Represents 1,995,093 shares of Common Stock to which Silitek disclaims
beneficial ownership. LPSC, which holds 1,995,093 shares of Common
Stock, as the record holder, is a controlled subsidiary of Silitek. The
address of LPSC is 28-1 Wu Shin St., Ta Wu Lung Industrial Zone,
Keelung, Taiwan, Republic of China.

(5) Represents 100,000 shares of Common Stock which Mr. Soong has the right
to acquire within 60 days of April 30, 1997, by the exercise of vested
stock options.

(6) Represents 47,000 shares of Common Stock which Mr. Lin has the right to
acquire within 60 days of April 30, 1997 by the exercise of vested
stock options.

(7) Includes 1,000 shares of Common Stock held in the name of PaineWebber
Trust for the IRA of Mr. Giordano and 30,000 shares of Common Stock
which Mr. Giordano has the right to acquire within 60 days of April 30,
1997 by the exercise of vested stock options.

(8) Represents 20,000 shares of Common Stock which Mr. Lu has the right to
acquire within 60 days of April 30, 1997 by the exercise of vested
stock options.

(9) Represents 80,000 shares of Common Stock which Dr. Mao has the right to
acquire within 60 days of April 30, 1997 by the exercise of vested
stock options.

(10) Represents 25,000 shares of Common Stock which Mr. Rosenberg has the
right to acquire within 60 days of April 30, 1997 by the exercise of
vested stock options.

(11) Represents 20,000 shares of Common Stock which Dr. Silverman has the
right to acquire within 60 days of April 30, 1997 by the exercise of
vested stock options.

(12) Represents 16,667 shares of Common Stock which Mr. Morillas has the
right to acquire within 60 days of April 30, 1997 by the exercise of
vested stock options.

(13) Includes 60,000 shares of Common Stock which Mr. Liu has the right to
acquire within 60 days of April 30, 1997 by the exercise of vested
stock options.

(14) Includes 398,667 shares which the directors and officers have the right
to acquire within 60 days of April 30, 1997 by the exercise of vested
stock options.

PROPOSAL ONE - ELECTION OF DIRECTORS

DIRECTORS AND EXECUTIVE OFFICERS

The Company's Bylaws provide that the number of directors
shall be determined from time to time by the Board of Directors, but may not be
less than five nor more than seventeen. The number of directors is currently set
at seven. The Bylaws further provide for the election of each director at each
annual meeting of stockholders.

The persons named below, all of whom currently are members of
the Board of Directors of the Company, have been nominated for election to the
Board of Directors to serve until the next annual meeting of shareholders and
until their successors have been elected and qualified. All nominees have
indicated their willingness to serve and, unless otherwise instructed, Proxies
will be voted in such a way as to elect as many of these nominees as

4
8
possible under applicable voting rules. In the event that any of the nominees
should be unable to serve as a director, it is intended that the Proxies will be
voted for the election of such substitute nominees, if any, as shall be
designated by the Board of Directors. The Board of Directors has no reason to
believe that any nominee will be unavailable.

None of the directors, nominees for director or executive
officers were selected pursuant to any arrangement or understanding, other than
with the directors and executive officers of the Company acting within their
capacity as such. There are no family relationships among directors or executive
officers of the Company as of the date hereof, and, except as set forth above,
as of the date hereof, no directorships are held by any director in a company
which has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or subject to
the requirements of Section 15(d) of the Exchange Act or any company registered
as an investment company under the Investment Company Act of 1940. Officers
serve at the discretion of the Board of Directors.

The following table sets forth certain biographical
information of the nominees for director and the executive officers of the
Company:

DIRECTOR
OFFICERS AND DIRECTORS AGE POSITION WITH THE COMPANY SINCE (1)
- ---------------------------------------------------------------------------------------------------------

Raymond Soong (2) ..................... 55 Chairman of the Board 1993
David Lin (3) ......................... 50 President and Chief Executive Officer; 1991
Director
Michael R. Giordano (4) ............... 50 Director 1990
M.K. Lu (5) ........................... 48 Director 1995
Shing Mao (6) ......................... 61 Director 1990
Michael A. Rosenberg (7) .............. 68 Director 1989
Leonard M. Silverman (8) .............. 57 Director 1995
Pedro Morillas (9) .................... 51 Executive Vice President N/A
Joseph Liu (10) ....................... 55 Vice President-Operations, Chief N/A
Financial Officer and Secretary

(1) Directors are elected at each annual meeting of Stockholders.

(2) Mr. Soong has been the Chairman of the Board of Silitek since 1990 and
has been Chairman of the Board of LPSC since 1992. See "Security
Ownership of Certain Beneficial Owners and Management" and "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Silitek, LPSC and the Company. Since 1995, Mr.
Soong has also been a director of FabTech, Inc. ("FabTech"), with whom
the Company entered into an agreement in February 1996, whereby the
Company gains a new supply of processed wafers used in the manufacture
of several types of discrete semiconductors. FabTech is a
newly-created, wholly-owned subsidiary of LPSC. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between FabTech, LPSC and the Company. Mr. Soong is a
graduate of the National Taipei Institute of Technology's Electronic
Engineering Department. After serving as a senior engineer for RCA and
as a chief engineer for Texas Instruments, Mr. Soong, together with
several of his coworkers, found Taiwan Liton Electronic Co. Ltd., a
Taiwan corporation ("Taiwan Liton"), in 1975. Taiwan Liton, which
manufactures electronic components and subsystems, is an affiliate of
Silitek through common control, and its stock is listed on the Taipei
Stock Exchange. Mr. Soong is also Chairman of the Board of Taiwan
Liton, and the newly formed joint venture with Shanghai Kai Hong
Electronics Co., Ltd. ("Kai Hong"). See "Certain Relationships and
Related Transactions" for a discussion of the relationship between Kai
Hong and the Company.

(Footnotes continued on following page)

5
9
(Footnotes continued from previous page)

(3) Since 1991, Mr. Lin has served as a director of the Company. Mr. Lin
has served as President and Chief Executive Officer of the Company
since March 1993. Mr. Lin is also President of Silitek and had served
as Executive Vice President of Silitek since 1990, prior to becoming
President. See "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Relationships and Related Transactions" for a
discussion of the relationship between Silitek, LPSC and the Company.
Mr. Lin was previously President of Texas Instruments Asia, Limited, in
Taiwan from 1982 to 1990. Mr. Lin has been a director of LPSC since
1991 and a director of Maxi Switch, Inc., since 1990. Mr. Lin is also a
director of the newly formed Kai Hong joint venture. See "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Kai Hong and the Company.

(4) Mr. Giordano joined the investment banking firm of PaineWebber
Incorporated as a Senior Vice President-Investments, when PaineWebber
acquired his previous firm, Kidder Peabody and Company, Inc. Mr.
Giordano advises corporations, foundations, trusts, and municipal
governments in investments and finance. Mr. Giordano was with Kidder
Peabody since 1979. Formerly a captain and pilot in the USAF, Mr.
Giordano received his Bachelors of Science degree in Aerospace
Engineering from California State Polytechnic University and his
Masters degree in Business Administration (Management and Finance) from
the University of Utah. Mr. Giordano also did post graduate work in
International Investments at Babson College. Mr. Giordano is a member
of the Company's Audit Committee and Compensation and Options
Committee, and is also the pension consultant for the Company's 401(k)
plan. See "Certain Relationships and Related Transactions."

(5) Since 1991, Mr. Lu has been President and a director of LPSC. From 1983
to 1990, Mr. Lu was General Manager/Vice President of Silitek. See
"Security Ownership of Certain Beneficial Owners and Management" and
"Certain Relationships and Related Transactions" for a discussion of
the relationship between Silitek, LPSC and the Company. Since 1995, Mr.
Lu has also been a director of FabTech. See "Certain Relationships and
Related Transactions" for a discussion of the relationship between
FabTech, LPSC and the Company. Mr. Lu earned his Bachelor of E.E. at
Tatung Institute of Technology and is a graduate of the Institute of
Administration at National Chengchi University. Mr. Lu is also a
present member of the Chinese Management Association and the Chinese
Association for Advancement of Management. Mr. Lu is also a director of
the newly formed Kai Hong joint venture. See "Certain Relationships and
Related Transactions" for a discussion of the relationship between Kai
Hong and the Company.

(6) From 1988 to present, Dr. Mao has been Chairman of the Board of
Lite-On, Inc., a California corporation located in Milpitas, California
("Lite-On Milpitas"), a wholly-owned subsidiary of Taiwan Liton. See
"Security Ownership of Certain Beneficial Owners and Management" and
"Certain Relationships and Related Transactions" for a discussion of
the relationship between Silitek, LPSC and the Company. Dr. Mao has
been a director of Dyna Investment Co., Ltd. of Taiwan, a venture
capital company, and a director of LPSC, both since 1989. Since 1995,
Dr. Mao has also been a director of FabTech. See "Certain Relationships
and Related Transactions" for a discussion of the relationship between
FabTech, LPSC and the Company. Before joining Lite-On, Dr. Mao served
in a variety of management positions with Raytheom Company for four
years, with Texas Instruments for 11 years, and with UTL Corporation
(later acquired by Boeing Aircraft Company) for seven years. Dr. Mao
earned his Ph.D. degree in electrical engineering at Stanford
University in 1963.
Dr. Mao is also a member of the Company's Audit Committee.

(7) From 1992 to present, Mr. Rosenberg serves as an independent consultant
to Vishay Company, a major international passive component manufacturer
with 50 operating plants located in 11 countries, and a Fortune 500
Company. Until 1991, Mr. Rosenberg was President, Principal Operating
Officer and a director of SFE Technologies. SFE Technologies, with
principal offices in San Fernando, California, was a manufacturer of
electronic components. From 1970 to 1991 Mr. Rosenberg served as Vice
President Technology at SFE Technologies. Mr. Rosenberg is a member of
the Company's Audit Committee and Compensation and Options Committee.

(Footnotes continued on following page)

6
10
(Footnotes continued from previous page)

(8) From 1984 to present, Dr. Leonard Silverman has been the Dean of
Engineering at the University of Southern California, and has been
employed by USC since 1968. Dr. Silverman is internationally known for
his pioneering work in the theory and application of multi-variable
control systems and signal processing and has more than 100
publications to his credit. Dr. Silverman has been honored as a Fellow
of the IEEE, as a Distinguished Member of the IEEE Control Society, and
has received a Centennial Medal of the IEEE. He has also received
election to the National Academy of Engineering, one of the highest
honors that can be bestowed on an engineer. Dean Silverman also serves
on the Board of Directors for Advanced Micro Devices, as well as for
the Colachis Foundation, the Lord Foundation, and the M.C. Gill
Foundation. Dr. Silverman earned his A.B., B.S., M.S. and Ph.D. degrees
in electrical engineering at Columbia University during the period 1961
through 1966.

(9) Mr. Morillas joined the Company in 1993. Prior to becoming Executive
Vice President of the Company, Mr. Morillas was associated with
National Semiconductor for over 10 years, most recently as Vice
President, Asia Marketing, in Hong Kong for four years. Mr. Morillas is
also a director of the newly formed Kai Hong joint venture. See
"Certain Relationships and Related Transactions" for a discussion of
the relationship between Kai Hong and the Company.

(10) Mr. Liu has served as Vice President, Operations of the Company since
1994 and Chief Financial Officer and Secretary since 1990. Mr. Liu was
the Company's Vice President, Administration from 1990 to 1994. Prior
to joining the Company, Mr. Liu held various management positions with
Texas Instruments ("TI"), Dallas, since 1971, including Planning
Manager, Financial Planning Manager, Treasury Manager, Cost Accounting
Manager and General Accounting Manager with TI Taiwan, Ltd. in Taipei;
from 1981 to 1986 as Controller with TI Asia in Singapore and Hong
Kong; from 1986 to 1989 as Financial Planning Manager, TI Latin America
Division (for TI Argentina, TI Brazil, and TI Mexico) in Dallas and
from 1989 to 1990 Chief Coordinator of Strategic Business Systems for
TI Asia Pacific Division in Dallas. Mr. Liu is also a director of the
newly formed Kai Hong joint venture and serves as Chief Financial
Officer of FabTech. See "Certain Relationships and Related
Transactions" for a discussion of the relationship between Kai Hong,
FabTech and the Company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has a standing Audit Committee and a
Compensation and Options Committee.

The members of the Audit Committee are Dr. Shing Mao, Michael
Giordano and Michael A. Rosenberg. The Audit Committee met twice during fiscal
year 1996. The Audit Committee makes recommendations to the Board of Directors
regarding the engagement of the Company's independent auditors, reviews the
plan, scope and results of the audit, reviews with management the Company's
policies and procedures with respect to internal accounting and financial
controls and reviews changes in accounting policy and the scope of the non-audit
services which may be performed by the Company's independent auditors. The Audit
Committee also monitors policies to prohibit unethical, questionable or illegal
activities by the Company's employees.

The Compensation and Options Committee, presently consisting
of Michael A. Rosenberg and Michael R. Giordano, makes recommendations to the
Board of Directors regarding compensation, benefits and incentive arrangements
for officers and other key managerial employees of the Company including awards
under the Company's Incentive Bonus Plan. The Compensation and Options Committee
also administers the Company's 1993 Incentive Stock Option Plan ("1993 ISO
Plan"), the Company's 1993 Non-Qualified Stock Option Plan ("1993 NQO Plan"),
and the Company's 1984 Non-Qualified Stock Option Plan ("1984 NQO Plan").

7
11
STOCK OPTIONS

The 1993 ISO Plan provides for the issuance of up to 1,000,000
shares of the Company's authorized but unissued Common Stock. Options granted
under the 1993 ISO Plan are not transferable, except by will or the laws of
descent or distribution. A vested but unexercised option is normally exercisable
for 90 days after termination of employment, other than by death or retirement.
In the event of death, unmatured options are accelerated to maturity. An option
granted under the 1993 ISO Plan may not be priced at less than 100% of fair
market value on the date of grant and expires 10 years from the date of grant.

The 1993 NQO Plan became effective retroactively to July 6,
1993, upon approval by the shareholders at the Company's 1994 annual meeting.
The 1993 NQO Plan provides for the issuance of up to 1,000,000 shares of the
Company's authorized but unissued Common Stock. Options may be exercised by the
optionee during his or her lifetime or after his or her death by those who have
inherited by will or intestacy. A vested but unexercised option is normally
exercisable for 90 days after termination of employment, other than by death or
retirement. In the event of death, unmatured options are accelerated to
maturity. The Compensation and Options Committee, which administers the 1993 NQO
Plan, has full discretion to determine whether or not options granted under the
1993 NQO Plan shall have a right to relinquish up to one-half of an unexercised
position of an option for an amount of cash, if concurrently, the holder of the
option exercises a portion of the option and purchases a number of shares of
stock at least equal to the number of shares which could have been purchased
under the portion of the option relinquished ("SAR"). However, the Board of
Directors has expressly stated that it has not and does not intend to grant such
SAR. The shares to be issued upon exercise of options under the 1993 NQO Plan
require a three-year vesting period. The option price is 100% of the fair market
value of such shares on the date the option is granted. Options expire ten years
from the grant of the option.

The 1984 NQO Plan provides for the issuance of up to 300,000
shares of the Company's authorized but unissued Common Stock. Options granted
under the 1984 NQO Plan are not transferable, except by will or the laws of
descent or distribution. A vested but unexercised option is normally exercisable
for 90 days after termination of employment, other than by death or retirement.
In the event of death, unmatured options are accelerated to maturity. An option
granted under the 1984 NQO Plan may not be priced at less than 100% of fair
market value on the date of grant and expires 10 years from the date of grant.

The Board of Directors met one time during fiscal year 1996.
The Compensation and Options Committee and the Audit Committee each met once
during fiscal year 1996. All of the persons who were directors of the Company
and/or members of committees were present for all of the meetings during fiscal
year 1996.

COMPENSATION OF DIRECTORS

All directors each receive $750 for each board meeting
attended during the year ended December 31, 1996. No additional amounts are paid
to directors for committee participation or special assignments. Both employee
and non-employee directors are eligible to receive grants of stock options.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ELECTION OF THE BOARD OF DIRECTORS'
NOMINEES.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Under Section 16(a) of the Securities Exchange Act of 1934,
the Company's directors, executive officers and any persons holding ten percent
or more of the Common Stock are required to report their ownership of the Common
Stock and any changes in that ownership to the Securities and Exchange
Commission (the "SEC") and to furnish the Company with copies of such reports.
Specific due dates for these reports have been established and the Company is
required to report any failure to file on a timely basis by such persons. Based
solely upon a review of copies of reports filed with the SEC during the fiscal
year ended December 31, 1996, each person subject to the reporting requirements
of Section 16(a) has filed timely all reports required to be filed in fiscal
1996.

8
12
EXECUTIVE COMPENSATION AND RELATED INFORMATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth certain summary information
concerning compensation paid or accrued by the Company with respect to each
person who acted in the capacity of an executive officer of the Company
(determined as of the end of the last fiscal year) (the "Named Executives") for
each of the fiscal years ended December 31, 1996, 1995 and 1994:

SUMMARY COMPENSATION TABLE

Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
-------------------------------- --------------------- ----------
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus($) sation($) Awards($) SARs (#) Payouts($) sation($)
- -------- ---- --------- -------- -------- --------- -------- ---------- ---------

DAVID LIN 1996 --(1) -- -- -- 100,000(2) -- --
President and 1995 --(1) -- -- -- -- -- --
Chief Executive 1994 --(1) -- -- -- -- -- --
Officer

PEDRO MORILLAS 1996 133,000 60,000 --(3) -- 70,000(4) -- --
Executive 1995 128,003 146,481 --(3) -- -- -- --
Vice President 1994 125,169 71,504 --(3) -- -- -- --

JOSEPH LIU 1996 120,000 30,000 --(5) -- 50,000(6) -- --
Vice President- 1995 115,564 73,240 --(5) -- -- -- --
Operations, Chief 1994 115,560 45,300 --(5) -- 40,000(7) -- --
Financial Officer
and Secretary

(1) Mr. Lin receives no direct compensation from the Company, other than
issuance of the Company's stock options. However, Mr. Lin receives cash
compensation directly from Silitek for his services as President of
Silitek, which, through its subsidiary LPSC, supplies a significant
volume of the semiconductors products distributed by the Company. As
disclosed elsewhere in this proxy, Silitek is also the beneficial owner
of 1,995,093 shares of the Company's Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management" and "Certain
Relationships and Related Transactions" for a discussion of the
relationship between Silitek, LPSC and the Company.

(2) Mr. Lin's options were granted pursuant to the Company's 1993
Non-Qualified Stock Option Plan ("1993 NQO Plan") at an exercise price
of $6.00. The 1993 NQO Plan became effective retroactively to July 6,
1993, upon approval by the shareholders at the Company's 1994 annual
meeting. The 1993 NQO Plan provides for the issuance of up to 1,000,000
shares of the Company's authorized but unissued Common Stock. Options
granted shall terminate and be of no force and effect with respect to
any shares not previously taken up by optionee upon the expiration of
ten years from the date of grant. A vested but unexercised option is
normally exercisable for 90 days after termination of employment, other
than by death or retirement. In the event of death, unmatured options
are accelerated to maturity. The Stock Option Committee, which
administers the 1993 NQO Plan, has full discretion to determine whether
or not options granted under the 1993 NQO Plan shall have a right to
relinquish up to one-half of an unexercised position of an option for
an amount of cash, if concurrently, the holder of the option exercises
a portion of the option and purchases a number of shares of stock at
least equal to the number of

(Footnotes continued on following page)

9
13
(Footnotes continued from previous page)

shares which could have been purchased under the portion of the option
relinquished ("SAR"). However, the Board has expressly stated that it
has not and does not intend to grant such SAR. The shares to be issued
upon exercise of options under the 1993 NQO Plan require a three-year
vesting period. The option price is 100% of the fair market value of
such shares on the date the option is granted. Options expire ten years
from the grant of the option.

(3) Mr. Morillas receives the benefit of a Company-owned automobile and a
life insurance premium; the aggregate value is less than 10% of his
total annual salary and is not included in this total. Effective
September 1, 1994, the Company implemented a Deferred Profit Sharing
Plan ("401(k) Plan") whereby employees shall be permitted to make
elective deferrals in any amount from 2% to 15% of their compensation.
The Company contributes an additional and discretionary 50% of the
employee's contribution, not to exceed 3% of the employee's
compensation. Under the Company's 401(k) Plan, the employee then
directs funds into selected investments. Mr. Morillas participates in
the 401(k) Plan and the Company's discretionary contribution is 3% of
his compensation from September 1, 1994. In addition, Mr. Morillas
receives the benefit of the Company's group health insurance plan,
which is partially funded by the Company; the value of such benefit is
less than 10% of his salary and is not included in this total.

(4) Mr. Morillas' options were issued pursuant to the Company's 1993
Incentive Stock Option Plan ("1993 ISO Plan") at an exercise price of
$6.00 and are exercisable annually in three equal amounts over a three
year vesting period. The 1993 ISO Plan provides for the issuance of up
to 1,000,000 shares of the Company's authorized but unissued Common
Stock. Options granted under the 1993 ISO Plan are not transferable,
except by will or the laws of descent or distribution. An vested but
unexercised option is normally exercisable for 90 days after
termination of employment, other than by death or retirement. In the
event of death, unmatured options are accelerated to maturity. An
option granted under the 1993 ISO Plan may not be priced at less than
100% of fair market value on the date of grant and expires 10 years
from the date of grant.

(5) Mr. Liu receives the benefit of a Company-owned automobile and a life
insurance premium; the aggregate value is less than 10% of his total
annual salary and is not included in this total. Mr. Liu participates
in the Company's 401(k) Plan and the Company's contribution is 3% of
his compensation from September 1, 1994. In addition, Mr. Liu receives
the benefit of the Company's group health insurance plan, which is
partially funded by the Company, the value of such benefit is less than
10% of his salary and is not included in this total.

(6) Mr. Liu's options granted in 1996 were issued pursuant to the Company's
1993 ISO Plan at an exercise price of $6.00 and are exercisable
annually in three equal amounts over a three year vesting period.

(7) Mr. Liu's options granted in 1994 were issued pursuant to the Company's
1993 ISO Plan at an exercise price of $7.875 and became exercisable
with respect to 50% of the options on June 17, 1995 and the remaining
50% of the options on June 17, 1996.

10
14
STOCK OPTIONS

The following table contains information concerning the grant
of stock options during fiscal year ended December 31, 1996 to the Named
Executives:

OPTION/SAR GRANTS IN FISCAL YEAR 1996

Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term (1)
- --------------------------------------------------------------------- --------------------
Number of Percent
Securities of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Granted Employees Base Price Expiration
Name (#) in FY 1996 ($/Sh) Date 5% ($) 10% ($)
- -------------- ------------ ------------ ----------- ---------- ------- -------

David Lin 100,000 27.8 6.00 08/01/06 377,337 956,245
Pedro Morillas 70,000 19.4 6.00 08/01/06 264,136 669,372
Joseph Liu 50,000 13.9 6.00 08/01/06 188,668 478,123

(1) The Potential Realizable Value is the product of (a) the difference
between (i) the product of the closing sale price per share at the date
of grant and the sum of (A) 1 plus (B) the assumed rate of appreciation
of the Common Stock compounded annually over the term of the option and
(ii) the per share exercise price of the option and (b) the number of
shares of Common Stock underlying the option at December 31, 1996.
These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises are dependent upon a
variety of factors, including market conditions and the price
performance of the Common Stock. There can be no assurance that the
rate of appreciation presented in this table can be achieved.

OPTION EXERCISES AND HOLDINGS

The following table contains information with respect to the
Named Executives concerning the exercise of options during the fiscal year ended
December 31, 1996 and unexercised options held by the Named Executives as of
December 31, 1996:

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR-END OPTION VALUES

Value of Unexercised
Shares Number of Unexercised "In-the-Money" Options/SAR
Acquired Value Options/SAR's at 12/31/96(#) at 12/31/96($)(1)
on Exercise Realized ---------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------- ----------- -------- ----------- ------------- ----------- -------------

DAVID LIN -- -- 47,000 100,000 252,625 125,000
PEDRO MORILLAS -- -- 16,667 70,000 89,585 87,500
JOSEPH LIU -- -- 60,000 50,000 107,500 62,500

(1) The value of unexercised "in-the-money" options is the difference
between the closing sale price of the Company's Common Stock on
December 31, 1996 ($7.25 per share) and the exercise price of the
option, multiplied by the number of shares subject to the option.

11
15
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

Effective March 16, 1993, the Company entered into an
employment agreement with Pedro Morillas, the Company's Executive Vice
President. Under such employment agreement, Mr. Morillas is entitled to, among
other things, (i) receive an annual base salary and performance bonus subject to
the determination and evaluation of the Company's Compensation Committee on a
yearly basis, (ii) participate in all plans sponsored by the Company for
employees in general, (iii) use of a Company car, and (iv) an initial option
granted on July 6, 1993 to purchase from the Company up to 50,000 shares of the
Company's Common Stock at $1.875 per share (exercisable in three equal
installments commencing June 10, 1994 and expiring on the tenth anniversary of
the date of grant).

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS TO STOCKHOLDERS

The report of the Compensation and Options Committee of the
Board of Directors to Stockholders shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.

The Compensation and Options Committee (the "Committee")
consists of two directors, Michael A. Rosenberg and Michael R. Giordano, who are
not employees or former employees of the Company. The Committee recommends
salary practices for executive personnel, reviews the performance of the Company
and the executive officers, sets performance objectives, recommends the
compensation of executive officers, and recommends the grant of options under
the Company's various stock option plans. David Lin, the Company's President and
Chief Executive Officer, has final approval of all salary, cash bonus amounts
and stock option grants for Pedro Morillas (Executive Vice President) and Joseph
Liu (Chief Financial Officer). In May 1996, the Committee set compensation
levels for the executive officers of the Company.

The Company's general approach to compensating executive
officers is to pay cash salaries which are competitive with salaries paid to
executives of other companies in the Company's industry, which are of similar
size and engaged in a similar line of business, and to employ a subjective
assessment of the individual's experience and past and potential contribution to
the Company.

The Company's policy in compensating executive officers is to
establish methods and levels of compensation that will provide strong incentives
to promote the profitability and growth of the Company and reward superior
performance. Compensation of executive officers includes base salary,
performance-based incentive bonuses and stock-based programs. Salaries are
established by the Committee based on the Committee's subjective assessment of
the executive's scope of responsibility, level of experience, individual
performance, and contribution to the business.

The Company believes that the emphasis on performance-based
and stock-based compensation serves to align the interests of the executive
officers with the interests of the Company's Stockholders. The Company also
seeks to establish overall compensation levels that are sufficiently competitive
to attract, retain, and motivate highly competent management personnel. Mr.
Morillas' base salary is paid in accordance with the terms and conditions of a
compensation agreement based upon the aforementioned subjective criteria of the
Committee. See "Employment Contracts and Termination of Employment and Change in
Control Arrangements." Mr. Liu's base salary is also paid in accordance with
subjective criteria set by the Committee.

The Company's performance, for purposes of compensation
decisions, is measured under the annual bonus plan against goals established
prior to the start of the fiscal year by the Committee, and is reviewed and
approved by the Committee. The Company's annual bonus plan is based on specific
financial performance results. Bonuses, set at a fixed amount and paid as a
percentage of the total, are based upon reaching a percentage between 80 and
120% of the goal. Bonus compensation paid to Mr. Morillas is based upon goals
set by the Committee for net sales and profit before tax. Mr. Liu's bonus is
based on targets set by the Committee for net sales, and profit before tax, as
well as, return on assets.

12
16
COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

No cash compensation is paid by the Company to Mr. David Lin,
the Company's President and Chief Executive Officer. Because Mr. Lin also serves
as President of Silitek Corporation, he is compensated directly from Silitek.
Mr. Lin is however, eligible to participate in, and receive stock option grants
through, the Company's 1993 Non-Qualified Stock Option Plan. Shares that have
been granted to Mr. Lin were based upon the Committee's subjective assessment of
the performance of Mr. Lin and the Company.

STOCK OPTIONS

The Committee strongly believes that the interests of senior
management must be closely aligned with those of the Company's stockholders.
Stock options are granted to officers, other executives and selected employees
whose contributions and skills are important to the long-term success of the
Company. Stock options granted to executive officers are granted at the fair
market value as of the date of grant with a ten year term. If employment is
terminated, the term of the grant is 90 days from the termination date. To
encourage retention, the ability to exercise options granted under the plans is
subject to vesting restrictions. The Committee's policy is to award an initial
grant at the date of employment, which vests over three years, and is in
recognition of the executive officer's potential contribution to the Company.
The three year vesting period may be increased or decreased at the Committee's
discretion. After three years, it is at the Committee's discretion to award
additional grants based upon future contribution. Decisions made by the
Committee regarding the timing and size of other option grants take into
consideration Company and individual performance, competitive market practices,
and the size and term of option grants made in prior years. The Committee does
not consider current option holdings when granting additional options. The
Company's Stock Option Plans have been amended and approved by the stockholders
so stock options that have been awarded can qualify for exclusion under Section
162(m) of the Internal Revenue Code of 1986 as performance-based compensation.

Dated April 3, 1997,
Michael R. Giordano
Michael A. Rosenberg
Compensation Committee of the Board of Directors

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation and Options Committee consists of two
directors, Michael A. Rosenberg and Michael R. Giordano.

No person who served as a member of the Company's Compensation
and Options Committee during the 1996 fiscal year has ever been an officer or
employee of the Company or any of its subsidiaries.

David Lin, the President, Chief Executive Officer and director
of the Company, during fiscal year 1996, was President and a director of
Silitek. Silitek's entire Board of Directors participated in compensation
decisions for Silitek in the absence of its Compensation Committee during fiscal
year 1996.

Silitek controls LPSC, its wholly-owned subsidiary. LPSC is
the record owner of 40.2% of the Company's issued and outstanding Common Stock,
excluding Treasury Stock, and as of April 30, 1997, continues to be the record
owner of 40.2% of all of the Company's issued and outstanding securities,
excluding Treasury Stock. Thus, since LPSC is a controlled subsidiary of
Silitek, Silitek is the beneficial owner of 40.2% of the Company's outstanding
voting securities. However, although Silitek could be considered the ultimate
beneficial owner of all of the Company's securities held of record by LPSC,
Silitek has disclaimed beneficial ownership of the 1,995,093 shares of Common
Stock held by LPSC. See "Security Ownership of Certain Beneficial Owners and
Management" and "Certain Relationships and Related Transactions" for a
discussion of the relationship between Silitek, LPSC and the Company.

13
17

Performance Graph

Set forth below is a line graph comparing the yearly
percentage change in the cumulative total stockholder return of the Company's
Common Stock against the cumulative total return of the American Stock Exchange
Market Index ("AMEX Market Index") and a Company-constructed electronics
manufacturing and distribution peer group for the five fiscal years ending
December 31, 1996. The graph is not necessarily indicative of future price
performance.

The graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG DIODES INCORPORATED, AMEX MARKET INDEX AND PEER GROUP INDEX (1)

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------------------------------------------

Diodes Incorporated $100 $ 137.50 $ 537.50 $ 500.00 $ 1,050.00 $ 725.00
- --------------------------------------------------------------------------------------------------------------------
AMEX Market Index 100 101.37 120.44 106.39 137.13 144.70
- --------------------------------------------------------------------------------------------------------------------
Peer Group Index (weighted average) 100 194.65 285.82 339.98 691.95 585.63
- --------------------------------------------------------------------------------------------------------------------

(1) Assumes $100 invested on December 31, 1991 in the Common Stock of
Diodes Incorporated, the stock of the companies in the AMEX Market
Index, and in the stocks of the peer group companies, and that all
dividends received within a quarter, if any, were reinvested in that
quarter. The peer group companies consist of Microsemi Corporation,
Nu-Horizons Electronics Corporation, Siliconix, Inc., Semtech
Corporation, Sterling Electronics Corporation, Unitrode Corporation,
Western Microtechnology, Inc., and included this year, Taitron
Components, Inc. ("Taitron"). The Company believes Taitron operates in
a similar market and sells similar products as the Company. Taitron is
a

14
18

new addition to the peer group because in the past, insufficient stock
price history has prohibited it from inclusion in the Company's proxy
peer group.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

LPSC, a wholly-owned subsidiary of Silitek, is the record
owner of 40.2% of the Company's issued and outstanding Common Stock, excluding
treasury stock, at December 31, 1996, and as of April 30, 1997, continues to be
the record owner of 40.2% of all of the Company's issued and outstanding
securities, excluding treasury stock. Thus, since LPSC is a controlled
subsidiary of Silitek, Silitek is the beneficial owner of 40.2% of the Company's
outstanding voting securities. However, although Silitek could be considered the
ultimate beneficial owner of all of the Company's securities held of record by
LPSC, Silitek has disclaimed beneficial ownership of the 1,995,093 shares of
Common Stock owned by LPSC. See "Security Ownership of Certain Beneficial Owners
and Management" and "Certain Relationships and Related Transactions" for a
discussion of the relationship between Silitek, LPSC and the Company.

During the years ended December 31, 1996 and 1995,
approximately 28% and 16%, respectively, of the purchases of products for resale
by the Company, amounting to approximately $10,403,000 and $6,512,000,
respectively, were from LPSC. These products, which were also available
generally from other sources, were purchased in transactions negotiated at
prices competitive with prices charged by other vendors of similar products in
similar quantities. There are no special or exclusive trading agreements or
understandings between the Company and LPSC, except as described below, other
than the Company's marketing agreement with LPSC.
.
In February 1996, the Company announced an agreement with
FabTech whereby the Company gains a new supply of processed wafers used in the
manufacture of several types of discrete semiconductors. The Company has
advanced FabTech approximately $2.5 million in working capital to be used in
upgrading, reconfiguring, and starting up operations at an existing wafer
fabrication facility located in the AT&T building in Lee's Summit, Missouri.
FabTech is a newly-created, wholly-owned subsidiary of LPSC.

The Company's Taiwan and Kai Hong manufacturing facilities
receive wafers from FabTech, among others. Output from the FabTech facility
includes wafers, which may be used in the production of such products as
Schottky barrier diodes, fast recovery epitaxial diodes (FREDs), and other
widely used value-added products. Schottky barrier diodes are employed in the
manufacture of the power supplies found in personal computers,
telecommunications devices and myriad other applications where high frequency,
low forward voltage and fast recovery are required.

In March 1996, the Company entered into the Kai Hong joint
venture for the development of additional manufacturing capacity in Shanghai.
The joint venture allows for the manufacturing and sales of diodes and
associated electronic components. The Company has a 70% controlling interest, is
responsible for production and management, and currently receives 100% of the
production, mainly in SOT-23 packaged components. The Company has an equity
contribution of $2.8 million and the minority interest party has an equity
contribution of $1.2 million. From March 1996 to December 1996, during the
initial set up phase, LPSC provided to the joint venture certain management
personnel and services and was reimbursed approximately $240,000. The joint
venture agreement allows for additional production expansion in several phases
according to market demand. The initial phase of the Kai Hong operation is now
in full production, and beginning in the first quarter of 1997, is making a
positive contribution to the Company's bottom line.

Mr. Raymond Soong, who became Chairman of the Board of
Directors of the Company effective March 16, 1993, is also the Chairman of the
Board of Silitek, LPSC, Taiwan Liton, and the newly formed Kai Hong joint
venture.

Mr. David Lin, who has been a director of the Company since
1991 and effective March 16, 1993 became President and Chief Executive Officer
of the Company, is also the President and a director of Silitek and his salary
is fully paid by Silitek. See "Executive Compensation." Mr. Lin is also a
director of the newly formed Kai Hong joint venture.

15
19
Silitek is affiliated through common ownership and control
with Taiwan Liton, and both companies are members of the Lite-On Group of
companies in Taiwan. Both Silitek and Taiwan Liton are public corporations in
Taiwan with stock registered on the Taipei Stock Exchange. Taiwan Liton owns
100% of the voting shares of Lite-On Milpitas.

Dr. Shing Mao, who is a director of the Company, is Chairman
of the Board of Lite-On Milpitas, a wholly-owned subsidiary of Taiwan Liton. Dr.
Mao is also a director of LPSC, and since 1995, has also been a director of
FabTech.

Mr. M.K. Lu, who has been a director of the Company since
1995, is also the President and a director of LPSC since 1991. From 1983 to
1990, Mr. Lu was General Manager/Vice President of Silitek. Mr. Lu is also a
director of the newly formed Kai Hong joint venture.

During 1996, Mr. Michael R. Giordano, a member of the
Company's Board of Directors and Senior Vice President-Investment Consulting at
the investment banking firm of PaineWebber, Inc., has, from time to time,
assisted members of the Board of Directors and Executive Officers of the Company
in stock option exercises and subsequent stock sales of the Company's Common
Stock. Mr. Giordano has also, from time to time, assisted LPSC in stock
transactions. Compensation received by Mr. Giordano for services rendered to the
Company and LPSC in 1996 was less than $2,000. Mr. Giordano is a member of the
Company's Audit Committee and Compensation and Options Committee, and is also
the pension consultant for the Company's 401(k) plan.

Mr. Pedro Morillas, Executive Vice President of the Company,
is also a director of the newly formed Kai Hong joint venture.

Mr. Joseph Liu, Vice President, Operations, Chief Financial
Officer and Secretary of the Company, is a director of the newly formed Kai Hong
joint venture and serves as Chief Financial Officer of FabTech.

PROPOSALS OF STOCKHOLDERS

Under certain circumstances, stockholders are entitled to
present proposals at stockholder meetings. Any such proposal to be included in
the proxy statement for the Company's 1998 annual meeting of stockholders must
be submitted by a stockholder prior to January 15, 1998, in a form that complies
with applicable regulations.

ANNUAL REPORT AND FORM 10-K

The Company's Annual Report of the fiscal year ended December
31, 1996 accompanies this Proxy Statement. The Annual Report contains
consolidated financial statements of the Company and its subsidiaries and the
report thereon of Moss Adams LLP, the Company's independent auditors for the
fiscal years ended December 31, 1996, 1995 and 1994.

STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS REQUIRED TO
BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE EXCHANGE
ACT, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, BY WRITING TO THE COMPANY;
ATTN: JOSEPH LIU, 3050 EAST HILLCREST DRIVE, WESTLAKE VILLAGE, CALIFORNIA 91362.

OTHER MATTERS

Management knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If,
however, other matters are properly brought before the Meeting, it is the
intention of the Proxyholders to vote the shares represented by the Proxies on
such matters in accordance with the recommendation of the Board of Directors and
authority to do so is included in the Proxy.

Dated at Westlake Village, California, this second day of May,
1997,

By Order of the Board of Directors,

16
20
/s/ Joseph Liu
Joseph Liu,
Secretary

REVOCABLE PROXY REVOCABLE PROXY
DIODES INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS - JUNE 6, 1997

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned stockholder(s) of Diodes Incorporated (the "Company")
hereby nominates, constitutes and appoints David Lin and Joseph Liu, and each of
them, the attorney, agent and proxy of the undersigned, with full power of
substitution, to vote all stock of the Company which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company (the "Meeting") to
be held at The Radisson Hotel, 30100 Agoura Road, Agoura Hills, California
91301, on Friday, June 6, 1997 at 10:00 a.m., and any adjournments thereof, as
fully and with the same force and effect as the undersigned might or could do if
personally thereat, as follows:

1. ELECTION OF DIRECTORS

FOR all Company nominees listed WITHHOLD AUTHORITY
below (except as marked to the to vote for all nominees
contrary below) listed below

Discretionary Authority to cumulate votes is granted

Nominees: Michael R. Giordano; David Lin; M.K. Lu: Shing Mao; Michael A.
Rosenberg; Leonard M. Silverman and Raymond Soong.

(Instructions: To withhold authority to vote for any one or more nominees,
write that nominee's or nominees' name(s) in the space provided below)

17
21
Please Sign And Date On Reverse Side

REVOCABLE PROXY REVOCABLE PROXY

THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF EACH
OF THE NOMINEES. ALL PROPOSALS TO BE ACTED UPON ARE PROPOSALS OF THE COMPANY. IF
ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED BY THE
PROXYHOLDERS IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD
OF DIRECTORS.

The undersigned hereby ratifies and confirms all that said attorneys
and proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.

Date: ____________________

------------------------------------------------
(Number of Shares)

------------------------------------------------
(Name of Stockholder, Printed)

------------------------------------------------
(Signature of Stockholder)

------------------------------------------------
(Name of Stockholder, Printed)

------------------------------------------------
(Signature of Stockholder)

(Please date this Proxy and sign your name as it
appears on your stock certificate(s). Executors,
administrators, trustees, etc., should give
their full titles. All joint owners should
sign.)

I (We) do do not expect to attend the
Meeting.

22
This Proxy will be voted "FOR" the election of all nominees unless
authority to do so is withheld for all nominees or for any individual nominees.
PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.